Archive for July 2012

Phoenix Prices Gain as Foreclosure Resales Dwindle: DataQuick

July 31, 2012


After being known as one of the hardest-hit cities, Phoenix has been gaining recognition for its rapidly rising prices.

DataQuick reported the median sale price of a home in the Phoenix metro area in June rose for the seventh month in a row to $152,000, the highest level since late 2008. The figure is a 23.1 percent yearly increase from $123,500 in June 2011. In May 2012, the median sale price was $150,000.

DataQuick, which tracks real estate trends nationally via public property records, still found that June’s median sale price was 42.4 percent below the all-time peak of $264,100 in June 2006, but 28.4 percent higher than the median’s post-peak low of $118,347 in August 2011.

DataQuick explained one of the reasons behind the boost in the median sale price is the area’s mid- to high-end markets have represented a larger share of total sales.

In June, 34.1 percent of all sales were for homes priced above $200,000, compared with 25.6 percent a year ago.

Additionally, the portion of foreclosure sales has been diminishing. According to DataQuick, foreclosure resales, defined as homes that were foreclosed on in the prior 12 months, fell to 21.2 percent of the resale market in June. The figure is the lowest level since January 2008, when foreclosure resales accounted for 18.6 percent of the resale market.

In May, the foreclosure resale level was 24.3 percent and 49.6 percent a year ago. In March 2009, foreclosure resales hit a high-point at 66.2 percent.

The Phoenix area lost 2,087 properties in June to foreclosure, which is a 13.6 percent decrease from May and a 56.5 percent drop from a year ago.

To read the complete article please use the link below.

Jury Convicts Two Attorneys Over $25M Mortgage Fraud Scheme

July 31, 2012

Two New York attorneys were convicted of 10 felony counts for their roles in a $25 million mortgage fraud scheme.

The U.S. Attorney’s Office for the Eastern District of New York announced in a statement Monday that a federal jury in Brooklyn reached a verdict late Sunday, convicting attorneys Matthew Burstein, 40, and Aaron Rabinowitz, 40, of the law firm Burstein & Rabinowitz.

The pair were allegedly involved in a scheme that resulted in over $25 million in fraudulently-obtained loans from Countrywide Financial, Fremont Investment and Loan, IndyMac Bank, Sun Trust Mortgage, Inc., Wells Fargo & Company, and New Century Mortgage Corporation Sentencing is scheduled for November 26, 2012, and the defendants could face up to 30 years in prison for charges related to bank and wire fraud.

According to the statement, evidence from the government established that from January 2006 to September 2008, the defendants worked as attorneys at real estate closings for fraudulent home sales in New York City.

The defendants conspired with real estate agents and loan officers to falsify loan documents in order to obtain mortgage loans for properties located in Queens, Brooklyn, and Long Island.

Many of the properties were purchased by recruited straw buyers, whose failure to make the mortgage payments to the banks led to millions of dollars in defaulted loans.

The defendants turned a profit by paying themselves attorneys’ fees from the mortgage loan proceeds.

To read the complete article please use the link below.

Trepp Reports Another All-Time High for CMBS Delinquency Rates

July 31, 2012

The delinquency rate for commercial real estate loans reached another all-time high in July, according to a report from Trepp.

Spiking up another 18 basis points, the CMBS delinquency rate stood at 10.36 percent, up from 10.16 percent in June and 10.04 percent in May. Last year at this time, the rate was 9.88 percent.

July’s increase is the fifth monthly rise and means the delinquency level is up 97 basis points since February.

The analytics company said the continued increase is due to a wave of five-year loans that could not refinance. Since most of the 2007 loans matured in the first half of 2012, Trepp predicts the rate should plateau in coming months, despite the jump in the delinquency rate in July.

In response to Trepp’s findings, David Tobin, principal at Mission Capital Advisors, said the delinquency rate remains elevated because of the market pressures all vintages of originations are experiencing.

“These include persistently high unemployment, which directly affects office and industrial demand and secular changes in how retail real estate interacts with consumers – or doesn’t as the case may be,” said Tobin.

To read the complete article please use the link below.

GDP Growth Slows to 1.5% in Q2 as Government Spending Drops

July 30, 2012

The U.S. economy grew at a disappointing 1.5 percent in the second quarter, the Bureau of Economic Analysisreported Friday, down from an upwardly revised 2.0 percent growth rate in the first quarter but better than expected. Economists had forecast GDP to grow at 1.2 percent in the second quarter. A drop in government spending – primarily at the state and local level – held growth down.

 The growth pace is below the 3.0 percent level needed to add jobs to make a dent in the nation’s unemployment rate. Indeed the GDP report covered the same quarter which saw the weakest job growth – 225,000 jobs – since the third quarter of 2010 when the economy grew at a relatively robust 2.5 percent.

Friday’s BEA report was an “advance estimate” based on incomplete data subject to revision or in some cases data that has not yet been reported.

The BEA also released the regular annual revisions to GDP for the previous three years from the end of 2008. Those revisions showed a steeper plunge in the first half of 2009 than previously reported, but also stronger growth in the first half of 2010 than first calculated. Data for 2011 were generally mixed compared with initial reports: stronger than first reported in the second and fourth quarters but weaker in the first and third.

For 2008 to 2011, real GDP increased at an average annual rate of 0.3 percent, BEA said while in the previously published estimates, real GDP had increased at an average annual rate of 0.4 percent. From the fourth quarter of 2008 to the first quarter of 2012, real GDP increased at an average annual rate of 1.5 percent, slightly faster than the previously published estimates, which pegged real GDP growth at 1.4 percent.

In dollar terms, GDP increased $107.6 billion, most of which $60.3 billion was an increase in personal consumption. The second quarter increase in personal consumption though was less than half the $133.4 billion growth in the first quarter.

Government spending at all levels fell $6.2 billion in the second quarter compared with a $3.6 billion increase in the first. State and local government spending dropped $8.7 billion in the second quarter, offset by a $2.5 billion increase in federal spending.

To read the complete article please use the link below.

Homeownership Rate Edges Up After 15-year Low, Vacancy Rates Fall

July 30, 2012

The nation’s homeownership rate rose to 65.5 percent in the second quarter, the Census Bureau reported Friday.

The Census Bureau though revised downward the homeownership rate for the first quarter to 65.4 percent (from the originally reported 65.5 percent), the lowest since the first quarter of 1997 when the rate was also 65.4 percent. The homeownership rate peaked at 69.2 percent in the second quarter of 2004. The rate measures the proportion of households owning their primary residence, computed by dividing the number of household that are occupied by owners by the total number of occupied homes.

The Census Bureau also reported the homeowner vacancy rate fell to 2.1 percent nationwide, down from 2.2 percent in the first quarter and 2.5 percent one year ago. The homeowner vacancy rate is at its lowest level since Q1 2006. The rental vacancy rate dropped to 8.6 percent from 8.8 percent in the first quarter and from 9.2 percent in Q2 2011. The rental vacancy rate fell to its lowest level since Q2 in 2002.

The homeowner vacancy rate is the proportion of the homeowner inventory that is vacant or for sale. The rental vacancy rate is the proportion of the rental inventory that is vacant or for rent.

According to the quarterly report, the number of housing units in the second quarter was 132,718,000, an increase of 486,000 from Q2 2011, about 14 percent of which – 18,518,000 – were vacant. The number of units for sale fell to 1,595,000 in Q2 from 1,959,000 in Q2 2011, a drop of 364,000. The number of housing units held off the market increased 265,000 in the year to 7,612,000.

To read the complete article please use the link below.

The Recession’s Impact on Confidence in Homeownership

July 30, 2012

While younger folks are oftentimes viewed as being more prone to taking risks than more elderly people, a study found that this idea doesn’t ring true when it comes to buying a home during an economic downturn.

The study was authored by economists from the Federal Reserve Bank of Boston, Anat Bracha and Julian C. Jamison, and examined how the recession affected attitudes toward home ownership.

The study found that people who lived in hardest-hit ZIP codes in 2008 were significantly more likely to be confident about owning a home if they are older (over 58), but are significantly less likely to be confident about owning a home if they are younger.

According to the authors, one reason for this is because younger respondents have more malleable perspectives, whereas older respondents have a worldview that is more difficult to alter. Thus, older respondents may simply interpret the house price drop as a temporary dip in a market that is bound to become stable again, making the downturn a good time to purchase.

A chart in the report showed that the greater the drop in home prices, the less confident individuals under 58 were in the soundness of buying a home. With older individuals, the bigger the drop in prices, the more confident they were in the idea of buying a home.

The study also examined the effects of simply knowing about the recession’s impact versus first-hand experience and how this changes attitudes toward homeownership. The authors found that having information about the market crash is not enough to change individual attitudes. Instead, one must have experienced the crises either by personally enduring a hardship from it or witnessing someone close to them suffer.

To read the complete article please use the link below.

HUD Issues Final Rule Aimed At Preserving Public And Other HUD-Assisted Housing

July 28, 2012

Rental Assistance Demonstration to preserve tens of thousands of public, HUD-assisted housing units

WASHINGTON – With the publication of the Rental Assistance Demonstration (RAD) final rules in today’s Federal Register, the U.S. Department of Housing and Urban Development (HUD) officially implemented the Obama Administration’s groundbreaking strategy to preserve tens of thousands of units of public and assisted housing.

RAD allows public housing agencies and owners of certain at-risk, federally-assisted properties to convert their current assistance to long-term contracts. Such contracts will better allow owners to leverage millions of dollars in debt and equity to address immediate capital needs and preserve these affordable housing units.  Today’s publication updates initial rules published for public comment in March.

“After extensive consultation over the past few years with key stakeholders, including public housing agencies, multifamily property owners, residents and the lending community, this innovative approach greatly enhances our ability to confront the decline of our public housing and older assisted housing stock,” said HUD Secretary Shaun Donovan.  “RAD allows HUD to test the conversion of assistance as a means of preserving this scarce inventory of affordable housing and keep it on firm financial footing well into the future.”

Last year, HUD released Capital Needs in the Public Housing Program, a Congressionally-funded study of capital needs in public housing.  The study found that the nation’s 1.2 million public housing units need nearly $26 billion to keep these homes in safe and decent condition for families, a figure well in excess of the roughly $2 billion annually that the Congress appropriates for capital repairs. Beyond the public housing stock, the Moderate Rehabilitation (Mod Rehab), Rent Supplement (Rent Supp), and Rental Assistance Payment (RAP) programs either offer no option to renew and risk being lost from the affordable housing stock or cannot renew on terms that attract sufficient capital to preserve long-term affordability.

To read the complete news release please use the link below.