HOPE NOW: 5.9M Completed Mods Since 2007; Short Sales Increase

Short sales continued to increase in October, whileforeclosure starts fell, according to data from HOPE NOW, an industry alliance of mortgage servicers, investors, mortgage insurers, and nonprofit counselors.

Completed short sales reached 38,518 in October, representing a 13 percent increase from September. Since 2009, over one million short sales have been competed, according to HOPE NOW.

Foreclosure starts—which totaled 113,555—saw a dramatic decline and dropped by 24 percent from the previous month. As starts fell, foreclosure sales increased 12 percent during the same time period, with sales totaling 71,080 compared to 62,645 in September.

Faith Schwartz, executive director of HOPE NOW, says the significant decrease in foreclosure starts is worth noting, but cautioned one month does not indicate a trend.

“With multiple servicing transfers, AG settlement activity, and seasonal adjustments, we will be working with more volatility around monthly data for some time,” she said.

Meanwhile, HOPE NOW also reported nearly 6 million struggling homeowners have received a modification since 2007. Among the modifications, 4.8 million were proprietary loan modifications, while 1.1 million mods were through the government’s Home Affordable Modification Program (HAMP).

In October alone, HOPE NOW estimates servicers modified 88,583 loans for homeowners, up from 74,329 in September. Of those who were modified in October, 72,580 received proprietary modifications, while 16,003 were modified through HAMP.

“The combination of loan modifications and short sales, completed by the industry in the month of October, means that close to 130,000 homeowners received a permanent, alternative to foreclosure,” said Schwartz.

However, the number of borrowers who may need to seek a modification increased, with delinquencies edging higher in October. The number of borrowers who were past due by at least 60 days increased by 3 percent to 2.54 million from September. For assistance with short sales, loan modifications, loan refinancing and all loan related assistance program…visit our site http://www.ksiconsultingco.us; where we are making your real estate experience pleasurable….

Report: Home Sales Struggle in Largest Counties While Prices Increase

The largest counties in the country displayed strong home price growth in November, but sales were weak, according DataQuick’s most recent Property Intelligence Report (PIR).

The company’s PIR tracks valuation, REO inventory, and sales trends in the 42 largest counties on a monthly, quarterly, and yearly basis.

Among the findings, DataQuick reported prices grew in 41 of the 42 counties month-over-month in November, and all 42 counties showed quarterly and yearly home price growth.

Adding to the positive trend was the decline in foreclosuresfor 24 of the 42 counties from October. Quarter-over-quarter, foreclosures fell in 20 of the 42 counties, and compared to last year, foreclosures were down in 29 counties.

Sales were dismal for the most part, with sales increasing in only 13 of the 42 reported counties month-over-month. On a quarterly basis, sales were up in just 7 counties. Over the last year, sales improved in 25 of the 42 counties.

“While there is evidence that a recovery in housing is underway nationally, the strength of the housing market varies across the country,” said Gordon Crawford, VP of analytics for DataQuick. “In comparison to prior reports, we see that home price growth and foreclosureperformance improved, while sales performance worsened.”

Crawford also warned of factors that could contribute to home price declines. Those factors include the potential fiscal cliff effects, decreases in federal spending, as well as the impact of shadow inventory and negative equity.

“One area of continuing concern is Florida’s Gulf Coast housing market,” Crawford explained. “While recent home price growth has been positive, the substantial increase in foreclosure rates threatens future home price growth as foreclosed properties hit the market.”

Galante Gains Support After Committing to FHA Reforms

Weeks after HUD Secretary Shaun Donovan defended her performance in front of a Senate banking committeeFederal Housing Administration (FHA) Acting Commissioner Carol Galante may have earned a new ally on Capitol Hill.

Senator Bob Corker (R-Tennessee) announced he “feels comfortable supporting [Galante’s] bid to become FHAcommissioner after receiving a letter detailing her commitment to reforming FHA’s underwriting requirements and restoring its Mutual Mortgage Insurance (MMI) Fund to health.

Both Donovan and Galante have been answering criticism in the wake of the revelation that FHA may be headed toward its first-ever taxpayer bailout. Many critics have pointed to FHA’s underwriting standards as an example of the agency’s unsustainable model, and one even accusedFHA of engaging in “abusive practices.”

Galante’s letter to Corker outlines a number of steps designed to strengthen the quality of FHA’s new business, including increasing underwriting criteria for borrowers with lower FICO scores, increasing the down payment requirement and insurance pricing for high-balance loans, and beefing up underwriting requirements for borrowers who have been foreclosed on within the last seven years.

In addition, Galante plans to place a moratorium on the full drawdown reverse mortgage program while the agency examines the program’s viability. According to an actuarial report of FHA’s finances for fiscal year 2012, $2.8 billion of the agency’s currently projected $16.3 billion deficit can be traced to its reverse mortgage program.

In her letter to Corker, Galante offers her word that these reforms will be acted on by January 31 of next year.

“I’ve been working closely with Secretary Donovan and Acting Commissioner Galante over the past few weeks on ways we can put FHA on sound financial footing. While this is only a first step, I am encouraged that Acting Commissioner Galante has committed to structural reforms that we both believe put FHA in a much stronger position,” Corker said.

He added that “[g]iven the reforms she is committed to, I believe that having an accountable commissioner with her resolve and expertise will be in the best interest of the taxpayer.”

Webinar Addresses Pending 2013 HAFA Short Sale Changes

On Monday, the Charfen Institute hosted a webinar to discuss short sale updates from the government’s Home Affordable Foreclosure Alternatives Program (HAFA), which is part of the Making Home Affordable program.

Laurie Maggiano, director of policy at Treasury’s homeownership preservation office, and Alex Charfen,CEO of the Charfen Institute, led the conversation on the updates.

The new policy changes for HAFA will take effect February 1, 2013, but servicers can begin implementing the changes earlier.

One of the updates discussed during the webinar is the requirement for servicers to make a decision on a borrower’s request for a HAFA short sale within 30 days. Prior to the change, servicers had 45 days.

Another update that can speed up the short sale process for certain borrowers is the introduction of a “pre-determined hardship.” If a borrower is 90 days or more delinquent and has a FICO score that is less than 620, he or she is considered to have a pre-determined hardship.

According to supplemental directive 12-7, borrowers with a pre-determined hardship still must execute a hardship affidavit before closing a HAFA short sale, but servicers do not have to further validate the hardship.

The hardship affidavit can be found online athmpadmin.com.

This is government doing what it should be doing—setting standards and letting the private sector take over, Maggiano explained.

During the webinar, Maggiano stressed that borrowers who are experiencing a hardship but have a good credit score and are not delinquent can still qualify for a HAFAshort sale. But, those borrowers will need to explain the nature of their hardship in the affidavit.

In addition to helping borrowers who may not be delinquent, HAFA also provides short sales for non-owner occupied properties and offers relocation assistance to those tenants living in the distressed property. Tenants are eligible to receive up to $3,000, the webinar explained.HAFA was modified in June to allow for non-owner occupied properties to be eligible under the program.

Another change discussed during the webinar is the requirement for both the seller and buyer to execute a new affidavit that affirms the sale “represents an arms-length transaction and that no money is being given or received that is not reflected on the HUD 1 Settlement Statement,” the directive stated.

Treasury also increased the reimbursement amount to primary mortgage investors for payments to subordinate lien holders. The reimbursement to investors can be up to $5,000. Prior to the change, investors were eligible to receive $2,000.

Another policy update helps to prevent short sale fraud. Starting in February, resales can’t occur within 30 days of a HAFA short sale closing. Before the change, resales couldn’t be completed within 90 days of closing. In addition, resales for more than 120 percent of the HAFAshort sale price are not allowed if they occur between 31 and 90 days of closing.

The directive also stated certain HAFA documents are optional rather than mandatory. For example, servicers are not required to use forms such as SSA, DIL Agreement, Request for Approval of Short Sale (RASS), and Alternative Request for Approval of Short Sale (Alt RASS), according to the directive.

The changes do not apply to mortgages backed by Fannie Mae or Freddie Mac. The GSEs previously announced their own revised short sale guidelines. For more information on how to qualify for the HAFA program, or any other modification programs; visit our website @ http://www.ksiconsultingco.us’; where we are making  your real estate experience pleasurable…..

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Prices Continue to Climb in November: RE/MAX

Even as the market heads into its slow season, sales numbers continued to stand well above their year-ago level in November, according to RE/MAX’s latest National Housing Report.

The report shows home sales were up 15.7 percent year-over-year in November, the second highest annual increase this year (behind October’s 17.8 percent yearly rise). According to RE/MAX, November is the 17th consecutive month in which sales have posted year-over-year increases.

Of the 52 metros included in the survey, 49 reported higher sales than November 2011, and 37 of those markets saw double digit increases, including: Providence, Rhode Island (62.6 percent); Burlington, Vermont (50.8 percent); Manchester, New Hampshire (38.8 percent); Nashville, Tennessee (35.7 percent); Tampa, Florida (35.1 percent); and Boston, Massachusetts (32.0 percent).

Prices also rose both on a month-to-month and year-over-year basis. The median price for homes sold in November was $163,750, 3.6 percent higher than October and 6.9 percent higher than November 2011. November is the 10th straight month to experience year-over-year price gains.

“2012 has been a great turn-around year for housing, with prices and sales moving beyond where we were last year,” said RE/MAX CEO Margaret Kelly. “We’re ending the year the way we started it, with better than expected performance. If we can get more reasonable regulation from Washington and if mortgage availability improves, 2013 will see a much stronger housing market.”

Perhaps the biggest contributing factor the continued rise in prices is a dwindling inventory. The average number ofhomes for sale in November was about 8.0 percent lower than in October and 29.1 percent lower than the previous year. As of November, month-to-month inventories have now fallen for 29 consecutive months.

The decline in inventory is something of a double-edged sword: While it boosts prices, it also creates difficulties for potential buyers in dried-up markets. According to the report, some areas—including San Francisco and Los Angeles—posted months’ supplies as low as 1.1 months in November, well below the national average of 5.6 months. A balanced market will sit somewhere between five and six months’ supply.

 

Report: California’s Foreclosure Inventory Continues to Dry Up

Foreclosure inventory in California continued its steady decline in November, according to data fromForeclosureRadar.

The total number of preforeclosures, foreclosures scheduled for sale, and REOs fell 7.6 percent from October to November and declined by 31.8 percent from a year ago.

ForeclosureRadar said, “the significant decline in foreclosure inventory over the past year has contributed to what some are calling an ‘inventory crisis’ of totalhomes for sale.”

The company attributes foreclosure cancellations as part of the reason for the decline.

Cancellations rose 4.7 percent from October and spiked 69.9 percent in the past two months. Compared to last year, cancellations are up 34.7 percent.

ForeclosureRadar believes short sales and successful modifications are likely leading to cancellations rather than statutory time frames or filing errors.

Foreclosure starts and sales were also down in California. Starts fell by 19.9 percent month-over-month, and foreclosure sales decreased by 14.8 percent from October.

The company also tracks foreclosure activity in four other states located west: Arizona, Nevada, Oregon, and Washington.

Most states also experienced monthly declines in foreclosure starts and sales. In Arizona, foreclosure starts fell month-over-month by 23.5 percent, and sales were down by 16.8 percent.

Nevada experienced a 19 percent drop in foreclosure starts and 9.8 percent decline in foreclosure sales.

While Oregon experienced the biggest drop in terms of percentage, a closer look at the numbers explains the dramatic declines. In Oregon, foreclosure starts fell by 45.9 percent, but the actual number of foreclosures went from 85 to 46. In California, foreclosure starts totaled 11,533 in November after dropping from 14,398 the month before.

Foreclosure sales in Oregon decreased by 36.7 percent, but were reduced to 112, a small number compared to sales in California, which totaled 7,494.

In Washington, foreclosure starts fell by 2.9 percent, but sales increased by 81.8 percent to 1,367.

 

Fannie Mae: Housing Market to Press On While Economy Lags

After rising in the third quarter, overall economic growth is expected to decline this quarter and in early 2013, according to Fannie Mae. However, the GSEanticipates further strengthening in the housing market.

Economists at Fannie Mae anticipate economic growth of less than 2 percent for the first half of 2013 followed by more accelerated growth for the remainder of the year.

Factors contributing to the slow-down in economic growth include the effects of Hurricane Sandy, uncertainty regarding the fiscal cliff, the recession in the Euro zone, the sovereign debt crisis, and tensions in the Middle East.

However, while the overall economy remains somewhat dismal, Fannie’s economists finds a bright spot in the housing market, which “has stayed resilient and continues to show signs of a strong, sustained recovery, according to Doug Duncan, Fannie Mae’s chief economist.

In fact, Duncan points out that residential investment will likely bolster annual economic growth for the first time since 2005.

“Despite unsteady macroeconomic conditions, we anticipate housing and mortgage activity to gain momentum in 2013,” Duncan said.

Mortgage rates are low, and home sales and home prices are rising with the exception of a recent seasonal dip during the fall and winter. Fannie Mae expects these overall trends of rising home prices and sales to continue.

Fannie Mae anticipates a 7.5 percent rise in home sales over the course of 2013 after this year’s 10.2 percent increase.

Senators Introduce Legislation to Prevent FHA Bailout

The new year may bring with it new reforms for theFederal Housing Administration (FHA) as Congress considers a bill designed to bring the agency back to fiscal solvency.

It was revealed in November that FHA’s Mutual Mortgage Insurance (MMI) Fund—its protection against the cost of default claims—had fallen to a reserve ratio of -1.44 percent for fiscal year 2012. The agency is mandated by law to have a ratio of 2 percent.

In response, Sen. Pat Toomey (R-Pennsylvania) has introduced an amendment to reduce the risk of what would be FHA’s first-ever taxpayer bailout. The amendment—S. 3678, A bill to help ensure the fiscal solvency of the FHA mortgage insurance programs of the Secretary of Housing and Urban Development, and for other purposes —is identical to the FHA Emergency Fiscal Solvency Act of 2012 (H.R. 4264), which passed in the House in September.

Toomey’s amendment would: increase minimum annual insurance premiums, giving HUD the ability to charge a higher premium if necessary; bar “unscrupulous” lenders from participating in FHA programs; require repayment

of losses to FHA by lenders who committed fraud; improve FHA’s internal financial controls, transparency, and disclosure requirements; and require the Government Accountability Office (GAO) to conduct an independent safety and soundness review of the agency.

“While I hope to see further reforms, this measure is an important first step in modernizing the FHA and protecting taxpayers from another government mandated bailout,” Toomey said. “A companion piece of legislation received wide bipartisan support in the House of Representatives, and I hope we can pass this legislation with the same enthusiastic bipartisan support in the Senate.”

According to the Library of Congress’ website, S. 3678 has been referred to the Senate Committee on Banking, Housing, and Urban Affairs.

Toomey isn’t the only senator acting to put FHA in the black. In the same week, Sen. Bob Corker (R-Tennessee) introduced his own amendment to the Transaction Account Guarantee extension bill (S. 3637).

The FHA Stabilization and Reform Amendment would: increase the minimum FICO score for all new FHA-insured loans to 620; reduce FHA’s maximum loan limit to $625,000; place a 24-month moratorium on the full drawdown of the reverse mortgage program; and increase down payments to 20 percent for borrowers seeking a new mortgage within seven years of a prior foreclosure.

“The FHA has moved so far beyond its original mission to assist low-income Americans to purchase their first home that it poses a real threat to taxpayers and must be fixed to begin restoring fundamentals in a home mortgage market that has been heavily distorted by unprecedented government involvement in housing,” Corker said. “These common-sense reforms would help put FHA back on a path to financial stability.”

Survey: Rising Prices Motivate Buyers to Purchase Now

The expectation for prices to continue rising is creating urgency among consumers to buy now, according to aRedfin survey of 1,084 active homebuyers.

The percentage of homebuyers who believe prices are bound to move higher in the next 12 months increased to 71 percent in the fourth quarter from 61 percent in third quarter, according to the survey. The fourth quarter share is also more than double from 34 percent in the first quarter.

More respondents cited rising prices as an incentive to purchase a home now, with 33 percent falling into this category compared to 29 percent in the third quarter and 19 percent in the first quarter.

While rising prices are causing some buyers to purchase now, low inventory is prompting others to hold off on their search.

Thirty-eight percent of respondents say they plan to take a break and wait for more listings. Meanwhile, other buyers are compensating for the lack of listings by expanding their search area, with 46 percent indicating they are expanding into areas not previously considered.

Buyers still cited low interest rates as the leading reason to buy this year, but the share decreased to 57 percent in the fourth quarter from 64 percent in the third quarter.

According to the survey, Americans appear to be less discouraged by the state of the economy.
Just 22 percent of respondents say a weak economy is a major concern for buying now, a decrease from 27 percent in the third quarter.

As prices rise, the survey also found that during the nine months between the first quarter survey and the fourth quarter survey, the percentage of buyers who were also potential home sellers doubled from 8 percent to 16 percent.

Repeat buyers are also planning to make upgrades with their next purchase. When asked about the planned size of their next home compared to their current home, 49 percent indicated plans to buy a “much bigger” home, which was the most common response. In addition, 41 percent plan to buy a home that is the same size but nicer, more affordable, or in a different location. Redfin says it expects “2013 to be the year of the move-up buyer.”

Wells Fargo Releases Commentary on State of Housing

The housing market has managed to be one of the few areas in the economy that is “essentially unshaken” by fiscal cliff uncertainties, according to a commentary from the Wells Fargo Securities Economics Group.

Based on recent moves from the Federal Reserve, the commentary further noted the Fed “appears to be banking on a housing recovery.”

Last week, the Fed announced plans to continue buying $45 billion in long-term securities amid the expiring Operation Twist. The Fed also maintained its pace of buying $40 billion each month in mortgage-backed securities.

While the price tag for such a move is steep, the effect appears to be more subtle.

In the commentary, the group said, “the Fed is slated to add more than a trillion dollars to its balance sheet over the next year” and “the moves have so far had little impact on already-low long-term interest rates.”

Even though the impact on rates may not be drastic, the group noted a less quantifiable positive effect.

“While further interest rate reductions will do little to improve affordability or attract buyers, they may instill confidence, particularly among builders and lenders,” according to the commentary.

In addition to actions from the Fed, the housing market has gained support from other factors such as an improving unemployment rate, increasing home prices and sales, and decreasing foreclosures.
Notably, the decline in foreclosure sales has helped existing home prices, which have increased 10.9 percentyear-over-year in October while foreclosure sales have declined to 12 percent of total sales, according to the National Association of Realtors (NAR).

But, as conventional activity slows due to seasonal effects, the group warned the share of foreclosure sales could increase, which would bring down prices.

However, the increased use of short sales over foreclosures has provided median home prices with support.

The commentary noted data from NAR, which found markdowns for foreclosures averaged about 20 percent below market value in October, while short sales were discounted by 14 percent.

Although Wells Fargo said, “home prices have bottomed” and expects to see increases “between 2.5 and 3 percent per year for the next few years,” the bank still cautioned home price appreciation may be “exaggerated,” when considering “constrained” inventory and seasonal factors.