Monday, March 26th, 2012

Fannie & Freddie Consider Principle Reduction

NPR and ProPublica Report GSEs Considering Principal Reduction

NPR and ProPublica reported Friday that Fannie Mae and Freddie Mac might consider principal reduction as a means to help underwater homeowners.

“NPR and ProPublica have learned that both firms have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases,” NPR stated in an article.

Edward DeMarco, acting director of the FHFA, has stood firm in his decision to not allow for principal reduction, despite mounting criticism from Democrats and petitioning from organizations to have DeMarco fired.

But, in a statement to ProPublica and NPR, ProPublica reported that DeMarco said, “As I have stated previously, FHFA is considering HAMP incentives for principal reduction and we have been having discussions with [Freddie and Fannie] and Treasury regarding our analysis.”

Despite the Treasury’s offer to provide incentives to the GSEs for administering principal reduction, DeMarco told lawmakers during a hearing on February 28 that “both companies have been reviewing principal forgiveness alternatives. Both advised me they do not believe that it is in the best interest of the companies to do so.”

While many contend that allowing the GSEs to apply principal reduction would help the housing market to recover and keep people from going into foreclosure, others argue that while 60 percent of all mortgages are owned or guaranteed by the GSEs, they account for roughly 29 percent of seriously delinquent loans.

Mark Calabria, director of financial regulation at the Cato Institute, showed support for the FHFA’s stance on principal reduction during a separate hearing March 15, where he pointed that GSE loans display a smaller percentage, just 9.9 percent of underwater loans, compared to private label securities, with 35.5 percent of loans underwater.

But, since principal reduction is considered as part of the HAMP modification, it has also been noted that the GSEs account for about half of all HAMP modifications.

During the fourth quarter of 2011, the FHFA reported about 19,500 HAMP trials became permanent modifications, which brought the total number of active HAMP permanent modifications to about 400,000.

Another argument used against principal reduction is its potential cost to taxpayers. FHFAs estimate is principal reduction will cost taxpayers $100 billion, in addition to the $180 billion rescuing the GSEs has cost already.

March 2012

Posted by: Don Dutton at 12:57am

Thursday, March 1st, 2012

Foreclosures vs Short Sales

Short Sales Bring 24% Greater Returns than Foreclosures

The real estate professionals at Massachusetts-based McGeough Lamacchia Realty have been proponents of short sales for quite some time, insisting that everyone comes out ahead when a short sale is achieved as opposed to a foreclosure. Now they’re sharing the facts that back up their claim.

On average a home sold through short sale brings a 24 percent greater return than a foreclosed property, according to recent findings from McGeough Lamacchia Realty.

“This means the banks are losing an average of $43,000 for every foreclosure sale compared to what they would have made in a short sale,” said a blog post on the company’s website.

The firm reviewed prices for short sale and foreclosure sale properties in 2010 and 2011 in Boston, Phoenix, Tuscon, Southern California, and Southwest Florida.

While banks often offer incentives to homeowners who pursue a short sale, “more needs to be done to promote short sales,” McGeough Lamacchia said.

Specifically, the firm points out that Fannie Mae and Freddie Mac are not offering the cash incentives for short sales that are now standard through the Home Affordable Foreclosure Alternatives program.

“Fannie Mae and Freddie Mac need to do more to promote short sales and make it easier for distressed homeowners to do a short sale and avoid foreclosure,” McGeough Lamacchia said in their blog post.

Feb 2012

Posted by: Don Dutton at 9:26am

Friday, February 10th, 2012

Foreclosures Decreasing

Report Reveals Number of Foreclosures Down From Last Year

A foreclosure report released by CoreLogic Wednesday revealed that the number of homes in foreclosure is decreasing nationwide. The report included monthly data on foreclosures, foreclosure inventory, and 90-plus delinquency rates.

Completed foreclosures for 2011 totaled 830,000, compared to 1.1 million in 2010. The December 2011 completed foreclosures figure was also down to 55,000, compared to 67,000 in December 2010.

Nationally, the number of loans in the foreclosure inventory decreased 8.4 percent in December 2011, compared to December 2010, which is a decline of about 130,000 properties. Data from the report revealed 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011.

“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” Mark Fleming, chief economist with CoreLogic, said in the release. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”

The share of borrowers nationally that were 90 days or more delinquent decreased to 7.3 percent in December 2011, compared to 7.8 percent in December 2010.

From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures, according to the report.

CoreLogic, headquartered in California, provides information, analytics, and services to the private and public sectors.

December 2011 Highlights From the Report

The five states with the highest foreclosure inventory:

Florida (11.9 percent)
New Jersey (6.4 percent)
Illinois (5.4 percent)
Nevada (5.3 percent)
New York (4.6 percent)

The five states with the lowest foreclosure inventory:

Wyoming (0.7 percent)
Alaska (0.8 percent)
North Dakota (0.8 percent)
Nebraska (1.0 percent)
Washington (1.3 percent)

Of the top 100 markets measured by Core Based Statistical Areas (CBSAs) population, 34 are showing an increase in the foreclosure inventory in December 2011, compared to 46 in November 2011.

February 9, 2012

Posted by: Don Dutton at 2:18pm

Wednesday, February 8th, 2012

Fannie Mae Opens Up Repos

Fannie Mae Now Accepting Online Offers for REOs

Fannie Mae announced Tuesday that it has expanded its online system to accept purchase offers for all its REOs listed for sale.

Real estate agents will now submit offers online on behalf of clients, receive receipt confirmation, and track the status of submitted offers through the HomePath.com website. HomePath is the GSE’s REO disposition operation.

In November 2010, Fannie Mae launched the HomePath Online Offers pilot in Orlando, Florida; San Diego, California; and Detroit, Michigan. Active Data Technologies, Inc., the developer of the offer platform, commented just five months after the launch that the technology was seeing positive results in these three test markets.

Now, the Online Offers feature is available for all Fannie Mae-owned properties across the nation through HomePath.com.

“Collecting offers online through HomePath.com will provide greater transparency for homebuyers and their agents,” said Jay Ryan, VP for REO at Fannie Mae. “Our online platform will make it easier to sell properties to owner occupants, which is a major factor in helping to stabilize communities across the nation.”

George Philbeck, a real estate professional with Keller Williams Advantage II Realty in Orlando, has been using Online Offers since the pilot launched in 2010.

“As an agent, I believe Online Offers is efficient, informative and user-friendly,” Philbeck said. “With Online Offers, my clients’ offers are guaranteed to make it to the right person at Fannie Mae for review. It has worked very well for me and for my clients.”

Real estate professionals representing buyers are able to connect directly with Fannie Mae’s listing agents through the HomePath website. The buyer’s agent can also find information on the site regarding financing and incentive options offered through HomePath.

The HomePath site offers a wide selection of properties, including single-family homes, condominiums, and town houses.

Brad Geisen, president and CEO of Active Data Technologies, called HomePath Online Offers a “step in the right direction” by automating the transaction process to move inventory quicker and get the housing market on the roa

Posted by: Don Dutton at 3:22pm

Tuesday, January 31st, 2012

Economists Talk About The Market

Rise in Home Sales Signifies Strengthening Market: Economists

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales. While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.” Yun suggests consumers are gaining confidence from “record low mortgage interest rates, job growth and bargain home prices.”

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year. Distressed homes made up 32 percent of sales in December, according to NAR’s existing home sales report for the month. Foreclosed home sales closed at about 22 percent below market rate in December, a discount 2 percent higher than that recorded a year earlier.

Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago. Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago. Purchases by first-time home buyers declined in December – both from the previous month and the previous year. First-time home buyers accounted for 31 percent of purchases in December, down from 35 percent in November and 33 percent in December 2010.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently. “The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says.

Posted by: Don Dutton at 12:23am

Monday, January 16th, 2012

Market Improves

December 2011 statistics published by the NWMLS show the highest sales figures since 2006. Closed sales show prices stabilizing in King and Snohomish counties. Median prices dropped just slighly in Pierce, Thurston and Kitsap counties. Interest rates remain at a record low of 3.875% for 30 yr fixed rate mortgages.

More buyers are coming into the marketplace. Agents report that the best priced listings in King and Snohomish counties often receive multiple offers. 2012 will begin on a positive note.

Posted by: Don Dutton at 2:30am