Archive for April 2013

LPS: California, Washington Lead Monthly Price Gains in February

April 30, 2013

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This is good news for the housing industry. Please read the article below and let me know what you think.

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After tracking transactions in February, Lender Process Services, Inc. (LPS) found home prices rose 1 percent month-over-month, with California and Washington leading the gains.

In dollar terms, LPS’ Home Price Index (HPI) for non-distressed sales stood at $210,000, up 7.3 percent from February 2012 when prices averaged $196,000. Currently, prices are 20.6 percent below the June 2006 peak of $265,000.

LPS data also showed short sales, which accounted for 12 percent of February sales, were sold at a 25 percent discount compared to non-distressed sales. Meanwhile, REOs accounted for 10.5 percent of sales and were discounted by 27 percent compared to non-distressed properties.

On a statewide level, LPS reported California and Washington both saw prices increase 2.2 percent from January to February, the largest gain out of any other state.

Nevada and Hawaii took the next two spots after prices were up by 1.8 percent and 1.6 percent, respectively, while Illinois and Nebraska both posted a 1.4 percent increase.

On the other hand, Connecticut experienced a monthly decrease after prices fell by 0.3 percent. Other states in the bottom were Vermont (+0.2 percent), Rhode Island (+0.2 percent), and Oklahoma (+0.3 percent). Six states saw prices rise by just 0.4 percent: New Mexico, Maryland, North Carolina, Tennessee, New Jersey, and Massachusetts.

LPS also provided short sale and REO data for larger states. New York offered the biggest short sale discount, 35 percent, while in Texas averaged 19 percent. Short sale discounts in California and Florida were 23 percent and 28 percent, respectively.

To read the complete article please use the link below.

Price Gains in February

Freddie Mac: Common Securitization Platform Will Benefit Market

April 30, 2013

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I am very skeptical about this program. I think that it could end up costing a whole lot of money with very limited benefits. Please read the article below and let me know what you think.

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In the Federal Housing Finance Agency’s (FHFA) Conservatorship Priorities for 2013, delivered in early March, Acting Director Edward DeMarco discussed his goal of creating a common securitization platform for the GSEs. The platform will exist outside of Fannie Mae and Freddie Mac as an entirely independent venture and will replace their current systems for securitizing mortgages.

“[T]he overarching goal is to create something of value that could either be sold or used by policy makers as a foundational element of the mortgage market of the future,” DeMarco said.

As FHFA and the GSEs take the first steps toward developing this platform, Freddie Mac’s SVP of conservatorship and corporate initiatives, Stephen Clinton, outlined some of the positive impacts the platform could have on the market.

The common securitization platform “will reduce costs, improve transparency, and lower barriers to entry for private market credit risk takers,” Clinton said in a company blog post.

He insisted the platform will offer benefits for taxpayers, borrowers, and the housing finance system as a whole.

Clinton also praised FHFA’s role in the effort thus far, saying, “They are driving the process forward with a nuanced understanding that while standardization is a good thing, even good things can be overdone.”

The platform’s architects must strike a delicate balance by providing an effective solution for the market while not overstepping bounds and precluding the private market.

Without divulging any final decisions, Clinton said “most people” concur the platform should address securities issuances, while “such matters as credit models, pricing, and customer relationships should be left outside the platform.”

“A key public policy goal here is to attract more private investors in mortgage credit risk and limit the current concentration and taxpayer risk of Fannie Mae, Freddie Mac, and Ginnie Mae,” Clinton said.

To read the complete article please use the link below.

Common Securitization Platform

Moody’s: Home Prices to Increase, Loss Severities to Remain High

April 29, 2013

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This should be good news for everybody. Sellers will like the higher prices their homes will bring and buyers will like the increase in inventory. Please read the article below and let me know what you think.

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Home prices will increase over the next three years as the economy expands and servicers work through their distressed inventories, according to a report from Moody’s Analytics. However, the firm predicts rising prices will not be enough to offset anticipated rising loss severities.

Home prices will rise about 4.2 percent between the fourth quarter of last year and the fourth quarter of 2015, according to Moody’s. “Not only will several years of solid job and household growth help home values by the end of this period, housing markets throughout the nation will have worked off most of the remaining distressed inventory,” Moody’s said in its report.

Recent price gains have resulted from high affordability, soaring investor interest, and low inventories with declining foreclosure inventories playing a major role.

Moody’s predicts foreclosures will have less of a hold on home prices in years to come as “fundamentals that normally drive house prices” come back into play, including “job growth, demographics, affordability, and supply conditions.”

However, the transition from the current heavy foreclosure influence on prices will not happen overnight.

Distressed and foreclosed homes “will still distort house price trends over the next year or two, but to a far lesser extent, particularly for the states with especially wild swings,” Moody’s said.

States with lengthy foreclosure timelines will continue to be hindered by their foreclosure inventories, but the slow pace will prevent a flood on the market.

Nationally, the market holds about 3 million homes in serious delinquency or foreclosure—which is about 3 times the normal level, according to Moody’s.

Foreclosures increased 12 percent year-over-year in February, according to RealtyTrac. However, Moody’s points out a few states claim the lion’s share of this increase—New York, New Jersey, Illinois, Ohio, and Florida. When these states are taken out of the equation, foreclosures declined 11 percent over the year.

Outward economic factors will play positively on housing markets in the South and West, while the Northeast and Midwest will continue to struggle in the near future.

To read the complete article please use the link below.

Home Prices to Increase

Non-Investor Homebuyers also Driving Market Recovery, Survey Finds

April 29, 2013

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This is one of the best signs that the housing market recovery is well on its way. Please read the article below and let me know what you think.

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Investors aren’t the only major players driving the housing recovery. According to results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey for March, first-time homebuyers and current homeowners are also building a strong presence as they dominate the non-distressed market.

When comparing activity among the buyer types for non-distressed properties, non-investors held a significant lead.

In March, investors accounted for 13.3 percent of the market share for non-distressed properties, while current homeowners represented 50 percent of the market. First-time homebuyers also made up a significant portion at 36.8 percent.

For purchase activity overall, the HousingPulse survey found current homeowners accounted for 42.2 percent of the market share Activity from first-time homebuyers picked up and reached an eight-month high after accounting for 36.1 percent of market share. At the same time, investor activity represented just 21.8 percent of market share in March. HousingPulse results also revealed investor market share nationwide has been ranging between 19 and 23 percent for much of the past year.

As non-investor activity strengthens, the survey showed the non-distressed market is benefitting as well. Offers for non-distressed properties heated up in March, with the three-month moving average hitting a three-and-a-half year high at 2.2, according to the survey. In California, non-distressed properties received four offers on average.

Non-distressed properties also stayed on the market for a shorter period of time, averaging 10.9 weeks, which is the lowest level the survey has recorded in three-and-a-half years. The average sales-to-list-price ratio for non-distressed properties also improved and rose to 96.8 percent in March, up from 94.9 percent a year ago.

To read the complete article please use the link below.

Non-Investor Homebuyers

Economic Recovery Exacerbates Wealth Inequality

April 28, 2013

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I think that this has been true since the end of WWII. When adjusted for inflation I believe the percentages are roughly the same from 1946 until now. Please read the article below and let me know what you think.

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The economic recovery, which began in 2009, has brought disproportionate gains to the wealthiest Americans, while the majority of households experienced a decline in worth, according to research released this week from the Pew Research Center.

The top 7 percent of households—measured in terms of household wealth—experienced a 28 percent increase in net worth from 2009 to 2011, while the remaining 93 percent of American households experienced a 4 percent decline in worth, according to Pew.

The major factor contributing to this disparate change in wealth among American households is that wealthier households tend to hold more of their worth in financial holdings, while home values tend to contribute most to the value of less wealthy households.

Financial holdings, including stocks and bonds, tend to make up about 65 percent of the wealth of households with $500,000 or more in net worth. Homes contribute just 17 percent to these households’ net worth.

In contrast, for households with less than $500,000 in net worth, home values contribute about 50 percent to net worth, and financial holdings contribute about 33 percent, according to Pew Research Center.

In an economic climate in which the S&P 500 rose 34 percent and the S&P/Case-Shiller Home Price Indices declined 5 percent—which occurred between 2009 and 2011—it is easy to see how wealthier households gained more wealth while less wealthy households experienced a reduction in net worth.

To read the complete article please use the link below.

Economic Recovery

Zillow: Home Price Growth Moderates in Q1

April 28, 2013

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I think that this shows that the housing market is starting to normalize. Please read the article below and let me know what you think.

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After “months of robust and largely unsustainable annual home value appreciation,” the national housing market finally showed signs of moderation in this year’s first quarter, Zillow reported Thursday.

Zillow’s Home Value Index (HVI) rose to $157,600 as of the end of Q1, up 0.5 percent over Q4 2012 and 5.1 percent over the same time last year. Quarterly home value appreciation in the fourth quarter was 2.1 percent—indicating the market is slowing down to a more sustainable pace, says Zillow chief economist Dr. Stan Humphries.

“The national housing market has rebounded strongly over the past year. But the sometimes dramatic home value run-ups experienced during these months were never expected to be sustainable, and recent slowdowns are indicative of a market that is slowly finding its natural level,” Humphries said.

Not all markets saw a slowdown in growth, however. According to Zillow, five metros tracked by the company experienced year-over-year appreciation of more than 20 percent: Phoenix (up 24 percent); Las Vegas (up 22.3 percent); San Jose (up 22.1 percent); San Francisco (up 21.4 percent); and Sacramento (up 20.1 percent).

In addition, seven of the top 30 metros covered by Zillow saw a decline in home values last quarter, “[f]urther underscoring the unevenness of the recovery,” the company reported. The New York metro posted a decline of 0.3 percent after three straight quarters of positive growth, while the Chicago area experienced depreciation of 1.4 percent after a flat fourth quarter in 2012.

In the rental market, national rents rose 0.9 percent quarter-over-quarter and were 4.9 percent over Q1 2012. Zillow’s Rent Index stood at $1,290 as of March 31.

Seattle-based Zillow also found an increase in foreclosure rates, with 5.11 out of every 10,000 homes lost to foreclosure in the first quarter, down from 1.3 homes in the previous quarter and 2.4 homes year-over-year. Zillow explained the rise is “likely because of a seasonal acceleration after the traditionally slow holiday period.”

To read the complete article please use the link below.

Home Price Growth

Why VA Loans Lead in Foreclosure Avoidance

April 27, 2013

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I’m sure that this will come as a big surprise to many of you. This shoots holes in the idea that low down payment is the main factor in defaulting on mortgages. Please read the article below and let me know what you think.

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A no-down payment loan program has quietly become the mortgage industry leader when it comes for foreclosure avoidance.

For most of the last five years VA loans have maintained the lowest foreclosure rate of any major loan product, besting even prime loans. In the same span, the VA has helped nearly 300,000 military homeowners avoid foreclosure, mostly through supplemental servicing and encouraging lenders to explore viable alternatives.

VA loans closed Q4 2012 with a foreclosure inventory rate of 2.08 percent, just ahead of prime loans (2.10 percent) and well ahead of FHA loans (3.85 percent) and prime ARMs (6.68 percent). In addition, the program recently saw its streak of 14 consecutive quarters with the lowest delinquency rate come to a close.

The relative safety of the program is all the more compelling given that 9 in 10 borrowers put no money down on a VA purchase.

There are a couple key reasons why VA loans have emerged as a safe haven for homeowners in jeopardy.

Avoidance a priority:

The Loan Guaranty Program employs about 300 people who focus on veteran borrowers in default. These foreclosure specialists are in constant contact with financial institutions nationwide and keep tabs on every VA homeowner on the edge of default. They often wind up acting as intermediaries between the veterans and servicers and help push for options such as repayment plans, forbearance and loan modifications.

Residual income standard:

This is a unique VA underwriting requirement. Borrowers must meet a monthly benchmark for residual income that varies by geography and family size. For example, a family of four purchasing in the Midwest must have at least $1,003 left over each month after making major installment payments like a mortgage or student loans. The minimums are higher on the coasts. This type of standard can help identify veterans who might present significant lending risks.

To read the complete article please use the link below.

Foreclosure Avoidance