June 2010 What's News in Real Estate

Wright Realtors Real Estate News

Jun 30

Oil Spill Hurts Fla. Market, Fitch Says
Fitch Ratings says the Gulf of Mexico oil spill will depress Florida real estate, a market already hit hard by falling home values and steep unemployment.

Fitch managing director Roelof Slump says the Sunshine State has the highest mortgage delinquency rate across all property types, with 50 percent of loans—not counting those backed by Fannie Mae and Freddie Mac—at least 60 days past due and over 80 percent underwater at the end of May.

The study also shows that the amount owed by 40 percent of home owners tops 150 percent of the property value.

"Directionally, it seems pretty clear given that all the pressures these home owners are under, both the frequency and severity [of defaults] are likely to worsen," speculates Slump, adding that residential values have fallen statewide.

Source: Miami Herald, Jane Wooldridge(06/29/10)

Jun 29

Russian Spy Suspects Have Real Estate Ties
Two women charged Sunday in connection with a Russian spy ring apparently have ties to the real estate industry.

According to Inman News, suspect Anna Chapman lists on her LinkedIn profile that she is CEO for PropertyFinder Ltd, and says she runs a real estate search engine for Russian speakers, Domdot.ru.

The other suspect linked to the industry is Tracey Lee Ann Foley. Inman says Foley obtained her real estate sales license in Cambridge, Mass., in August 2007, and her broker’s license in November 2009, according to state licensing records. She was hired by Redfin as a contract field agent in February, according to a statement released by Redfin. The company also reported that it believed Foley had previously worked for Channing Real Estate and Weichert Real Estate.

The two women are among 11 charged with money laundering and failure to register as representatives of a foreign government. According to an article in the New York Daily News, the Russian government called the charges “baseless and improper.”

Source: Inman News, Andrea V. Brambila (06/29/2010)

Jun 28

Financial Reform Bill Gives Nod to Simple Loans
Under the proposed financial reform compromise bill, a mortgage lender would have to keep 5 percent of each mortgage when it is securitized, unless the mortgage is a plain vanilla type of loan that the government dubs a “qualified residential mortgage.”

Analysts believe that such an incentive is means that the mortgages available to most borrowers will come from conventional institutions like banks. If more exotic loans are available, they will be offered by private lenders that charge significant fees to take these risks.

Source: Bankrate.com, Holden Lewis (06/28/2010)

Jun 27

• Slideshow

Not a Short Sale, Not an REO. Original owner, nice t-floor plan, separate living & family rooms, fireplace with gas insert, Tile counters with Jenn-aire range, ceiling fans thru-out, new exterior paint, central heat & air, covered & screened patio, quiet Country Club area west of I-5

Jun 26

Forecasters Split on 2010 Housing Market
Economic forecasters appear to be split on the outlook for residential real estate values.

The news this week regarding new- and-used home sales in May seems to support the views of bears like Dean Baker, co-director of the Center for Economic and Policy Research. Baker projects that home prices will decline 12 percent in 2010.

Meanwhile, Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York, predicts a gain of 2.5 percent.

Terry Loebs, managing director of MacroMarkets, which creates securities that allow investors to hedge their housing bets, says, “The width of that spread is a byproduct of uncertainty in the market.”

Source: Bloomberg, Kathleen M. Howley (06/24/2010)

Financial Compromise Bill Close to Passage
The U.S. House and Senate reached agreement early Friday morning on the largest financial overhaul since the Great Depression.

The bill will particularly affect home buyers seeking mortgages, requiring lenders to ensure that a borrower is able to repay a home loan by verifying income, credit history, and employment. It also would ban payments to brokers for helping borrowers find alternative financing. v The measure sets up a consumer financial protection agency to police lending, and it adopts new rules for mortgage-backed securities, requiring banks in most cases to retain 5 percent of the credit risk on their books.

Congressional leaders hope to win full House and Senate approval next week and send the bill to President Obama by July 4.

Source: The Wall Street Journal, Victoria McGrane (06/25/2010)

Jun 25

Housing Expert: 'The Suburban Century Is Over'
At a recent meeting of the Urban Land Institute of Minnesota, Senior Fellow John McIlwain said "a new normal" will be created in the housing market over the next 10 years, and he marked the end of "the suburban century."

He noted that markets offering "a vibrant 24/7 lifestyle" will see the most robust activity, "net-zero-energy" units will become the norm, and the rental market will expand as homeownership rates fall to more historic levels.

Suburban town centers will gain popularity among those wanting an urban lifestyle without living in a big city.

Over the next decade, McIlwain said four demographic groups will fuel the housing market. He said older baby boomers increasingly are moving back to the central city, while younger baby boomers are finding it more difficult to relocate for jobs because they cannot sell their suburban houses. Meanwhile, millennials are more environmentally aware and will seek urban lifestyles, and immigrants who cannot afford large suburban houses to shelter multiple generations will increase demand for rentals.

With 1.5 million housing units per year needed to accommodate the shift to normal levels of household formation, McIlwain said zoning, financing, and regulations need to be rethought to meet housing demand.

Source: minnpost.com, Brad Allen (06/21/2010)

Jun 24

Inmates Get $9.1 Million in Home Buyer Credits
More than 1,200 prison inmates, including 241 serving life sentences, applied for and received first-time hom ebuyer tax credits, according to a Treasury Department report released Wednesday.

Treasury said many filed multiple claims, even some outside the alloted time persiod, and received help from paid preparers. Altogether they fraudulently received $9.1 million in tax credits with $1.7 million going to prison lifers.

The report also identified 2,555 filers who received $17.6 million for homes that they purchased before the tax credit program began. It flagged 206 filers who sought credits on multiple properties and were awarded $1.4 million.

In addition, 34 employees of the IRS were nabbed for filing illegally for the credit.

Source: CNNMoney, Aaron Smith (05/23/2010)

Jun 23

HAMP Modifications Rising
The U.S. Treasury and Department of Housing and Urban Development released a monthly “housing scorecard” Monday and declared that housing is on the mend. The report, though, also showed more loan modifications canceled than approved.

More than 340,000 households had received long-term reductions in mortgage payments under the Home Affordable Modification Program (HAMP) by the end of May and are making on-time payments. More than 429,696 trials had been canceled, up from 277,640 in April. About 468,000 households were still in a trial phase, with 190,000 stuck there for at least six months because banks are moving slowly.

Source: Associated Press, Alan Zibel (06/21/2010)

Source: CNNMoney.com, Les Christie (06/16/2010)

Jun 19

Rates on 5-Year ARM Hit Record Low
Interest on five-year adjustable-rate mortgages averaged 3.89 percent for the week ended June 17, the lowest level since Freddie Mac began tracking the statistic in January 2005.

One-year Treasury-indexed ARMs also fell, dipping from 3.91 percent to 3.82 percent, the lowest average in more than 10 years. Also, 30-year fixed loans settled at 4.75 percent, a slight gain from 4.72 percent last week.

Source: The Wall Street Journal, Amy Hoak (06/18/2010)

Jun 18

Fannie and Freddie Stock Delisted from NYSE
Quasi-governmental mortgage finance giants Fannie Mae and Freddie Mac have voluntarily delisted their stock from the New York Stock Exchange after their values fell to less than $1.

The other option was to present a plan to bring share value back above $1, but the federal regulator in charge of the firms opted against that because, according to a notice from Federal Housing Finance Agency, the government couldn’t be sure of success.

"A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets," said Edward DeMarco, the agency's acting director.

Source: The Wall Street Journal, Nick Timiraos (06/17/2010)

Jun 17

Senate Extends Tax Credit Closing Deadline
The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.

The extension was added to a bill to pay for jobless benefits.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The measure still must be approved by the House.

Source: Associated Press, Andrew Taylor (06/16/2010)

Dealing With IRS Tax Credit Rejections
The IRS has been rejecting first-time home buyer claims from anyone who shows a Form 1098 Mortgage Interest Expense in their prior year files.

In many cases, the applicants are entitled to the credit because their previous mortgage interest deduction is for a timeshare, mobile home, boat, or other recreational property.

If you are in this unfortunate position, here is some advice from Enrolled Agent Eva Rosenberg, who authors the Web site TaxMama.com.

• Send a letter explaining the situation and providing proof of a previous rental or other non-ownership living situation, including copies of rental contracts for the last three years, an old driver's license showing that address, utility bills, etc.

• Home buyers who believe the IRS may view their situation in this way should be proactive, providing proof that they are a first-time buyer when they initially file for the credit.

• Anyone who is rejected after two attempts to explain the problem to the IRS should call the Taxpayers Advocate Service toll-free, (877) 777-4778, their Congressman, and their Senator, Rosenberg advises.

Source: TaxMama.com, Eva Rosenberg, EA (06/16/2010)

Jun 14

Jobs Key to Housing Recovery
Some recovery in the labor market and record low mortgage rates could help offset some of the pressures on the housing market, according to a new study released by the Joint Center for Housing Studies at Harvard University.

"Right now, economists expect the unemployment rate to stay high, but if employment growth surprises on the upside or downside, housing numbers could too," Eric Belsky, executive director of the center, said in a statement.

Home owners' level of debt relative to equity stood at a record 163 percent at the beginning of the year, and housing costs have become a severe burden for more borrowers, the center adds.

Source: Reuters, Al Yoon (06/14/10)

FBI Renews Push to End Mortgage Fraud
The FBI says it will renew its efforts to end mortgage fraud. A spokesman said last week that the FBI anticipates arresting hundreds in crackdowns scheduled over the coming weeks.

Offenses agents expect to find range from schemes that encourage borrowers to lie about their incomes to scams that rely on falsifying foreclosure information.

The FBI has set up 23 fraud task forces across the U.S. to carry out the anticipated sweep.

Source: Financial Times (06/11/2010)

Jun 12

NAR Lauds Proposal to Extend Tax-Credit Closings
The National Association of REALTORS® today expressed thanks on behalf of America’s homebuyers to three Senators for introducing a measure to extend the present home buyer tax credit closing deadline to Sept. 30. They are Senate Majority Leader Harry Reid, D-Nev., and Sens. Johnny Isakson, R-Ga., and Chris Dodd, D-Conn.

“As the leading advocate for homeownership and housing issues, NAR commends these Senators for their attentiveness and sensitivity to thousands of qualified home purchasers, who through no fault of their own, are not able to meet the closing deadline of June 30 for the home buyer tax credit. Now we urge the Senate and the House to act quickly to pass this legislation and ease the minds and pocketbooks of these home buyers,” said NAR President Vicki Cox Golder.

The measure was offered as an amendment to H.R. 4213, a tax extension bill now in the Senate.

NAR estimates that approximately 75,000 home buyers of distressed properties who have qualified for the tax credit and met the contract deadline of April 30 would not be able to close their transaction by the June 30 closing deadline. REALTORS® have reported as many as one-third of qualified applicants have been notified by lenders that their mortgages will not close before June 30 due to the sheer volume of applications in the pipeline.

“These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a work-flow jam with the lenders or other delays and might not be able to complete the purchase of their homes,” said Golder. “It would be a tragedy for them not to be able to complete the purchase in time to claim the credit.”

Golder said she also wanted to make this clear: “This amendment does not extend the deadline for home buyers to qualify for the tax credit; it extends the deadline for closing the transaction, from June 30 to Sept. 30. Since these applications were already in the pipeline and figured into the program’s cost, the extension of the closing deadline should not incur any further government costs.”

Jun 11

Nine Ways to Improve a Home's Curb Appeal
HGTV’s real estate site, FrontDoor.com, offers some ways to make a home more appealing.

Source: FrontDoor.com (06/09/2010)

Source: RISMEDIA (06/09/2010)

Jun 10

Lenders Warn Foreclosure May End in Lawsuit
The housing crisis will spark a wave of lawsuits filed by lenders seeking to recoup loses on home sales and foreclosure auctions that do not return enough money to pay the mortgages in full, according to real estate and legal experts. Experts predict that mortgage companies will begin to sue home owners in the next two years, including borrowers who ransack a house that has been lost to foreclosure and those who walk away from "underwater mortgages," with hopes of discouraging others from such behavior.

Lenders are unlikely to target borrowers who negotiate in good faith or have defaulted on their home due to job loss or other unforeseen circumstances; other borrowers could be hounded by collection agencies that have purchased their mortgage debt from their lender.

Source: RISMedia (06/08/10)

Jun 8

Mortgage Fraud Rises: Who's at Risk?
A report analyzing national mortgage fraud risk in the first quarter of 2010 says it has increased by 4 percent compared to the fourth quarter of 2009 and is up 11 percent from the first quarter a year ago.

Other findings from risk analytics company Interthinx included:

Arizona surpassed California as the state with the highest fraud risk. Nevada, California, Florida and Michigan rounded out the top five.
Property valuation fraud risk was the primary driver of the index.
Identity fraud risk and employment/income fraud risk both increased 10 percent from the fourth quarter of 2009.
Occupancy fraud risk is down by 11 percent compared to the fourth quarter of 2009, but analysts believe it may trend upward if shadow foreclosure inventory is released for sale.

Source: Interthinx (06/08/2010)

Jun 5

FHA: Loan of Choice for Most Buyers
The vast majority of potential home buyers – 87 percent – plan to use a Federal Housing Administration home loan to finance their purchases, according to a new survey from the Home Buying Institute, a consulting service.

In a survey of 12,000 home shoppers, two-thirds first-time buyers – nearly 54 percent – said they preferred an FHA loan because it requires a small down payment. The remainder chose an FHA loan for these reasons:

Source: Home Buying Institute (06/04/10)

Jun 4

BofA Rolls Out Plan to Forgive Principal
Bank of America announced Wednesday that it was rolling out a relief program for roughly 45,000 of its most troubled borrowers that would reduce mortgage principal by as much as 30 percent.

To be eligible, homeowners must have missed at least two monthly payments and owe 20 percent or more than their home is worth. Homes must have been originally financed by Countrywide Financial Corp. under specific lending programs.

The offer is a result of an agreement with state attorneys general that settles charges over high-risk loans made by Countrywide. The federal government will pay 18 percent of the forgiven principal.

Source: The Associated Press (06/02/2010)

Jun 3

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®. Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”

NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.

Pending Home Sales Index by region:

“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues."

He added that there could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.

Source: NAR

7 Cities Hit Hard by the Recession
Seven U.S. cities, mostly in older, industrial areas, are facing economic problems similar to those of Greece and Spain.

Moody’s Investor Services and Standard & Poor’s have identified debt pressures in the following cities as particularly heavy:

When cities default, vendors, such as road construction and garbage collection firms usually take a harder hit than bondholders because cities want to be able to borrow again.

Residents often feel the most pain, losing city jobs and services while being faced with higher taxes.

Source: CNNMoney.com, Hibah Yousuf (06/01/2010)

Jun 2

Hot Dining Hub: Outdoor Kitchens
Outdoor kitchens are increasing in popularity.

“People have a higher expectations for their exterior spaces since HGTV came around," said Scott Redmon, owner of Alfresco Living in Maitland, Fla.

Besides a grill, fired by gas, wood or charcoal, more home owners are adding keg-tappers, wine chillers, icemakers and warming cabinets.

Outdoor kitchen designers also recommend good task and ambient lighting, an easy-to-clean countertop material. and a design that avoids heat retention.

Source: Orlando Sentinel, Jean Patteson (05/29/2010)

Jun 1

Owners in Default Stay in Homes Anyway
An increasing number of home owners in foreclosure continue to live in their homes, mostly ignoring the foreclosure action and refusing to pay anything.

The average borrower in foreclosure is unlikely to be evicted for 438 days, says LPS Applied Analytics. LPS says more than 650,000 households haven’t paid their mortgage in 18 months, and in the case of 19 percent of those households, the lender hasn’t made any effort to repossess the property.

In some states like California and Texas, lenders can foreclose without a say-so from the courts. In those states, the action is likely to be quick. But in 19 states, including Florida and New York, the court must approve the foreclosure and resulting eviction and the process is slow.

Source: The New York Times, David Streitfeld (05/31/2010)

Luxury Home Market Improving
After a tough 2009, the luxury home market is on the upswing. Sales of homes with asking prices of $2 million to $5 million in the first quarter totaled 2,461, up 32 percent from the previous year.

The increased sales appear to be driven by realistic seller pricing, increased buyer confidence, and improved financing options.

But even though the market appears to be improving, experts still have concerns. They say sales of high-end homes are affected by the movement of the stock market, and "if the markets don't recover soon, it will scare people" and hurt demand for high-end homes, says Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

Source: The Wall Street Journal, Juliet Chung and James R. Hagerty (05/28/2010)

More Past Real Estate News

June 2010 What's News in Real Estate

See also