by JON PRIOR

www.housingwire.com

Friday, January 20th, 2012, 9:00 am

The Federal Housing Administration will toughen its standards for approving lenders that insure mortgages on its behalf and force more of them to buyback defaulted loans.

FHA Commissioner Carol Galante said the upcoming rule changes will help the agency protect its Mutual Mortgage Insurance Fund, which, according to some, is in danger of needing a bailout. The fund slipped to a 0.24% capital ratio in the fiscal year 2011, down from 0.5% the year before.

The rule was initially proposed in October 2010 andfinalized Friday.

The rule changes apply to lenders authorized to insure mortgages for the FHA without first submitting documents to the agency. Roughly 80% of all FHA-insured mortgages are done this way.

The FHA will make it tougher to get approval for the coveted status. According to the new rule, a lender must hold a serious delinquency rate at or below 150% of the program’s average for the two years prior to its application. This rate will apply to all states in which the lender does business.

Also, the final rule forces lenders to indemnify – or reimburse FHA for an insurance claim – if the lender “knew or should have known” of any fraud or misrepresentation involved. Lenders would be on the hook for indemnification if the loan defaults within five years of origination.

Some commentary from the industry asked it to be shorted to a two or three year window, because problems that occur after then are due to job loss or divorce rather than decisions made at origination. FHA wouldn’t budge and said adopting the shorter timeframe “would be inconsistent with proper risk management practices.”

Others wanted clarification on whether or not the FHA would judge nationwide lenders with others operating within a smaller geographic area when determining approval or renewal of the status. They recommended larger lenders be held to a claim rate up to 150% of the national average, rather than just the states in does business in.

FHA didn’t amend the rule based on these comments either.

In a separate proposal, the FHA is changing the maximum allowable amount of seller concessions, or how much the seller contributes to the down payment or closing costs. The FHA said it will be reduced because the current level creates incentives to inflate the appraised value of the home.

Galante said the FHA will “continue to strike a balance” between managing its risk and continuing to provide support to a still struggling housing market.

“Taken together, the changes announced today will protect FHA’s insurance fund from unnecessary and inappropriate risks while offering clear guidance to lenders regarding HUD’s underwriting expectations,” Galante said.

by JUSTIN T. HILLEY

www.housingwire.com

Friday, January 20th, 2012, 9:32 am

Sales of existing homes rose for the third straight month, increasing 5% in December, according to the National Association of Realtors.

The trade group said the sale of single-family homes, townhomes, condos and co-ops increased to a seasonally adjusted rate of 4.61 million in December from a downwardly revised 4.39 million in November.

For all of 2011, existing-home sales rose 1.7% to 4.26 million from 4.19 million in 2010.

Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery.

“The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”

The national median existing-home price for all housing types fell 2.5% to $164,500 in December from the same month a year earlier. Distressed homes accounted for 32% of sales in December (19% were foreclosures and 13% were short sales), down from 36% in December 2010, but up from 29% in November.

Potential homeowners also have access to the lowest mortgage interest rates in 40 years. The national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96% in December from 3.99% in November, according to Freddie Mac. The rate was 4.71% in December 2010.

Total housing inventory in December dropped 9.2% to 2.38 million existing homes available for sale, representing a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November. Available inventory trended down since setting a record of 4.04 million in July 2007 and is at the lowest level since March 2005 when 2.30 million homes sat on the market.

NAR President Moe Veissi said more buyers are expected to take advantage of market conditions this year.

“We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”

by KERRI PANCHUK www.HousingWire.com

Monday, January 23rd, 2012, 7:51 am

Investors are gobbling up residential real estate with cash, pushing national home prices lower, according to the latestCampbell/Inside Mortgage Finance HousingPulse Tracking Survey.

The overall proportion of cash buyers in the housing market soared to a record 33.2%, compared to 29.6% a year earlier.

Meanwhile, the investor class relied heavily on cash to buy homes, with 74% of investors using cash to buy homes in December.

Investors represented 22.8% of home purchases in December alone, up slightly from 22.2% a month earlier.

The study says investor bids are bringing prices lower by waiting for other buyers to lose bids through the extensive mortgage approval process. The study says investors are nabbing properties at lower prices when other buyers lose bids during the extensive mortgage approval process or appraisals.

Real estate agents that responded to the survey said investors usually offer 10% to 20% below the listing price up to a price of $250,000.

by ANDREW SCOGGIN www.housingwire.com

Friday, January 13th, 2012

The housing sector will likely take incremental steps forward in 2012, though total originations will fall on fewer refinances, according to economists at Fannie Mae.

The second half of the year should outpace the first six months in terms of growth, though fiscal policy and political uncertainty in Washington will likely drive consumer and business activity, the mortgage giant said.

Chief Economist Doug Duncan said positive consumer activity and challenges in housing and the global economy will equate to moderate growth for the year.

“We’re entering 2012 with decent momentum, especially on the employment side, which is fostering positive household and consumer behavior,” Duncan said in a release. “Unfortunately, we expect this momentum to slow as we move through the first half of the year.”

The report released Friday forecast total home sales to increase 3.5% to about 4.74 million in 2012 from 2011 with another 5% gain in 2013 to nearly 5 million. New home sales could jump 10.4% for 2012.

The Federal Housing Finance Agency home sales price index, excluding refinances, could dip 1.1% for 2012 from a year before, according to the forecast. Economists predicted the 2011 index would finish 4.6% lower than 2010.

Mortgage originations as dollar volume could see a decline as well in 2012, largely on a steep drop in refinances. The Fannie report said total originations will fall to $1.01 trillion in 2012 from a predicted final 2011 tally of $1.36 trillion. Economists expected refinancing to plummet to $540 billion from $894 billion.

Purchase mortgages, however, will rise to $471 billion in 2012 from a estimated 2011 total of $464, according to the report.

Total single-family outstanding mortgage debt will likely drop 1.3% to $10.14 trillion in 2012.

For the U.S. economy as a whole, Fannie researchers predicted real GDP would increase 3.3% in the fourth quarter to finish the year at 1.7% growth. Economists forecast 2.3% GDP growth for 2012 and 2013.

By Les Christie @CNNMoney January 12, 2012

NEW YORK (CNNMoney) — Foreclosure filings and repossessions fell to their lowest level since 2007 last year.

Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million, according to RealtyTrac, the online marketer of foreclosed properties.

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed. That’s a significant improvement from the peaks reached in 2010 — when 1.05 million homes were repossessed — and the lowest levels seen since 2007.

More than 4 million homes have been lost to foreclosure over the past five years.

While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the “robo-signing” scandal that broke in late 2010.

During the year, banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. As a result, the average time it took to process a foreclosure climbed to 348 days during the fourth quarter, up from 305 days a year earlier.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac.

However, Moore said there were “strong signs” during the second half of the year that lenders are working through foreclosure backlogs in certain markets. He expects foreclosure activity to rise above 2011′s level but remain below the peak hit in 2010.

Low rates offer some help for homeowners

Early in 2011, many forecasters were predicting a wave of foreclosures due to resetting adjustable-rate mortgages, but low mortgage rates helped many borrowers refinance into more affordable loans, said Moore.

The government helped as well, through efforts like the Home Affordable Refinance Program (HARP), which made refinancing easier for borrowers who owe more on their mortgage than their homes are worth.

Government foreclosure prevention programs, including HARP and the Home Affordable Modification Program (HAMP), have started about 5.5 million mortgage modifications since April 2009, according to the U.S. Department of Housing and Urban Development.

“Programs like HAMP and HARP have definitely made a dent in the foreclosure problem,” said Moore “However, they are certainly not living up to their billing of preventing several million foreclosures. In addition, many [HAMP] homeowners fall back into foreclosure later on.”

Of course, there were still plenty of factors working against homeowners in 2011, including the continued erosion in home prices. Falling prices rob homeowners of home equity, which they can tap if they need emergency cash.

Foreclosure hot spots

Hot spots for foreclosures remain mostly in “bubble states,” where speculative investors helped drive up home prices beyond their fundamental values during the mid-2000s housing boom.

Nevada, where one out of every 16 households received some kind of default notice during the year, was the worst hit of all, a distinction it has held for the fifth consecutive year.

Arizona had the second highest foreclosure rate and California came in third. Florida, which had been running neck-and-neck with the other “Sand States” in past years, fell to seventh, behind Georgia, Utah and Michigan.

Among metro areas, Las Vegas suffered from the highest foreclosure rate in 2011. California put seven cities in the top 10, led by Stockton in the second slot. Other cities in the top 10 included Phoenix, which finished sixth, and Reno, Nev. was eighth. 

www.housingwire.com

by JACOB GAFFNEY

Friday, January 6th, 2012

Mortgage finance firm Freddie Mac will give unemployed borrowers a break on their mortgage for up to one year.

“These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies,” said Tracy Mooney, senior vice president of single-family servicing and REO at Freddie Mac.

“We believe this will put more families back on track to successful long-term homeownership,” Mooney adds.

Freddie said the new deal expands the powers of mortgage servicers. The edict gives servicers the ability to forebear a mortgage for six months without prior approval from Freddie. Freddie Mac can approve an additional six months after that.

Previously, Freddie Mac allowed servicers to grant up to three months of forbearance with no payment, or six months at a reduced payment, without prior approval.
The new options go into effect on Feb. 1.

Longer forbearance times used to be restricted to events such as natural disasters, permanent disability or long-term medical emergencies — and required prior approval.

William Dudley, president of the Federal Reserve Bank of New York, called for principal forgiveness from Fannie Mae and Freddie Mac, something both GSEs say is not worth doing.

By Les Christie @CNNMoney January 2, 2012

NEW YORK (CNNMoney) — Flippers, the real estate investors who buy homes on the cheap and quickly resell them at a profit, just got a reprieve from the Federal Housing Administration.

In an effort to help stabilize housing prices and unload some of the foreclosures that are flooding low-income communities, the mortgage insurer extended a waiver of its anti-flipping regulations through 2012.

The waiver, which was initially issued in 2010 and set to expire this month, suspends regulations that prohibit the agency from insuring mortgages used to purchase homes that are bought and resold in less than 90 days.

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Acting Federal Housing Administration Commissioner Carol Galante.

Low-income neighborhoods are particularly plagued by foreclosed homes that lower property values and act as magnets for crime and other social ills. Real estate flippers often rehab these damaged homes before reselling them, improving conditions for neighborhoods.

The FHA, which does not issue mortgages but insures them, is a primary player when it comes to mortgage lending in low-income communities. Many loans in these communities could not be issued without FHA backing.

The ban against flipping was initially put in place to prevent predatory flipping, in which homes are quickly resold at inflated prices to unsuspecting borrowers.

In order to qualify for the waiver, certain conditions must be met. The transaction must be “arms length” with no other relationship between seller and buyer.

In addition, if the new sale price is 20% or more above the previous selling price, the lender has to document and justify the increase and meet other conditions, such as making sure the home has been inspected.

Since the waiver went into effect in February of 2010, the FHA has insured more than 42,000 loans to purchase homes that were being resold within 90 days. These totaled more than $7 billion in mortgage principal.

With mortgage rates below 4% and prices near bottom in many

markets, it’s a good time to buy a house. But many owners won’t

sell because they can’t get the price they want.

To pay for the two-month payroll tax cut, a small fee will be levied for a decade on all mortgages sold to Fannie Mae and Freddie Mac. That also makes it harder to overhaul the housing finance system.

The Consumer Financial Protection Bureau’s new mortgage complaint service is an extension of the agency’s existing hotline for credit card-related disputes and inquiries.