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March 31, 2013

Are We on the Brink of a Home-Buying Frenzy?

Filed under: General,Loans,Real Estate Market Data — Tags: , — admin @ 6:34 pm

By Credit.com

Housing experts have noted that in the last few months, there has been a significant uptick in demand for homes by consumers eager to take advantage of still-low home prices and record-low interest rates. And soon that demand might spike even higher.

While there’s been considerable talk about the nation’s shadow inventory — that is, homes that are in foreclosure, or homes not being put up for sale until the market improves — being a factor that holds back home prices, it seems that something now being referred to as “shadow demand” could have a positive impact, according to new data from Altos Research. This pent-up demand from potential borrowers is due largely to the financial problems millions nationwide ran into over the course of the last several years. In general, these consumers would have liked to have entered the housing market years ago but were not able to do so for various reasons, both because of their personal finances and the uncertainty in the broader housing market.

[Related Article: The First Thing to Do Before Buying a Home]

Between 2008 and 2010, there were as many as 2 million people who might have wanted to form their own households but didn’t because of the effects of the recession, the report said. On average, between 1997 and 2007, about 1.3 million new households were created annually, due to both immigration and young people becoming financially independent. But after the housing bubble burst and the economy took a hit, that number shrank to about 600,000 per year.

Now, with the various improvements seen nationwide not only in housing but the broader economy, it may be that these people who fell behind in the past are getting ready to flood the market and significantly increase demand for what is currently a rather limited number of available properties, the report said. In some areas, they may have already started to trickle in. That, in turn, will likely lead to even more price increases that could help to bring more underwater homeowners back out from under negative equity; the Federal Reserve Board recently estimated that if home prices were to gain 10 percent of their current values, it would bring about 40 percent of these borrowers back to being right side up.

[Related Article: 10 Mistakes New Homebuyers Make]

However, all these buyers coming back into the market might not be a positive for other buyers. Recent polls show that many are already growing frustrated with their difficulties in closing deals because of already-high competition for listed properties.
More from Credit.com

Fed to Keep Rates Low, But for How Much Longer?

Filed under: General,Loans,Real Estate Market Data — admin @ 6:22 pm

The Federal Reserve’s policy-making committee announced it will continue to hold down short-term interest rates, which in turn will help keep mortgage rates low. But there is question of how much longer the central bank will do this.

The Fed said it will continue to buy $85 billion a month in Treasuries and mortgage-backed securities, but would reduce its asset purchase — known as “quantitative easing” — if job growth continues at its current pace.

Last year, the Fed committed to holding short-term interest rates near zero for as long as unemployment remained above 6.5 percent. In February, the unemployment rate was 7.7 percent. Many economists don’t expect unemployment to drop to levels around 6.5 percent until 2015.

However, Fed Chairman Ben Bernanke noted Wednesday that there is not consensus among the policy-making committee on how much longer to continue quantitative easing.

The committee recognized progress in the economy and job growth in recent months, noting “a return to moderate economic growth following a pause late last year.”

Bernanke has testified to Congress that quantitative easing has helped revive the housing market. Mortgage rates have fallen near all-time lows, with the average 30-year fixed-rate mortgage averaging 3.63 percent on March 14, according to Freddie Mac. In November 2012, 30-year rates fell as low as 3.31 percent.

Housing is “coming back, it’s real, and it’s going to be a positive driver,” said Jeff Fettig, the chief executive officer of Whirlpool Corp., the world’s largest appliance maker. “For every 6 percent increase in existing-home sales you see a 1 percent demand increase in appliances.”

Source: “Fed to Maintain Stimulus Efforts Despite Job Growth,” The New York Times (March 20, 2013) and“Bernanke Seen Keeping Up Pace of QE Until Fourth Quarter,” Bloomberg (March 20, 2013)

Mortgage Rates Reverse, Head Lower This Week

Filed under: Loans,Real Estate Market Data — Tags: , , — admin @ 6:18 pm

Mortgage rates moved lower this week, just in time for the spring home buying season, Freddie Mac reports in its weekly mortgage market survey. After rising last week, the 30-year fixed-rate mortgage reversed course and inched back down. The 30-year fixed-rate mortgage — the most popular among home buyers — has remained below 4 percent for a year.

“Low and stable inflation is placing downward pressure on fixed mortgage rates,” says Frank Nothaft, Freddie Mac’s chief economist.

Here’s a closer look at mortgage rate averages for the week ending March 21:

  • 30-year fixed-rate mortgages: averaged 3.54 percent, with an average 0.8 point, dropping from last week’s 3.63 percent average. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.08 percent.
  • 15-year fixed-rate mortgages: averaged 2.72 percent, with an average 0.7 point, dropping from last week’s 2.79 percent average. Last year at this time, 15-year rates averaged 3.30 percent.
  • 5-year adjustable-rate mortgages: averaged 2.61 percent, with an average 0.6 point, holding the same as last week. Last year at this time, 5-year ARMs averaged 2.96 percent.
  • 1-year ARMs: averaged 2.63 percent, with an average 0.4 point, dropping from last week’s 2.64 percent average. Last year at this time, 1-year ARMs averaged 2.84 percent.

Source: Freddie Mac

October 12, 2012

The high price of “forced” insurance

Filed under: General,Loans — Tags: , — admin @ 4:11 pm

This article originally appeared in the New York Times

Borrowers who allow their homeowners’ insurance to lapse will often get stuck with a bill for much more expensive coverage, courtesy of their lenders.

Called force-placed or lender-placed insurance, these policies protect banks’ interests when borrowers fail to follow through on the standard loan requirement that they maintain continuous coverage on their home.

Read the full story

Short sale fraud “heating up,” expert says

Filed under: General,Loans — Tags: , — admin @ 3:53 pm

This article originally appeared in Orange county Register .

A panel of short sale experts presenting at CALIFORNIA REALTOR® EXPO 2012 in Anaheim last week said that “fraud is heating up like a wildfire right now …” and “we’ve got to be aware that this fraud is changing directions, jumping containment lines.”

Making sense of the story

  • Short sales involve the selling of a home for less than is owed on its mortgage.
  • Among the most common forms of fraud are: Flopping, non-arm’s length transaction, side agreements, and false information.
  • Flopping: Scammers arrange to buy a home at an artificially deflated price intending to flip it immediately at its actual value.
  • Non-arm’s length transactions: The buyer in a short sale is related to the seller by blood, marriage, or some type of business or personal affiliation.  This istypically arranged by an underwater borrower to regain ownership of the property free from the mortgage debt.
  • Side agreements: In addition to payments included in a lender’s “approval letter,” the buyer and seller have side agreements to pay off junior liens, short sale negotiators’ fees, or other third-party fees.
  • False information: The transaction includes phony details in the closing settlement statement, or HUD-1, to hide buried costs and fees.

Read the full story

October 8, 2012

When will the housing market be “corrected?”

Filed under: General,Loans,Real Estate Market Data — admin @ 6:37 pm

San Diego Union Tribune

The housing recovery in California is expected to continue through to 2013, but the market won’t be “corrected” until as far off as 2017, according to the California Housing Market Forecast released by the CALIFORNIA ASSOCIATION OF REALTORS.

 

Making sense of the story

 

  • Homes sales and prices are expected to keep rising, but lower-than-normal inventory levels and underwater mortgages are key hindrances to a faster recovery, according to Leslie Appleton-Young, chief economist with the CALIFORNIA ASSOCIATION OF REALTORS®.
  • Home sales are forecasted to rise 1.3 percent to 530,000 units next year, based on the projected tally of 523,300 units this year. That’s a slower growth than that of 2011 to 2012, which is roughly 5 percent.
  • The momentum in prices also is expected to carry through to 2013, a result of pent-up demand for a limited housing supply. The median price could rise 5.7 percent to $335,000 in 2013. That’s lower than the projected price growth from 2011 to 2012, an estimated 11 percent. The state has a 3.2 months’ worth of housing inventory, significantly lower than the 16 months’-plus supply of saw roughly four years ago.
  • “Pent-up demand from first-time buyers will compete with investors and all-cash offers on lower-priced properties, while multiple offers and aggressive bidding will continue to be the norm in mid- to upper-price range homes,” said Appleton-Young in the report.
  • Appleton-Young says what underwater borrowers throughout the state will do — be it selling or holding — will have a big effect on next year’s housing recovery.
  • Other things to watch next year that will have a bearing on the housing market include: policies related to the state,local and federal governments; and housing and monetary policies, Appleton-Young said.

Read the full story

October 2, 2012

Is a mortgage refinance right for you?

Filed under: Loans — Tags: , — Ian Milne @ 6:42 pm

Sacramento Bee

With rates for 30-year mortgages hovering below 4 percent since last October, all kinds of homeowners are trying to get their monthly mortgages reduced, say lenders and mortgage experts.

Along with months of record-breaking low interest rates, other factors are driving the refinancing boom: a competitive lending market and changes in some federal refinancing programs for struggling homeowners.  It’s prompted many established homeowners with old-school, high-interest mortgages to decide it’s time to refi.

Making sense of the story

  • To determine whether you should refinance, look at how long you plan to be in your current home and whether the upfront costs outweigh the monthly savings.  Generally the primary reasons for refinancing a mortgage are to:
    • Lower monthly mortgage payments.
       
    • Eliminate the unpredictability of an adjustable-rate mortgage by switching to a fixed rate.
       
    • Free up home equity cash for home improvements, college costs or other expenses.
       
    • Shorten the loan term, say from a 30- to a 15-year mortgage, which can save thousands in interest payments.
  • It pays to compare quotes from several lenders because they offer different rates and fees. Start with your current lender or sit down with a local loan originator. You can also do refinance comparisons online, using mortgage calculators at sites like Bankrate.com or those of individual banks and lenders.
     
  • If you’re a struggling homeowner, ask your lender about changes in the federal Home Affordable Refinance Program and FHA refinance programs that have made refinancing options more plentiful.

Read the full story

 

July 10, 2012

Speeding up refinances

Filed under: Loans,Real Estate Market Data — Tags: , , , , , , , , , — admin @ 7:28 am

The New York Times

Speeding up refinances
While many large financial institutions are facing backlogs of mortgage applications as more homeowners take advantage of low interest rates and the government-sponsored Home Affordable Refinance Program (HARP), borrowers looking to accelerate the refinancing process are finding some relief from brokerages and community banks that are not servicing HARP loans.

Making sense of the story

  • HARP borrowers typically refinance with the banks that originally serviced their loans, because those banks already have their information and, according to the Mortgage Bankers Association, “There’s potential for it to be a less painful process.”
  • Still, tighter lending standards precipitated by the mortgage crisis have made for an arduous application process.
  • Mortgage brokers are reporting an increase in business from those looking to streamline the process.  According to one broker, a benefit of working with a mortgage broker is that they have direct contact with the banks and can keep track of the application as it goes through many hands at the bank.
  • Borrowers also might want to consider refinancing with a community bank, especially those that do not service HARP-eligible borrowers and are able to respond quicker to non-HARP refinance requests.

Read the full story 

July 8, 2012

California Homeowner Bill of Rights.

Filed under: General,Loans — Tags: , , , , , , , , , — admin @ 5:50 pm

San Francisco Chronicle

Homeowner Bill of Rights plans move forward
On Wednesday, a so-called “Homeowner Bill of Rights” moved a step closer to passing, with housing advocates claiming the bill would help people stave off foreclosures. The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) opposes provisions in this measure which will allow anyone to stop the foreclosure process by filing a lawsuit, merited or not.

Making sense of the story

  • C.A.R. agrees that careful and balanced reforms to the foreclosure process are necessary. However, C.A.R. opposes AB 278 because it will further delay the housing recovery by inviting bad-faith lawsuits and defaults, making it difficult for even well-qualified borrowers to obtain financing.
  • The legislation would ban the practice of dual-tracking, in which a bank continues foreclosure proceedings while a homeowner is seeking a loan modification; require banks to provide a single of point – either a person or a team – for struggling borrowers; and give borrowers the right to sue their lenders for “significant, material” violations of the new law.
  • The bills also require lenders to give a clean explanation when they reject borrowers for a loan modification, to verify mortgage documents before a foreclosure, and to provide copies to borrowers upon request.  Lenders can be fined up to $7,500 per loan for filing and recording unverified documents.  The bills’ provisions apply to first-lien mortgages for owner-occupants.
  • For more information about C.A.R.’s opposition to AB 278 and to learn how to take action, visit http://www.car.org/governmentaffairs/getinvolved/redalert4/.

 

Read the full story

June 22, 2012

Taking advantage of low rates

Filed under: General,Loans — Tags: , , , , , , , , , — admin @ 4:30 pm

The New York Times

Mortgage rates continue to set new record lows, leaving many home buyers and refinancers wondering how low rates can go and how to capture the best rates now.
Making sense of the story
• Many economists are forecasting that mortgage rates will rise again later this year as the American economy gradually improves and as more global investors turn to the U.S. as a safe haven for money.
• The average rate on a 30-year fixed-rate mortgage averaged 3.71 percent the week of June 14.
The rate had averaged 3.9 percent three months earlier and 4.5 percent a year earlier.
• According to one economist, rates could possibly fall further, perhaps as much as a quarter of a percentage point, but it is more likely that they would start a “slow drift” upward.
• Those planning to refinance or buy a home in the next two or three months might want to consider locking in a mortgage rate now.
• Borrowers with rate locks, with a built-in deadline, often receive priority treatment from lenders, because the borrower is telling the lender that he or she is serious about closing soon.
• Lock-in costs and policies vary widely, and are based partly on the time frame the borrower wants covered. Most borrowers will need a 60- to 90-day lock.
• If interest rates continue to fall during the lock period, borrowers can ask the lender to rewrite the rate lock at an additional cost, or obtain a “float-down” provision in the original agreement. A lock with a float-down agreement allows the borrower to change the rate, often only once, before closing on the mortgage. This option is generally more expensive than a standard lock.
Read the full story

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