Today’s News Synopsis:
Stats from Freddie Mac show the average rate for 30-year FRMs increased to 4.79 percent. Moody’s Investor Service reports commercial property values are down 42% from the peak in 2007. According to Trulia, many areas in the United States are now becoming cheaper to rent than own in. The US Department of Labor (DOL) received 10,000 fewer initial unemployment claims in the week ending May 29 than the previous week.
In The News:
Time - “The ‘Free Rent’ Approach: When Homeowners Just Stop Paying their Mortgages” (6-1-10)
“The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics”
Los Angeles Times – “A foreclosure fix” (6-2-10)
“Banks foreclosed on almost 200,000 homes in California last year, and this year’s toll is expected to be even higher. State lawmakers have tried to encourage banks to do more loan modifications that help both sides, keeping borrowers in their homes while cutting lenders’ losses. Yet homeowner advocates say a serious problem remains. Overwhelmed and disorganized, lenders continue to foreclose on borrowers who are in the process of negotiating new loan terms. At a time when the market is flooded with repossessed properties, that’s just inexcusable.”
Mortgage Bankers Association – “Mortgage Refinance Applications Increase Slightly, Purchase Applications Decline Further in Latest MBA Weekly Survey” (6-2-10)
“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending May 28, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 0.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.3 percent compared with the previous week.”
NAR - “Pending Home Sales Surge Continuing” (6-2-10)
“The Pending Home Sales Index,* a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.”
Orange County Register – “O.C. buyers grab 56% more new homes” (6-2-10)
“Buyers signed contracts to purchase 523 new homes in Orange County during this year’s winter quarter. That’s the highest number of sales contracts for any quarter since the spring of 2008.”
Orange County Register – “Realtors fight to expand loan protections” (6-2-10)
“At issue is a proposal that would forbid lenders from seeking unpaid portions of a refinanced mortgage after a home goes through foreclosure. Currently lenders can’t do that if the loan was issued at the time the home was purchased. In a law dating to the 1930s, the homeowner’s liability is limited to the amount the lender recovers from the property at a foreclosure sale — even if that’s less than the amount owed.”
Orange County Register – “Really? Problem banks list grows to 775″ (6-2-10)
“BAD DEBT: The FDIC’s confidential list of ‘problem’ banks grew to 775 in the first quarter, with U.S. banks collapsing amid losses on residential and commercial real estate loans. EXTEND AND PRETEND: At least 25% of commercial real estate loans are doomed to foreclosure, experts in Arizona say. Another 50% could go either way.”
Mercury News – “Mortgage rates up from yearly lows, Freddie Mac says” (6-3-10)
“Rates on 30-year fixed mortgages ticked up this week from the lowest level of the year. Freddie Mac said Thursday that the average rate rose to 4.79 percent, up from 4.78 percent last week. A year ago, the rate averaged 5.29 percent.”
Wall Street Journal – “Looking for Lending” (6-3-10)
“Compared to peak prices in October 2007, commercial property values are down 42%, according to Moody’s Investors Service Inc. Price index reports compiled by Moody’s and Real Capital Analytics Inc. show that as of March 2010, the cost of industrial and office space fell 32% in the last two years. Retail space also plummeted 28%.”
Housing Wire – “REIT Activity Picks Up in 2010 After Five Year Doldrum” (6-3-10)
“In 2005, publicly traded US REITs completed 6,351 acquisitions and 2,812 dispositions, compared to 360 acquisitions and 994 dispositions in 2009. The largest decrease in acquisitions was in the retail/other sector, which declined from 1,720 in 2005 to 65 in 2009, a decrease of 96.2%. The healthcare also saw a deep decline. In that sector, there were 103 acquisitions in 2009, compared to 402 in 2005, a drop of 74.4%.”
Housing Wire – “In Some Cities, Trulia Finds It’s Now Cheaper to Rent than Own” (6-3-10)
“The top areas where house prices worked out to be more expensive than renting were New York, Seattle, Portland, and San Francisco. Omaha, Neb., Oklahoma City, Okla., and Kansas City, Mo. also cracked the top-10 list.”
Housing Wire – “Jobless Claims Ease Ahead of May Unemployment Data” (6-3-10)
“The US Department of Labor (DOL) received 10,000 fewer initial unemployment claims in the week ending May 29 than the previous week, on a seasonally adjusted basis. The news of fewer initial claims arrives a day ahead of officially updated unemployment rate figures. Economists anticipate the fragile recovery added 55,000 jobs to private sector employment and 700,000 to total non-farm payrolls in May.”
Housing Wire – “May House Prices Show Highest Increase Since 2006″ (6-3-10)
“House prices climbed 6.8% in May 2010 from last year, the largest yearly increase since July 2006, according to a report from real estate data provider Clear Capital. In June 2009, Clear Capital reported a 19.3% drop in May house prices, a ‘far cry’ from the increase shown in this report a year later, said Alex Villacorta, senior statistician at Clear Capital. The rolling quarter-over-quarter number, which measures houses prices against those three months ago showed a 1.8% decline, an improvement from the 5% drop in April.”
Housing Wire – “Delayed Mortgage Liquidation Hikes Risk of RMBS Write-Downs” (6-3-10)
“The back-loading of defaults draws out liquidation timelines, impacting the expected losses to senior tranches of residential mortgage-backed securities (RMBS), according to Toronto-based credit rating agency DBRS. And in some cases, this raises the occurrence of write-downs by one-third, or 33%. Distressed loans move from 30 to 60 to 90-days delinquent and then follow the foreclosure timeline set forth in the appropriate state before entering REO status. Following this process, loans are liquidated from the RMBS trust.”
Housing Wire – “California Set to Vote on Foreclosure Mediation Bill” (6-3-10)
“Assembly Bill 1639 was introduced by a trio of Democratic members of the assemby — Pedro Nava (Santa Barbra), Ted Lieu (Torrance) and speaker emeritus Karen Bass (Los Angeles). If passed, the bill would establish the Facilitated Mortgage Workout (FMW) program. Through it, lenders are required to meet with borrowers to develop a modification plan before foreclosure. The loan must have originated before Jan. 1, 2009, and the home must be occupied by the borrower as a principal residence. The principal balance on the mortgage cannot exceed $729,750.”
Looking Back:
One year ago, MBA statistics showed that mortgage application volume decreased by 16 percent within one week. J.P. Morgan Chase, Goldman Sachs and American Express owed the government $38.4 billion. The FHA loan limit was raised to nearly $730,000 in Orange County, and was accepting 3.5% down on purchases.
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.