U.S. existing home sales rise in December but down for 2014

24 01 2015

U.S. home resales rose slightly in December but fell overall for the year, the first annual drop since 2010 and another sign that the housing market recovery remains uneven amid expectations of a pick-up in 2015.

The National Association of Realtors said existing home sales increased 2.4 percent to an annual rate of 5.04 million units last month. That was slightly below economists’ expectations for a 5.06-million-unit pace.

“The still-tight mortgage credit conditions and more challenging first-time homebuyer affordability that were revealed by the failure of home sales to continue recovering last year remain serious concerns as we head into 2015,” said Ted Wieseman, an economist at JPMorgan in New York.

First-time buyers made up 29 percent of transactions in December as well as for the year as a whole, well below the level needed to boost growth in the housing market.

For all of 2014, existing home sales fell 3.1 percent, the first annual drop in four years. The housing market has struggled to maintain momentum since stagnating in the second half of 2013 following a run-up in mortgage rates.

At December’s sales pace it would take 4.4 months to clear all available houses from the market, down from 5.1 months in November and the lowest since January 2013.

However, a decline in mortgage rates, an easing of lending standards and the resurgent health of the U.S. economy over the last few months has spurred optimism that sales could strengthen this year.

And the outlook for the economy remains upbeat. In a separate report the Conference Board said its Leading Economic Index rose 0.5 percent last month after a 0.4 percent increase in November.

December’s jump was driven by gains in most of the index’s components, suggesting the short-term outlook is getting brighter and the economy continues to build momentum, the Conference Board said.

Source: Reuter

Fannie Mae and Freddie Mac to Accept 3% Down Payment Mortgages

21 10 2014

Fannie Mae and Freddie Mac are close to allowing consumers to buy a home with as little as a 3 percent down payment and still have the mortgages backed by the two agencies.

More details are expected to be announced in coming weeks, but the move from a 5 percent down payment could increase the ability of creditworthy but cash–strapped consumers to become homeowners and help a faltering housing market regain its traction. Both agencies at one point had accepted 3 percent down payments. Fannie Mae stopped accepting loans with 3 percent down payments last year, while Freddie Mac stopped accepting them in June 2011.

“Through these revised guidelines, we believe that the enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower down payment mortgages by taking into account compensating factors,” said Mel Watt, director of the Federal Housing Finance Agency, Fannie and Freddie’s overseer, during a speech Monday at the Mortgage Bankers Association’s annual convention in Las Vegas. “It is yet another much-needed piece to the broader access-to-credit puzzle.”

Watt also announced other policy initiatives to make lenders more comfortable with the federal government’s mortgage purchase guidelines in the hope it will loosen their purse strings.

“It’s a very big deal,” said Dan Gjeldum, a senior vice president at mortgage lender Guaranteed Rate. “It will dramatically reduce the expense for a first-time homebuyer. The easier it is to do business with the agency, the easier it’s going to be for consumers to work with mortgage companies.”

Fannie Mae and Freddie Mac do not originate mortgages directly to homebuyers. Instead, lenders sell mortgages that meet certain criteria to the two agencies, which in turn package them into securities and sell them to investors. The investments are guaranteed, which means that investors recoup losses if the homeowner defaults. Fannie and Freddie can force lenders to repurchase bad loans.

The upshot of those assurances is a more cautious lending environment that is leaving some would-be buyers on the sidelines.

Watt said Monday the FHFA was taking steps to clarify the circumstances under which Fannie and Freddie could force a lender to repurchase a loan, in an effort to reduce lender confusion. “I hope our actions provide sufficient certainty to enable your companies to reassess existing credit overlays and more aggressively make responsible loans available to creditworthy borrowers,” Watt said in prepared remarks distributed by the FHFA.

In its most recent report, the FHFA said the average FICO credit score of borrowers was 744 for Fannie Mae and 742 for Freddie Mac, lower than at the end of 2013. FICO scores range from 300 to 850.

Borrowers who put down less than 20 percent on a home purchase typically pay mortgage insurance that continues until their equity in the home reaches 20 percent. Reducing the down payment requirement to 3 percent from 5 percent will require a longer period of mortgage insurance and benefit mortgage insurance providers.

Homebuyers with lesser credit scores and smaller down payments traditionally flocked to mortgages backed by the Federal Housing Administration that required down payments of only 3.5 percent. However, to aid the agency’s finances, the upfront fees and monthly insurance premiums associated with those loans have increased, reducing demand for them and keeping more first-time buyers on the sidelines.

Watt’s announcement is the latest step in the federal government’s effort to continue a housing market recovery that has stagnated lately, confounding industry watchers. Last month, Fannie Mae shortened the waiting period that homeowners who have gone through a bankruptcy, a foreclosure or a short sale must wait before they can again purchase a home.

Addressing the convention earlier Monday, David Stevens, president and CEO of the mortgage bankers, noted that 2014 purchase loan originations are expected to be more than 10 percent below last year’s level.

Even billionaire Warren Buffett has recently weighed in on the market’s malaise, saying he didn’t understand why low interest rates and economic improvement weren’t fueling a housing market recovery. “You would think that people would be lining up now to get mortgages to buy a home,” he said at a conference this month.

At one point, there was speculation that the average interest rate on a 30-year, fixed-rate mortgage would hit 5 percent by year’s end, but analysts now think that threshold won’t be hit until halfway through 2015. Last week, the average fixed interest rate on a 30-year mortgage was 3.97 percent, the lowest it’s been since June 2013.

However, most consumers rarely see rates that low because Fannie Mae and Freddie Mac, as well as extra-cautious lenders, tack on credit overlays tied to consumers’ down payment amounts and credit scores.

“Mortgages are still tough to get,” said Pradeep Shukla, president of the Mainstreet Organization of Realtors. “Lenders are still extra cautious. On the whole, what is most important is consumer confidence and that is still lacking.”

Source: Chicago Tribune

Delinquent Homeowners Two Years Behind on Mortgage Payment Can Now Qualify For Loan Modification

21 10 2014

Florida borrowers two or more years late on their mortgage payments could get another chance to save their homes following a change in loan modification rules by the Federal Housing Finance Agency.

Federal mortgage backers Fannie Mae and Freddie Mac announced the elimination of an eligibility cap that forbid loan modifications to people with delinquencies of 720 days or more.

The change was made to the “streamlined modification” program, which was created in 2013 and billed as a more automatic route to lower mortgage payments because no application or exchange of paperwork is required.

It’s estimated that nearly half of borrowers nationwide who are ineligible because of the 720-day cap, would otherwise be able to get a loan modification through the program, according to the Federal Housing Finance Agency.

Lenders must comply with the cap elimination by April 1, 2015, but are being encouraged to make the change immediately. Borrowers who were previously denied a streamlined modification because they were more than two years late on payments must be reevaluated, according to letters sent to lenders and mortgage servicers Oct. 1.

“We’ve had multiple clients receive approvals under this program,” said Paul Baltrun, director of corporate development for the Law Office of Paul A. Krasker in West Palm Beach. “It’s very little paperwork, mostly just phone conversations with the lender, and the turn time is quicker.”

The streamlined modification program was developed because of consistent complaints from borrowers that banks repeatedly lose loan modification paperwork in a bureaucratic process that can take years to complete. Banks have also said obtaining the correct employment and payment documents from borrowers can be a hurdle in completing a modification.

Under the program, lenders send contracts to borrowers with new payment amounts. The modification could include a fixed interest rate, an extension of the loan to 40 years, and possibly deferring a portion of the debt owed to the end of the loan so it’s not included in current payment calculations.

Also, borrowers are encouraged to apply for other loan modification plans, such as the Home Affordable Modification Program, which could offer a better deal.

If the borrower agrees and makes three on-time payments, the modification becomes permanent.

Baltrun said it’s hard to gauge how many people the change will affect. Although the worst of the foreclosure crisis is over, he said a significant number of homeowners are still looking for modifications because they have lost jobs, or have used up their savings trying to stay in their home.

“I think it will help a small number of people in specific circumstances,” said Baltrun, who believes removing the cap is a good change. “Why would someone who is 721 days late be declined when someone who is 719 days late is approved?

Other eligibility requirements for the streamlined modification include homeowners must be at least 90 days late on their mortgage and can’t have more than 20 percent equity in their home.

About 3 percent of Florida homeowners with mortgages were 90 days late or more on payments during the second quarter of this year, according to the Mortgage Bankers Association. Nearly 10 percent were either 90 days delinquent, or in foreclosure.

While that’s still the second highest foreclosure and serious delinquency rate in the nation behind New Jersey, it’s an improvement from where Florida was at the end of 2011 when 18 percent of mortgages were in the same position.

Streamlining modifications is increasingly important in Florida where foreclosure courts are moving cases more quickly through the system. That means less time for negotiating with the bank before a final foreclosure judgment is issued.

“You can’t even keep people in their homes very long anymore,” said Deerfield Beach-based attorney Bonnie Lynn Canty, who defends foreclosures. “Used to be four years out before you were looking at a (foreclosure) sale date. Now, it’s at the most two years.”

Source: Palm Beach Post, Bloomberg BusinessWeek

Florida offers $350M aid to underwater home borrowers

24 09 2013

Thousands of Florida homeowners who owe far more on mortgages than their houses are worth could get a break of up to $50,000 if they qualify under a new state program.

The Florida Housing Finance Corp. announced that homeowners in Florida who meet eligibility requirements will be able to apply online for money to reduce mortgage principal beginning 9/25/13 under the $350 million plan. The program is restricted to homeowners whose mortgages are 125 percent or more than the current market value of their house, which is considered to be severely underwater on a mortgage.

The program, formally known as the Florida Hardest Hit Principal Reduction Program, also envisions that most affected mortgages will be refinanced or recast, reducing monthly payments.

“For those who qualify, this new program can help to reduce their principal balance, which can result in a lower monthly payment and put more money in their pockets,” said Steve Auger, Florida Housing’s executive director.

The online application process will begin at 9 a.m. on 9/25/13 at http://www.principalreductionflhhf.org. The unpaid balance of the mortgage cannot exceed $350,000.

Initially, the program will be restricted to 25,000 applications on a first-come, first-served basis but could be expanded, Auger said. The money is just a portion of the $1 billion Florida has received under a federal program aimed at states where housing suffered the most during the economic recession.

At least 200,000 underwater homeowners in Florida could probably qualify for the program, said David Westcott, director of home ownership programs at Florida Housing. Out of the 25,000 initial applications, Westcott said he expects about 10,000 homeowners will actually qualify for the money.

“You have to be severely underwater,” he said.

Among the other rules to qualify:

• Homeowners must be Florida residents and legal U.S. residents and must occupy the house as a primary residence.

• Total household income for everyone 18 and older living in the home cannot exceed 140 percent of the area’s median income.

• Mortgage payments must be current, and a payment cannot have been 60 or more days late in the past 24 months.

• The mortgage had to originate prior to Jan. 1, 2010.

The money will be provided in what’s called a forgivable loan. That means, depending on the type of loan, it will either be forgiven in 20 percent increments over a five-year period or forgiven in total at the end of five years.

If the house is sold before the five years are up, Westcott said the homeowner would be required to repay the remaining, unforgiven amount of the loan if there’s enough money from the sale to do so.

The housing agency has come under some criticism from U.S. Sen. Bill Nelson, D-Fla., and others who say it has been slow to get money to homeowners who need it and has been poorly managed. A federal audit was begun earlier this year at Nelson’s request, although agency officials have said their management has been favorably reviewed by the U.S. Treasury Department and state regulators.

Source: The Associated Press

Florida’s Housing Market Continues Positive Trend in August 2013

31 08 2013

Florida’s housing market continued its positive trend in August with increased closed sales, higher median prices, more pending sales and a stable supply of homes for sale.

“Both sales and prices demonstrate that Florida’s housing market is growing and continuing to gain strength,” says 2013 Florida Realtors President Dean Asher, broker-owner with Don Asher & Associates Inc. in Orlando. “The growth in jobs and other positive signs are putting buyers at ease with how the economy is progressing. At the same time, prices are encouraging sellers to get off the fence and helping to ease inventory pressures.

“August is the 20th month in a row that we’ve seen the statewide single-family home median sales price increase year-over-year.”

Statewide closed sales of existing single-family homes totaled 20,933 in August, up 12.5 percent compared to the year-ago figure, according to data from Florida Realtors Industry Data and Analysis department in partnership with local Realtor boards/associations. Closed sales typically occur 30 to 90 days after sales contracts are written.

Meanwhile, pending sales – contracts signed but not yet completed or closed – for existing single-family homes rose 17.2 percent over the previous August. The statewide median sales price for single-family existing homes last month was $175,000, up 18.6 percent from the previous year.

According to the National Association of Realtors (NAR), the national median sales price for existing single-family homes in July 2013 was $214,000, up 13.5 percent from the previous year. In California, the statewide median sales price for single-family existing homes in July was $433,760; in Massachusetts, it was $350,000; in Maryland, it was $286,758; and in New York, it was $241,947.

The median is the midpoint; half the homes sold for more, half for less. Housing industry analysts note that sales of foreclosures and other distressed properties downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Looking at townhouse-condos, a total of 9,491 units sold statewide last month, up 6.3 percent from August 2012. Meanwhile, pending sales for townhouse-condos last month increased 11.6 percent year-to-year. The statewide median price for townhouse-condo properties was $130,000, up 25.2 percent over the previous year. NAR reported that the national median existing condo price in July 2013 was $209,600.

The inventory for single-family homes stood at a 5.1-months’ supply in August; inventory for townhouse-condos was at a 5.2-months’ supply, according to Florida Realtors.

“The most striking feature of this month’s data relates to new listings and inventory,” says Florida Realtors Chief Economist Dr. John Tuccillo. “Each month in 2013 has seen a rise year-over-year in new listings for both single family homes and townhouses and condos, with the exception of March for condo/townhomes. Balancing out the growth in closed sales, the increase in new listings has contributed to steady inventory. Single-family-home inventory is now at 5.1 months for August 2013, after holding steady at a 5-months supply in May through July. Condo/townhome inventory remains at a 5.2 months supply for the third month in a row.

“Combined with a relative decline in cash sales, this suggests that the pressure on inventories that has plagued the Florida market may be easing.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.46 percent in August 2013, up from the 3.60 percent average recorded during the same month a year earlier.

Source: Florida Realtors

Quick Home Sales Have Benefits and Pitfalls

1 05 2013

Like many house hunters, Joe and Kerry Mutschelknaus had been scouring the area for a new home for several months without much luck.

So when they found a five-bedroom colonial-style home in Loudoun Valley Estates in Ashburn, they didn’t waste any time: They made an offer the day after it went on the market. As soon as that contract was negotiated, they listed their house in Arlington County, selling it the next day.

The Mutschelknauses’ purchase offer was contingent on the sale, so they had an incentive to accept a buyer’s offer quickly.

“We received a full-price offer for our home, so even though we were a little nervous that we might be leaving money on the table, we were confident that we were getting the upper end of what we could expect,” says Joe Mutschelknaus. “Even if we had gotten a higher price, we weren’t sure if it would appraise for that amount.”

You’ve heard of flash mobs and Flash Player: Now there are “flash sales” — a term the real estate brokerage Redfin coined to refer to homes that sell in a day or less.

When too few homes are available for sale and the homes are selling quickly, buyers and their agents are forced to move fast when a home comes on the market. Thus, some agents are pre-marketing their sellers’ homes to ramp up the possibility of a deal the day a home is entered into the multiple listing service.

The quick sale has advantages for buyers and sellers who want to get ahead of the competition and avoid dragging out the process. But some experts cite some pitfalls: In going for the early offers, sellers might miss out on some potentially higher bids later. And buyers in those quick deals often waive inspections, potentially harming themselves later when they wind up spending thousands of dollars to correct problems that could have been identified early and fixed by the seller.

“Flash sales are clearly an outgrowth of the imbalance of supply and demand in attractive areas,” says John L. Heithaus, chief marketing officer of MRIS, the Rockville-based multiple listing service for the Washington region. “Flash sales don’t do buyers any good, because rationality goes out the window when competition kicks in. Sellers in a flash sale are likely to wonder if they could have gotten a better price for their home.”

According to data firm RealEstate Business Intelligence (RBI), a subsidiary of MRIS, 350 homes sold in March within two days, up from 237 in March 2012. Also last month, 174 homes were sold with zero days on the market, up from 134 in March 2012.

Inventory is at near-historic lows. From March 2012 to March 2013, the number of listings, according to RBI, fell 40.12 percent.

Although data — including days on the market — can provide some information about fast home sales, statistics can’t tell you what’s happening behind the scenes.

“In some cases, buyers or their Realtors have advance notice that a home is coming on the market,” says Sitrin. “Buyers want to get into a house before it’s listed and to avoid the competitive market at all costs.”

Tonya Nelson, a realty agent at Redfin in Falls Church, who worked with the Mutschelknauses to sell their Arlington home, says sellers benefit from a flash sale because they don’t have to keep showing their property.

“Buyers are usually making good offers that appeal to sellers,” says Nelson. “In Joe and Kerry’s case, they not only got the full asking price, but they were also able to rent back the home so they had some extra time before they have to move.”

Other agents are more skeptical of the benefit of flash sales for sellers.

“When sellers accept an offer before their home is listed or on the first day, they haven’t tested the market,” says Robyn Burdett, an associate broker and vice president of Re/Max Allegiance in Fairfax City. “They didn’t allow the market to determine their price and terms but took what looked to be a good offer.”

Surprisingly, not all sellers are motivated solely by price, says Sitrin.

“Some homeowners would rather not have the hassle of people coming into their home, or they don’t want to fix it up and would rather sell ‘as is,’ ” says Sitrin. “If your mortgage is paid off, you bought your house for $40,000 decades ago and now it’s selling for $800,000, then you’re more concerned about selling your home and don’t care if you got $20,000 less for it than you could have. It’s different for a seller who’s moving up, because that seller needs every penny and should keep it on the market for at least a few days.”

Burdett says that some sellers have a valid reason for selling their home before it officially goes on the market, such as difficulty showing the house because of pets, young children or elderly parents.

Tom and Anna Kate Murphy worked with Burdett to sell their home in Burke, a single-family house that sold in one day for $525,000.

“The house went on the market on a Friday, and we got an offer on it that day,” says Anna Kate Murphy. “We had an open house scheduled for Sunday, but we decided to accept the first offer we received because it was a full-price offer, and we didn’t want to wait. Another home like ours had been listed at $485,000, and buyers got into a bidding war, but we felt like our house was priced competitively but not too high.”

Burdett says that other sellers she has worked with received an offer within two hours of going on the market but chose to wait two days to accept the first of the five offers they received.

Gretchen Koitz, principal of the Koitz Group with Keller Williams Capital Properties in Bethesda, says that although three to five days on the market is typical in our market today, homes listed as sold after zero days on the market are becoming more common.

“Zero days reflects the fact that agents are reaching out to other agents who do business in a certain neighborhood or building to find listings before they go on the market,” says Koitz. “It’s totally up to the homeowner whether to sell without exposing their property to such a hot market. On the other hand, the purchaser will usually make it worthwhile to accept a prelisting offer by offering a great price and eliminating contingencies.”

Koitz says that some sellers think a quick sale is worth the possibility of a lower price if they can avoid being “nickeled and dimed on everything by the buyers.”

Heithaus suggests that sellers get back-up offers by listing their home on MRIS as “under contract with a kick-out contingency” in case the offer they accepted falls through.

Burdett says she belongs to the Top Agent Network, a networking group of Realtors who are among the top 10 percent in their area in sales volume. The network sends out prelisting information to members so they know what’s coming on the market.

“Some Realtors call and ask, ‘What does my buyer have to do to get this house today?’ ” says Burdett. “The best way is an all-cash offer with no contingencies, including waiving an appraisal.”

Still, house hunters who enter these quick deals should go in with their eyes wide open, experts say.

“Buyers who remove contingencies are setting themselves up for potential problems,” says Heithaus. “They have to remediate any issues with the house themselves if they don’t make the sale contingent on a home inspection.”

Koitz says buyers must do their research and buy only when they are comfortable with the price.

“It’s the same rules as always for buyers, but it’s more important than ever to follow them,” she says.

Sitrin says that the downside for buyers is that they feel pressured to move fast.

“I tell buyers to take as long as you need to find the home you want, but once you find it, you should rush to make an offer,” says Sitrin.

Source: The Washington Post

U.S. Home Prices Jump the Most Since May 2006

1 05 2013

Home prices are rising at the fastest pace since May 2006, making it difficult for the first-time buyer to close a deal.

U.S. home prices rose from a year ago in all 20 cities that the Standard & Poor’s/Case-Shiller index tracks.

NBC’s Diana Olick reports: http://www.nbcnews.com/video/nightly-news/51340582#51340582

The Northeast Florida real estate market continues to improve, with smaller inventory levels and strong demand pushing prices up. Sales were up 19.2 percent from the same period last year and median sales price was up 16.4 percent from previous year.

Another change is buyers are shifting demand from distressed properties to conventional homes, the Northeast Florida Association of Realtors (NEFAR) reports.

Here are some of the key stats:

  • Median sales price was up 16.4 percent year-over-year to $139,650
  • Closed sales were up 19.2 percent to 4,541
  • Inventory of homes for sales was 7,825, down 31.9 percent
  • Pending sales were up 37.7 percent, to 6,240

Read the full report from NEFAR.

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