The MBA’s weekly survey shows that mortgage loan application volume increased by 4.9%. The Commerce Department reported new homes sales decreased 12.4% in July. According to Zillow, most Western states experienced a decrease in 20-year mortgage rates last week. California’s 30-year rate decreased to 4.30%.

In The News:

Mortgage Bankers Association - “Mortgage Refinance Applications Continue to Increase as Rates Decrease in Latest MBA Weekly Survey” (8-25-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending August 20, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 4.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 4.5 percent compared with the previous week”

Washington Post – “New home sales hit lowest level” (8-25-10)

“The Commerce Department reported Wednesday that new homes sold in July at an annual rate of 276,000, down 12.4 percent from June and down 32.4 percent compared with the same time last year”

Housing Wire – “Dow Closes Down Nearly 134 Points Following Bad Housing Data” (8-25-10)

“The American stock markets closed lower today following the news of homes sales dropping a staggering 27%. Stocks of big banks that have large mortgage-finance operations such as Citigroup (C: 3.68 -0.81%), Bank of America (BAC: 12.63 -0.08%), Wells Fargo (WFC: 23.4907 -0.63%) and JPMorgan (JPM: 36.179 -0.09%) closed lower despite doing large amounts of trading volume, according to the New York Stock Exchange”

Housing Wire – “Zillow: Rate on 30-Year Mortgage Remains Flat on Average” (8-25-10)

“Most western states saw a decline in rates: California’s current rate of 4.3% is down from 4.33% last week; Colorado’s at 4.17% is down from 4.19%; Washington’s at 4.29% is down from 4.33%; Illinois’ at 4.24% is down from 4.3%, and Florida’s at 4.2% is down from 4.21%.”

Housing Wire – “Deutsche Bank Summarizes Future of GSEs, Government Guarantee” (8-25-10)

“Key elements included re-launching of the MBS guarantee business backed by catastrophe insurance from the US government. This guarantee would implicitly serve as a backstop to the TBA pass-through market. In a panel with investors in the space, both of these aspects were considered key to maintaining adequate liquidity at the GSEs.”

Housing Wire – “House Prices Begin to Climb, Up 0.9% in Q2 in FHFA Index” (8-25-10)

“The agency said its second quarter HPI – calculated using information from mortgages acquired by Fannie Mae and Freddie Mac – rose 0.9% on a seasonally adjusted basis from the prior quarter, yet fell 1.6% from the year ago. Still, prices of other goods and services in the second quarter were 3% higher than the year earlier. This puts the second quarter inflation-adjusted home price about 4.4% higher than last year, according to the FHFA.”

Housing Wire - “Americans Continue to Deleverage with Credit Card Debt Below $5k per Person” (8-25-10)

“The average national credit card borrower debt slid downward for the fifth consecutive quarter by 4.1% to $4,951, marking the first time the average has been below $5,000 since 2002, according to a report released today by TransUnion. This, coupled with the fact the national credit card delinquency rate for borrowers 90-plus days delinquent plummeted to 0.92% in Q210 (down 17.1% from the first quarter and 21.3% from last year) suggests that borrowers are saving more and spending more responsibly.”

Orange County Register – “Thinking of a refi? Tips for borrowers” (8-25-10)

“This summer’s bout of falling mortgage rates has sparked yet another frenzy of homeowners looking to refinance their loans. Now could be a good time to do it, too, with interest rates at their lowest in decades — lower than in 2001, lower than in 2003 and even lower than in 2004, when we last told you rates were at record lows. They’re lower now.”

Orange County Register – “O.C. housing risk 9th highest in U.S.” (8-25-10)

“Orange County home prices have 99.7% chance of price loss in two years, or by the winter of 2012. PMI Group doesn’t say how big of a price drop that would be, so the declines could be small or large. Nationwide, the average risk for price drops was 51.9% — down from 53.8% the previous quarter.”

Looking Back:

One year ago, the CAR reported Home sales increased 12 percent in July in California. Nationally home prices fell 6.1 percent in the second quarter from 2008, claimed the FHFA.

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 event 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.

Sean O’Toole Founder and CEO of ForeclosureRadar (Full Bio)

September 17^th, 2010, The Norris Group returns with its award winning event I Survived Real Estate 2010. The Norris Group has assembled an incredible line up of industry experts to discuss the state of REO from the inside. Topics will include regulatory intervention and aftermath, bulk buying, myths and facts, and opportunities emerging for real estate professionals. 100 percent of the proceeds support the Orange County affiliate of Susan G. Komen for the Cure. This event would not be possible without generous help from the following platinum partners: Foreclosure Radar and Sean O’Toole, the San Diego Creative Real Estate InvestorsAssociation and Bill Tan, Investors Workshops and Shawn Watkins and Angel Bronsgeest, Invest Club for Women and Iris Veneracion and Bobby Alexander, San Jose Real Estate Investors Association and Geraldine Barry, Claudia Buys Houses, Frye Wiles, MVT Productions, and White House Catering.

This week Bruce is joined by Sean O’Toole. Sean is the Founder and CEO of ForeclosureRadar.com. ForeclosureRadar is the only company that tracks every foreclosure in California, Arizona, Nevada, Washington and Oregon. It makes updates daily on all foreclosure auctions. Prior to ForeclosureRadar, Sean spent 15 years building and launching software companies. In 2002, Sean entered the foreclosure business, and bought and sold over 150 properties.

Bruce thinks everyone who is a trustee sale buyer should be a member of ForeclosureRadar. When Sean started Foreclosure Radar, there were only about 40 trustee sale buyers who bought the majority of the deals within the state, but now there are thousands. The invention of the lower bid has created activity. We wish they would drop their opening bids even lower.

5 to 10 billion dollars worth in properties go to the courthouse steps every month. 80 percent of those properties go back to the bank as REOs. The number of REOs have decreased 50 percent from July 2008. However, there are still a huge number of properties being taken back by banks. From a historical perspective, we still have an outrageously high number of REOs.

People tend to have this mentality that nothing bad can happen from here on out, because they don’t think the lenders will unload a bunch of inventory into the market. However, in 2007 and 2008, that is exactly what they did. Up until the end of 2008, regulations required you to file a notice of default after 60 to 90 days of delinquency. In September of 2008, Paulson changed the rules, and since then, they have changed the rules to mark to market. Lenders now have this mentality that discourages them from foreclosing so long as there is some hope of receiving payment at some point in the future.

People are wondering when all the shadow inventory is going to show up and ruin everyone’s day. Shadow inventory has a few different holding tanks. The banks are holding it and not releasing it. In 2008, there was growing evidence that banks had inventory that were not being listed. In 2009, banks started selling more foreclosures than they were taking back. In the mean time, we had delinquencies that were over 90 days delinquent and were not going into foreclosure. Some properties are as much as 180 days delinquent. We have 1 million homeowners in California that are not making payment, but only 200,000 in foreclosure, and only 15,000 to 20,000 being foreclosed on per month.

There is a report claiming that “once a person is behind, the odds of them making that payment current again without a loan modification is 1%”. Sean thinks that may be true historically, but right now, the situation is worse than that. In the past, people went delinquent because of job problems, but this time, they are going late because we had a massive credit bubble that doubled home prices fictitiously. We have now corrected those prices, but we have 4 trillion dollars in excess mortgage debt. People are realizing that they are never going to get that money back, and paying the interest doesn’t help them.

ForeclosureRadar noticed an increase in investor activity in 2009. Subscriptions increased slightly around that time. Right now, people are concerned that the economy and housing might double-dip. Bruce thinks that a double-dip will probably occur.

A lot of ForeclosureRadar’s growth has come from builders and commercial real estate brokers. The court house steps have become much more competitive because of these two groups. They can’t just stop working because their niche isn’t doing well.

From 2002 to 2006, good investors could get a 50 to 75 percent return on capital. In 2007, the market went away because the banks weren’t dropping the bids. In 2008 and 2009, Sean heard plenty of stories about investors getting an 80 percent return on capital. It got really good for a little while, but over the past six months, the market got a lot more competitive. There are plenty of risks with buying at auctions. Bruce believes that someone makes a mistake every day at the courthouse that alters their financial life for a while.

The government has decided that it is better to avoid taking a property back to the lender. ForeclosureRadar is tracking the lenders who are willing to work problems out. Investor short sales concern Sean, especially if the deal is being bought to be flipped. Some people are claiming you can make a lot of money by doing a short sale through a double escrow. Sean thinks people who do that are going to get themselves into trouble. Bruce interviewed the FBI on this subject, and the FBI described the people who do double escrows as perpetrators. There are short sale opportunities out there, but there is a lot of risk involved. It can be difficult to convince lenders that you have added a significant amount of value to a recent short sale.

Lenders understand that auctioned properties are being sold at a discount. On a short sale, lenders believe that a market sale is being made, and they will not like the idea of selling a short sale at $100,000 below market.

Deutsche Bank recently made a report on mortgage servicers and how long it takes to do a short sale. With prime mortgages, GMAC took six months on average, CitiGroup took 7.5 months, Wells Fargo took 8 months, and Countrywide took 13 months. There is a buyer attached to the end of these deals, and no one is going to wait 13 months.

People involved with HAFA brag about their ability to sell within six months, and Bruce thinks that is ridiculous. The problem is that people are not coming to terms with the losses they are going to take. The government also has a few policies that are affecting speed. If Bruce was attached to that business, he would be very frustrated.

Mortgage insurance companies know they will have a better income and have less of a loss with a short sale, but if they have that loss right now, then they’ve got a payout to make. If they do not approve a short sale, and force a property into foreclosure, they may not have to payout for 8 or 9 months.

Sean believes that companies are moving away from principal reductions. Freddie claimed that they are not going to do principal reductions, because they have been tasked with protecting tax payer funds and they cannot just give out principal. If GSEs, who hold a lot of the mortgage debt, start giving out principal reductions, then that comes directly at the cost of the taxpayers. Freddie has a deed-in-lieu lease back program with a lease option. If someone does a deed-in-lieu under this program, they have a two year waiting period before they get to buy a property, and Bruce has the feeling that the property they will buy is that same property they were previously in. That would cause less volatility in the market, because it would discourage buyers from moving around.

Sean recently did some research for American Banker Magazine on jumbo loans. Loans under $417,000 are the fastest to be foreclosed on. Mini jumbos, which range from $417,000 to $729,000, take 30 days longer to foreclose on, and it takes even longer to foreclose on big jumbos. If lenders are struggling to deal with reality anywhere, it is at the high end of the market. Lenders sometimes try to aggressively foreclose with the hope of scaring the borrower into paying, but when they don’t get scared, the borrowers will simply vacate and move, and then the foreclosure gets cancelled. When lenders do not foreclose because they do not want the house, they are usually cancelling foreclosure by the masses. These lenders are often working to get people into the HAFA program, so that they can get a short sale or deed-in-lieu. Sean thinks the HAFA program is just like HAMP last year. It is not meant to conclude a bunch of short sales, it is meant to put people through another six months of delay only to tell them that they do not qualify.

Sean O’Toole’s website is www.foreclosureradar.com

Sean will be on the I Survived Real Estate 2010 panel in September.

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.

Thank you for being a Gold Sponsor for I Survived Real Estate 2010: Delmae Properties, Elite Auctions, Entrust California, Inland Empire Investors Forum, Keystone CPA, Las Brisas Escrow, Leivas Financial Services, Mike Cantu, North San Diego Real Estate Investors Association, Northern California Real Estate Investors Association, Personal Real Estate Investor Magazine, Realty 411 Magazine, San Jose Real Estate Investor Association, Tony Alvarez, and Westin South Coast Plaza.

RealtyTrac reports foreclosure filings increased in 75% of the nation’s metro areas during the first 2 quarters. Statistics from the Department of Labor show unemployment insurance claims fell by 11,000 last week. According to Freddie Mac’s weekly survey, the average rate for a 30-year fixed-rate mortgage decreased to 4.54%. Fiserv predicts that single-family home prices will fall 4.9 percent during the next 12 months.

In The News:

NAHB - “Remodeling Dips but Shows Signs of Stabilization” (7-29-10)

“The remodeling market slid backward during the second quarter, according to the latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI). The RMI (combining current and future market indicators) sunk to 40.7 from 43.8 in the first quarter. Current market conditions slid back to 42.6 from 44.5 in the previous quarter. Future indicators of remodeling business declined to 38.9 from 43.1 in the last quarter.”

CNN - “Foreclosures climb in 75% of metro areas” (7-29-10)

“Foreclosure filings climbed in 75% of the nation’s metro areas during the first half of 2010, according to a report issued Thursday. RealtyTrac, an online marketer of foreclosed homes, said that California, Florida, Arizona and Nevada continue to lead the nation in the rate of foreclosures. Las Vegas was the worst-hit city.”

San Francisco Chronicle – “Feds put up $1 billion more for mortgage relief” (7-29-10)

“Congress has just come up with an extra $1 billion to help people who can’t pay their mortgage because of unemployment or a medical problem. Under this new Emergency Mortgage Relief program, eligible homeowners who are at least three months delinquent can get up to $50,000 apiece in federal loans to pay their mortgages.”

Housing Wire – “Weekly Jobless Claims Beat Consensus, Slip to 457,000″ (7-29-10)

“Initial unemployment insurance claims fell 11,000 in the week ending July 24, beating the market consensus of a 4,000-claim drop. Jobless claims slipped to a seasonally adjusted 457,000 from the previous week’s upwardly revised figure of 468,000, according to new data today from the US Department of Labor. The four-week moving average slipped 4,500 to 452,500 this week.”

Housing Wire – “Weekly Mortgage Rates Hit New Lows” (7-29-10)

“The Freddie Mac survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.54% with an average 0.7 origination point for the week ending July 29, down from last week’s average of 4.56% and a year ago, when the average was 5.25%. It’s a new record low for the survey, which began in 1971.”

Housing Wire – “Fiserv Sees More Pain Ahead in House Prices, Projects 4.9% Decline” (7-29-10)

“Fiserv (FISV: 49.22 +0.70%), financial services technology provider, found that national average house prices rose 2% in Q110 from a year before — the first yearly gain since 2006. Fiserv projects that single-family house prices are likely to fall another 4.9% over the next 12 months as tight economic circumstances continue. Continued high unemployment and a large number of distressed properties remaining in markets like Florida, Arizona and Nevada are weighing on the housing market.”

Housing Wire – “SEC Charges Citigroup $75m for Misrepresentation of Subprime Assets” (7-29-10)

“The Securities Exchange Commission (SEC) today charged Citigroup Inc. with misleading investors about the company’s exposure to subprime mortgage assets targeting two Citi executives for their roles in the incident that will cost the company $75m. Citigroup will not dispute the fine, the SEC said, and will pay the full amount.”

Looking Back:

One year ago, the MBA reported that mortgage application volume decreased by 6.3 percent within a week. A bill was being supported by 276 members of the House, which would have audited central banks. About $2.2 trillion of U.S. commercial properties bought or refinanced since 2004 became less valuable than their original price, said Real Capital Analytics in 2009.

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.

The S&P home price index suggests that prices increased by 1.3 percent from April to May. 91 of the top 100 homebuying zip codes are in California. The vacancy rate for rental housing has remained flat at 10.6 percent for the past year. MPF Research reports the number of occupied apartments grew by 215,000 in the 64 largest U.S. markets in the first half of 2010.

In The News:

Associated Press – “Home prices increase 1.3 pct. in May from April” (7-27-10)

“The Standard & Poor’s/Case-Shiller 20-city home price index released Tuesday posted a 1.3 percent increase in May from April. Nineteen of 20 cities showed price gains month over month. Minneapolis and Atlanta led the way with 2.8 percent and 2 percent increases, respectively. And San Diego posted its 13th straight monthly gain.”

Inman - “California ‘hot’ among homebuyers” (7-27-10)

“Of the report’s 100 ‘hottest’ ZIP codes nationwide, 91 were in California. This means that, on average, homes in these ZIP codes sold for the most above listing price, while homes in the ‘coldest’ ZIP codes sold for the most under listing price.”

Housing Wire – “Housing Vacancy, Homeownership Rates Remain Level in Q210″ (7-27-10)

“The 2.5% vacancy rate of owner-occupant housing units was only 10 basis points (bps) below the previous quarter and remained level with the year-ago quarter. The rental housing market’s vacancy rate of 10.6% in Q210 was level with the previous quarter and year-ago quarter. Additionally, the homeownership rate slipped to 66.9%, nearly level with 67.1% in the previous quarter”

Housing Wire – “HUD Fines CitiMortgage $700,000 for Failure to Report Delinquencies” (7-27-10)

“The US Department of Housing and Urban Development (HUD) reached a $700,000 settlement with CitiMortgage, Inc. (CMI) after the company failed to report delinquent loans by the specified monthly deadline. The action was reported in a recently released notice of actions being taken against Federal Housing Administration (FHA) lenders that failed to comply with government standards for lending practices.”

Housing Wire – “FHFA Sees 30-Year Mortage Rate Dip to 5% June” (7-27-10)

“The average contract mortgage rate on conventional 30-year fixed-rate mortgages slipped to 5% in June, 12 basis points (bps) down from a month earlier, according to the Federal Housing Finance Agency (FHFA). The rate had held at 5.12% for the past two months. The contract rate on the composite of all mortgage loans (both fixed- and adjustable-rate) fell 9 bps to 4.9%”

Bloomberg - “Apartment Rentals Surge in U.S. on Home Foreclosures, Job Gains” (7-27-10)

“The number of occupied apartments increased by 215,000 in the 64 largest U.S. markets in the first half, according to MPF Research. That’s almost double the units added in all of 2009 and the most since the firm began tracking the data in 1992. The vacancy rate declined to 6.6 percent last month from 8.2 percent in December.”

Bloomberg - “U.S. Cities, Counties Poised to Cut 500,000 Jobs, Report Finds” (7-27-10)

“U.S. local governments may cut almost 500,000 jobs through next year to cope with sliding property taxes, a decline in state and federal aid and added need for social services, according to a report released today. The report, a result of a survey by the National League of Cities, the U.S. Conference of Mayors and the National Association of Counties, showed local governments are moving to cut the equivalent of 8.6 percent of their workforces from 2009 to 2011. That suggests 481,000 employees will lose their jobs, according to the report, which said the tally may yet rise.”

Orange County Register – “Hear why next housing peak ‘2016 or beyond’” (7-27-10)

“Economist Mark Schniepp of the California Forecast tells ocregister.com in a podcast interview that local housing will endure a recovery that’s ‘painstakingly frustrating’ in its modesty with improving but not impressive sales volumes and prices. But it will take a big turnabout in the employment picture before hosuing’s rebound become significant but it will still be ‘until 2016-2017 or beyond’ before the old peaks are surpassed.”

Housing Wire – “Big 4 Banks Add $9.5bn in Nonperforming, Foreclosed Properties in One Year” (7-27-10)

“Each of the ‘big-four’ banks, Bank of America (BAC: 14.19 +0.28%), Wells Fargo (WFC: 28.39 +1.72%), JPMorgan Chase (JPM: 40.69 +0.89%) and Citigroup (C: 4.16 +0.24%) released quarterly earnings reports for Q210 in July, reporting a total increase of $9.5bn in nonperforming or foreclosed properties from the same quarter last year.”

Looking Back:

One year ago, pools increased a homes value by up to 11 percent in Southern California. Fiserv predicted that California would be the hottest home market in 2010. New home purchases climbed 11 percent in June 2009.

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.

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.

The NAHB reports that builder confidence increased from Q1 2009, but is still low. The MBA’s weekly survey shows that mortgage application volume increased by 3.4 percent. According to Freddie Mac, of all borrowers who had 30-year FRMs, 75% refinanced into a new 30-year FRM. Barclays estimates that foreclosure shadow inventory should peak during the summer of 2010.

In The News:

NAHB - “Active Adult Home Builder Activity, Confidence Remain Low” (5-12-10)

“The 55+ single-family HMI measures builder sentiments based on current sales, prospective buyer traffic and anticipated six-month sales for the 55+ single-family market.  A number greater than 50 indicates that more builders view conditions as good than poor. Although the index recorded a slight rise in the first quarter of 2010 – moving up two points to 19 from its 2009 Q1 level of 17 – the level of confidence remains low.”

Mortgage Bankers Association – “Refinance Applications Surge, Purchase Applications Drop in Latest MBA Weekly Survey” (5-12-10)

“The Refinance Index increased 14.8 percent from the previous week and the seasonally adjusted Purchase Index decreased 9.5 percent from one week earlier.  The unadjusted Purchase Index decreased 8.9 percent compared with the previous week and was 0.6 percent lower than the same week one year ago. The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 7, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 3.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 3.4 percent compared with the previous week.”

Inman - “More U.S. residents on the move” (5-12-10)

“The percentage of U.S. residents who moved between 2008 and 2009 jumped to 12.5 percent (37.1 million people), according to a report by the U.S. Census Bureau. That increase comes after a record-low move rate between 2007 and 2008: 11.9 percent, or 35.2 million people. The bureau’s data comes from the 2009 Current Population Survey conducted between February and April every year at about 100,000 U.S. addresses. It includes residents who are at least 1 year old.”

Housing Wire – “Freddie Mortgage Refinancing Dominated by Fixed-Rate Products” (5-12-10)

“Of borrowers who had 30-year FRMs, 75% refinanced into a new 30-year FRM, while 15% opted for a 15-year FRM and the remaining 10% chose a 20-year FRM. Freddie said the combined 25% of 30-year borrowers that refinanced into a shorter-term loan is the most since Q304, when 30% of 30-year borrowers refinanced into a balloon mortgage or shorter-term FRM.”

Housing Wire – “Shadow Inventory To Peak in Summer of 2010: Barclays” (5-12-10)

“The shadow inventory of foreclosures should peak in the summer of 2010 before falling gradually in the later months, according to a new report from Barclays Capital. Barclays defines the shadow inventory of foreclosures as loans in 90-plus day delinquency or already in the foreclosure process. According to the report, there are currently 2.4m loans in 90-plus day delinquency and another 2.1m in foreclosure, totaling 4.5m in the shadow inventory.”

Housing Wire – “End in Sight for General Growth Bankruptcy” (5-12-10)

“The end is in sight, as a plan is in place for General Growth Properties (GGP: 14.96 +0.20%) to emerge from bankruptcy as early as this summer. The judge overseeing the case approved bidding procedures and the issuance of warrants to a group of investors led by Brookfield Asset Management (BAM: 25.49 +1.03%).”

Bloomberg - “‘Perfect Quarter’ at Four U.S. Banks Shows Fed-Fueled Revival” (5-12-10)

“Bank of America Corp., JPMorgan Chase & Co. and Goldman Sachs Group Inc., the first, second and fifth-biggest U.S. banks by assets, all said in regulatory filings that they had zero days of trading losses in the first quarter. Citigroup Inc., the third-largest, doesn’t break out its daily trading revenue by quarter. It recorded a profit on each trading day, two people with knowledge of the results said.”

Bloomberg - “Morgan Stanley’s Gorman Denies Bank Misled CDO Buyers” (5-12-10)

“Morgan Stanley Chief Executive Officer James Gorman denied allegations the U.S. bank misled investors about mortgage derivatives it sold them. The firm is being probed by U.S. prosecutors over whether the bank misled clients when it sold them collateralized debt obligations as its own traders bet that the value of the securities would drop, the Wall Street Journal reported today. The New York-based firm hasn’t been contacted by the Justice Department, Gorman told reporters in Tokyo today.”

According to First American CoreLogic, distressed home sales in Orange County are selling 34 percent under the typical market place. Altos Research reports a 0.5 percent in the national median home price. A modification becomes permanent through HAMP after the borrower makes all three monthly payments during the trial period. Fiserv estimates that home prices will not return to the past peak levels until 2025.

In The News:

My Desert – “Valley’s Housing Market Warming” (4-12-10)

“The median sales price of new and single-family homes rose 11 percent to about $200,000, about $20,000 higher than in February 2009. Home sales also rose 9.4 percent compared to the same period last year. Real estate sales have been outpacing sales from the previous year every month since October. Sales volume rose 31 percent in November, 29 percent in December, and 22.2 percent in January.”

Orange County Register – “Distressed home discounts at 6-month high” (4-12-10)

“Orange County homebuyers got a 34% price discount when they chose a distressed property vs. overall market prices in January, according to First American CoreLogic. That’s the biggest discount in six months.”

Wall Street Journal – “Second Mortgages Vex Borrowers” (4-12-10)

“Banks are coming under increasing political pressure to write off or at least write down second-lien and other junior mortgages as a way to help borrowers keep their homes or extract themselves from heavy debt. As the Wells Fargo suit shows, however, banks often are reluctant to give up on loans when they see a chance of recovering all or part of their money. This issue will be the focus of a hearing Tuesday by the House Financial Services Committee in Washington. Panel members are due to quiz executives from Wells Fargo, Bank of America Corp., Citigroup Inc. and J.P. Morgan Chase & Co. about their junior-lien mortgage policies.”

Bloomberg - “Bank Profits Dimmed by Prospect of Home-Equity Losses” (4-12-10)

“Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. may have to set aside an additional $30 billion to cover possible losses on home-equity loans, an amount almost equal to analysts’ estimates of profit at the three banks this year. The cost of these reserves was calculated by CreditSights Inc., a New York-based research firm whose prediction almost four years ago proved prescient after banks reported unprecedented mortgage-related writedowns. Recognizing the home- equity loan losses is unfinished business from the housing bubble, CreditSights said in a March 29 report.”

Housing Wire – “So, Where Will Housing Double Dip?” (4-12-10)

“Put in more plain terms, a state with a 1% foreclosure rate and an 11% delinquency rate should be expected to feel the impact of distressed properties moving through the pipeline far more than a state with a 5% foreclosure rate and a 5% delinquency rate, for example. The reasoning is simple: distressed property sales (short sales or REOs) are a drag on retail home prices. In markets that have seen comparatively less foreclosures relative to the volume of delinquencies stuck in the pipeline, the impact of those delinquencies will be felt proportionately more strongly as they are finally dealt with.”

Housing Wire – “Altos Sees House Price Decline Decelerate in March” (4-12-10)

“The median house listing price declined 0.5% in the Altos Research 10-city composite in March, improved from February’s 1.3% decline in an indication the pace of decline may be decelerating. March, the eighth consecutive month of decline, brings the Q110 price decline to 1.8%. But weekly price changes have shown a modest upward trend in the past seven weeks, which means a uptick in house prices could arrive in the coming months, Altos said.”

Housing Wire – “BofA Completes 33,000 Permanent HAMP Mods” (4-12-10)

“Bank of America (BAC: 18.66 +0.38%) completed almost 32,900 permanent mortgage modifications through the Home Affordable Modification Program (HAMP) through March, up from 20,666 in February. The Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. When Treasury first reported permanent modifications in November 2009, BofA reported 98 permanent modifications. A modification becomes permanent through HAMP after the borrower makes all three monthly payments during the trial period.”

Housing Wire – “Despite HAMP, Mortgage Delinquency Grows 21% over 2009: LPS” (4-12-10)

“The number of mortgages delinquent at the end of February 2010 is 21.3% higher than the same time last year despite government-led modification efforts, according to the latest monthly report from Lender Processing Services (LPS: 37.61 +0.94%).”

Housing Wire – “Peak House Prices Will Return to Sand States after 2025: Fiserv” (4-12-10)

“Housing markets that experienced the greatest inflation in house prices — including certain metro areas in sand states California, Florida, Arizona and Nevada — will not see a return of peak-level home prices before 2025, according to financial services technology provider Fiserv.”

Wall Street Journal – “AIG, Goldman Unwind Soured Trades” (4-12-10)

” The derivatives unit of American International Group Inc. has unwound most of its soured mortgage trades with Goldman Sachs Group Inc. still left after the insurer was bailed out by the U.S. government in 2008, according to people familiar with the matter. The move by AIG Financial Products to terminate credit-default swaps insuring about $3 billion of mortgage-asset pools arranged by Goldman caused AIG to realize a $1.5 billion to $2 billion loss last year, the people said.”

Bloomberg - “Pimco Says Investors to Hold Down U.S. Mortgage Rates” (4-12-10)

“Investor demand for mortgage-backed securities will keep U.S. home-loan rates down after the Federal Reserve ended its purchases of the debt, said Pacific Investment Management Co., manager of the world’s biggest bond fund. The Fed’s unprecedented program to buy $1.25 trillion of the securities that guide home-loan costs stopped U.S. housing prices from falling, Scott Simon, who is in charge of investing in the notes at Pimco, wrote on the company’s Web site.”

New rules for the HAMP program may require servicers to screen borrowers for modification after only 31 days of delinquency. ForeclosureListings.com shows that California experienced an 11.9% increase in foreclosures. Freddie Mac reports the 30-year FRM rate is currently at 4.99 percent. According to the Comptroller of the Currency,  the re-default rate for modified loans is over 50 percent.

In The News:

Los Angeles Times – “Bank of America to reduce mortgage principal for some borrowers” (3-25-10)

“Amid increasing government pressure to stem foreclosures, Bank of America Corp. said Wednesday that it would offer to erase as much as $3 billion in principal owed by thousands of severely delinquent borrowers who owe more than their homes are worth.”

Mercury News – “Citigroup agrees to modify some second mortgages” (3-25-10)

“Citigroup on Thursday became the latest lender to commit to the government’s program to modify second mortgages as a recovery in the housing market appears to be in jeopardy. With Citi on board, now four big owners of home mortgages in the U.S. have joined the program — part of the Obama administration’s $75 billion loan modification plan aimed at reducing monthly payments to help customers stay in their homes. Bank of America, Wells Fargo and JPMorgan Chase already participate.”

Inman - “Home values rise in Boston, San Diego” (3-25-10)

“Radar Logic’s monthly RPX report, based on 28 days of price-per-square-foot data, found that the price per square foot rose most in Boston (up 15.5 percent, to $187.84 per square foot) year-over-year in January, and dropped most in Las Vegas (down 21.4 percent, to $76.18 per square foot) during that period.”

Housing Wire - “Treasury to Require HAMP Servicers to Step Up Outreach Efforts” (3-25-10)

“Allison announced that servicers must pursue early intervention, pre-screening every borrower that misses two or more payments to determine eligibility for HAMP and soliciting those qualifying borrowers for HAMP participation. This change encourages servicers to reach out to the borrower as early as 31 days of delinquency when the chance for homeownership retention is best, according to a supplemental directive on the changes provided to HousingWire.”

Housing Wire – “ForeclosureListings: Texas Leads Nation in Foreclosure Gains” (3-25-10)

“The 35% increase of Texas foreclosures in February was the highest monthly gain of any state in the country, according to data from ForeclosureListings.com, an online foreclosure marketplace. Michigan had the second highest increase at 17.5%, followed by California at 11.9% and Florida at 4.7%.”

Housing Wire – “Mortgage Rates Increase as Fed MBS Purchase Program Nears End” (3-25-10)

“Freddie Mac (FRE: 1.29 +0.78%) said the average rate for a 30-year fixed-rate mortgage (FRM) was 4.99% with an average 0.6 origination point for the week ending March 25, up from last week’s average of 4.96%. A year ago, the rate average was 4.85%. The Bankrate.com survey of large banks and thrifts put the average rate for a 30-year FRM at 5.11% with an average 0.41 origination point, up from last week’s average of 5.07%, but down from last year’s average of 5.19%.”

Bloomberg - “Half of U.S. Home Loan Modifications Default Again” (3-25-10)

“More than half of U.S. borrowers who received loan modifications on delinquent mortgages defaulted again after nine months, according to a federal report. The re-default rate of loans modified in the first quarter of 2009 was 51.5 percent by the end of the year, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint report today. The figure, which measures payments at least 30 days late, climbed to 57.9 percent for changes made in the prior 12 months.”

Bloomberg - “Prepare to Pay 15% Less for New U.S. Homes: Chart of the Day” (3-25-10)

“New-home prices may have to tumble 15 percent in the U.S. before sales start to rebound, according to Michael Panzner, an author and financial blogger. ”

Looking Back:

One year ago, The MBA reported a 32 percent increase in mortgage applications from the previous season. One in five homeowners owed more on their mortgage than their house was worth. The Federal Reserve began purchasing long-term treasuries. New home sales in the U.S. increased by 4.7 percent within a month.

The CBIA reports that new home sales decreased by 12 percent from January of 2009. Mortgage loan application decreased by 1.9 percent from last week. HOPE NOW made over 99,000 modifications in January, and HAMP made over 50,000.

In The News:

CBIA - “California New-Home Market Begins 2010 Still in the Red, CBIA Announces” (3-17-10)

“The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more were 12 percent below January 2009. This was a slight improvement from the 15 percent year-over-year decline in December, but was still a lackluster pace. During January, 1,886 new homes and condominiums were sold in the subdivisions tracked by Costa Mesa-based HWMI, compared to 2,137 in January 2009. Sales of single-family homes were down by 17 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – rose by 8 percent and sales of condominiums were 4 percent lower than a year ago.”

Mortgage Bankers Association – “Mortgage Applications Decrease in Latest MBA Weekly Survey” (3-17-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending March 12, 2010.  The Market Composite Index, a measure of mortgage loan application volume, decreased 1.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 1.7 percent compared with the previous week.”

Housing Wire – “Citi Mortgage Workouts Outnumber Foreclosures 15 to 1 in Q409″ (3-17-10)

“CitiMortgage, the mortgage servicing branch of Citigroup (C: 4.09 +0.99%), worked with nearly 128,000 borrowers in Q409 to avoid foreclosure on almost $19bn in mortgage loans, according to the company. Loan modifications in the distressed asset portfolios outpaced both foreclosures and delinquencies. Modifications increased 17% in Q409 from the previous quarter. For the entire year of 2009, Citi loan modifications increased 47% from 2008.”

Housing Wire – “HOPE NOW Modifies Mortgages Twice as Fast as HAMP” (3-17-10)

“HOPE NOW, an alliance between mortgage service professionals and non-profit counselors, reported 99,499 modifications in January, compared to 50,364 new permanent modifications under the Home Affordable Modification Program (HAMP). January HOPE NOW modification numbers dropped only slightly from 104,423 non-HAMP modifications in December, compared to roughly 35,000 permanent modifications under HAMP in that same month.”

Housing Wire – “Industry Wants Risk Retention Exemption in Dodd Bill” (3-17-10)

“Senator Christopher Dodd (D-CT), chairman of the Senate Banking Committee, unveiled details of a new bill to Congress yesterday that aims to overhaul the financial regulatory system and establish the Consumer Financial Protection Agency (CFPA). Under the Restoring American Financial Stability Act of 2010, financial firms would be required to hold a portion of the credit risk inherent in certain loan products on their books. This ‘risk retention’ is designed to make banks hold an interest in the financial products they create.”

Inman - “Fed to end MBS purchases” (3-17-10)

“Mortgage rates are expected to rise gradually as the Federal Reserve left a key short-term interest rate untouched Tuesday, but said it would wrap up $1.25 trillion in purchases of mortgage-backed securities this month. In a statement, the Federal Open Market Committee said its target for the federal funds overnight rate will remain in the range of zero to 0.25 percent, as inflation is likely to remain ’subdued for some time.’”

Looking Back:

One year ago, over 15,000 homes and apartments were sold in Southern California within a month. The NAHB reported that housing starts increased by 22 percent in February of 2009. Builder confidence was at a record low for over two months.

MDA DataQuick reports Southern California home sales increased by 0.8 percent since February. According to the Commerce Department, home and apartment construction fell 5.9 percent in February. The Federal Reserve chose to keep interest rates at a record low. The Korpacz Real Estate Investor Survey estimates that the worst of the commercial real estate decline is over.

In The News:

DQNews - “Southern California median price and sales volume up” (3-16-10)

“A total of 15,359 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was virtually unchanged from 15,361 in January, and up 0.8 percent from 15,231 in February 2009, according to MDA DataQuick of San Diego.”

Associated Press – “Housing construction drops 5.9 pct in February” (3-16-10)

“The Commerce Department said Tuesday that construction of new homes and apartments fell 5.9 percent in February to a seasonally adjusted annual rate of 575,000 units, slightly higher than the 570,000 that economists were expecting. January activity was revised up to a pace of 622,000 units, the strongest showing in 14 months.”

San Francisco Chronicle – “Fed holds rates at record lows to foster recovery” (3-16-10)

“The Fed held its target range for its bank lending rate at zero to 0.25 percent, where it’s been since December 2008. In response, commercial banks’ prime lending rate, used to peg rates on certain credit cards and consumer loans, has remained about 3.25 percent — its lowest in decades.”

Housing Wire – “Citi Mortgage Workouts Outnumber Foreclosures 15 to 1 in Q409″ (3-16-10)

“CitiMortgage, the mortgage servicing branch of Citigroup (C: 4.05 +4.11%), worked with nearly 128,000 borrowers in Q409 to avoid foreclosure on almost $19bn in mortgage loans, according to the company. Loan modifications in the distressed asset portfolios outpaced both foreclosures and delinquencies. Modifications increased 17% in Q409 from the previous quarter. For the entire year of 2009, Citi loan modifications increased 47% from 2008.”

Housing Wire – “PWC Director: the Worst May be Over for Commercial Real Estate” (3-16-10)

“Commercial real estate investors expect capitalization rates to stabilize and vacancy rates to level in 2010, according to the quarterly PricewaterhouseCoopers (PWC) Korpacz Real Estate Investor Survey. The news comes as large amounts of capital looks ready to invest in the market, according to a director at the business advisory firm.”

Housing Wire – “Defaults Soar as Foreclosures Slide in Sunny California: ForeclosureRadar” (3-16-10)

“Notice of defaults, the start of the foreclosure process, in California increased 19.7% in February, while the amount of foreclosed homes for sale remained near record levels, according to ForeclosureRadar. At the same time, the number of foreclosures slipped nearly 12%.”

Housing Wire – “Equator Oversees 125,000 Automated Short Sales in Four Months” (3-16-10)

“In a report that may be considered numerical ammunition to the argument that short sales are heating up faster than modifications, Equator announced that it ushered along more than 125,000 short sale transactions, from November to February, since launching an automated short sale platform. Comparatively, the 113 servicers participating in Home Affordable Modification Program (HAMP) conducted 170,000 permanent modifications since its launch in March 2009.”

Looking Back:

One year ago, mortgage fraud reports reached a record high. The county assessor’s office predicted that property taxes would increase for 70 percent of homes in California. The Obama administration made plans to tighten finance rules. The Joint Economic Committee of Congress reported that the total economic cost of foreclosure was approximately $151,000.