ORLANDO, Fla. – Feb. 23, 2011 – Florida’s existing home and existing condo sales rose in January, according to the latest housing data released by Florida Realtors®. Existing home sales increased 14 percent last month with a total of 12,151 homes sold statewide compared to 10,702 homes sold in January 2010, according to Florida Realtors. January’s statewide sales of existing condos rose 36 percent compared to the previous year’s sales figure.
Seventeen of Florida’s metropolitan statistical areas (MSAs) reported increased existing home sales in January; 16 MSAs had higher condo sales.
“Now is a great time for anyone thinking of buying a home in Florida to make that decision,” 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 are historically low, although they are beginning to tick up slightly as the economy shows signs of strengthening. Conditions remain very favorable for buyers, with a range of housing inventory and attractive prices.
“Homebuyers soon will have the opportunity to visit a number of open houses in their preferred locales all in a single weekend, as part of the second annual Florida Open House Weekend, March 26-27, 2011! From the Keys to the Panhandle, Realtors across Florida are participating in this statewide open house event sponsored by Florida Realtors. Consult a local Realtor® about Florida Open House Weekend, and find out more about qualification criteria and opportunities in your local housing market.”
Florida’s median sales price for existing homes last month was $122,200; a year ago, it was $131,000 for a 7 percent decrease. Analysts with the National Association of Realtors (NAR) note that 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 December 2010 was $169,300, down 0.2 percent from a year ago, according to NAR. In California, the statewide median resales price was $301,850 in December 2010; in Massachusetts, it was $285,950; in Maryland, it was $240,000; and in New York, it was $225,000.
According to NAR’s latest outlook, improving economic conditions and strong affordability are positive factors for the coming months. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions,” said NAR Chief Economist Lawrence Yun. “Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit.”
In Florida’s year-to-year comparison for condos, 6,681 units sold statewide last month compared to 4,916 units in January 2010 for an increase of 36 percent. The statewide existing condo median sales price last month was $79,400; in January 2010 it was $97,000 for an 18 percent decrease. The national median existing condo price was $165,000 in December 2010, according to NAR.
The interest rate for a 30-year fixed-rate mortgage averaged 4.76 percent in January, down from the 5.03 percent average during the same month a year earlier, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
SHORT SALES
A short sale is a transaction in which the lender(s) agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt. Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. A short sale can also be the best option for homeowners who are “upside down” on a mortgage because a short sale may not hurt their credit history as much as a foreclosure.
The increasing number of short sales on the market presents challenges for Realtors. In a recent survey of Florida Realtors, short sales and foreclosure were listed as the top legislative and/or regulatory priority. Many of the issues raised by Realtors however, cannot be legislated or regulated at the state level.
Realtors must educate their elected officials regarding the negative impact the current lack of a standardized short sales process is having on the overall real estate market. Until the real estate market in Florida rebounds, the general economy of Florida will not recover. Among the ideas to solve the short sale crisis that have been posed by Florida Realtors are:
Streamline the process/standardize forms;
Prevent strategic defaults;
Allow refinancing at current interest rates & allow principle reduction;
Regulate foreclosure and short sale negotiations;
Provide incentives such as doc stamp relief, deficiency judgment relief and debt forgiveness for those buying foreclosures.Up to this point, states have relied on the federal government to tackle issues related to short sales. TheU.S. Treasury Department created the Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives (HAFA) Program. The HAFA program is meant to make a short saleor a deed-in-lieu of foreclosure a viable option to help homeowners avoid foreclosure. Many Realtors do not believe these federal programs are as successful as they should be. Florida Realtor leaders are in discussions with the U.S. Treasury Department, Fannie Mae, Freddie Macand state legislators regarding solutions to this crisis. Fannie Mae specifically is advocating their “shortsale assistance desk” to Florida Realtors.
Fed throws its weight into foreclosure probe WASHINGTON – Oct. 26, 2010 – Raising pressure on banks, the Federal Reserve is wading into the investigation of whether mortgage lenders cut corners and used flawed documents to foreclose on homes.
Major banks are already under investigation by state officials with subpoena power, who could force them to detail how they handled hundreds of thousands of foreclosure cases.
Federal Reserve Chairman Ben Bernanke added weight to those efforts Monday by saying the central bank would look “intensively” at policies and procedures that might have allowed banks to seize homes improperly.
“We take violation of proper procedures very seriously,” Bernanke said in remarks to a housing-finance conference in Arlington, Va.
The Fed has the power to impose penalties on some of the nation’s largest banks. Still, most legal experts expect an investigation by attorneys general in all 50 states to have a swifter and more lasting impact.
Big mortgage lenders are looking into whether employees signed foreclosure documents without reading them. Some banks have halted tens of thousands of foreclosures since similar practices became public.
While the banks say there’s little if any evidence that any foreclosures were improper, regulators around the country have suggested the banks were in a rush to foreclose and may have committed outright fraud.
Bank of America and Ally Financial Inc.’s GMAC Mortgage have started processing foreclosures again, after calling a temporary halt while they reviewed mortgage documents.
It’s happening as the housing market struggles to recover. Sales of previously occupied homes rose 10 percent in September, but the foreclosure problem surfaced only at the end of the month. Industry experts say fears could keep buyers on the sidelines now.
Ohio Attorney General Richard Cordray said Bernanke’s speech will force financial institutions to take the matter more seriously. In stepping up their inquiries, the Fed and other bank regulators are “not giving aid and comfort to institutions that want to sort of minimize this and almost sweep it under the rug,” Cordray said.
The Fed is working with the Treasury Department’s Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. They have a range of options. They include ordering companies to stop certain practices, imposing fines and working with lenders to come up with a fix. Bernanke provided no details in his speech about any penalties being weighed.
According to two officials familiar with the joint federal inquiry, the banking agencies are looking into whether companies had controls in place when foreclosure documents were signed and whether employees involved in the foreclosure process were adequately trained. The officials spoke on condition of anonymity because they weren’t authorized to speak about the inquiry.
Ultimately, though, the mess will probably be settled by the states.
“They can move more quickly than the Fed, and I think they have more leverage over banks to get them to quickly settle,” said Mark Williams, a former bank examiner at the Fed and now a lecturer at Boston University.
Some analysts suggested the Fed is trying to send the message that it’s helping to manage the foreclosure controversy. The central bank shared blame with other federal regulators for failing to head off the 2008 financial crisis.
“The Fed is already late to the crime scene,” Williams said.
Like the Obama administration, Bernanke and other federal regulators have declined to call for a national moratorium on foreclosures. At least one regulator, Sheila Bair, chairman of the FDIC, is even discouraging homeowners from overloading the courts with lawsuits.
“The regrettable truth is that many of the properties currently in the foreclosure process are either vacant or occupied by borrowers who simply cannot make even a significantly reduced payment,” Bair said in a speech Monday.
In home markets that have been devastated by the housing bust, the paperwork mess is already causing buyers to be wary of purchasing homes in foreclosure. Some buyers are worried the sale will be canceled because the previous owners were wrongly foreclosed on.
Roy Weiner, a Las Vegas real estate agent who specializes in foreclosures, said potential buyers of those properties have been aggressively inquiring about which bank holds the defaulting borrower’s loans – and whether the foreclosure was handled properly.
WASHINGTON – Oct. 22, 2010 – Mortgage documents were treated in an almost lackadaisical way during the mortgage lending spree and now those documents are at the center of a legal clash that pits big lenders against homeowners.
About a month after Washington Mutual Bank made a multimillion-dollar mortgage loan on a mountain home near Santa Barbara, California, a crucial piece of paperwork disappeared.
But bank officials were unperturbed. After conducting a “due and diligent search,” an assistant vice president simply drew up an affidavit stating that the paperwork – a promissory note committing the borrower to repay the mortgage – could not be found, according to court documents.
The handling of that lost note in 2006 was hardly unusual. Mortgage documents of all sorts were treated in an almost lackadaisical way during the dizzying mortgage lending spree from 2005 through 2007, according to court documents, analysts and interviews.
Now those missing and possibly fraudulent documents are at the center of a potentially seismic legal clash that pits big lenders against homeowners and their advocates who are concerned that the lenders’ rush to foreclose flouts private property rights.
That clash – expected to be played out in courtrooms across the United States and scrutinized by law enforcement officials investigating possible wrongdoing by big lenders – leaped to the forefront of the mortgage crisis this week as big lenders began lifting their freezes on foreclosures and insisted the worst was behind them.
U.S. government officials meeting in Washington on Wednesday indicated that a government review of the problems would not be complete until the end of the year.
In short, the legal disagreement amounts to whether banks can rely on flawed documentation to repossess homes.
While even critics of the big lenders acknowledge that the vast majority of foreclosures involve homeowners who have not paid their mortgages, they argue that the borrowers are entitled to due legal process.
Banks “have essentially sidestepped 400 years of property law in the United States,” said Rebel A. Cole, a professor of finance and real estate at DePaul University in Chicago. “There are so many questionable aspects to this thing it’s scary.”
The country’s mortgage lenders contend that any problems that might be identified are technical and will not change the fact that they have the right to foreclose en masse.
“We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,” Barbara J. Desoer, president of Bank of America Home Loans, said this week. “We paused while we were doing that, and now we’re moving forward.”
Some analysts are not sure that banks can proceed so freely. Katherine M. Porter, a visiting law professor at Harvard University and an expert on consumer credit law, said that lenders were wrong to minimize problems with the legal documentation.
“The misbehavior is clear: They lied to the courts,” she said. “The fact that they are saying no one was harmed, they are missing the point. They did actual harm to the court system, to the rule of law. We don’t say, ‘You can perjure yourself on the stand because the jury will come to the right verdict anyway.’ That’s what they are saying.”
Robert Willens, a tax expert, said that documentation issues had created potentially severe tax problems for investors in mortgage securities and that there was “enough of a question here that the courts might well have to resolve the issue.”
As the legal system begins sorting through the competing claims, one thing is not in dispute: The pell-mell origination of mortgage loans during the real estate boom and the patchwork of financial machinery and documentation that supported it were created with speed and profits in mind, and with little attention to detail.
As lenders and Wall Street firms bundled thousands of mortgage loans into securities so they could be sold quickly, efficiently and lucratively to legions of investors, slipshod practices took hold among lenders and their representatives, former employees of these operations say.
Banks routinely failed to record each link in the chain of documents that demonstrate ownership of a note and a property, according to court documents, analysts and interviews. When problems arose, executives and managers at lenders and loan servicers sometimes patched such holes by issuing affidavits meant to prove control of a mortgage.
In Broward County, Florida, alone, more than 1,700 affidavits were filed in the last two years attesting to lost notes, according to Legalprise, a legal services company that tracks foreclosure data.
When many mortgage loans went bad in the last few years, lenders outsourced crucial tasks like verifying the amount a borrower owed or determining which institution had a right to foreclose.
Now investors who bought mortgage trusts – investment vehicles composed of mortgages – are wondering whether the loans inside them were recorded properly. If not, tax advantages of the trusts could be wiped out, leaving investors with significant tax bills.
For years, lenders bringing foreclosure cases commonly did not have to demonstrate proof of ownership of the note. Consumer advocates and consumer lawyers have complained about the practice, to little avail.
But a decision in October 2007 by Judge Christopher A. Boyko of U.S. District Court in northern Ohio to toss out 14 foreclosure cases put lenders on notice. Judge Boyko ruled that the entities trying to seize the properties had not proved that they actually owned the notes, and he blasted the banks for worrying “less about jurisdictional requirements and more about maximizing returns.”
He also said that lenders “seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance.” Now that their practices have been “put to the test, their weak legal arguments compel the court to stop them at the gate,” the judge ruled.
WASHINGTON – Oct. 22, 2010 – Rates on 30-year fixed mortgages rose slightly from their lowest level in decades, inching up to a national average of 4.21 percent.
Mortgage buyer Freddie Mac says the average rate for 30-year fixed loans was up from 4.19 percent the previous week. That was the lowest level on records dating back to 1971.
The average rate on 15-year fixed loans rose to 3.64 percent. That was up from 3.62 percent a week earlier, the lowest weekly average on records dating back to 1991.
Rates have been falling since April. The latest declines are largely because investors have been buying up Treasury bonds in anticipation of the Federal Reserve’s likely move to buy Treasurys to stimulate the economy. That demand lowers Treasury yields, which mortgage rates tend to track.
Low rates haven’t helped the struggling housing market, which recorded its worst summer in more than a decade. But they have led to a modest surge in refinancing.
To calculate average mortgage rates, Freddie Mac collects rates from lenders around the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a given day.
Rates on five-year adjustable-rate mortgages averaged 3.45 percent, up from 3.47 percent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.3 percent from 3.43 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for loans in Freddie Mac’s survey averaged 0.8 a point for 30-year. It averaged 0.7 of a point for 15-year and 1-year mortgages and 0.6 of a point for 5-year mortgages.
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ORLANDO, Fla. – Sept. 23, 2010 – Sales of existing homes in Florida rose 1 percent in August, with a total of 13,997 homes sold statewide compared to 13,908 homes sold in August 2009, according to the latest housing data released by Florida Realtors®. Statewide existing home sales in August increased 3 percent over statewide sales activity in July.
Ten of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales last month, while 13 MSAs posted increased existing condo sales. Florida’s median sales price for existing homes last month was $134,000; a year ago, it was $146,500 for a decrease of 9 percent. 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 July 2010 was $183,400, up 0.9 percent from a year earlier, according to the National Association of Realtors® (NAR). In Massachusetts, the statewide median resales price was $333,000 in May; in California, it was $314,850; in Maryland, it was $267,489; and in New York, it was $227,000.
In Florida’s year-to-year comparison for condos, 5,706 units sold statewide last month compared to 4,662 units in August 2009 for an increase of 22 percent. Statewide existing condo sales last month increased almost 2.7 percent over July’s condo sales. The statewide existing condo median sales price in August was $81,600; in August 2009 it was $107,200 for a 24 percent decrease. The national median existing condo price was $176,800 in July, according to NAR.
The housing sector faces a long recovery process, due in part to slow job growth and the still-fragile economy, according to NAR’s latest industry outlook. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said NAR Chief Economist Lawrence Yun. The pace of sales has slowed since May, following the expiration of the federal homebuyer tax credit, Yun said, who predicted this “pause period” likely will last through September.
“However, given rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs,” he said.
The interest rate for a 30-year fixed-rate mortgage averaged 4.43 percent in August, down from the 5.19 percent averaged in August 2009, according to Freddie Mac. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Tax credit advice
To read more about the IRS rules for the three tax credits, visit its website. For answers to specific questions regarding a home sale, buyers should contact a tax advisor.
TAMPA, Fla. – Sept. 17, 2010 – The federal homebuyer tax credit did its job to boost the real estate market, but many involved – from buyers to the IRS – have run into problems with confusing wording and stipulations.
The result: Hundreds of thousands who’ve already filed for the credit will have to give the money back.
More than 2.6 million eligible for the credit have bought homes since July 2008. They’ve received $19 billion in tax breaks.
But it turns out nearly half of those who received the money for the credit, claimed on their 2009 tax returns, will have to return it, according to an audit from the U.S. Treasury Inspector General for Tax Administration.
And a recording error could lead the IRS to ask tens of thousands more to return the money even though they are entitled to keep it.
This means anyone who bought a home in 2008 or later should make sure they applied for the correct credit and compensated accordingly. Paperwork should be checked, and buyers who are asked to repay need to double-check that, too.
Apparently, some mistakenly thought they qualified. Others tried to cheat the system, and the IRS failed to catch them until after the checks cashed.
About 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 return should not have received the money.
Part of the confusion was because homebuyers were eligible for two different types of credits, depending on when their homes were purchased. The government’s first version of the credit was a no-interest loan of up to $7,500. It was required to be paid back over 15 years.
Congress eliminated the repayment requirement for homes bought in 2009, but those who claimed the credit for homes purchased in 2008 will still be required to repay it, beginning when they file their 2010 income tax return. Some who bought in 2008, the audit said, tricked the IRS into granting them the credit by lying about their closing date on their application.
But the IRS caused part of the problem. Apparently, it recorded the wrong home purchase date for about 73,000 that claimed the credit. That could mean some will be asked to pay back money they weren’t required to repay, the report said.
Here are some things to keep in mind if you haven’t yet claimed your credit or if you’re checking your paperwork.
• You don’t have to wait to claim your credit on your 2010 return if you bought this year. If you purchased a home before the April 30 deadline, you can amend your taxes to claim the credit.
• There are two credits available. One is for first-time buyers or those who have not owned a home in the past three years. The maximum for this credit is $8,000 and does not have to be paid back. It applies to purchases made this year between Jan. 1 and April 30.
• Some buyers who already owned homes can claim a credit worth up to $6,500 for purchases made between Nov. 7 and April 30. To qualify, the buyer must have owned a primary residence for at least five consecutive years out of the past eight years. This credit also does not need to be paid back.
• There are income and price requirements. If the home was purchased after Nov. 6, it can cost no more than $800,000. Also, if purchased after that date, individuals cannot earn more than $125,000 and married couples filing jointly cannot earn more than $225,000.
• If you’re claiming the credit, a paper filing is necessary. Only taxpayers not claiming the credit can file electronically. Buyers can still use electronic forms, but must print them out and mail them in, along with form 5405.
• Buyers must prove they are eligible. You’ll need to send a copy of the HUD settlement statement along with the tax form. If you’re claiming the longtime owner credit, also include proof, such as copies of mortgage interest statements, property tax records or homeowner’s insurance records.
• The credit is for your primary home. If you decide to rent or sell the home within three years, the credit must be repaid.
Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.
HomebuyersHo
WASHINGTON – Sept. 16, 2010 – Fannie Mae’s latest national housing survey finds that most Americans believe the housing market has reached bottom, but they are more cautious about owning a home. Respondents to the Fannie Mae National Housing Survey believe that home prices will hold steady (47 percent) or increase (31 percent) over the next year, and that rental prices will stay the same (46 percent) or go up (39 percent). Across the general population, the average expected rise in rental prices is four times that of home prices (3.6 percent versus 0.9 percent).
Seventy percent of Americans think it is a good time to buy a house, compared with 64 percent in a similar survey conducted in January 2010. But 33 percent – up from 30 percent – of all respondents said they would be more likely to rent their next home if they moved.
“These findings indicate a return to a more balanced and realistic approach toward housing,” said Doug Duncan, vice president and chief economist, Fannie Mae. “While this will likely weigh on the housing recovery in the near-term, it should, over time, help to build a stronger and healthier market focused on sustainable homeownership. Homeowners and renters alike continue to be wary of taking on risk, and they are less confident in the long-term outlook for housing.”
A majority of Americans (67 percent) continue to believe that housing is a safe investment; however, that number is down 16 percentage points from a similar survey conducted in 2003 – the largest drop by far among all investment types tracked since then. Delinquent borrowers and renters are notably more discouraged than mortgage borrowers and underwater borrowers about a home’s safety as an investment and the appeal of buying versus renting. More than 70 percent of all respondents believe it will be harder for the next generation to buy a home, up three points from the beginning of the year.
The Fannie Mae National Housing Survey polled homeowners and renters between June 2010 and July 2010. Findings were compared to a similar survey conducted by Fannie Mae from December 2009 to January 2010 and released in April 2010, and a similar survey conducted in 2003.
Overview of key findings
• A large majority of Americans (78 percent) believe that home prices either will remain flat or go up over the next year, up five points from the beginning of the year. Forty-seven percent believe prices will hold steady, while 31 percent think they will go up. This is a notable shift from January 2010, when these numbers were 36 percent and 37 percent, respectively.
• Thirty-nine percent think rental prices will increase over the next 12 months, while 46 percent said they would stay the same.
• Consumers continue to believe it is a buyers’ market; 70 percent said it is a good time to buy a house, up six points from January. However, 83 percent believe it is a bad time to sell a house.
• A majority of Americans (67 percent) continue to believe that buying a home is a safe investment, although this is down three points since January and 16 points since 2003. Housing ranked second behind putting money into a savings or money market account (76 percent).
• Fifty-four percent think it would be very difficult or somewhat difficult to get a home loan today, down six points since January. However, 71 percent of Americans think buying a home will be harder for the next generation, up three points since January.
Consumers continue to be cautious in housing decisions
• The number of respondents who said they would be more likely to rent rather than buy their next home if they were going to move increased from 30 percent in January to 33 percent in July.
• A majority of renters said they would be more likely to rent their next home if they were to move, increasing significantly from 54 percent in January to 60 percent in July, even though 69 percent of renters think it makes more sense to buy a home.
• Twenty-two percent of mortgage borrowers said they have reduced their mortgage debt significantly in the last year, and 27 percent of mortgage borrowers say they have reduced their non-mortgage debt significantly.
Views on homeownership diverge among sub-groups
• Mortgage borrowers (74 percent) and underwater borrowers (69 percent) are more likely to say owning a home is a safe investment than delinquent borrowers (57 percent) and renters (54 percent). However, this measure has fallen among all sub-groups since January, with delinquent borrowers and renters showing the largest declines, down eight and seven points, respectively.
• Mortgage borrowers (83 percent) and underwater borrowers (77 percent) said they are more likely to buy in the future than rent – both groups increased two points from January.
• The number of renters (37 percent) and delinquent borrowers (52 percent) who said they are more likely to buy in the future declined by seven and four points from January, respectively.
Economic and housing attitudes among minority respondents
• Forty-eight percent of African-Americans and 36 percent of Hispanics believe the economy is on the right track, compared to just 30 percent of the general public.
• Seventy-one percent of African-Americans and 58 percent of Hispanics expect their personal finances to get better over the next year, compared to 44 percent of the general public.
• African-Americans (65 percent) and Hispanics (72 percent) believe that obtaining a home mortgage today would be difficult, compared to 54 percent of the general public.
• African-Americans (75 percent) and Hispanics (76 percent) both still believe that owning a home is a good way to build up wealth that can be passed along to their families, compared to 58 percent of the general population.
A fact sheet containing a complete set of the survey’s key findings can be found (PDF format) at:
© 2010 Florida Realtors®
MIAMI – Sept. 15, 2010 – Fannie Mae is approving new Florida condominiums for financing at a clip of more than 15 per month and has cleared 123 projects through the first eight months of 2010, reports Condo Vultures.
That condo sales pace represents a ‘seismic policy shift’ in Fannie Mae’s outlook for the state, says the real estate consulting firm – which notes that just 87 new properties were mortgage-worthy last year, compared to zero in 2008 and only 27 the year before.
Fannie Mae’s approval of a new condominium loan means individual unit buyers will be able to obtain conventional financing at record low rates, and sellers will not have to offer units at deeper discounts for all-cash buyers.
Source: American Banker (09/14/10) P. 9; Sichelman, Lew
This week, 33% of the industry experts polled by Bankrate.com believe mortgage rates will rise over the next week or so; 11% think they’ll fall; and 56% believe rates will remain relatively unchanged.
McLEAN, Va. – July 9, 2010 — U.S. mortgage rates fell for the second straight week to the lowest level in five decades, as a refinancing boomlet took hold.
Mortgage company Freddie Mac reports that the 30-year fixed-rate mortgage (FRM) average 4.57 percent, down from last week when it averaged 4.58 percent. That’s the lowest level since Freddie Mac began tracking rates in 1971.
Last year at this time, the 30-year FRM averaged 5.20 percent.
“With mortgage rates falling to historic lows, refinance activity has been strong over the past three months,” said Frank Nothaft, Freddie Mac vice president and chief economist. “The Bureau of Economic Analysis reported that the effective mortgage rate of all loans outstanding was just below 6 percent in the first quarter of 2010, the lowest since the series began in 1977. Since the start of the second quarter, two out of three mortgage applications on average were for refinancing, according the Mortgage Bankers Association.
The 15-year FRM this week averaged 4.07 percent, up from last week when it averaged 4.04 percent. That was the lowest on records dating to September 1991. A year ago at this time, the 15-year FRM averaged 4.69 percent.
Average rates on one-year adjustable-rate mortgages fell to 3.75 percent from 3.80 percent.
The rates do not include add-on fees known as points. One point is equal to 1 percent of the total loan amount. The nationwide fee for all types of loans in Freddie Mac's survey averaged 0.7 a point.
© Florida Realtors
ORLANDO, Fla. – July 6, 2010 – With more than half of the Central Florida’s homeowners owing more for their homes than the properties are worth, the question for some has become: How do I get out of this?
Of all the existing-home sales reported by Realtors in the core Orlando market in May, 23 percent were short sales. They are called “short” sales because the sales price come up “short” of, or less than, the amount owed on the mortgage.
What these homeowners, whose loans are “underwater,” may not realize is that they could successfully complete a short sale of their house but then face a lawsuit from their lender for not paying off the entire loan, a shortfall known as a “deficiency.”
At particular risk of being hit with such a debt judgment are owners of second homes and investment properties, homeowners who haven’t faced any kind of financial hardship, and owners who have a second mortgage.
“That’s going to be a huge problem moving forward in the next few years,” said Orlando lawyer Matt Englett, who specializes in home foreclosures. “These people who use Realtors to advise them on the transactions can end up facing deficiencies, and the deficiency notes will go to third-party collections agencies, and they will start suing and progressively pursuing those people.”
Homeowners have several options if they wish to avoid getting calls and lawsuits from debt collectors.
In a mortgage document called the “payoff letter,” a lender may include a blanket provision stating that it reserves the right to sue the seller at any time for unpaid mortgage debt. At the very least, Englett said, sellers need to make sure they do not give lenders that right.
Some lenders, particularly smaller ones, have been willing to state just the opposite -- that they will not pursue any mortgage debt from the seller, he added.
Simply asking the lenders to cooperate by removing any wording about collections isn’t enough, Englett said. The seller is usually faced with building a case that details errors and omissions made by the lender in its mortgage documents, to gain leverage and force the lender to forgive the debt.
A new option that emerged in June is a federal program that calls on banks to forgive some of the mortgage debt of certain, qualified short-sale sellers. To qualify, sellers must:
Meet the criteria of the federal government’s Home Affordable Modification Program.
Have the house as their primary residence.
Face a financial hardship, and their mortgage payment must be more than 31 percent of their gross income.
The new program makes short sales a good option for homeowners facing a financial hardship, though it’s not meant for homeowners who can afford their mortgage but want to walk away from an upside-down loan, said Frank Rubino, vice president of the Chase Homeownership Center in Orlando.
“It’s not right. It’s not moral. It’s not the right thing to do,” Rubino said. “Why should customers look to the bank to substantiate a loss for the house they bought? ... If they bought the house and sold it for $100,000 more than they paid, they wouldn’t share those profits with the bank.”
The decision of whether to pursue a former homeowner for outstanding debt varies from mortgage servicer to mortgage servicer, Rubino said, and can hinge on such things as whether the customer mismanaged his or her finances, Rubino said.
Sellers with a second mortgage face particular challenges if they try to walk away from a short sale without any remaining debt.
Jennifer Davis, a real estate agent for Lifestyles Home Sales Inc. of St. Cloud, said she recently almost lost a sale because of outstanding debt the seller owed on the house. Fortunately, she said, the buyer wanted the house badly enough to cover the outstanding note.
Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency -- “and the collection firms can chase you down for 20 years,” Davis said.
In cases where the seller has a second mortgage or can’t qualify for the federal programs, Davis said, she usually directs them to a real estate lawyer and a tax adviser.
WASHINGTON – July 1, 2010 – The deadline for closing on a home and qualifying for the federal homebuyer tax credit ended at midnight, and the National Flood Insurance Programs expired May 31, 2010. But two bills reauthorizing each program received Congressional approval yesterday, though both still need President Obama’s signature to become law, a move expected shortly.
Once the president signs the bills, both extensions become retroactive, meaning the law will not recognize a lapse in coverage for either program.
Homebuyer tax credit
The only thing that changes under the new tax credit bill – The Homebuyer Assistance and Improvement Act (H.R. 5623) – is the deadline for closing on a home. Under the latest version of the tax credit, buyers had to secure a signed contract by April 30, 2010, and close by June 30, 2010. The bill extends the closing deadline to Sept. 30, 2010.
Short sales, however, can take considerably longer than two months to close. And an onslaught of buyers trying to beat the June 30 deadline proved challenging to Realtors, title companies and lawyers trying to beat the clock.
The National Association of Realtors lobbied heavily to get the tax credit extended, but Congress took the issue down to the wire before eventually approving the change.
National Flood Insurance Program
The federal flood insurance program has general support among lawmakers, but they continue to disagree on the details. As a result, it has expired three times this year, only to be reauthorized after the fact by Congress. Each extension is considered a short-term fix so lawmakers have time to consider a long-term solution.
Officially, NFIP is still on hiatus until the president signs the bill, HR 5569, into law; but once that happens, it’s official again back to May 31, 2010.
© 2010 Florida Realtors®
WASHINGTON – June 30, 2010 – Thanks to new federal programs that offer cash incentives, some lenders are turning to deeds-in-lieu as the best solution for underwater borrowers willing to turn over their properties.
It’s cheaper for lenders to do deeds-in-lieu because it gives them overnight control of the property. With mortgage rates at less than 5 percent, lenders believe that they can resell a property faster and on more favorable terms than they would receive going through a short sale.
Matt Vernon, an expert in short sales and deed-in-lieu deals for Bank of America, says his company is offering cash incentives that range from $3,000 to $15,000 to persuade troubled borrowers to sign on.
Deeds-in-lieu don’t harm a borrower’s credit rating as much as a foreclosure or a bankruptcy, but because they are treated as debts that are “not paid as agreed,” they do leave a mark on credit scores.
Source: Washington Post, Ken Harney (06/26/2010)
House votes to extend homebuyer credit 3 monthsWASHINGTON – June 30, 2010 – Homebuyers would get an extra three months to complete their purchases and qualify for a generous tax credit under a bill overwhelmingly passed by the House on Tuesday.
Under current law, homebuyers who signed purchase agreements by April 30 have until today, June 30, to close on the sale to qualify for tax credits of up to $8,000. The bill would give buyers until Sept. 30 to complete their purchases.
The extended deadline only applies to people who signed purchase agreements by April 30. The National Association of Realtors estimates that about 180,000 homebuyers who already signed purchase agreements are likely to miss the deadline.
“We owe this to the people who have essentially followed the rules who are caught by a closing date,” said Rep. Sander Levin, D-Mich., chairman of the House Ways and Means Committee.
The bill passed 409-5. It now goes to the Senate, where senators were working Tuesday evening on a bill that would extend the tax credit and extend unemployment benefits for workers who have been laid off for long stretches.
The Senate could vote on its bill as early as this week – if senators can round up 60 votes to overcome a filibuster.
The popular tax credit has helped to stabilize the nation’s slumping housing market. Nearly 3 million taxpayers claimed the tax credit through May 22 – claiming more than $21 billion – according to the Treasury Department.
The Realtors group says the tax credit has generated 1 million new home sales that wouldn’t have happened otherwise.
The bill would also make it easier for the Internal Revenue Service and state prison officials to share information about inmates in an effort to fight fraud. The Treasury Department’s inspector general for tax administration reported last week that nearly 1,300 prison inmates had improperly received more than $9 million in homebuyer tax credits while they were locked up.
The report said the IRS did not have up-to-date information on inmates.
The tax credit for first-time homebuyers was part of President Barack Obama’s economic recovery package enacted last year. In November, Congress extended the credit and expanded it to longtime owners who bought new homes. First-time buyers were eligible for a tax credit of up to $8,000. Current owners who bought and moved into another home could qualify for a credit of up to $6,500.
The Realtors group has been pushing hard in Congress for the extension. Mortgage lenders, the trade group says, have been swamped with borrowers trying to get approved by the end of the month.
Delays with mortgage lending and appraisal companies have meant that home sales are taking far longer to complete this year.
“A lot of lenders weren’t able to handle the influx of loans that came with the tax credit,” said Lucien Salvant, a spokesman for the National Association of Realtors.
There have been particularly long delays for buyers of so-called short sales – ones in which banks agree to accept less than the total mortgage amount. In Las Vegas, for example, short sales made up nearly a third of all sales last month.
Many banks “just don’t have the process to the point where they can do it in a reasonable amount of time,” said Jack Woodcock, a real estate agent in Las Vegas. Extending the tax credit deadline, he said, would be a welcome relief to those borrowers, many of whom “made their decision based upon that tax credit.”
WASHINGTON – June 29, 2010 – According to the National Association of Realtors® (NAR), up to 180,000 homebuyers will lose their federal homebuyer tax credit through no fault of their own if Congress fails to pass an extension by June 30 when the closing deadline expires.
Included in that number are thousands of homebuyers in every state of the union, from 390 in Wyoming to 17,700 in California, according to estimates by NAR. In Florida, 14,830 homebuyers could lose the tax credit if closings are delayed.
“We are strongly urging the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these homebuyers,” said NAR President Vicki Cox Golder.
“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a workflow jam with lenders or other delays such as lapses in the National Flood Insurance Program, Rural Housing Service, and new home construction, and might not be able to complete the purchase of their homes by the current deadline,” said Golder. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”
NAR issued the following state-by-state estimate of the number of home sales that would be delayed beyond the June 30 deadline; numbers are rounded to the nearest 10:
Alabama, 2,590
Alaska, 830
Arizona, 5,440
Arkansas, 2,090
California, 17,700
Colorado, 3,390
Connecticut, 1,770
Delaware, 400
District of Columbia, 300
Florida, 14,830
Georgia, 6,270
Hawaii, 710
Idaho, 1,270
Illinois, 7,030
Indiana, 3,560
Iowa, 2, 030
Kansas, 1,840
Kentucky, 2,540
Louisiana, 1,800
Maine, 840
Maryland, 2,630
Massachusetts, 3,930
Michigan, 6,470
Minnesota, 3,760
Mississippi, 1,530
Missouri, 3,600
Montana, 760
Nebraska, 1,110
Nevada, 3,800
New Hampshire, 690
New Jersey, 4,300
New Mexico, 1,160
New York, 9,190
North Carolina, 4,890
North Dakota, 460
Ohio, 8,510
Oklahoma, 2,760
Oregon, 2,090
Pennsylvania, 5,830
Rhode Island, 500
South Carolina, 2,460
South Dakota, 500
Tennessee, 3,910
Texas, 15,340
Utah, 1,130
Vermont, 400
Virginia, 3,890
Washington, 3,190
West Virginia, 940
Wisconsin, 2,690
Wyoming, 390
© 2010 Florida Realtors®