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The Norris Group Real Estate News Roundup 7/9/10

Friday, July 9th, 2010

Sources:
http://www.nytimes.com/2010/07/09/business/economy/09rich.html?_r=2
http://blogs.wsj.com/wealth/2010/06/29/mansion-foreclosures-surge/?source=patrick.net
http://latimesblogs.latimes.com/money_co/2010/07/30year-mortgage-rate-edges-down-to-new-record-low.html
http://www.boston.com/business/articles/2010/07/09/banks_fight_changes_to_accounting_rules/
http://www.aba.com/Industry+Issues/FASB_advocacy.htm
http://www.dsnews.com/articles/fannie-mae-adopts-new-rules-for-pre-mod-income-verification-2010-06-28
http://www.lpsvcs.com/NewsRoom/IndustryData/Documents/06-2010%20Mortgage%20Monitor/LPS_Mortgage_Monitor_May_2010_Final.pdf

Today’s News Synopsis:

According to Greg Paquin, Sacramento new home sales decreased by 21.3 percent in the second quarter. Foreign home buyers purchased $66 billion of US residential property during the year ending May 2010. The VP of the Federal Reserve Bank of Cleveland believes that the high foreclosure rate is likely to continue for some time. Multiple economic statistics show that the tax credits may have simply hid an ongoing recession in real estate.

In The News:

Sacramento Bee – “New-home sales plunge in Sacramento area” (7-9-10)

“Second-quarter new-home sales in the Sacramento area fell 21.3 percent from the first quarter and by 50.1 percent from the already dismal second quarter of 2009, said Greg Paquin, a Folsom consultant who issued the sales report.”

Housing Wire – “REITs Raised $22bn for Real Estate Investments in 2010: NAREIT” (7-9-10)

“The US Real Estate Investment Trusts (REITs) raised $22bn in initial, debt and equity capital offerings in 2010, and as a whole the industry owns $500bn of commercial real estate assets, approximately 10% to 15% of total institutionally owned commercial real estate, according to a mid-year report by the National Association of REITs, NAREIT.”

Housing Wire – “International Investment in US Housing Market Rises: NAR” (7-9-10)

“Foreign home buyers — those with residency outside the US as well as recent immigrants and temporary visa holders — purchased $66bn of US residential property, or 7.27% of the market, in the year ending March 2010, according to the National Association of Realtors (NAR). Based on NAR’s existing home sales information, $907bn of residential sales occurred in the 12 months ending March 2010.”

Housing Wire – “DebtX Sees Commercial Mortgage Values Recover Slightly in May” (7-9-10)

“The aggregate value of commercial real estate (CRE) loans that collateralize commercial mortgage-backed securities (CMBS) rose to 76.6% of the original balance in May, from 76.4% in April, according to loan sale advisor DebtX. Values are up from 75.9% in March and 76.5% in February. CRE loan values are down from 77.6% in May 2009, according to DebtX.”

Housing Wire - “High Foreclosure Rate Likely to Persist, Cleveland Fed VP Says” (7-9-10)

“If past recessions are a guide, the nation’s high foreclosure rate is likely to persist, according to authors at the Federal Reserve Bank of Cleveland.”

Housing Wire – “Bank Bailout May Turn a Profit for Treasury, KB&W Report Finds” (7-9-10)

“The Capital Purchase Program, $205bn in financial firm relief funds from the Treasury’s $700bn stimulus package, the Troubled Asset Relief Program (TARP), is nearly repaid in full and likely to turn a profit, according to a report from broker/dealer investment bank Keefe, Bruyette and Woods.”

Housing Wire – “Ginnie Guarantees $33.4bn of MBS in June” (7-9-10)

“The Government National Mortgage Association — or Ginnie Mae — guaranteed more than $33.4bn of mortgage backed securities (MBS) in June.”

Inman - “Tax credits hid ongoing real estate slide?” (7-9-10)

“The economic data that did arrive confirmed a slipping recovery, but not a double-dip. The Institute for Supply Management service-sector report for June followed last week’s pattern: softer than prior month, and well below forecast (May 55.4, forecast 55, actual 53.8). New claims for unemployment insurance came down 21,000 last week to 454,000, but have been stuck in that range all year long. Mortgage refi applications have begun to rise, but purchase ones fell again, by 2 percent last week, now 42 percent below the end of April.”

Looking Back:

One year ago, the government-insured (FHA and VA loans) share of mortgage applications was 35.9 percent. The average 30-year rate dropped to 5.2 percent. UCLA economists predicted that commercial real estate demand would not return to 2006 levels until 2014. The Financial Crimes Enforcement Network reported that suspicious mortgage activities were increasing significantly.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: bruce norris, CMBS, commercial, credit, debt, DebtX, economic, employment, equity, Federal Reserve, Ginnie Mae, Greg Paquin, immigrant, loan, NAR, NAREIT, property, real estate, realtor, recession, REIT, residential, TARP, tax, trust
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The Norris Group Real Estate News Roundup 7/8/10

Thursday, July 8th, 2010

Today’s News Synopsis:

According to Freddie Mac, the average 30-year fixed mortgage rate dropped to 4.57 percent. International Monetary Fund warns a double dip recession is still possible, despite its prediction that GDP will increase over the next year. Fitch Ratings predicts home improvement spending will increase 3.5% this year. Clear Capital reports national housing prices rose 5.2% during the last quarter.

In The News:

Associated Press - “Mortgage rates drop to new low of 4.57 pct.” (7-8-10)

“The average rate on a 30-year fixed mortgage dropped to 4.57 percent this week, mortgage company Freddie Mac reported Thursday. That’s down from the previous record low of 4.58 percent set last week.”

Housing Wire – “International Monetary Fund Warns of Housing Double-Dip Risk” (7-8-10)

“Signs of recovery in the US economy and housing market are stronger than expected, due to policy response from the federal government, according to the International Monetary Fund (IMF). While IMF expects US gross domestic product (GDP) growth of 3.25% in 2010 and 3% in 2011, unemployment is projected to remain above 9%.”

Housing Wire – “Fitch: Homebuyer Tax Credit Will Boost Home Improvement Spending” (7-8-10)

“Fitch Ratings expects home improvement spending to increase 3.5% in 2010 over 2009 levels, partly due to an influx of home sales incentivized by the first-time homebuyer tax credit”

Housing Wire – “Wells Fargo to Lay Off 3,800 Employees, Leave Non-Prime Space” (7-8-10)

“In a restructuring of its financial division, Wells Fargo (WFC: 26.64 -0.08%) said it will eliminate 2,800 positions in the next two months and another 1,000 people by the end of the year. The bank will close 638 financial stores in the US as it will stop originating non-prime portfolio mortgage loans.”

Housing Wire – “Fannie, Freddie Dropped from New York Stock Exchange” (7-8-10)

“The Federal Housing Finance Agency (FHFA) directed the government-sponsored enterprises (GSEs) in June to de-list from the NYSE and any other national securities exchange. The direction came after the price of their common stock hovered near the minimum average closing price of $1 for more than 30 days for most months since the conservatorship took effect in September 2008.”

Housing Wire – “House Prices Soar 8.8% from 2009: Clear Capital” (7-8-10)

“House prices rose in June across the US in both the rolling quarter and the previous-year data, according to real estate asset valuation data provider Clear Capital. National prices rose 5.2% over the previous three-month period and 8.8% since June 2009. The quarterly and yearly growth seen in June builds on already positive data, after prices climbed 6.8% in May from the year before.”

Housing Wire – “John Burns Sees Housing Market Hit Bottom with Little Downside to Investing” (7-8-10)

“The housing market has improved in the last two years to the extent that John Burns Real Estate Consulting sees the market as possibly approaching the beginning of its next up cycle.”

Bloomberg – “Apartment Vacancies in U.S. Drop From 30-Year High, Reis Says” (7-8-10)

“The vacancy rate for apartment properties was 7.8 percent, down from a 30-year high of 8 percent in the first quarter and up from 7.7 percent a year earlier, according to a report today by the real estate research firm. First-quarter vacancies were the highest since 1980, when Reis began tracking the data.”

Orange County Register – “O.C. builders rank among U.S. top 40″ (7-8-10)

“Seven homebuilding companies based in Orange County or having a strong presence here ranked in Builder Magazine’s newest list of the nation’s Top 100 Builders. Five of them were among the nation’s top 40 builders.”

Looking Back:

One year ago, 68 percent of recent home buyers said price decreases encouraged them to buy a house. PMI forecasted that home prices would decrease through 2011. Default rates doubled for commercial properties valued at more than $108 billion.

Tags: bank, bruce norris, builder, Clear Capital, credit, economy, Federal, FHFA, fitch ratings, freddie mac, gdp, gse, IMF, International Monetary Fund, John Burns, loan, morgage, real estate, REIS, tax, Wells Fargo
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The Norris Group Real Estate News Roundup 7/7/10

Wednesday, July 7th, 2010

Today’s News Synopsis:

The MBA reports mortgage loan application volume increased 6.7 percent from last week. Delinquencies on home equity loans decreased to 4.12% in the first quarter. 89 percent of mortgage lenders intend to, or already, offer Web-based mortgage application services. The average price discount on foreclosed properties nationwide is 26 percent.

In The News:

Mortgage Bankers Association – “Mortgage Refinance Applications Increase in Latest MBA Weekly Survey” (7-7-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending July 2, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 6.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6.5 percent compared with the previous week.”

CNet - “Freddie, Fannie reject energy retrofit loans” (7-7-10)

“The FHFA said it does not object to all energy retrofit loans, but specifically to those PACE or PACE-like energy loans that are essentially structured as property taxes and, therefore, have first lien. In the event of a foreclosure on the property, those loans are legally required to be paid off first before any money goes to the mortgage lender.”

Los Angeles Times – “Home equity loan delinquencies fall for first time in two years” (7-7-10)

“The percentage of home equity loans on which consumers were at least one payment late declined to 4.12% in the first quarter from 4.32% the previous quarter. Not since the first quarter of 2008, when the rate fell to 2.34% from 2.39%, had there been a decline. Missed payments on consumer loans overall improved for the third straight quarter, the ABA said in its quarterly Consumer Credit Delinquency Bulletin. Bank card delinquencies fell from 4.39% to 3.88% of all accounts — the first time since 2002 that card delinquencies were below 4%.”

Housing Wire – “When it Comes to Servicing Ginnie Mortgages, BofA Scores Again” (7-7-10)

“BofA-serviced Ginnie loans ranked among the lowest in terms of 60-day delinquencies (less than 1% in May), followed closely by Wells Fargo (WFC: 26.67 +6.04%) (just over 1%). Countrywide loans had the highest 60-day delinquency rate of around 3%”

Housing Wire – “Tech Developer’s Survey Finds Lenders Expect Surge in Online Mortgage Volume” (7-7-10)

“18% of mortgage lenders offer so-called ’smart’ Web-based mortgage application services. The survey defines ’smart’ software products as those that are interactive mortgage-application systems that are a fully transactional, Web-based solution that intelligently guides borrowers through the application, adjusting the questions for applicants according to responses. Of the remaining companies that current do not offer the service, 71% said they will adopt online mortgage application technology sometime in the future, while 14% said they would not. The remaining 15% responded they were unsure.”

Bloomberg - “U.S. Commercial Property Sales Trail Six-Year Average” (7-7-10)

“U.S. commercial real estate sales in the first half totaled about a quarter of the average of the previous six years as owners kept properties off the market, impeding investors with record funds for purchases. Buyers and sellers completed $34.2 billion of deals through June, or 26 percent of the average first-half dollar volume since 2004, according to preliminary figures from Real Capital Analytics. The total was about 12 percent of the 2007 peak, when $277.7 billion of properties changed hands in the same period, data from the New York-based real estate research firm show.”

Realty Times – “Short Sale Tactics May Bring on Legal Liabilities For Agents” (7-7-10)

“Real estate agents know that short sales are likely to be time-consuming and frustrating. What many don’t know is that short sales carry high risks of legal liability for agents. One area of short sales that is fraught with liability is in the use of negotiators. In California, short sale negotiators must possess a real estate license and are subject to a variety of regulations. Moreover, a negotiator’s agency relation to the principals is frequently unclear and undisclosed. Undisclosed dual agency is a particular problem.”

Orange County Register – “O.C. builders hit by tax break’s demise” (7-7-10)

“The total number of O.C. sales contracts — the start of escrow for new home purchases — tumbled to 191, down from 218 in April, according to Costa Mesa-based Hanley Wood Market Intelligence, which tracks new home sales. May’s total was up a mere 3.8% from year-ago levels. By comparison, O.C. contracts had been up 39.7% in April. April 30 was the deadline to open escrow on a home purchase to qualify for the federal tax credit.”

Orange County Register – “Calif. has 4th largest foreclosure discount” (7-7-10)

“The company ranked of 44 states and Washington D.C. (other states don’t have enough data for valid analysis, according to Realtytrac) for the gap between pricing for homes sold somewhere in the foreclosure process vs. those that were not anywhere in foreclosure. As for fat foreclosure discounts, Ohio led the nation at 39.5%, followed by Kentucky at 35.2% and Illinois at 35.1%. The average sales price of properties nationwide that sold while in some stage of foreclosure in the first quarter was 26 percent below the average sales price of properties not in the foreclosure process.”

Tags: ABA, BofA, bruce norris, builder, commercial, delinquency, equity, escrow, FHFA, foreclosure, ginnie, lender, loan, MBA, mortgage, Real Capital Analytics, real estate, RealtyTrac, short sale, Wells Fargo
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The Norris Group Real Estate News Roundup 7/6/10

Tuesday, July 6th, 2010

Today’s News Synopsis:

According to Lender Processing Services, the national mortgage delinquency rate increased to 9.2% in May. Reis reports national office vacancies increased by 0.1 percent in the second quarter to 17.4 percent. The former CEO of Irvine Co. believes the housing and commercial real estate market will be rocky for the next year or two due to the volume of underwater loans. The former secretary of labor under President Clinton, Robert Reich, believes the U.S. economy will have a very slow recovery, and may experience a double dip.

In The News:

Yahoo - “Mortgage rates scream buy, but who is listening?” (7-3-10)

“Under normal circumstances, 4.58 percent would be irresistible. A decade ago, if you’d told David Christensen, owner of Mountain Lake Mortgage in Lakeside, Mont., that rates would drop this low, he wouldn’t have believed you. And if rates did somehow fall this far, he never thought he would lack for customers, as he does now. Yet both have come true. Christensen argues that mortgage lending standards have tightened so much since the financial crisis that many people with decent but not-stellar credit can’t qualify. Lenders are demanding stronger credit scores and higher down payments or home equity.”

Robert Reich – “Slouching Toward a Double Dip or a Lousy Recovery at Best” (7-3-10)

“In June the nation added fewer jobs than necessary merely to keep up with population growth (private hiring rose by 83,000 after adding only 33,000 jobs in May). The typical workweek declined. Average earnings dropped. Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. ”

Housing Wire – “National Mortgage Delinquency Rate Swells to 9.2% in May: LPS” (7-6-10)

“The national mortgage delinquency rate grew to 9.2% in May, up 2.3% from a month earlier and 7.9% from a year earlier, according to the latest report from mortgage performance data and analytics provider Lender Processing Services (LPS: 31.41 -0.16%).”

Bloomberg - “Profit Upgrades Clash With El-Erian’s Fading Recovery” (7-6-10)

“Analysts are raising earnings estimates for U.S. companies at the fastest rate since at least 2004 just as stocks post the biggest losses in 16 months on concern that the economy will sink back into a recession. Profit for Standard & Poor’s 500 Index companies will jump 34 percent in 2010, compared with a projected gain of 27 percent on March 29, according to more than 8,000 estimates compiled by Bloomberg. The revision, the most during any quarter in at least six years, came as lower-than-forecast home sales, manufacturing and private-sector job growth sent the benchmark gauge for American equities down 16 percent since April 23.”

Bloomberg - “Office Vacancy Rate in U.S. Climbs to 17-Year High, Reis Says” (7-6-10)

“Office vacancies in the U.S. rose to the highest level since 1993 in the second quarter as the sluggish economic recovery damps demand from corporate tenants, Reis Inc. said in a report. The vacancy rate climbed to 17.4 percent from 16 percent a year earlier and 17.3 percent in the first quarter, the New York-based research company said today in a statement. Effective rents, the amount tenants actually pay landlords, fell 5.7 percent from a year earlier and 0.9 percent from the previous three months, according to Reis.”

Bloomberg - “Property Bonds Slump Most Since ’09 on Slowdown: Credit Markets” (7-6-10)

“Bonds sold by real-estate companies are performing the worst compared with the rest of the market since March 2009 on concern the slowing economic recovery will cause more defaults. Yield premiums of bonds sold by real-estate investment trusts, shopping-mall owners and office landlords widened 9 basis points, or 0.09 percentage point, more than those on other debt in June, and continued to rise this month, according to Bank of America Merrill Lynch indexes.”

Orange County Register – “Adjustable mortgages back in fashion?” (7-6-10)

“DataQuick reports that 10% of Orange County home buyers who financed their home purchases in May used some sort of adjustable mortgage — the highest level of variable-loan use since August 2008. The bottom for adjustable-loan use was April and May of 2009, when just 2.4% of financed deals had variable financing.”

Orange County Register – “Real estate outlook ‘rocky’ for 2 years” (7-6-10)

“The former CEO and vice chairman of the Irvine Co. says that the outlook for housing and commercial real estate will be rocky for the next year or two because of the volume of underwater loans.”

Housing Wire – “CMBS Delinquency Rate Triples From a Year Ago, Passes 7%: Realpoint” (7-6-10)

“Delinquencies in commercial mortgage-backed securities (CMBS) in the US reached 7.2% in May from 6.9% in April, and more than triple the rate a year ago, according to the analytics firm Realpoint. Realpoint tracks delinquency data on nearly $800bn of CMBS pools for the monthly reports. In May, the total delinquent unpaid balance for these loans reached $57.3bn, a $2.9bn increase from the previous month.”

Looking Back:

One year ago, a study of 3.5 million mortgages nationwide found that in June loan servicers held 32,000 foreclosure sales. Vacancy rates for rental properties increased to 5.3% in the first quarter of 2009.

Tags: adjustable, Bank of America, bond, bruce norris, CMBS, credit, David Christensen, delinquency, economy, equity, Irvine Co, landlord, Lender Processing Services, lending, loan, LPS, Merrill Lynch, mortgage, Mountain Lake Mortgage, real estate, Realpoint, REIS, Robert Reich, Standard & Poor, underwater, vacancy
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The Norris Group Real Estate News Roundup 7/2/10

Friday, July 2nd, 2010

Sources:
http://www.housingwire.com/2010/07/02/the-amazing-shrinking-unemployment-rate
http://online.wsj.com/article/SB10001424052748704898504575342593039984442.html?mod=WSJ_hps_MIDDLETopStories
http://www.realtor.org/press_room/news_releases/2010/07/tax_flood_credits
http://www.realtor.org/press_room/news_releases/2010/07/phs_drop
http://www.dsnews.com/articles/financial-reform-bill-passes-house-2010-07-01
http://www.dsnews.com/articles/fannie-mae-adopts-new-rules-for-pre-mod-income-verification-2010-06-28
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/sel1009.pdf
http://www.dsnews.com/articles/government-agencies-hold-46-of-reo-inventoryand-more-is-coming-2010-06-28
http://www.radarlogic.com/rlresearch/
http://online.wsj.com/article/SB10001424052748704895204575321003529487016.html?mod=WSJ_RealEstate_LeftTopNews
http://online.wsj.com/article/SB10001424052748704895204575321003529487016.html?mod=WSJ_RealEstate_LeftTopNews#articleTabs%3Dslideshow

Today’s News Synopsis:

The Department of Labor claims that unemployment decreased by 0.2 percent in May. President Obama signed the 3 month extension for the first time homebuyer tax credit. Distressed inventory has grown by 37% since October 1st 2009.

In The News:

Housing Wire – “Treasury Launches New Mortgage Help for Unemployed in July” (7-2-10)

“In June, the unemployment rate edged down to 9.5% from 9.7% in May, according the Department of Labor. Homeowners who qualify for the program have a first-lien mortgage originated on or before Jan. 1, 2009. The unpaid principal balance on a single-unit primary residence must be equal to or less than $729,750, and the mortgage has to be in default or in imminent default.”

Housing Wire – “Obama Signs Homebuyer Tax Credit Extension” (7-2-10)

“President Barack Obama this morning signed HR 5623, the ‘Homebuyers Assistance and Improvement Act of 2010,’ a three-month extension on the closing deadline for first-time home buyers to receive the tax credit.”

Housing Wire - “The Amazing Shrinking Unemployment Rate” (7-2-10)

“the nation’s unemployment rate fell from 9.7% in May to 9.5% in June. But the decline has nothing to do with an improvement in the nation’s labor force. If anything, the improvement suggests just how inadequate our government’s measures of employment really are. Why? Because 652,000 jobless Americans simply disappeared altogether in June, dropping out of the labor force and vanishing from any and all calculations.”

Inman - “HUD offers LGBT housing protections” (7-2-10)

“The nation’s housing agency announced a new policy Thursday to provide further assistance to lesbian, gay, bisexual and transgender people who file complaints of housing discrimination. The federal Fair Housing Act, adopted in 1968 and amended in 1988, does not explicitly forbid housing discrimination based on sexual orientation or gender identity.”

Orange County Register – “Foreclosures on the rise” (7-2-10)

“Since October 1, 2009, the distressed inventory has grown by 37%. The active distressed inventory has increased from 2,346 homes on October 1st and now totals 3,217, levels not seen since May of 2009. The distressed inventory now represents 31% of the current active inventory. Last year at this time, there were 2,919 distressed homes on the market, representing 32% of the active inventory.”

Orange County Register – “Construction jobs at 14-year low” (7-2-10)

“In the first half of 2010, 114,000 U.S. construction workers lost their jobs; rest of the economy added nearly a million jobs. The industry added 49,000 jobs in March and April — than gave back 52,000 jobs in the last two months. The industry’s unemployment in June remained at 20.1 percent.”

Tags: bruce norris, construction, credit, default, Department of Labor, distressed, employment, Homebuyers Assistance and Improvement Act of 2010, HR 5623, HUD, inventory, mortgage, principal, real estate, tax
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181-TNG Radio – Nancy West 7-3-10

Friday, July 2nd, 2010

Nancy West

Marketing and Outreach Specialist, Housing and Urban Development (HUD)

(Full Bio)

This week Bruce is joined by Nancy West. Nancy is a marketing and outreach specialist for the Department of Housing and Urban Development. She has been working in the mortgage industry since 1977. Nancy joined HUD in 2004, and in 2006 she accepted one of four nationwide marketing and outreach specialist positions.

Non-profit organizations have a special access to a specific list of REO properties. To be considered a non-profit organization, you must be a 501C3 classified company under the IRS. All the requirements for meeting this classification are listed at www.HUD.gov

There is also a special list of REO properties for police officers, firefighters, paramedics and school teacher. These people have the opportunity to buy a HUD REO for 50 percent of the sale value. They are required to occupy the property for 3 years. After those first 3 years, their home value is officially decreased by 50 percent. The difficulty with this program is that these people are restricted to buying in revitalization areas. Right now, there are not many revitalization areas.

Cities and Counties individually determine what they want to do with NSP money. Some cities are acquiring REOs, rehabbing them and reselling them, and others are acquiring REOs and turning them into rental opportunities.

The FBI released a report on Friday about the amount of fraud they are seeing. California, Nevada, Florida, New York and Michigan are experiencing the highest fraud rates, and those states are also experiencing the largest number of foreclosures. Nancy is not sure if these foreclosures are primarily due to consumers, loan officers or realtors. She believes that fraud was committed by many groups, and that no specific group is significantly more responsible than the other.

Loan modification programs are now open to be qualified for. To qualify for loan modification, people are now trying to commit fraud on their modification application. The problem with this strategy is that if they make their financial statement look too poor, they may not qualify for a modification. Bruce knows someone who was recently denied a loan modification due to the fact that they had the ability to make their payments, and then chose to strategically default.

The mission of HUD is to provide a decent, safe, and sanitary home, and a suitable living environment for every American. When Bruce read this, he realized that the word “ownership” was not included in HUD’s mission statement. This made him feel that HUD is now broadening their scope to include the chance that the number of renters may increase in the future. Nancy claims that HUD and FHA has not changed their mission statement. HUD’s mission is to strengthen and provide homeownership and rental properties to the under-served, first time buyers, minorities and elderly. HUD does this in a variety of ways, including Section 8 housing vouchers. FHA wants to specifically promote homeownership to those same people. FHA offers home retention opportunities through the reverse mortgage program. The mission has not changed, it has simply refocused.

HUD has a few programs that most people are not aware of. Individuals who rent in Section 8 single-family dwellings are typically very successful. Many of them eventually leave the program and become home owners. Also, FHA has the Disaster Relief Mortgage Program which many people are not aware of. This program allows people to obtain a mortgage with no down payment if their home was destroyed in a natural disaster. As soon as a disaster area is declared, FHA issues a notice to lenders that a moratorium has been placed on foreclosure action. Also, HUD sends staff to assist homeowners in disaster areas.

If a consumer wants to qualify for a Section 8 rental subsidy, they must apply at their local housing authority. The housing authority will go over the qualifications with them, and see what properties are available.

Right now, the government has helped make the housing industry more fluid. When the problem first developed, lenders were still interested in lending, not collecting. They did not have the correct staff to deal with the problem. Many people who could not get a modification 3 months ago can get it now. This is because of new programs through Making Homes Affordable program and TARP programs.

FHA has always had a modification program. FHA requires lenders to provide loss mitigation help when borrowers fall 30 days delinquent. FHA also has a forbearance option and a partial claim. HAMP is also a tool that FHA can use. FHA can perform short sales with incentives, and deeds in lieu of foreclosure. There is currently no time benefit for people who take the deed-in-lieu path rather than foreclosure. However, their credit score will not be affected in the same way.

Individuals who simply cannot afford a mortgage will not be eligible for a loan modification. For example, some borrowers would require an 80 percent reduction in their loan balance to be able to afford the mortgage. This is not possible.

Non-owner occupants are currently not eligible for loan modification.

TARP’s funds are currently being used for modifications, not HUD’s. HUD is not currently able to make loans to solve lender problems. However, this kind of loan may be considered in the future.

There was once a program which allowed lenders to get 90 percent of the value of a property from a HUD loan to keep a homeowner in their property. That was either the Hope for Homeowners Program or the FHA Secure Program. When this program first developed, lenders were too optimistic about how many of the deals they would be able to fix with it. It took a lot of time before they realized that this program would not be as successful as they had hoped.

TARP funds can be used to modify principle loan balances, but FHA does not have a program for this yet.

There are some 100 dollar down payment programs for HUD REOs. These programs cannot be used in all areas. Currently all areas have a 100 dollar down payment program for owner occupants. If someone is acquiring a property using FHA financing, they have to pay for the difference between the list price and what they bid, and then another $100. The highest offer will not always win on a HUD property. What ultimately determines whether or not you will win a HUD bid is whether or not your offer will net the most profit.

HUD once had a program for veterans which included no down payment, but when the Housing and Economic Recovery Act was passed in 2008, veterans were required to put down 3.5 percent.

HUD is also in the development business. There are HUD projects that win awards. The mission of Secretary Donovan is to build these residences in an environmentally friendly way.

A new HUD plan has been formulated for 2015 which will make HUD less bureaucratic and more fluid. This will allow them to pay more attention to people in charge of departments. The first goal is to stem the foreclosure crisis. HUD needs to meet the need for quality, affordable rental homes. HUD wants to utilize housing as a platform for improving the quality of life. Home ownership is still a good opportunity. Housing provides wealth in the future by building equity. HUD wants to build inclusive and sustainable communities free of discrimination.

Tags: 230k, appraisal, appraiser, audits, bankruptcy, Barney Frank, bruce norris, congress, Disaster Relief Mortgage Program, FHA, hamp, Housing and Economic Recovery Act, housing and urban development, HUD, loan, loans, Making Homes Affordable, mortgage, Nancy West, property, realtor, reos, Section 8, TARP
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The Norris Group Real Estate News Roundup 7/1/10

Thursday, July 1st, 2010

Today’s News Synopsis:

Freddie Mac announced the average rate for 30-year fixed loans sank to 4.58 percent this week. According to the NAR, pending home sales decreased 30 percent from April. President Obama is expected to sign the extension to the home buyer tax credit. RealtyTrac reports that foreclosure sales took up 31% of all home sales in the US through Q110.

In The News:

Associated Press – “Mortgage rates drop to another low, 4.58 pct.” (7-1-10)

“Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week. That’s down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971. The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.”

NAR - “Pending Home Sales Drop as Expected” (7-1-10)

“The Pending Home Sales Index,* a forward-looking indicator, dropped 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April, and is 15.9 percent below May 2009 when it was 92.3. The falloff comes on the heels of three strong monthly gains as home buyers rushed to take advantage of the tax credit.”

CNN - “Homebuyer credit extension heads to Obama” (7-1-10)

“First-time homebuyers will have until Sept. 30 to close on their purchases and land an $8,000 tax credit under a bill passed by the Senate late Wednesday. President Obama is expected to sign the bill, which was overwhelmingly approved by the House on Tuesday. The deadline had been June 30.”

Housing Wire – “Short Sale Discounts Vary Widely from State to State” (7-1-10)

“This week, RealtyTrac released a report that foreclosure sales took up 31% of all home sales in the US through Q110. According to the report, there were 88,000 pre-foreclosure sales, often short sales, in Q110, for an average discount from retail home prices of 14.7%. By comparison, REO discounts in the US averaged 34%.”

Housing Wire – “CoreLogic’s Mark Fleming: The Recovery Looks Like a ‘U’, Not a ‘W’” (7-1-10)

“Our economists have been more concerned about a U-shaped recovery, rather than a double dip. What they see as more likely is a long bottom drifting up slowly, following the same ‘U’ shape as the 2000 recession, only with a longer, more pronounced bottom.”

Housing Wire – “Fannie Updates Appraisal Policies” (7-1-10)

“Fannie will now require interior photographs of specific rooms and areas of the house in the appraisal report. The GSE provided guidance on when an appraisal is considered deficient and when a lender can make changes to the opinion of market value based on underwriter judgment, automated valuation models or other methodology. The policy changes take effect for all mortgage loan applications dated on or after Sept. 1, 2010.”

Orange County Register - “12,300 O.C. building jobs lost in year” (7-1-10)

“O.C. building trades shed 12,300 jobs in the past year, according to a recent analysis of federal employment data by the Associated General Contractors of America. In all, Orange County construction employment fell by 16% from May 2009 to May 2010.”

Realty Times – “Should You Buy A Condo?” (7-1-10)

“Maintenance. Most condominiums require very little maintenance from their tenants. Yard work and the like are done and paid for through your monthly dues. Reserve funds are saved up by the condo association for larger periodic repairs, such as roof replacement and painting. Amenities. In many condominium communities you’ll find you have access to a clubhouse, pool, exercise facilities, concierge, or even door security. These great perks cost you nothing extra and are quite the draw for many buyers.”

Looking Back:

One year ago, the NAR reported that pending home sales remained relatively flat from April to May. Mortgage application volume decreased 18.9 percent within one week. Kenneth Rosen, an economist from the University of California, predicted that as many as one in five U.S. hotel might default by the end of 2010.

Tags: Associated General Contractors, automated valuation, bruce norris, condominium, credit, economist, employment, fannie mae, foreclosure, freddie mac, gse, lender, loan, mortgage, real estate, RealtyTrac, recession, reo, short sale, tax
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The Norris Group Real Estate News Roundup 6/30/10

Wednesday, June 30th, 2010

In The News:

Mortgage Bankers Associations – “Mortgage Refinance Applications Increase as Rates Continue to Drop in Latest MBA Weekly Survey” (6-30-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 25, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 8.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 8.3 percent compared with the previous week.”

Los Angeles Times – “Foreclosure sales decline, but housing recovery still has far to go” (6-30-10)

“A total of 232,959 U.S. homes that sold in the first quarter were either bank-owned or in some stage of the foreclosure process. That’s a 14% decrease from the prior quarter and a 33% decline from a peak in the first quarter of 2009, according to Irvine-based RealtyTrac.”

Orange County Register – “Newspaper home data ’stinks’ to consultant” (6-30-10)

“If you read the newspapers, you would think prices are appreciating, whether it is the Case Shiller price index or median resale prices – the two price measures that used to be the most reliable measures. Just look at recent price trends for Southern California. According to CS, prices are up 6% in LA (includes Orange Co.) and 11% in San Diego since March of 2009. According to the median price, prices are up 12% in LA, 17% in Orange County, 12% in Riverside and 18% in San Diego since April of 2009. Neither is correct if you are talking about most homes in those markets. While we love the CS methodology, both CS and the median price are wildly impacted when the mix of what is transacting shifts dramatically from the norm.”

Orange County Registered – “A quarter of H.B. homes on market distressed” (6-30-10)

“The newest ‘market time’ for Huntington Beach, Thomas’ math that tracks theoretical time it would take to sell all listed homes at the pace of new escrows opened, is 3.95 months, compared with Orange County’s overall 3.37 months. The city’s share of its distressed properties — foreclosures or short sales — among active listings is 25.3% vs. the county’s 30.7%. And I double checked with Thomas — it’s just a coincidence that the number of deals in escrow and the number of distressed homes on the market each happen to be 169.”

Looking Back:

One year ago, prime mortgages 60 days or more past due climbed to 2.9 percent. Existing home sales increased 2.4 percent in one month. The S&P/Case-Shiller home-price index decreased 18.1 percent from 2008 to 2009.

Tags: bank, bruce norris, distressed, escrow, foreclosure, loan, MBA, mortgage, real estate, RealtyTrac, short sale
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The Norris Group Real Estate News Roundup 6/29/10

Tuesday, June 29th, 2010

Today’s News Synopsis:

Standard & Poor claims U.S. home prices rose 0.8 percent in April. According to the MBA, independent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009. Congress is still debating over legislation that would eliminate the HVCC in 90 days if passed. The House voted 409-5 to extend the closing deadline for the tax credit to Sept. 30.

In The News:

Los Angeles Times – “Home prices rise in 20 major cities as buyers rush to obtain tax credit” (6-29-10)

“Prices rose 3.8% in April compared with April 2009 and were up 0.8% from March, when the data aren’t adjusted for seasonal fluctuations, according to the Standard & Poor’s/Case-Shiller index of 20 metropolitan areas. California cities continued to appreciate, according to the nonseasonally adjusted index, with Los Angeles and San Diego up 0.7% in April and San Francisco up 2.2%.”

Mortgage Bankers Association – “Production Profits Rebounded in 2009, According to MBA Study of Independent Mortgage Bankers and Subsidiaries” (6-29-10)

“Independent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009, compared to $305 per loan in 2008, according to the Mortgage Bankers Association (MBA)’s Annual 2009 Mortgage Bankers Production Survey released today.”

Housing Wire – “Senator Yanks Financial Reform Support Due to Last Minute Bank Tax Change” (6-29-10)

“Senator Brown sent a letter to sponsors Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA) citing the addition of a $19bn bank tax included in the House, but not the Senate versions, as the reason for pulling support. The bill reconciled late last week.”

Housing Wire – “Amendment to Eliminate HVCC Still Alive in Financial Reform Bill” (6-29-10)

“An amendment to the Wall Street Reform Bill that would eliminate the Home Valuation Code of Conduct (HVCC) survived congressional debates last week, according to one representative’s office. A congressional conference last week took place to reconcile both versions of the House and Senate financial reform bills. As it stands now, the HVCC would be eliminated 90 days after the bill is signed.”

Bloomberg - “Volcker Rule May Give Goldman, Citigroup Until 2022 to Comply” (6-29-10)

“Goldman Sachs Group Inc. and Citigroup Inc. are among U.S. banks that may have as long as a dozen years to cut stakes in in-house hedge funds and private- equity units under a regulatory revamp agreed to last week. Rules curbing banks’ investments in their own funds would take effect 15 months to two years after a law is passed, according to the bill. Banks would have two years to comply, with the potential for three one-year extensions after that.”

Bloomberg - “U.S. House Extends Closing Deadline for Homebuyer Tax Credit” (6-29-10)

“The U.S. House of Representatives voted to give homebuyers who qualified for a federal tax credit more time to settle on their pending purchases. The House voted 409-5 to extend the deadline for closing home purchases to Sept. 30. The program initially required borrowers who signed contracts before April 30 to complete paperwork by July 1 to get a tax credit of as much as $8,000.”

Orange County Register – “O.C. brokers raking in more cash” (6-29-10)

“Dollars earned by brokers from Orange County home sales jumped 27.3% in May over broker revenues generated the same month a year ago. It was the first May in five years in which broker revenues increased from year-earlier levels, according to new data from the Southern California Multiple Listing Service.”

Orange County Register – “1 in 4 transactions a short sale” (6-29-10)

“Of the 2,778 homes sold through the MLS, 672 or 24.2% of them were so-called ’short sales.’ By comparison, homes seized by lenders through foreclosure accounted for 13% of all May sales, or one out of every eight. Altogether, ‘distressed sales’ accounted for almost 40% of all homes sold through the MLS in May.”

Looking Back:

One year ago, the House of Representatives passed legislation that required new homes to be built 30 percent more energy efficient than mandated in the 2006 International Energy Conservation Code. The federal regulator for Fannie Mae and Freddie Mac claimed that home prices were bottoming.

Tags: banker, Barney Frank, broker, bruce norris, Case-Schiller, Christopher Dodd, Citigroup, foreclosure, Goldman Sachs, HVCC, MBA, MLS, mortgage, Multiple Listing Service, real estate, Standard & Poor
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The Norris Group Real Estate News Roundup 6/28/10

Monday, June 28th, 2010

Today’s News Synopsis:

Statistics from the Federal Reserve show the median borrower who ’strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%. McGraw-Hill Construction reports new construction starts increased 3% in April. According to CoreLogic, more than 11 million borrowers currently owe more on their mortgage than it is worth. Experian statistics show that 19 percent of all defaults in 2009 were strategic.

In The News:

Press Enterprise – “Crash opens market for luxury apartments” (6-26-10)

“While homebuilders are aiming at a more frugal consumer by cutting frills, some apartment developments in San Bernardino and Riverside counties are going upscale with features like granite countertops and hardwood floors and rents comparable to a home mortgage. The Lewis Group of Cos., an Upland-based developer of master-planned communities and apartments, figures that partly because many people have been burned by the housing crash, there is demand from prospective tenants moving out of houses who want and can afford a house-like apartment experience.”

Chicago Tribune – “Moral bankruptcy?” (6-27-10)

“Some have struggled unsuccessfully to keep their homes, and others have just walked away. Phillips decided he wanted revenge and was willing to ruin his credit record for it. When a short sale didn’t work out as planned, the 32-year-old Chicagoan opted for Chapter 7 bankruptcy liquidation, a move that will leave Phillips with little except for the scant possessions in his one-bedroom condo. It also will leave his lender, Chase, with little except for, eventually, a condo that has lost value. Meanwhile, Phillips continues to live there, mortgage-free.”

Los Angeles Times – “Undone by their dreams” (6-26-10)

“In the last four years, according to the San Bernardino County assessor’s office, 373 of the 941 single-family homes in Mission Crest — nearly 40% — have been foreclosed on. Thirty-five have gone through foreclosure more than once. Properties that once sold for nearly $400,000 are worth less than $200,000.”

Mercury News – “Santa Clara County assessor adds Web tools to help homeowners” (6-28-10)

“More than 100,000 residents will be given access to a special website — tracking home sales by neighborhood — where they can see precisely why the assessor’s office decided to assign a particular home its worth.”

Wall Street Journal – “How Far Underwater Do Borrowers Sink Before Walking Away?” (6-28-10)

“At what point do borrowers who owe more than their homes are worth decide to stop paying the mortgage? A new study from economists at the Federal Reserve Board aims to answer that question. The research found that the median borrower who ’strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%.”

Housing Wire – “Monday Morning Cup of Coffee” (6-28-10)

“The House Financial Services Committee issued a statement Sunday urging ‘bold action’ on the Dodd-Frank bill, the reconciled financial reform bill agreed to by a Congressional committee last week and named after Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA). The final bill now travels to separate House and Senate votes and then, upon passage by Congress, to a Presidential signature into law.”

Housing Wire – “Surge in Nonresidential Building Boosts May Construction Starts” (6-28-10)

“New construction starts increased 3% from April to May, according to a monthly survey by McGraw-Hill Construction. The seasonally adjusted annual rate of total construction starts was $406.3bn in May, up 3% from $392,988bn in April. For the first five months of 2010, the unadjusted value of total construction starts was $162bn, down 2% from $165bn during the same period of 2009.”

Housing Wire – “The Slippery Slope of Short Sales” (6-28-10)

“More than 11 million borrowers currently owe more on their mortgage than it is worth, according to CoreLogic (CLGX: 18.11 +0.28%)—and this group of borrowers would love nothing more than to replace their current underwater mortgage with whatever the accepted ’short sale price’ is deemed to be. I don’t know that such a response on the part of borrowers could be deemed irrational, either. Many will ask themselves why they have a mortgage at a higher amount, especially if the bank is willing to sell the house to another buyer for less money.”

Housing Wire – “G20 Applauds Dodd-Frank Bill in Pushing its own Global Financial Reform” (6-28-10)

“The meeting of G20 nations concluded this weekend in Toronto with communiqués reflecting a strong support for the US financial reform, called the Dodd-Frank bill. Indeed, information released from the summit show a mix of ambitious plans for growth, mixed with further calls to reduce spending, especially among countries with higher debt burdens.”

Housing Wire – “Experian Finds 19% of Mortgage Defaults in Q209 are Strategic” (6-28-10)

“Of all mortgage delinquencies in the second quarter of 2009 (Q209), nearly one in five — or 19% — were considered strategic defaults, according to the latest study of default trends by information services firm Experian.”

Bloomberg - “Commercial Mortgages Fail to Pay as Lending Increases” (6-28-10)

“Between 50 percent and 60 percent of loans on skyscrapers, hotels, shopping malls and apartment complexes failed to refinance within a few months of their maturity date this year, Bank of America Merrill Lynch analysts said in a report. That compares with 15 percent to 20 percent in 2008, according to the analysts led by Roger Lehman in New York. About $11 billion in loans, or one-third of the 2010 total, had hit their expected maturity dates through late May.”

Bloomberg - “Fannie Mae, Freddie Mac Should ‘Unwind’ Portfolios, Pimco Says” (6-28-10)

“Fannie Mae and Freddie Mac, the housing-finance companies supported by U.S. taxpayers, should take advantage of demand for government-backed mortgage debt and sell their holdings, according to Pacific Investment Management Co. ‘Since the government’s going to want to unwind them at some point anyway, why not do it at the best levels ever?’ Scott Simon, the mortgage-bond head at Newport Beach, California-based Pimco, manager of the world’s biggest fixed- income fund, said in a telephone interview.”

Inman - “Top 10 states for pending tax credit closings” (6-28-10)

“NAR estimates as many as 180,000 homebuyers who were under contract by April 30 may miss the June 30 closing deadline. To prod lawmakers into find a way to extend the deadline, NAR released a breakdown of how many home purchases are affected in each state.”

Looking Back:

One year ago, Freddie Mac estimated that sales of new and existing homes might increase to an annual pace of 5.1 million in the 3rd quarter. Real Capital Analytics forecasted that $16 billion of office transactions would be completed by the end of 2009. The number of Orange County property owners disputing their taxes jumped 23% near last year’s deadline.

Tags: apartment, Bank of America, bankruptcy, Barney Frank, borrower, bruce norris, Chase, Christopher Dodd, condo, congress, construction, CoreLogic, debt, default, economist, Experian, fannie mae, Federal Reserve, financial reform, foreclose, foreclosure, freddie mac, granite, House Financial Services, Lewis Group, McGraw-Hill, Merrill Lynch, mortgage, NAR, Pacific Investment Management, PIMCO, real estate, rent, Scott Simon, short sale, strategic, underwater
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