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





Residential Real Estate Price Growth is Strongest Since 2005

4 02 2014

Home prices — both nationwide and in Jacksonville — are on the rise, according to a report from CoreLogic.

Across the United States, home prices have increased 11 percent from December 2012 to December 2013, including distressed sales.

The CoreLogic Home Price Index report on Tuesday reported the 22nd consecutive monthly year-over-year increase in US home prices based on Multiple Listing Service data.

In Jacksonville, home prices increased 9 percent including distressed sales and 11.5 percent when distressed sales are excluded, on a year-over-year basis.

Sales jumped 1.5 percent from November to December.

The CoreLogic report follows a report from RealtyShack showing an increase in home flipping.

See the full CoreLogic report here.

Source: CoreLogic and Jacksonville Business Journal





Housing Affordability Index Rose to Record Level in Past Two Decades

23 02 2012

Nationwide housing affordability, as measured by the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), rose to the highest percentage recorded in the 20-year history of the index during the fourth quarter of 2011. However, prospective homebuyers continued to have trouble qualifying for a mortgage thanks to tighter credit standards and a soft economy.

HOI data released last week indicates that 75.9 percent of all new and existing homes sold in the fourth quarter were affordable to families earning the national median income of $64,200, the highest percentage recorded in the 20-year history of the index.

“While today’s report indicates that homeownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting homebuyers and builders remain significant obstacles to many potential homes sales, even with interest rates at historically low levels,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.

In Youngstown-Warren-Boardman, Ohio, Pa. – the most affordable major housing market in the country during the fourth quarter – 95.1 percent of all homes sold during the quarter were affordable to households earning the area’s median family income of $54,900.

Also ranking at the top of the most affordable major housing markets, in descending order were Lakeland-Winter Haven, Fla.; Modesto, Calif.; Harrisburg-Carlisle, Pa.; and Toledo, Ohio.

Among smaller housing markets, the most affordable was Kokomo, Ind., where 99.2 percent of homes sold during the fourth quarter of 2011 were affordable to families earning the median income of $59,100. Other smaller housing markets at the top of the index included Fairbanks, Alaska; Cumberland, Md.-W.Va.; Lima, Ohio; and Rockford, Ill.

In New York-White Plain-Wayne, N.Y.-N.J. – the least affordable major housing market during 2011’s fourth quarter – 29.0 percent of all homes sold were affordable to those earning the area’s median income of $67,400. It’s the 15th consecutive quarter in which the New York metropolitan division held the position.

Other major metro areas at the bottom of the affordability index included Honolulu; San Francisco-San Mateo-Redwood City, Calif.; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif., respectively.

Ocean City, N.J., where 47.5 percent of the homes were affordable to families earning the median income of $70,100, was the least affordable of the smaller metro housing markets in the country during the fourth quarter. Other small metro areas ranking near the bottom included Laredo, Texas; San Luis Obispo-Paso Robles, Calif.; Santa Cruz-Watsonville, Calif.; and Brownsville-Harlingen, Texas.

Source: National Association of Home Builders





Pending Home Sales at 5-Month High

5 05 2010

Pending sales of previously owned homes hit a five-month high in March as buyers rushed to sign contracts before a tax credit expired, while a jump in factory orders underscored manufacturing strength.

Analysts said the data on Tuesday suggested the economic recovery was gaining more muscle and was setting the tone for a strong second-quarter growth pace. The economy expanded at a 3.2 percent annual rate in the January-March period.

“The second quarter is going to be stronger than the first quarter in terms of growth. The data continues to point to a sort of chewing up some of that output gap that widened out when the recession hit,” said John Canally, an economist at LPL Financial in Boston.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in March, rose 5.3 percent to 102.9, building on the prior month’s 8.3 percent rise. Markets had expected pending sales, which lead existing home sales by one to two months, to rise 4 percent in March.

Separately, new orders for manufactured goods received by U.S. factories unexpectedly rose 1.3 percent in March, after an upwardly revised 1.3 percent gain in February initially reported as a 0.6 percent rise, the Commerce Department said.

Economists had looked for a decline of 0.1 percent. The upbeat reports had little impact on U.S. financial markets and were overshadowed by persistent doubts over Greece’s ability to tackle its debt problems.

Wall Street stocks suffered their biggest one-day loss in three months, with all major indices dropping more than 2 percent.

Treasury debt prices rallied and benchmark yields, which move in the opposite direction, hit two-month lows, while the U.S. dollar rose to a one-year high against the euro.

MANUFACTURING EXPANDING

The surprise surge in factory orders confirmed the manufacturing sector continued to led the economy’s recovery from the worst downturn since the 1930s. Data on Monday showed manufacturing activity, as measured by the Institute for Supply Management, grew at its fastest pace in nearly six years in April.

The strong bounce back in production follows a prolonged period of drawdown in business inventories to exceptionally lean levels.

Excluding transportation orders, factory orders surged 3.1 percent in March, the biggest gain in almost five years, the Commerce Department data showed.

Non-defense capital goods orders excluding aircraft, viewed as an indicator of business confidence, jumped 4.5 percent, the largest increase since December 2007.

While the rise in March pending home sales was a reflection of the boost from the homebuyer tax credit, it bode well for the spring sales season, analysts said.

They said the increase in pending home sales suggested sales of existing homes likely rose to an annual rate of between 5.6 million units and 5.8 million units last month. Sales of previously owned homes rose to rate of 5.35 million units in March.

“People do feel slightly better than they have in the past. You will see the numbers hang in there while there is still value to be had, but summer will be quite slow,” said Paul Anastos, president of Mortgage Master in Walpole, Massachusetts.

Prospective buyers had to sign contracts by the end of April and close by the end of June to be eligible for the tax break. Until recently, buyers had been slow to respond to the tax credit, which was extended and expanded last year, causing the housing recovery to stall.

Though home sales started improving in March, they are not expected to match the gains registered with the initial tax credit. Still, analysts do not see the housing market slipping back into the slump that helped to trigger the recession.

“We expect a pullback after the tax credit expires. Ultimately, the demand for housing is determined by the underlying economic fundamentals and they are gradually improving,” said Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

Employment, which is key to sustaining the economic recovery, is gradually rising.

According to a Reuters survey, nonfarm payrolls likely increased by 200,000 in April, adding to the prior month’s 162,000 gain. The unemployment rate, however, is expected to remain unchanged at 9.7 percent for a fourth month.

The employment report is due for on Friday.

Source: Reuter





Median Home Prices Show Signs of Stability

18 02 2010

Home prices rose in more than 40 percent of U.S. cities in the fourth quarter of last year, as massive federal spending helped the housing market show signs of stability.

The National Association of Realtors said that the median sales price for previously occupied homes rose in 67 out of 151 metropolitan areas in the October-December quarter versus a year ago. That’s a sharp improvement from the third quarter, when prices rose in only 20 percent of cities.

The national median price was $172,900, or 4.1 percent below the fourth quarter last year. That was the smallest year-over-year price decline in more than two years.

Home sales surged in the quarter, outpacing the third quarter and the previous year’s figures. A federal tax credit of up to $8,000 for first-time homebuyers that was originally due to expire Nov. 30 but was extended through April provided much of the fuel. Sales for the quarter hit a seasonally adjusted annual rate of 6 million, up 27 percent from a year earlier.

The big question hanging over the housing market this year is whether the tentative recovery will stumble after the government pulls back support. The Federal Reserve’s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March. A month later, the newly extended tax credit for first-time homebuyers runs out.

Economists are also concerned about a huge backlog of homeowners facing foreclosure. If those homes go up for sale at deeply discounted prices, median prices could turn downward again. Indeed, prices in some severely depressed areas are still falling.

The largest price decline by percentage in the fourth quarter was in Ocala, Fla., where the median sale price plunged 23.4 percent to $93,000. Foreclosure-plagued Las Vegas saw its median price tumble 23.3 percent to $139,400 versus a year ago.

The largest price gain was in Saginaw, Mich., where prices rose more than 50 percent to a median of $67,400. Cleveland followed with an increase of 25 percent to $110,000.

Source: Associated Press





NAR: 4Q Existing-Home Sales Surge in Most States

12 02 2010

Strong gains in existing-home sales were the predominant pattern in most states during the fourth quarter, with many more metro areas seeing prices rise from a year earlier, according to the latest survey by the National Association of Realtors (NAR).

Sales increased from the third quarter in 48 states and the District of Columbia; 32 states saw double-digit gains. Year-over-year sales were higher in 49 states and D.C.; all but three states had double-digit annual increases.

Total state existing-home sales, including single-family and condo, jumped 13.9 percent to a seasonally adjusted annual rate of 6.03 million in the fourth quarter from 5.29 million in the third quarter, and are 27.2 percent above the 4.74 million-unit level in the fourth quarter of 2008. Distressed property accounted for 32 percent of fourth quarter transactions, down from 37 percent a year earlier.

Lawrence Yun, NAR chief economist, says the first-time homebuyer tax credit was the dominant factor. “The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” he says. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage fell to a record low 4.92 percent in the fourth quarter from 5.16 percent in the third quarter; it was 5.86 percent in the fourth quarter of 2008.

In the fourth quarter, 67 out of 151 metropolitan statistical areas reported higher median existing single-family home prices in comparison with the fourth quarter of 2008, including 16 with double-digit increases; one was unchanged and 84 metros had price declines. In the third quarter only 30 MSAs showed annual price increases and 123 areas were down.

The national median existing single-family price was $172,900, which is 4.1 percent below the fourth quarter of 2008; the median is where half sold for more and half sold for less. “This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” Yun says.

“Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable,” Yun says.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., says near-term market conditions remain favorable. “Mortgage interest rates are expected to trend up later this year, but right now we have very good conditions with steadying home prices and favorable inventory in most areas, especially in the higher price ranges,” she says. The biggest issue is for repeat buyers who will have to accelerate their buying plans if they want the expanded tax credit. Since you must have a contract in place by the end of April, the best advice is to consult a Realtor now about qualification criteria and options in your area.”

Repeat buyers do not have to sell their existing home, but all buyers must occupy the property they purchase as a primary residence to qualify for the tax credit. Buyers who have a contract in place by April 30, 2010, have until June 30, 2010, to finalize the transaction to get a credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

In the condo sector, metro area condominium and cooperative prices – covering changes in 54 metro areas – showed the national median existing-condo price was $177,300 in the fourth quarter, down 4.8 percent from the fourth quarter of 2008. Eleven metros showed increases in the median condo price from a year earlier and 43 areas had declines; in the third quarter only four metros experienced annual price gains.

Regionally, existing-home sales in the Northeast rose 11.1 percent in the fourth quarter to a pace of 1.03 million and are 33.6 percent higher than a year ago. The median existing single-family home price in the Northeast declined 5.6 percent to $234,900 in the fourth quarter from the same quarter in 2008, but with widely varying conditions.

“In the Northeast, markets with lower median prices that have avoided wide swings, such as Buffalo, are generally showing consistent price gains,” Yun says. “Even so, some of the higher cost areas are showing signs of stabilization, such as Nassau-Suffolk, N.Y., and Boston.”

In the Midwest, existing-home sales jumped 14.5 percent in the fourth quarter to a pace of 1.38 million and are 29.9 percent above a year ago. The median existing single-family home price in the Midwest rose 1.1 percent to $141,100 in the fourth quarter from the same period in 2008, with the region accounting for the majority of metro areas experiencing double-digit gains.

Yun says markets with high unemployment rates in Ohio and Michigan experienced large price swings. “Big price gains in many Midwestern areas are due to a more normal range of home sales in contrast with predominately foreclosed sales a year ago,” he says.

In the South, existing-home sales rose 13.8 percent in the fourth quarter to an annual rate of 2.23 million and are 28.2 percent higher than the fourth quarter of 2008. The median existing single-family home price in the South was $153,000 in the fourth quarter, down 2.4 percent from a year earlier.

“Affordable markets in the South that have relatively better local economies are seeing healthy price gains, such as Houston, Oklahoma City and Shreveport, La.,” Yun says.

Existing-home sales in the West jumped 16.2 percent in the fourth quarter to an annual rate of 1.38 million and are 18.2 percent above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9 percent below the fourth quarter of 2008, but with many areas showing notable gains.

“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Yun says.

Source: Florida Realtors





Government Ends Federal Support for Mortgage Rates

27 01 2010

Expect low mortgage rates to end in March 2010. Washington Post ran this article this week:

For more than a year, the government pulled out the stops to revive homebuying by driving down mortgage rates.

Now, whether the housing market is ready or not, the government is pulling out.

The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own. The stakes for the economy are massive: If the market again falls into a tailspin, homeowners could face another wave of trouble, and it would deal a body blow to President Obama’s efforts to get the economy on track.

Keeping the mortgage rates at historic lows, which required a commitment of more than $1 trillion, was viewed within the administration as a central plank of the economic strategy last year, senior officials said. Though the policy did not attract as much attention as rescue efforts to bail out banks, it helped revitalize homebuying in some parts of the country and put money in the pockets of millions of homeowners who were able to refinance into lower monthly payments, the officials added.

“We did what we thought was necessary to stabilize the market, but we don’t think the government should continue special efforts forever,” said Michael S. Barr, an assistant secretary at the Treasury Department. “As you bring stability, private participants come back in. We do expect this now that the market has stabilized. I’m not going to say there will be no effect on rates, but we do think you are seeing market signs and market signals that there should be an orderly transition.”

A few federal officials and many industry advocates disagree, saying the government is exiting too soon. They offer dire warnings of higher rates and a slowdown in home sales. Fed leaders say they will end a marquee program supporting the mortgage markets in March. Obama’s economic team, led by Treasury Secretary Timothy F. Geithner, has decided not to replace it and has been shutting down its own related initiatives.

Over the past year, these programs have enabled prospective homebuyers to get cheap loans, helping those buying and selling property as well as those eager to refinance existing mortgages. If the end of the initiative drives up interest rates, say from 5 percent to 5.5 percent, homeowners could be deterred from refinancing, industry officials say. A sharper increase in rates could make homes too expensive for many buyers, forcing them from the market and causing the recent pickup in home sales to stall.

“Mortgage rates are the lifeblood of the housing market, and we have cautioned the Fed about the sudden stoppage of this program,” said Lawrence Yun, chief economist of the National Association of Realtors.

But senior government officials said it could be hard to reverse course without damaging the credibility of the Fed and the administration. If the government loses the trust of the financial markets, preparing them for policy changes could be tougher, possibly resulting in economic disruptions. The officials said they also worry that the mortgage market is becoming overly dependent on federal support, inserting the government too deeply into private enterprise.

Only a new crisis would be able to persuade the administration and the Fed to change their minds, officials said.

“This is a worthy experiment to see if they can begin exiting after providing an unprecedented amount of money to one sector of the economy,” said Mark Zandi, chief economist at Moody’s Economy.com. “It’s a close call, though. I can see why they are debating it.”

The Fed’s policymaking body sets a key interest rate at periodic meetings, which in turn influences rates for all kinds of loans. But mortgage rates also are shaped by the health of the market financing these loans.

Banks typically create giant pools of home loans and turn them into securities that can be traded on the open market. When the system is working, many investors buy these mortgage-backed securities, providing a stream of money for lenders so they can make loans at relatively cheap rates. But the trading of these securities seized up when the financial crisis struck and panicked investors. Government officials feared that the mortgage market would collapse.

The Fed and the Treasury stepped into the breach, becoming the only major buyers of these mortgage-related securities, and they kept the mortgage market flush with cash. The Treasury spent about $220 billion, and the Fed pledged $1.25 trillion, the single largest foray the central bank has made into the markets since the onset of the crisis. In essence, the Fed has been printing money and funneling it to people looking to buy a house or refinance an existing mortgage.

At the same time, the federal government stood behind mortgage-finance companies Fannie Mae and Freddie Mac by taking them over and pledging to cover their losses. That helped the firms lower borrowing costs, since lenders know they can’t fail, and the companies passed on their savings to mortgage borrowers in the form of low rates.

Combined, these federal efforts helped push down the rates ordinary Americans pay for a mortgage. The 30-year fixed-rate mortgage declined from 6.04 percent in November 2008, according to Freddie Mac data, and hit an all-time low of 4.71 percent about a year later.

Refinancings surged, while homebuying perked up. Existing-home sales climbed nearly 10 percent in September, their highest level in more than two years.

The policy was the government’s most effective salve for the ailing housing market at a time when other initiatives, such as the administration’s attempts to modify the mortgages of struggling homeowners, produced far more disappointing results.

Now the government wants to end its support for low rates and has been striving to persuade others to buy mortgage securities.

The success of this approach hinges on the willingness of private investors, from China to big Wall Street funds, to buy large amounts of the mortgage securities and fill the void left by the government.

On Christmas Eve, Treasury officials announced a move that would cover losses suffered by investors who buy these securities from Fannie Mae and Freddie Mac, which together now back about half of the nation’s $12 trillion mortgage market. The goal was simple, officials said. They wanted private investors to be reassured that mortgage securities are safe to buy.

As the economy showed signs of recovery at the end of last year, the administration and the Fed decided to end their support.

The Treasury stopped buying mortgage securities in December. The Fed said it would taper off purchases gradually, ending them by March 31.

Obama’s economic team could have raised the limits on how much mortgage securities Fannie and Freddie can buy, allowing those firms to replace the Fed’s purchasing program. But Barr said the administration thinks the mortgage business will stand on its own without such special assistance, similar to the way the nation’s biggest banks weaned themselves off federal bailout funds by raising private capital.

“The basic goal is to implement a gradual process where the government’s role in the economy goes down,” Barr said. “It has to be consistent with the basic goal of stability, but it is appropriate.”

Administration and Fed officials expressed confidence that rates will rise only modestly – perhaps a quarter of a percentage point. They attribute their optimism to the lengthy notice they have given the market. The markets already should have anticipated the government’s exit by adjusting interest rates higher. Yet mortgage rates have been falling slightly the past few weeks.

The optimism at the White House and the Fed, however, is not shared across the government. A few senior policymakers at the central bank view the economic recovery as still too fragile, suggesting that purchases perhaps should expand further. These dissenters also warn that mortgage rates could shoot up, perhaps to 6 percent or higher, because private investors buying securities would demand a greater rate of return than the Fed. To reach it, lenders may have to raise rates for consumers.

“Presumably, there is pent-up demand from the private sector, but the question is: At what rate are they going to be interested?” said Eric S. Rosengren, the president of the Federal Reserve Bank of Boston, who has indicated that he supports expanding the Fed’s mortgage securities purchase program.

There also could be unintended consequences to the government’s pull-out. Last year, big investors such as Pimco sold their mortgage-backed securities to the government and used that money to buy bonds and stocks. That extra cash, which propped up stock prices, could drain away after federal support ends.

Real estate and mortgage finance officials said the timing of the government’s exit seems especially ill-conceived, since the Fed’s support would end just a month before a homebuyer tax credit program, which the real estate industry has credited with jump-starting home sales.

Given the importance of the housing market, some industry officials doubt whether the government will follow through with its pledge to exit the mortgage market in March. Fannie and Freddie officials say that the companies together can buy about $300 billion of mortgage securities by the end of the year before they hit their federally mandated limits. Though it appears reluctant to do so, the administration could use that buying power to cushion the blow after the Fed’s program ends, the industry officials said.

“I believe they do want to end it in March, but it’s like all New Year’s resolutions,” said Mark Vitner, a senior economist at Wells Fargo Securities. “The Fed’s New Year resolution is to go on a diet, go to the gym, give up drinking and clean the garage. They might be able to do one of those things, but to do all four is tricky. They have to drain all the liquidity they added to the financial market so we don’t see a resurgence in inflation, but do it in a way so that the economy does not slip into recession.”

Source: Washington Post








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