Housing inventory slid to 1.89 million homes in December – down 6 percent from the previous month and 22.3 percent from the prior year, according to Realtor.com.

In the 145 markets tracked by Realtor.com, only Springfield, Ill., registered a year-over-year increase. Inventories plunged 49.7 percent in Miami, 49.1 percent in Phoenix, and 46.6 percent in Bakersfield, Calif.

Meanwhile, the national median price edged up 5 percent year-over-year.

Asking prices – the amount sellers include on a Realtor.com listing – climbed 32.5 percent in Miami, 21.7 percent in Naples, 21.5 percent in Fort Myers-Cape Coral, and 19.4 percent in Punta Gorda, according to Realtor.com.

However, asking prices were down 11 percent in Detroit, 10 percent in Chicago, 7.6 percent in Las Vegas, and 7 percent in Sacramento.

Source: Wall Street Journal

The program would cover both loans issued by government-controlled mortgage giants Fannie Mae and Freddie Mac and private mortgage lenders. Congress would have to approve it, a difficult hurdle.

“There’s never been a better time to build, especially since the construction industry was one of the hardest-hit when the housing bubble burst,” Obama said. “Of course, construction workers weren’t the only ones hurt. So were millions of innocent Americans who’ve seen their home values decline. And while government can’t fix the problem on its own, responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief.”

The housing bubble was at the center of the recession, prompting widespread foreclosures and leaving millions of homeowners with houses valued at less than their mortgages.

Under the plan, any homeowner current on his or her mortgage could take advantage of historically low lending rates. Mortgage rates have been below 4 percent for months.

A small fee on large banks would pay for the program, senior administration officials said.

Administration officials offered few details but estimated savings at $3,000 a year for average borrowers. It’s likely that millions of homeowners would be eligible, but they would have to seek out refinancing options under the program with their lender. Other government programs allow lenders to seek out potential applicants.

Further details of the program will likely be released in legislation in the next few days, officials said.

The new program would expand the Obama administration’s Home Affordable Refinance Program, which allows borrowers with Fannie and Freddie-backed loans to refinance at lower rates. Few people have signed up for that program. Many “underwater” borrowers – those who owe more than their homes are worth – couldn’t qualify.

About 1 in 4 Americans with a mortgage – about 11 million – are underwater, according to CoreLogic, a real estate data firm. Roughly 1 million homeowners have refinanced through the refinancing program. Government officials had estimated it would help 4 million to 5 million homeowners.

About half of all U.S. mortgages – about 30 million home loans – are owned by non-government lenders.

A task force on mortgage misdeeds

President Obama also announced the creation of a task force aimed at investigating the shoddy mortgage-lending practices that contributed to the financial collapse of 2008 and the housing crisis that continues to weigh on the economy.

Obama said he has asked Attorney General Eric H. Holder Jr. to create a special unit of state attorneys general and federal prosecutors to probe deeper into questionable lending practices and the way in which risky loans were packaged and sold to investors.

“This new unit will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans,” Obama said in his State of the Union speech.

The creation of the task force comes as the administration and a coalition of state attorneys general are pushing to finalize a long-awaited multibillion-dollar settlement with the nation’s largest banks over their flawed and fraudulent foreclosure practices.

The deal has drawn criticism from liberal and consumer groups as well as attorneys general from New York, Delaware and other states, who have insisted that more extensive investigations are warranted and that any settlement should not grant banks too broad a liability from future legal action.

Source: The Associated Press

Below is an excerpt from Real Estate Economy Watch:

Home prices this year cease their decline and gain a slight 0.2 percent across all markets as more and more individual markets stabilize in the months to come.

However, though national prices will be flat, some 40 percent of the top 50 markets it tracks will stabilize in 2012, forecast Clear Capital, a premium provider of data and solutions for real estate asset valuation and risk assessment for large financial services companies.

Clear Capital reported a 2.1 percent year-over-year decrease in 2011 that was bolstered by a stabilizing of prices in the latter half of the year and decreasing REO saturation.

“Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “With national prices down a little more than two percent for the year and sitting at their lowest point since 2001, our projections show that the current balance the market has found will continue through 2012.

“However, individual markets reacting to their local economic drivers exhibit a wide range of performance levels,” added Dr. Villacorta.

“Although the national numbers suggest markets are flat, when looking at individual metro markets it turns out only 24 percent of them showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower. What’s most interesting is that the lower segments of appreciating markets are driving much of the current price growth. In places like Florida, which have historically been hard hit, we are now seeing considerable activity in lower-end properties as demand continues to heat up.”

U.S. prices declined -0.4 percent in December on a quarter-over-quarter basis, showing the markets giving back some of the gains of the summer buying season. This is the first cooling off after six monthly reports showing minimal quarterly gains. In fact, the most recent six months of the year (June – December) saw national home prices flat at -0.1 percent.

While these national quarterly numbers for December fell slightly, half of the major markets covered saw quarterly gains. Dayton, OH checked in at the top of highest quarterly performers with a gain of 5.0%. On the downside, Atlanta, GA showed consistent weakness as December’s lowest performing major market with a loss of -8.4 percent quarter-over-quarter.

In addition to the relatively flat home price performance, national REO saturation rates at the end of 2011 reached a new yearly low at 24.8 percent. REO saturation was volatile early in 2011, and showed consistent declines and stability toward the latter half of the year.

On the national level, 2012 is expected to play out much like the last half of 2011, with a very subtle price change. A minimal decline in the beginning of the year is expected to turn into a meager gain by year’s end. At a more granular level, half of the 50 major metro markets are expected to post gains for the year, and individual metros will experience the full gamut of price movement, from double-digit growth to double-digit drops.

Double digit volatility can be seen with the two strongest markets, including Orlando with a healthy price increase of 11.7 percent, and Bakersfield close behind with a projected 11.1 percent increase. The deepest drops come from Atlanta with an expected drop of -14.4 percent, and Los Angeles with a predicted drop of -10.3 percent.

Florida markets are expected to extend their impressive 2011 performances into 2012. Miami and Tampa are projected to be among the five highest performing metros with 8.8 percent and 7.4 percent growth, respectively, and Jacksonville is forecasted to gain 4.3 percent, placing it at a respectable eighth among the top metro markets. The exceptional growth in these markets can be a result of several factors, including being hit especially hard in the downturn. While fighting back, they remain significantly off their highs of 2006. Other factors in play in these markets include large increases in the values of their lower priced homes (near double-digits for all markets) when compared to higher priced segments of the market, and a high percentage of all cash transactions (51.8 percent) when compared to other metros. This indicates a high degree of investor activity as they look for bargains in the region, driving up demand.

Although the range of movement for U.S. prices stabilized through 2011, prices have settled at the lowest level since early 2001. The forecast for 2012 shows home prices starting with a dip in the first quarter, improving in the spring and summer buying season, and continuing to climb to 0.2 percent overall growth for 2012. Individual markets reacting to their local economic conditions continued to exhibit a wide range of performance levels in 2011, with only 12 of the top 50 metro markets (24 percent), returning year-over-year price movement that can be considered stable – price swings of less than 2.5 percentage points. This will continue into 2012, with only 40 percent being considered stable. 

Source: Clear Capital and Real Estate Economy Watch

- Record low morgage: Mortgage rates hit a record low of 3.94 percent this year. The lowest rates we have seen in years.
- Once-in-a-generation time to buy: Homes sold for a fraction of their value five years ago, and excess inventory provided every buyer with a range of options. In some cities, homeownership became cheaper than renting. But job insecurities made buyers nervous to commit. Those who did found it difficult to get financing despite stellar credit scores. As a result, 2011 saw a real estate market with great deals, yet fewer buyers than needed. In 10 years, however, many Americans may look back on 2011 as the best time in a generation to invest in real estate-.
- More homeownership: Most renters want to buy a home: 72 percent consider homeownership a good financial decision, and 64 percent believe the time is right, according to the National Association of Realtors® 2011 Housing Pulse survey.
- The economy rebounded, sorta, kinda, a little: The Florida economy remained sluggish as unemployment rates stayed uncomfortably high and home sales stayed uncomfortably low; but, across the board, the state showed signs of recovery, with almost every economic indicator suggesting brighter days ahead.
- Strong home sales: Home sales edged higher most months; selling prices held their own and, in a few cases, median selling prices rose. Floridians’ consumer confidence also rose toward the end of the year after bobbing around for most of the summer. Employment followed, and while the state has a long way to go to hit “normal,” it reached a 2011 level of “better than last year.”
- Attractive commercial market: Florida investors increasingly want to buy office, retail and industrial properties. Vacancy rates, while high, have stabilized, along with rental rates. Core assets (essential to businesses) are selling and lenders – including the life insurance companies – are lending again. Banks are more realistic about prices for distressed properties, and 2012 should see the entry of more commercial tenants. “With modest economic growth and job creation, the fundamentals for commercial real estate should gradually improve in the coming year,” adds Lawrence Yun, NAR chief economist.
- Florida Legislature: We got Amendment 4 and scrapped the cap: Florida Realtors had a number of victories in the 2011 Florida Legislature, but none as important as a constitutional amendment voters will consider in November 2012, and none so hard-fought as a law to “scrap the cap” on Florida’s affordable housing trust funds. Amendment 4, if approved by Florida voters, will create a property tax increase cap of 5 percent each year on non-homestead real estate, down from the current 10 percent cap. It will also give some first-time homebuyers a property tax break that decreases over time. In 2012, Florida Realtors will roll out its “Yes on 4” campaign. In the “scrap the cap” victory, the Florida Legislature agreed to allow all doc stamps earmarked for the affordable housing Sadowski Trust Fund to actually go into the fund.
- Fasten your seatbelts. Property insurance is a bumpy ride: Lawmakers wrestled with a question that has been around for years: Should property insurance be affordable or available? If affordable, a major storm could bankrupt the state. If widely available, the cost could drive buyers away and hurt current homeowners. Citizens Property Insurance, the state-owned insurer, sits squarely in the middle of the debate since it covers most of the high-risk properties and, should a major storm hit, would force all Floridians to help pay for damages. To attract private insurers to the state and cut down on the number of owners under Citizens, Gov. Scott and lawmakers made changes. Sinkhole coverage became optional and much more expensive. Citizens dropped about 7,500 coastal homes in early December, and policy costs and rules are set to become even stricter in 2012. The uneasy balance between affordable or available insurance shifted a bit closer to the “available” side.
- HAMP, HARP, TARP do little for at-risk homeowners: Falling home values and risky mortgages caused more Florida owners to face foreclosure. The government created, and modified, a number of programs slated to help owners keep their homes, but most applied only to about half of those in trouble – owners who had mortgages held by Fannie Mae or Freddie Mac. Even then, however the carrots held out by HAMP, HARP, TARP and others didn’t entice lenders that feared principal cuts and long-term changes. The issue led to some strategic defaults – foreclosures where investors could afford to pay but walked away as a financial decision – court backups, and a system that allowed some non-paying owners to live in a home for over two years before authorities finally foreclosed. Analysts expect the problem to improve but continue in 2012.
- Should we slow the recovery to avoid another crisis? U.S. regulators have conflicting goals: Speed the recovery but, at the same time, take steps to make sure it never happens again. Unfortunately, it hasn’t figured out how to do both. While the federal government has tried to spark home sales through a number of programs (see No. 7 above), it has also created obstacles to homeownership by boosting mortgage rules, tightening appraisal standards and restricting the amount homeowners can deduct from federal taxes. A key concern of Realtors heading into 2012 is the qualified residential mortgage (QRM) rule – a minimum standard that mortgage loans must meet before Fannie Mae or Freddie Mac will consider buying them. Some lawmakers have suggested a 20 percent downpayment, a high standard that will force many buyers to wait years before they can afford homeownership. The discussion will continue in 2012.
- 2011 Realtors are different than 2005 Realtors: The skills needed to sell a house have changed. Realtors spend a lot more time talking to banks, trying to find out what’s happening with a client’s short sale; asking what paperwork they needed to file or re-file; and understanding new laws that oversee what they can do – and can’t do – when working with short-sale sellers. Realtors learned to accept disappointment – sales that fell apart at the last minute; appraisals that came in lower than hoped; and clients who wanted a bargain below any reasonable expectations.

Wishing you and yours a happy, healthy and prosperous new year!

Another 68 percent of those polled plan to help their children or grandchildren become homeowners down the road.

Experts attribute the trend to low home prices, parents wanting to provide some stability in their children’s lives and the fact that their children lack the necessary cash to make home purchases. These parents recognize that cash transactions offer better deals and quicker closings, or they know their children cannot afford a 20 percent downpayment or have a type of job, such as freelance or part-time, frowned upon by lenders.

However, experts insist that parents should not jeopardize their budgets or their retirement by helping offspring become homeowners, and they should make sure their children can afford the monthly costs and other expenses that accompany homeownership.

Source: CNNMoney

Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.

CoreLogic estimates the shadow inventory, also known as pending supply, based on the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more) – properties most likely to become bank-owned listings (REOs). Properties not yet delinquent aren’t included in the estimate of shadow inventory.

Data highlights:

* As of October 2011, shadow inventory remained at 1.6 million units, or 5-months’ supply and represented half of the 3 million properties currently seriously delinquent, in foreclosure or in REO.

* Of the 1.6 million properties currently in the shadow inventory, 770,000 units are seriously delinquent (2.5-months’ supply), 430,000 are in some stage of foreclosure (1.4-months’ supply) and 370,000 are already in REO (1.2-months’ supply).

* Florida, California and Illinois account for more than a third of the shadow inventory. The top six states, which would also include New York, Texas and New Jersey, account for half of the shadow inventory.

* Despite 3 million distressed sales since January 2009, a period when home prices were declining at their fastest rate, the shadow inventory in October 2011 is at the same level as January 2009.

* Because shadow inventory is often concentrated in suburban and exurban submarkets, where distressed sales compete with new construction sales, it is one of the reasons why new home sales continue to be weak. In normal times, new home sales account for 12 percent of all sales, but they are currently running at 7 percent of all sales.

“The shadow inventory overhang is a large impediment to the improvement in the housing market because it puts downward pressure on home prices, which hurts home sales and building activity while encouraging strategic defaults,” said Mark Fleming, chief economist for CoreLogic.

Source: Corelogic.com

“It’s really clear that two things are happening in Florida real estate,” said Florida Realtors Chief Economist Dr. John Tuccillo. “No. 1, sales are moving upward – not by a large increase, but definitely, positively on an upward trend. Second, prices are stabilizing. Now, it doesn’t mean that prices have turned around but they are stabilizing, and that’s vital for the market to gain equilibrium.

“The more important factor is that sales are increasing and in large part, that’s due to lenders becoming more educated on how to deal with distressed properties more effectively and in a more timely manner – and that’s helping the Florida real estate markets recover.”

Seventeen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in November; 10 MSAs had higher existing condo sales.

The statewide median sales price for existing homes remained relatively flat last month at $130,100; a year ago, it was $130,600. According to analysts with the National Association of Realtors (NAR), sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in October 2011 was $161,600, down 5.8 percent from the previous year, according to NAR. In California, the October statewide median resales price was $278,060; in Massachusetts, it was $275,000; in Maryland, it was $221,765; and in New York, it was $215,900.

In Florida’s year-to-year comparison for condos, 5,590 units sold statewide in November, a 2 percent gain over the 5,464 units sold in November 2010. The statewide existing condo median sales price last month was $86,700; a year earlier, it was $83,000 for a 4 percent increase. The national median existing condo sales price in October was $160,300, according to NAR.

“In recent weeks, we’ve seen encouraging reports of jobs growth and improvements in Florida’s economy,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart. “Mortgage rates have remained at record lows and home prices appear to be stabilizing in many local markets across the state – all positive signs for the housing recovery.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.99 percent in November, down from the 4.30 percent average during the same month a year earlier. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Related: NAR: Existing home sales continue to climb in November

Source: National Association of Realtors

Florida was behind only New Mexico in lowering its official jobless rate from 11.9 percent in November 2010 to 10 percent last month, the bureau said. New Mexico’s jobless rate dropped 2.1 percentage points from 8.6 to 6.5 percent.

Right behind Florida was Michigan, which lowered its rate 1.6 percentage points to 9.8 percent and West Virginia, which saw a 1.7 percentage point drop to 7.9 percent.

Also, the 98,100 jobs that Florida added over the year put the state third in the nation, behind only California and Texas. Still, Florida is just one of eight remaining states with double digit unemployment, though the situation is better than in Nevada, at 13 percent, and California at 11.3 percent. North Dakota has the lowest jobless rate, 3.4 percent.

Gov. Rick Scott talked about the state’s success in a radio appearance Wednesday morning. “We’ve got to get more jobs in the state, but this has been a great year” the governor said during an interview with WFLA Radio in Tallahassee.

Source: News Service of Florida

Report highlights include:

- U.S. quarter-over-quarter home prices hold their ground and post an increase of 0.3%, while REO saturation rates remain near 25%.
- Quarterly price movements have become more aligned across the four regions within the U.S., with only 2.0 percentage points separating the highest performing region (Midwest at 1.2%) and the lowest performing region (West at -0.8%).
- Though the national year-over-year price change of -2.2% showed slight improvement over last month’s report (-2.8%), it marked 14 consecutive months of yearly declines.
- REO saturation rates remain stable nationally at 24.6% of all transactions.
- The Atlanta MSA bucked the nationwide trend of stability, posting a -9.7% drop in prices quarter-over-quarter.

“The overall market stability in this month’s report gives me hope that housing markets are settling after a very turbulent two years,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “With only a one percent drop in national home prices since January and virtually no change in prices over the last six months, strong evidence suggests the big swings that many market participants are accustomed to could become a thing of the past.

“Although many of the nation’s major markets are experiencing no significant movement in prices, there are still several micro markets that are underperforming the overall market due to high levels of REO saturation. As lien holders continue to process their foreclosures and the flow of REOs continue to come to market, it will be critical for industry participants to ensure they understand the micro economic nature of specific markets.”

Regional Market Overview (Nov. 2010 to Dec. 2011)

Prices Flat as the Great Plains

- National home prices saw little movement across quarterly, six month, and yearly time periods.
- The West region experienced a slight improvement in quarterly price performance with a smaller decline than last month, and remains the weakest of the four regions.
- The Midwest, South and Northeast regions each turned in positive, but weaker quarterly numbers, compared to last month’s report.

The 0.3% increase for U.S. national home prices, after the 0.6% reported last month shows national home price gains continuing to stabilize and soften from those seen over the summer buying season.

Three of the four regions were generally flat, posting price changes of less than one percent quarter-over-quarter. The Midwest was the only region to see prices move above that threshold with a stronger 1.2% quarterly gain.

The West remained the only region to experience a quarterly price decline of -0.8%, showing a modest improvement over last month’s -1.0%. As this improvement comes at the beginning of the winter slow down, it suggests the stubborn quarter-over-quarter and year-over-year declines seen consistently in the hard hit region may be easing.

15 Highest and Lowest Performing Metro Markets (Nov. 2010 to Dec. 2011)

Highest Performing Markets: Holding Fast to Modest Gains

- Quarter-over-quarter gains for the highest performing markets continue to soften.
- Quarterly REO saturation rates hold steady on average, staying below the national rate.
- Four Florida markets maintain positions among the “top 15” list for a second consecutive month.

The highest performing markets continue to weaken quarter-over-quarter, with Washington, D.C. topping the list with 4.8% growth. Even though as a whole, this group hasn’t experienced returns this low since June 2011, each of the 15 markets continued to post quarterly gains. The overall performance of the group has stabilized and tightened, with only 3.1% separating the highest performing market (Washington, D.C.) from the 15th place market (Cleveland).

Four Florida markets (Orlando, Tampa, Jacksonville and Miami) continue to keep their positions among the highest performing markets quarter-over-quarter, rebounding from the steep drops and high levels of foreclosures they experienced over the past two years. Orlando and Miami also show strong year over year performance, topping the list with 5.9% and 5.4% growth respectively. The strong upward price movement for these Florida markets has correlated with a 12% drop in REO saturation over the last year at the state level. The growth in Florida’s MSAs must be described in proper perspective against the state’s precipitous -59.1% drop in prices from peak values in 2006 to today.

The average REO saturation among the top performing 15 markets is steady at 21.6%, trending well against last month’s 22.8% and solidly below the national average of 24.6%. This is a strong contributor to the group’s price stability and performance.

Lowest Performing Markets: Stabilizing, but Fighting REO Saturation

- Atlanta’s quarterly drop is more than double the decline of second place Seattle.
- REO saturation rates remain high but stable for the low performing MSAs, averaging 30.0%.
- Home prices in the Atlanta MSA experienced a very sharp quarter-over-quarter decline, with a notably high REO saturation rate of 42.8%. The increase in REO as a percentage of all sales is the result of a decrease in overall transactions and inflow of distressed properties, and is most likely creating the downward pressure on prices.

Aside from Atlanta, the lowest performing markets didn’t see much change in the rates of decline quarter-over-quarter from last month’s report, averaging -2.3% decline this month compared to -1.7% last month. The average REO saturation rate for the group was mostly unchanged from last month at 30.0%.

In contrast to the steep declines in Atlanta, the Dallas MSA posted a very mild quarter-over-quarter decline of -0.4%. This market has performed relatively well in recent past and is the only MSA on this list to boast a positive year-over-year price increase, at 1.6%. Though this gain is modest, it outpaced the rate of year-over-year growth in nine out of 15 markets on this month’s highest performing markets list.

Overall, the moderation and tightness of price decreases and stability of REO saturation for the lowest performing markets do provide for some degree of optimism for the market as a whole as we move into the softer winter buying season.

Source: Clear Capital

The Federal Housing Finance Agency acknowledged that the 894,000 mortgages refinanced under the Home Affordable Refinance Program had not lived up to the Obama administration’s expectations.

The reworked effort certainly will attract the attention of homeowners in hard-hit housing markets. But not every consumer with an upside-down mortgage will qualify, and it remains to be seen how many mortgage lenders will participate.

QUESTION: Who may be eligible?

ANSWER: The program is only eligible to borrowers whose loans are owned or guaranteed by Fannie Mae or Freddie Mac and who have 20 percent or less equity in their homes. To check if either Fannie or Freddie backs a mortgage, go to http://www.freddiemac.com/mymortgage or http://www.fanniemae.com/loanlookup. The only loans eligible are those that were backed by Fannie Mae and Freddie Mac before May 31, 2009.

Q: When can applications be submitted, and when does the program end?

A: The program begins Dec. 1 but some participating lenders may not be ready to take applications that soon. The program ends Dec. 31, 2013.

Q: Can borrowers apply at any lender?

A: Yes. Participation is voluntary for lenders, but one key component of the reworked program is designed to make lenders more comfortable with writing a new loan on an underwater property. Going forward, a HARP lender is not considered responsible if a loan it refinances goes bad because of mistakes in the original purchase loan. The change was considered critical to attracting lenders to the program and fostering competition among lenders for business. However, lenders still have underwriting guidelines to follow.

Q: What if I missed one mortgage payment?

A: The agencies don’t want to see any delinquencies in the most recent six months, but a borrower can be 30 days late on one payment in months seven to 12 of the past year.

Q: What kind of extra fees are tacked onto the loans?

A: For loans that amortize in 20 years or less, all fees related to the riskiness of the loan have been eliminated. For loans that amortize in more than 20 years, fees are capped at 0.75 percent of the loan amount.

Q: What are the maximum loan-to-value ratios?

A: For 30-year, fixed-rate loans, there is no maximum LTV ratio. For fixed-rate loans of more than 30 years and less than 40 years, the maximum LTV is 105 percent.

The maximum also is 105 percent for adjustable-rate loans with an initial fixed period of 5 years or more and terms up to 40 years.

Q: Can a borrower refinance from a 30-year to a shorter-term loan, even if it means increasing the monthly payments?

A: Yes. In fact, the government is encouraging that because interest rates are usually lower on shorter-term loans and it allows the borrower to increase equity in their homes at a faster rate.

But to qualify for a shorter-term loan under the program, the borrower has to meet additional criteria, like having a credit score of at least 620 and must have a debt-to-income ratio of no more than 45 percent.

Q: Can lenders solicit my business?

A: Yes. If lenders advertise the program to potentially eligible borrowers with loan-to-value ratios of 80 percent or more, they have to advertise it for both Fannie and Freddie-backed loans.

Source: Florida Realtors

Some 77,733 properties received an initial default notice last month, up 10 percent from September, according to foreclosure listing firm RealtyTrac Inc.

The number of homes scheduled to be auctioned or repossessed by lenders also posted monthly increases.

All told, notices of default, scheduled auctions and bank repossessions – warnings that can eventually lead to a home being lost to foreclosure – hit a seven-month high in October.

The numbers are further evidence foreclosure activity is picking up.

The activity slowed a year ago after problems surfaced with the way many lenders were handling foreclosure documentation, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing. Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

But banks appear to be moving past those problems now and starting to tackle a swelling backlog of homes with mortgages that have gone unpaid – something that lenders are seeing more of as the economy struggles and unemployment remains high.

The rate that homeowners were 60 or more days late on their mortgage payment rose in the June-to-September period for the first time since the last three months of 2009, according to TransUnion.

The credit reporting agency said 5.88 percent of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82 percent in the second quarter of 2011.

The number of U.S. homeowners underwater on their mortgage, or who owe more than their homes are worth, represents another potential source of trouble for lenders.

As of June 30, some 22.5 percent of all U.S. homes had a mortgage that was underwater, according to CoreLogic. That’s 10.9 million properties. Another 2.4 million borrowers had less than 5 percent equity in their home, the firm said.

Industry experts say a housing market turnaround isn’t likely to occur as long as there remains a glut of potential foreclosures hovering over the market, so October’s increase in foreclosure activity means a potentially faster revival for housing.

In some states, the number of homeowners put on notice by banks for missing payments far exceeded the national average for October.

Florida posted a 28 percent jump in October from September in homes receiving an initial default notice. Pennsylvania saw a 50 percent increase and Indiana registered a 61 percent gain, according to RealtyTrac.

In some cases, though, government intervention is slowing lenders down.

Take Nevada, where a law went into effect Oct. 1 requiring that foreclosure documents must be filed in the county where a property is located and a lender must provide a notarized affidavit detailing their legal right to proceed.

Despite registering a 34 percent drop in foreclosure activity overall, Nevada still registered the highest foreclosure rate in the nation for October, with one in every 180 households receiving a foreclosure-related notice, RealtyTrac said.

In all, 230,678 U.S. homes received a foreclosure-related warning last month, up 7 percent from September, but down nearly 31 percent from October 2010.

Foreclosure auctions rose 8 percent from September, but climbed by more than 35 percent in several states, including Florida, Minnesota and Illinois.

Lenders took back 67,624 properties in October, up 4 percent from the previous month, but down 27 percent from a year earlier.

Bank repossessions increased by a far larger margin in several states. In Oregon they climbed 45 percent, while in New Jersey they posted a 48 percent jump. Indiana registered a 73 percent increase.

Source: The Associated Press

The FHFC website specifically lists seven companies NOT associated with the program: Mader Law Group, Attorneys Legal Network, The Law Center, NOVA Debt, National Loan Restructuring and LMPrep LLC Hardship Center.

In February 2010, the U.S. Treasury created the “Housing Finance Agency (HFA) Innovation Fund for the Hardest-Hit Housing Markets”. It allocated funds to 18 states and the District of Columbia to assist in foreclosure prevention efforts. A total of $7.6 billion has been allotted for this fund; Florida’s total amount is more than $1 billion.

The Florida Housing Finance Corporation administers the state’s HHF fund under the following programs:

• Unemployment Mortgage Assistance Program (UMAP). UMAP provides up to six months of mortgage payments (with a cap of $12,000) paid directly to a mortgage lender to assist unemployed/underemployed borrowers with their first mortgage until they can resume full payments on their own.

• Mortgage Loan Reinstatement Payment (MLRP) Program. MLRP can be used to make a delinquent mortgage current (up to $6,000) for a homeowner who has returned to work or recovered from underemployment/underemployment.

For additional information on the HHF program and to apply, visit www.FLHardestHitHelp.org.

Existing home sales rose 12 percent in 3Q 2011 with a total of 46,759 homes sold statewide; during the same period the year before, a total of 41,728 homes changed hands according to Florida Realtors. Statewide sales of existing condos in the third quarter rose 13 percent compared to the year-ago sales figure.

Florida’s existing-home median sales price continued to stabilize and remained level at $136,000 for the three-month period; in 3Q 2010, it was $135,900. The median is a typical market price where half the homes sold for more, half for less.

In the year-to-year quarterly comparison for existing condo sales, 20,383 units sold statewide in the third quarter compared to 17,980 units in 3Q 2010 for a 13 percent increase. The statewide existing-condo median sales price was $89,600 in the third quarter; a year earlier, it was $83,700 for a 7 percent increase.

Mortgage rates continued to hover around historical lows in the third quarter. According to Freddie Mac, the national commitment rate for a 30-year conventional fixed-rate mortgage averaged 4.31 percent in 3Q 2011; one year earlier, it averaged 4.45 percent.

Source: National Association of Realtors and Florida Realtors

Jumbo loans are now less jumbo

As expected, the cutoff point where a government-backed conventional loan becomes a jumbo loan dropped lower on Oct. 1, 2011. Effective today, the federal government lowered the cutoff point where a conventional mortgage becomes a jumbo loanThis is done to encourage more private lending. The change impacts the maximum amount of a home loan that qualifies for funding through FHA, Fannie Mae and Freddie Mac. The impact in Florida will be less severe than in expensive housing markets elsewhere, however, since the maximum coverage amounts vary by region.

In addition, the maximum insured loan rates could still go higher should Congress choose to authorize it. The National Association of Realtors® previously issued a Call for Action, asking Realtors to contact their legislators. NAR says the lower convention loan limits will impact home sales at a time when the market cannot afford further stress.

You can search the database for new loan limits, both FHA and Fannie Mae/Freddie Mac, on https://entp.hud.gov/idapp/html/hicostlook.cfm.

More military can take advantage of HAFA

More military service members underwater on their homes may now be able to take part in the Home Affordable Foreclosure Alternatives (HAFA) program, allowing them to qualify for short sales and deeds-in-lieu of foreclosure. The Treasury Department clarified its guidelines for HAFA, after many military families complained that the program failed to consider a permanent change of station as a financial hardship. The omission prevented many from taking part in the program. The underwater military members say they were current on their mortgage until receiving orders to move.

“An example of such hardship includes a service member citing a ‘Permanent Change of Station’ order as the basis for his or her financial hardship when requesting HAFA, even if such service member’s income has not been decreased, so long as the service member does not have sufficient liquid assets to make his or her monthly mortgage payments,” the Treasury said in a directive sent to mortgage servicers Thursday.

VA to cover higher loan fees

The U.S. Department of Veterans Affairs says it will cover extra costs for veterans who struck deals on home loans but now face the possibility of higher fees amid confusion over a federal law change. The problem involves a Sept. 8 notice from the Department of Veterans Affairs loan operations that said fee rates would be lower beginning Saturday. Congress delayed that lower rate until November.

The change would have forced lenders who already had deals on home loans to increase the fee or pay it themselves. It could have taken longer to close mortgage deals because the fees changed the loan’s terms.

VA spokesman Josh Taylor said fee differences will be waived if veterans had closed loans at lower rates than required with new legislation.

Source: The U.S. Department of Housing and Urban Development, “Treasury Moves to Help More Military Qualify for HAFA,” HousingWire (Sept. 29, 2011), “VA to Cover Extra Costs Amid Home Loan Confusion,” Associated Press.

NEFAR’s latest statistics, which cover single-family home and condominium sales in Clay, Duval, Putnam and parts of St. Johns and Nassau counties, brought news of strengthening across the board in the regional real estate market – year-over-year improvements in sales, pending sales, median price and inventories.

Over the longer term, a review of NEFAR data suggests that the Jacksonville real estate market hit bottom earlier this year and is beginning to recover.

“August was a month of numerous positive indicators, sending a clear signal that we are on the path to a stabilized market with recovery now in progress,” NEFAR President Dane Leslie said in a news release.

The number of closed sales in the Jacksonville metro area edged up 1.5 percent over August 2010 to 1,441.

Pending sales, or sales that had not yet closed, spiked 24.4 percent to 1,744 year-over-year.

Most notably, there was recovery in median sales prices, which have trended downward in recent years. The median sales price was $138,000, 2.2 percent above $135,000 in August 2010. The average sales price also was up to $180,823, which was 6.6 percent over the $169,658 level of last August, NEFAR said.

Also in the positive news was the fact that overall sales were less weighted by “lender-mediated” or “distressed” sales – foreclosure, bank-owned and houses sold for less than their mortgaged amounts, or short sales. Distressed sales accounted for about 43 percent of all sales in August; in August 2010, they accounted for 51 percent of all sales.

New listings fell 21 percent from 2,924 in August 2010 to 2,319 this August. Inventories fell as well, another positive sign, NEFAR noted. About 11,167 properties were available for sale in August 2011 as compared to 16,464 in August 2010 – a 32 percent difference.

There are other indications of a recovery. The percentage of distressed sales has fallen steadily from a peak of 60 percent in February. Likewise, the median price of sales in the metropolitan area has slowly risen since bottoming out at $115,900 in February.

Source: Jacksonville.com

Under a Standard Modification, loans will have the interest rate set at 5 percent and the amortization period extended to 40 years from the time of the workout; lenders will receive cash incentives of up to $1,600 per home owner approved.

The Standard Modification replaces Freddie Mac’s Debt Coverage Ratio loan modification, which is now being referred to as a Classic Modification.

Source: “Freddie Offers New Loan Mod Option,” NASDAQ (09/13/11)

The current loan limits are set to expire Oct. 1. If an extension isn’t granted, the maximum mortgage amount in high-cost areas will drop from $729,750 to $625,500 (although that limit will vary throughout the country).

Some banks, such as Bank of America, have already stopped taking new applications for jumbo loans at the current rate so that they can process the ones already in the pipeline in time for the Oct. 1 deadline.

The drop in the conforming loan limit is expected to impact 2 percent of homes nationwide, but will have a much greater effect in some areas. For example, some analysts say 10 percent of the housing market in New York will be affected.

Pamela Liebman, CEO of New York real estate company the Corcoran Group, told USA Today that the new loan requirements will “put a lot of buyers out of the market.”

Meanwhile, lobbying efforts are continuing, as several industry groups, including the National Association of REALTORS®, are urging Congress to act quickly on a two-year extension to maintain the GSE loan limit at $729,750.

Source: “Coming Loan Changes Could Squeeze High-Priced Home Markets,” USA Today (Sept. 6, 2011)

“To help responsible home owners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” Obama said during his speech. Such a move would “put more than $2,000 a year in a family’s pocketbook and give a lift to an economy still burdened by the drop in housing prices,” he added.

Obama’s speech provided no specifics about the refinancing plan. He used the speech mostly to preview his American Jobs Act, a bill that would include tax cuts for small businesses, extend unemployment benefits, and provide other aid that would set out to help workers and spur more jobs.

Some critics said Obama’s speech did not contain enough to help the ailing housing market.

“That’s not the bold stroke that I want,” Mark Vitner, a senior economist at Wells Fargo, told HousingWire after the speech. “It’s not just refinance; we want people to be able to sell their homes.”

Some housing advocates said more needs to be done to address the massive number of foreclosures plaguing many housing markets.

“To get the economy moving forward, we simply must address the millions of people in danger of losing their homes to foreclosure,” adds Orson Aguilar, executive director of research group The Greenlining Institute. “This massive shadow inventory is a dead weight on the housing market and the whole economy, and we can’t ignore it.”

Some housing advocates praised the president’s refinancing proposal, saying it will help underwater home owners lock in record low rates and lower their monthly mortgage bill.

Source: “Obama Pushes Infrastructure Bank, Pledges Housing Fix,” American Banker (Sept. 8, 2011) and “Obama’s Job Plan Doesn’t Do Enough for Housing, Critics Say,” HousingWire (Sept. 8, 2011)

Pending sales of 1,661 in July marked an 18.3 increase from a year ago; indicative of continued consumer interest in buying a home at today’s very attractive prices. Actual closed sales of 1,353 took a one percent dip from last July’s 1,367.

July’s median sales price of $130,199 was a 5.6 percent decrease year-over-year, while the average sale price was up 5.1 percent.

Inventory continues to be absorbed, dropping 30.6 percent in July from a year ago. Months supply of inventory fell 31.3 percent to reach 8.2 months; a positive downward trend heading towards a balanced market of five- to six-months on hand.

NEFAR President Dane Leslie says, “Of the 1,353 homes sold in July, 754 were traditional and 599 were lender-mediated sales. Having 44.3 percent of sales being lender-mediated is higher than we would like, but we are encouraged that lender-mediated sales were in the minority in July and are optimistic by the continued absorption of these properties as the real estate market recovers.”

Source: Northeast Florida Association of Realtors and First Coast News