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California “June sales and price report”
Posted by: | CommentsHome sales decreased 4.2 percent in June in California compared with the same period a year ago, while the median price of an existing home rose 13.6 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reportedJuly 22, 2010 .
“Buyers who scrambled to close escrow in May to take advantage of federal and state tax credits before they expired impacted the number of homes sold last month,” said C.A.R. President Steve Goddard. “Although we expect sales to be lower in the second half of the year because of the absence of the government stimulus, they should remain above the long-run average and be significantly higher than the trough in 2007, when sales bottomed out.
“Although the tax credits are no longer available, it’s important to keep in mind that home prices are substantially below their peaks and interest rates remain at historic lows, making this a very affordable time for many first-time buyers to purchase a home of their own,” he said.
Closed escrow sales of existing, single-family detached homes in California totaled 492,800 in June at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 4.2 percent from the revised 514,230 sales pace recorded in June 2009. Sales in June 2010 decreased 11.1 percent compared with the previous month.
Video of report at: http://videos.car.org/mediavault.html?menuID=1&flvID=8
Lowest Interest Rates since 1971, per new Freddie Mac “Market Survey”
Posted by: | Commentsreleased the results of its Primary Mortgage Market Survey showing the 30-year and 15-year fixed-rate mortgages reaching the lowest interest rates since the national survey began back in 1971.
30-year fixed-rate mortgage (FRM) averaged 4.56 percent with an average 0.7 point for the week ending July 22, 2010, down from the previous week when it averaged 4.57 percent. Last year at this time, the 30-year FRM averaged 5.20 percent.
15-year FRM this week averaged a record low of 4.03 percent with an average 0.7 point, down from last week when it averaged 4.06 percent. A year ago at this time, the 15-year FRM averaged 4.68 percent.
Frank Nothaft, vice president and chief economist, Freddie Mac, notes: “The decline in mortgages rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors. For example, homebuilder confidence declined in July to lows not seen since April 2009, as measured by the NAHB/Wells Fargo Housing Market Index, following the large drop in housing starts reported for June.”
Fannie Mae to prohibit lenders from changing home appraisals
Posted by: | CommentsTo comply with the stricter lending guidelines of Fannie Mae and Freddie Mac, and to avoid accusations that the loans sold to Fannie and Freddie are based on inflated appraisals, some real estate professionals have reported lenders lowering home values on appraisals submitted to them. However, effective Sept. 1, Fannie Mae is prohibiting the purchase of loans from lenders who change appraisers’ numbers.
KEEP THIS IN MIND!
• Generally, lenders order a low-cost electronic valuation—based on publicly available statistical data—to review the accuracy of the information submitted by the appraiser. If there is a discrepancy between the electronic valuation and the appraiser’s report, the lender’s underwriters may reduce the appraisal figure.
• In some instances, real estate agents and consumers have reported that reduced appraisals have led to the derailment of home sales transactions, as some buyers refuse to pay more for a house than the appraisal says it is worth.
• This industry practice may soon change. In guidelines issued June 30, Fannie Mae said lenders must contact appraisers to resolve discrepancies between the valuations, rather than simply reducing the appraisal. If it is not possible to contact the appraiser, the lender should order a second appraisal.
• Borrowers and/or sellers who believe a home valuation is too low may appeal the valuation or request a second option. It’s important to note that the second valuation must be more than five percent higher than the first—anything less is considered an acceptable difference.
To read the full story, please click here:
http://www.latimes.com/business/realestate/la-fi-harney-20100718,0,7456241.story
National Debt = $47K for Each Resident!
Posted by: | CommentsThe heads of President Barack Obama’s national debt commission painted a gloomy picture Sunday as the United States struggles to get its spending under control.
Bowles said if the U.S. makes no changes it will be spending $2 trillion by 2020 just for interest on the national debt.
“Just think about that: All that money, going somewhere else, to create jobs and opportunity somewhere else,” he said.
Simpson, the former Republican senator from Wyoming, and Bowles, the former White House chief of staff under Democratic President Bill Clinton, head an 18-member commission. It’s charged with coming up with a plan by Dec. 1 to reduce the government’s annual deficits to 3 percent of the national economy by 2015.
Bowles led successful 1997 talks with Republicans on a balanced budget bill that produced government surpluses the last three years Clinton was in office and the first year of Republican George W. Bush’s presidency. Simpson, as the Senate’s GOP whip in 1990, helped round up votes for a budget bill in which President George H.W. Bush broke his “read my lips” pledge not to raise taxes.
Despite their backgrounds, both Simpson and Bowles said they were not 100 percent confident of success this time around.
Simpson labeled the commission members “good people of deep, deep difference, knowing the possibility of the odds of success are rather harrowing to say the least.”
Bowles also said Congress had to be ready to accept the commission’s findings.
“What we do is not so hard to figure out; it’s the political consequences of doing it that makes it really tough,” he said.
Arkansas Gov. Mike Beebe was one of those leaders who sat in rapt attention during the presentation, one of the first in public by the commission leaders.
“I don’t know that I ever heard a gloomier picture painted that created more hope for me,” said Beebe, commending its frankness.
“Federal Housing Finance Agency” update!
Posted by: | Comments(FHFA) issued a statement on 7/7/10, concerning energy retrofit lending programs that are finances through a county or city’s tax assessment regime. The so-called Property Assessed Clean Energy (PACE) programs allow homeowners to finance energy retrofit improvements to their homes through an assessment on their property tax bill. They have created concerns because the loans acquire priority lien over existing mortgages.
In the statement, FHFA directs Fannie Mae, Freddie Mac and the Federal Home Loan Banks to follow certain guidelines concerning the PACE loans. These allow the agencies to purchase mortgages on properties that previously acquired a PACE loan with a first-lien position. However, the agencies are directed to develop new underwriting guidelines going forward. For these new loans, the agencies will be required to adjust loan-to-value and debt-to-income ratios to reflect the “maximum permissible” PACE loan amount available to borrowers.
More info: http://www.fhfa.gov/webfiles/15884/PACESTMT7610.pdf
Fannie Mae Mortgage Modifications
Posted by: | CommentsAfter announcing this week that it intends to crack down on strategic defaulters, Fannie Mae issued a servicing guide (download here) implementing another new policy — requiring servicers to verify income, liabilities, and monthly expenses for all borrowers prior to granting a permanent standard Fannie Mae mortgage modification.
Previously, servicers were allowed to evaluate borrowers for standard mortgage modifications using stated information from the borrower.
Now, the servicer must not agree to change the terms of a mortgage until it verifies the borrower has a hardship, determines that a permanent standard Fannie Mae mortgage modification is the appropriate foreclosure prevention alternative and obtains Fannie Mae’s prior written approval, the guideline said.
Items that must be verified include salary and other income with paystubs or benefits checks, bills and a credit report.
If a borrower that receives a Fannie Mae modification becomes 60 or more days delinquent within the first year after the effective date of the modification, the new policy requires servicers to “immediately” work with the borrower to pursue either a preforeclosure sale or deed-in-lieu of foreclosure, or commence foreclosure proceedings, in accordance with applicable state law. If the servicer determines another modification is appropriate for the borrower, the servicer must first obtain Fannie Mae’s prior written approval.
With as many as 1/3 of all mortgage defaults occurring by borrowers strategically deciding to walk away, Fannie Mae announced a plan to crack down on strategic defaulters with a policy announced Wednesday that prevents strategic defaulters from getting another Fannie Mae-backed mortgage for seven years.
Fannie Mae will also take legal action against borrowers who strategically default in order to recoup mortgage debt. These would be limited to locations that allow deficiency judgments.
Great article and information by AUSTIN KILGORE
Mortgage Rates Hit an All-Time Low
Posted by: | CommentsAverage interest on a 30-year fixed mortgage fell to an all-time low of 4.69 percent this week, down from 4.75 percent a week ago, reports Freddie Mac.
Although rates have held below 5 percent since early May, Michael Fratantoni of the Mortgage Bankers Association notes that demand for purchase loans has fallen in six of the past seven weeks and now is at a 13-year low. Consumers have grown used to low rates, he explains, adding that they balk at buying because they are more concerned about stagnant wages and high unemployment.
Source: Washington Post, Dina ElBoghdady (06/25/10)
Dealing With IRS “Tax Credit Rejections”
Posted by: | CommentsThe IRS has been rejecting first-time home buyer claims from anyone who shows a Form 1098 Mortgage Interest Expense in their prior year files.
In many cases, the applicants are entitled to the credit because their previous mortgage interest deduction is for a timeshare, mobile home, boat, or other recreational property.
If you have a client who is in this unfortunate position, here is some advice from Enrolled Agent Eva Rosenberg, who authors the Web site TaxMama.com.
• Respond to the IRS immediately and tell them why their rejection is wrong. Be prepared to prove that the mortgage the IRS is seeing isn’t on a personal residence. First-time home buyers are entitled to own other types of real estate and still get the home buyers credit, so provide proof that the previous mortgage was on something else.
• Send a letter explaining the situation and providing proof of a previous rental or other non-ownership living situation, including copies of rental contracts for the last three years, an old driver’s license showing that address, utility bills, etc.
• Home buyers who believe the IRS may view their situation in this way should be proactive, providing proof that they are a first-time buyer when they initially file for the credit.
• Anyone who is rejected after two attempts to explain the problem to the IRS should call the Taxpayers Advocate Service toll-free, (877) 777-4778, their Congressman, and their Senator, Rosenberg advises.
Source: TaxMama.com, Eva Rosenberg, EA (06/16/2010)
Could New Home Appraisal Rules Get Scrapped?
Posted by: | CommentsThere is an increasing amount of opposition to the new home appraisal rules as many mortgage brokers and real estate agents are serving up criticism that the Code “Home Valuation of Conduct “(HVCC) guidelines adopted in 2009 are resulting in inaccurate and low-ball appraisals.
The main argument amongst critics is that the new rules have undesirable affects where appraisers are now being overextended, underpaid and forced to churn out appraisals in a hurried fashion. Conversely, many mortgage lenders, including J.P. Morgan and CitiGroup, have vested interests in the appraisal management companies that now play the role of divvying up appraisal assignments, so they naturally are against revamping the current appraisal guidelines.
Implemented last spring by Fannie Mae and Freddie Mac, the Code of Conduct bans mortgage brokers and loan officers from selecting appraisers to valuate homes in the deals which they are brokering. The purpose is to prevent the inflated and sometimes fraudulent appraisals which were partly responsible for an artificial surge in home prices during the past decade.
According to a recent article by Jessica Holzer in the Wall Street Journal , realtors and mortgage brokers have succeeded in inserting language into a House-passed financial-regulation bill that would end the new protocols. The measure would direct federal regulators to come up with an improved set of rules.
Under the new system, appraisal management companies now solicit out appraisal assignments for a fraction of the cost of what the work used to pay - in some cases less than half of the industry’s former compensation rate. As a result, many appraisals end up in the hands of the lowest bidder, and the work is being done by appraisers who have limited industry experience or are lacking of knowledge as it pertains to a specific real estate market and neighborhoods.
“More and more people are leaving the appraisal business than ever before because appraisals are now going out to the lowest bidders, commanding lower pay and fees,” says Bill Schettler, Vice President of Sales at Total Mortage Services, LLC.
Mr. Schettler, who worked six years as an appraiser himself, added, “Unfortunately, because of what the appraisal management companies are paying, many people are no longer able to make a living in the industry and there are more inexperienced people now doing the job. What is happening now is that appraisers have to travel further and further to cover more territory, so they can’t be as familiar with the homes as they were before”
National Association of Mortgage Brokers CEO Roy DeLoach told the Journal that out-of-town appraisers hired by vendors are diminishing homeowner equity through home valuations that aren’t credible: “It’s basically hollowing out the equity in communities whether you intend to sell or not.”
Loans for “Commercial Real Estate” are scarce, but available!
Posted by: | CommentsInteresting information and “take” By Bradley Markano • Jun 10th, 2010 • first tuesday blogs the news
Many of the small businesses that have successfully weathered the recession thus far are now looking to take advantage of skyrocketing commercial vacancy rates, and move into new property that would formerly have been unaffordable. These investors looking to purchase commercial property are increasing, but they are consistently frustrated by a still-tight credit market.
Nationally, commercial real estate values have dropped over 40% in the aftermath of the millennium boom, and rents and operating costs have dropped accordingly, leading some businesses to see an opportunity for expansion. Unfortunately for business owners, however, most lenders have already been burned once, and are not yet ready to reenter the commercial market.
The default rate on commercial mortgages nationwide is currently at 4.2%, according to a study from Real Capital Analytics’ study. As a result, commercial lenders are reluctant to put more capital into originating income property loans unless the borrower demonstrates extensive security to back it up. Even those borrowers that ultimately secure financing must often wait twice as long for the loan to be processed, thanks to greatly increased underwriting scrutiny.
first tuesday take: As in residential real estate, rumors of tight credit in commercial markets are likely to prove overblown for buyers and their brokers who provide abundant data on the collateral property’s value and the buyer’s creditworthiness. While those who expect a return to the easy lending standards of the mid-2000s will be instantly disappointed, buyers with sufficient cash to make a large down payment are still able to locate financing.
Lenders, whether they be residential or commercial, only care about one thing: making loans so they can return to profitability. Buyers who show that they are less likely to default, and who can back up their creditworthiness with hard cash for a down payment, have little to fear.
So make the offer, get it accepted, and move on with the loan application process. And if the process collapses the first time or with the first lender, move on to the next deal and the next lender: somewhere, there is always a lender who will make that loan.
Re: “Commercial Deals Abound but Loans Are Scarce”, from the Wall Street Journal
Bradley Markano • Jun 10th, 2010 • first tuesday Realty Publications, Inc.