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New home sales edge up 1.3% in October
by KERRI PANCHUK
New single-family home sales rose 1.3% in October when compared to the previous month, a government report said Monday.
In October, new home sales hit a seasonally adjusted annual rate of 307,000, up from 303,000 in September, according to a study from the U.S. Census Bureau and the Department of Housing and Urban Development.
Compared to October 2010, home sales are up 8.9% when considering 282,000 homes were sold during that month last year.
While sales edge up, the median sales price in October hit $212,300, and the average price was $242,300. The median sales price of new homes in September was $204,400, while the average price hit $243,900.
After studying the report, analysts with Econoday said, “Today’s report joins a growing list of housing indicators that are pointing to limited recovery for the sector, recovery supported by very low mortgage rates. Yet housing is still held down by foreclosures and by tight credit conditions that are limiting the number of home buyers.”
Capital Economics released a statement on the report, saying, “The 1.3% rise in new home sales in October was not especially encouraging given that it came at the expense of a 3.3% downward revision to the previous month’s numbers. More generally, new home sales are not going to return to normal levels when new builds are having to compete with cheap foreclosed properties
As Election Year Nears, Politics and Foreclosures Become More Intertwined Read more: As Election Year Nears, Politics and Foreclosures Become More Intertwined
Politics seems to become involved in just about anything these days – especially when you find yourself staring down 12 months of non-stop, round-the-clock, ultra-partisan political warfare known as campaigning. Somewhere in the midst of this election year, there will be the very real danger that serious issues, like the foreclosure crisis, will either be used as pawns in the bigger game of high-stakes politics or will be ignored altogether.
If recent political developments are any indication, the latter is more likely to occur.
The most recent debates for the Republican nomination for president were held over the past two weeks and featured hours worth of back and forth from the large field of would-be nominees who threw mud at each other over a litany of issues – but rarely mentioned anything about foreclosures. This is not unusual; the only candidate who has really put forth a solid plan for helping people stop foreclosures and deal with the massive surplus of foreclosure listings that are on the market now is Mitt Romney, and his plan was far short of an actual strategy.
Read more: As Election Year Nears, Politics and Foreclosures Become More Intertwined | Foreclosure News http://www.eforeclosuremagazine.com/foreclosure/as-election-year-nears-politics-and-foreclosures-become-more-intertwined#ixzz1f5ie8dyV
Real Estate: Why Home Prices Won’t Bottom Out
Watching the U.S. home market struggle to rebound is like listening to children in the back of a car. No, we’re not there yet.
The National Association of Realtors reported that ten real estate markets are “leading the nation toward a general recovery and stability of the housing sector,” but myriad problems are going to weigh down the housing market for months to come.
The lingering malaise in the economy has triggered a new wave of defaults and foreclosures. After five straight quarterly drops, foreclosures nationwide shot up 14 percent from the second to third quarter this year, according to data released by Realtytrac, the foreclosure information service, in October.
While RealtyTrac doesn’t foresee that the latest foreclosure wave will equal the severity of the 2007-2010 pattern — in which three million borrowers lost their homes — it’s going to slam on the brakes where areas are getting hit the hardest.
In theory, it should be a good time to buy a home. In the worst-hit areas, properties have lost more than half their value.
Yet as the average 30-year mortgage rate has slipped below 4 percent, the combination of employment insecurity and unusually tight standards for lending are discouraging buyers en masse. Lenders are asking for extensive income verification and tax returns. One lender I contacted for refinancing even wanted me to get an accountant to certify that I wasn’t lying to the IRS.
Here are some of the biggest roadblocks:
–Even in bruised cities where price appreciation is evident, unemployment is still too high. Six out of 10 of the “top turnaround towns” listed by Realtor.com for the third quarter had jobless rates above 10 percent. People can’t buy homes if they’re not working or soon to lose their jobs. Those cities, which include four of the largest cities in Florida, still have a long way to go to recover from the housing bust.
–Although at a record low, the home mortgage rate may still be high relative to home prices. This may sound counterintuitive, but research from the Leuthold Group in their November newsletter shows that a “real” mortgage rate — which factors in the falling market value of the home prices — is 8 percent. Leuthold says that real cost of buying must include the 4 percent interest rate and the 3.9 percent average home prices decline over the past 12 months. That cost is still scaring away buyers.
–The combination of unemployment, high housing inventory and foreclosures is hurting places where there wasn’t an excessive price run-up. Realtor.com found that the largest year-over year median listing price decreases through October were in cities like Chicago, Detroit and Atlanta. This three-punch combination will continue to ravage markets where there’s a sluggish economy
Possible solutions to the housing blockage range from the radical to the necessary. A group called Remortgage America is calling for the government to loan Americans mortgages at 1 percent to finance a new or existing residence.
Others would like to see Fannie Mae and Freddie Mac take the foreclosed homes they own and either auction them off or offer them in a huge fire sale.
The seized mortgage agencies account for up to one-third of foreclosed homes — about 250,000. American taxpayers are pouring tens of billions into propping up these two wards of the state, which were taken over by the U.S. Treasury in late 2008. The Obama Administration has yet to announce what it wants to do with the companies. Will they be restructured, liquidated or privatized?
A third option, which may have the least impact on a battered market, is to offer foreclosed homes in rent-to-own deals. Prospective homeowners get a place to live under reasonable leases and can build equity toward a purchase.
It’s estimated that some 3.4 million foreclosed homes will be on the books of banks and mortgage companies by the end of this year. As regulators, banks, mortgage companies and state attorneys general move sheepishly to unblock mortgage modifications, refinancings and resales, only one certainty prevails: The open market will not be able to properly price every property until all government restrictions are lifted on their sales and re-financing.
Home Prices Headed for Triple Dip? Maybe – Which Means Triple Opportunity
Fiserv, a financial analytics company, caused a stir this week when they announced that they were predicting a “triple dip” in home values for 2012. In other words, they expect another dramatic fall in home values across the country due to increased foreclosures to the tune of 3.6% by the middle of summer 2012.
That would create the third dip since 2006, after the first bottom reached in 2009. If you remember, a swarm of residential foreclosures sent prices plunging 31% below their 2006-level peak. The second dip occurred in the winter of 2010. At its lowest point, it represented a price fall of 33% from peak. If this third dip occurs as predicted, it would represent at least 35% lower prices from 2006.
That’s a pretty big number – and those interested in foreclosure investing should take note.
To put that into perspective, take a home that cost $200,000 in 2006. That represents a fairly decent “average” price that would buy you a nice home in most markets. Right now, that same home would cost $138,000. By next June, the same home would cost just $130,000.
Why the triple dip?
Foreclosures are the main drivers behind this move. The foreclosure process is up and running again in most markets, and even though banks haven’t completely opened the throttle yet, they will soon – and that means markets will be saturated with foreclosed homes for sale in just about every region.
Foreclosure auctions will be packed with homes and investors trying to find the perfect deal, which will be far easier to find than it has been. Additionally, financing for these homes will likely be easier than it will be for traditional homes simply because the amount being financed likely will be significantly lower than the already-depressed home values for unsold non-foreclosures.
Of course, not every market in the country will result in a triple dip. In some areas, believe it or not, prices are staying the same or even rising. High-end homes are still strong, and a few choice metro areas are set up for nice rebounds. Fiserv is predicting that roughly 100 out of 385 metro markets monitored will post price increases of at least 5% from the midpoint of 2012 through 2013, and a third of those markets will break the 10% barrier.
Naturally, though, if you want to make the most of the situation and fully leverage your capital, it helps to look to areas that will be hit even worse than the national average. That represents the greatest disparity between full recovery price (the price you can expect when the market levels out) and current available prices – i.e. your profit margin. Las Vegas always seems to find its way on this list and will probably tack on another 15-16% loss before it’s all over. Miami is set up for a similar 13% decline. Many California metro areas will post greater-than-average declines as well.
This prediction is just one forecast, but the reasoning is sound. More foreclosures will enter the fray and current credit is stretched paper-thin in most areas. But, as they say in any other investment vehicle, buy low and sell high. This upcoming year gives you plenty of opportunities for the first part of that money-making equation.
Read more: Original Source
HARP plan keeps mortgage insurers in play
The Mortgage Insurance Companies of America is supporting the revised Home Affordable Refinance Program as a step in the right direction since it aims to keep borrowers current while reducing default claims.
Earlier this week, the government announced a revamped HARP plan that will refinance more underwater mortgages.
The plan also will waive reps and warrants, making it easier for mortgages to transition to lower interest rates without buy-back risk coming into play. This also makes it easier for insurers to back the risk.
“No MICA member will institute any additional requirements on HARP loans beyond the GSEs’ program requirements, aligning with their common guidelines,”
The Joys of Homeownership
Today’s experts spout off the latest statistics about long-term wealth, home values, and interest rates, yet there’s a much more sentimental side to homeownership. In fact, many home buyers are drawn to homeownership for these warm and fuzzy reasons.
Owning a home allows you to put down roots, both figuratively and literally. On one hand you become part of a neighborhood and community. When you rent, neighbors come and go as quickly as leases renew. Homeowners, however, tend to stay put longer.
What does this mean for you? You can develop, many times, lifelong relationships. This also means your home will see you through many of life’s important milestone
Fannie Mae ignored foreclosure abuses
NEW YORK (CNNMoney) — Fannie Mae (FNMA, Fortune 500), the government-controlled mortgage giant, ignored indications that attorneys it hired to handle defaults were abusing the foreclosure process, according to a report from the inspector general for the Federal Housing Finance Agency (FHFA), the agency that oversees Fannie.
The inspector general concluded that as early as 2003, legal firms retained by Fannie engaged in misdeeds. These included filing false documents and “robo-signing,” in which law firm employees signed filings and affidavits attesting to knowledge that they did not possess.
Even after mortgage borrower complaints were raised in the press, the inspector general said FHFA and the agency it replaced, the Office of Federal Housing Enterprise Oversight, failed to take adequate corrective action and Fannie continued to use the law firms blamed for the problems.
“If a law firm self-reported no issues as it processed cases,” the inspector general said, “then Fannie Mae presumed the firm was doing a good job.”
In a letter to FHFA, Elijah Cummings, ranking member of the House Committee on Oversight and Government Reform who requested the report, called the failures “an abuse of the public trust and an assault on the integrity of our justice system.”
Foreclosures rise in August
The abuses likely affected many borrowers, given Fannie’s huge footprint in the mortgage market. By 2008, when it entered conservatorship after suffering large losses in the mortgage meltdown, the value of loans it backed exceeded $3 trillion — 26% of the total mortgage market.
As the foreclosure crisis deepened, many of those loans defaulted. In 2010, Fannie foreclosed on more than 260,000 borrowers.
“It appears that an untold number of borrowers with loans owned or
Read the full story here.
Mortgage help for unemployed disappears
A federal mortgage program to help the unemployed is ending.NEW YORK (CNNMoney) — The federal government can’t even give money away to help the unemployed pay their mortgage.
A $1 billion program to assist the jobless will likely end up spending only half the funds, at most, because so few people met the strict criteria.
The Housing Department, which had to approve the applications for the Emergency Homeowners’ Loan Program by Friday, expects that only 10,000 to 15,000 people will qualify. That’s only a small sliver of the roughly 100,000 who applied.
“No one could have anticipated how difficult the statutory requirements make it to reach homeowners,” said Lemar Wooley, a HUD spokesman.
Those who make the cut are expected to receive between $35,000 and $45,000 in aid, he said.
Many had high hopes for the loan program because it was targeting a segment of delinquent homeowners not being helped by other federal initiatives, such as mortgage modifications.
Passed last year as part of the Dodd-Frank Wall Street reform bill, it was modeled after a very successful program in Pennsylvania that has helped tens of thousands of residents since 1983.
The federal effort offered interest-free, forgivable loans to homeownerswho lost at least 15% of their income because of the economy or their own medical condition. Applicants had to be at least 90 days delinquent, facing foreclosure and show that they could resume payments if they found a new job.
10 dirt-cheap housing markets
If they qualified, they could receive up to $50,000 or 24 months of assistance, whichever came first.
The initiative quickly became a quagmire of delays and requirements, however. The rollout was postponed for months, finally launching in late June. HUD originally gave people less than six weeks to apply, but then pushed back the deadline to mid-September.
But it was the income and delinquency guidelines that prevented many seemingly eligible people from getting assistance, housing counselors say. HUD used a complicated formula that took into account monthly payments, income and arrears.
Only 34 of the 174 homeowners who came to Tierra del Sol Housing Corp. in Las Cruces, N.M., met the criteria, said Rose Garcia, the agency’s executive director. Some people were turned away because they were already too far behind in their payments or because their income fell because of a family member’s illness.
“This program could have made a difference to save people from being homeless,” she said. “But it doesn’t meet people’s needs.”