Month: March 2010

Home prices in 20 cities rose 0.3% in January

Bloomberg News

March 30, 2010, LA Times

Home prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands.

The S&P/Case-Shiller home-price index climbed 0.3 percent from the prior month on a seasonally adjusted basis after a similar gain in December, the group said Tuesday. The gauge was down 0.7 percent from January 2009, the smallest year- over-year decrease in three years.

Cheaper homes, low borrowing costs and government incentives are combining to support the housing market, which helped trigger the worst recession since the 1930s. A lasting recovery requires gains in hiring that may help stem foreclosures, easing the pressure on prices and giving Americans the confidence to spend.

“Housing is off the bottom, and home prices are finding a bottom,” said Stuart Hoffman, chief economist at PNC Financial Services Group. “Prices aren’t free-falling anymore.”

Seasonally adjusted home prices were forecast to fall 0.3 percent from the prior month, according to the median forecast of 18 economists surveyed by Bloomberg News. Estimates ranged from a decline of 0.8 percent to a gain of 0.2 percent.

The gauge was projected to drop 0.7 percent from January 2009, according to the survey median, following a 3.1 percent decrease in the 12 months ended in December. Year-over-year records began in 2001.

“While we continue to see improvements in the year-over- year data for all 20 cities, the rebound in housing prices seen last fall is fading,” David Blitzer, chairman of the index committee at S&P, said in a statement.

Compared with the prior month, 12 of the 20 areas covered showed a seasonally adjusted increase. Los Angeles had the biggest gain from December, rising 1.8 percent.

Some recent industry reports have indicated renewed price pressure. Twelve cities, including Boulder, Colorado, and Providence, Rhode Island, are showing extended declines in housing values, reversing signs of a recovery that began last year, according to Seattle-based Zillow.com, a real estate information provider.

The number of markets in a “double dip” jumped in January from five a month earlier, said Zillow, which defines a double dip as five consecutive price drops after at least five straight monthly increases. The gains must have been preceded by a period where values fell in at least 10 of 12 months.

One reason home values are depressed is that foreclosed houses are adding to inventory of unsold homes, which compete with more expensive new housing.

http://www.latimes.com/business/la-fiw-case-shiller31-2010mar31,0,2859515.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fbusiness+%28L.A.+Times+-+Business%29

Governor Schwarzenegger Signs $10,000 Homebuyer Tax Credit Legislation

03/25/2010   Office of the Governor

Governor Arnold Schwarzenegger today returned to the La Ventana Homes project in Fresno where he kicked off his campaign to extend and expand the hugely successful homebuyer tax credit to sign legislation that will do just that. AB 183, authored by Assemblymember Anna Caballero (D-Salinas) and Senator Roy Ashburn (R-Bakersfield), will provide a tax credit of up to $10,000 to Californians who are buying their first home or purchasing a brand new home. This legislation, part of the Governor’s larger California Jobs Initiative, will play a key role in getting our economy moving again by encouraging home ownership and stimulating job creation.
 
“I have been up and down the state pushing this important housing bill that will get people off the fence and into homes while creating jobs and stimulating our economy – and today I am proud to take action and put it into law,” said Governor Schwarzenegger. “Creating jobs is my number one priority and I am glad that I have been able to sign two job-creating bills in two days. I applaud the legislature for their great work and encourage them to keep it up and pass the remaining job-creating elements of my California Jobs Initiative.”
 
AB 183 was passed by the legislature on March 22 and gives the Franchise Tax Board authority to extend a total of $200 million in tax credits to California homebuyers; $100 million for buyers of new, unoccupied homes and another $100 million for first-time buyers of existing homes. The credit will be extended from May 1, 2010 to December 31, 2010. The tax credit will be available to buyers on a first-come, first-served basis and is applied in equal amounts over a period of three taxable years. To qualify, the buyer must not be a dependant and must purchase a home that does not belong to a relative.
 
Governor Schwarzenegger fought hard to extend and expand the homebuyer tax credit after its successful run in 2009. That $100 million tax credit, which was approved in February 2009, ran out after just four months with 10,659 Californians claiming the credit – increasing home purchases, jumpstarting building projects and boosting local economies. In fact, La Ventana Homes saw a 300 percent increase in sales when the tax credit went into effect.
 
The homebuyer tax credit is a part of the larger California Jobs Initiative that the Governor proposed in his State of the State address in January to create jobs and stimulate the economy. Today’s bill is the second piece of it to be approved by the legislature. A sales tax exemption on green-tech manufacturing equipment was also approved to encourage green businesses to relocate and invest in California. The Governor signed that yesterday.

http://gov.ca.gov/press-release/14712/

Schwarzenegger expected to sign new $10,000 California homebuyer tax credit

UNDISCLOSED SHORT SALE PAYMENTS MAY BE ILLEGAL

TAKEN FROM CAR (CALIFORNIA ASSOCIATION OF REALTORS)

Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws.  Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller’s senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow.  Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014).  Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500).  Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent’s participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

New Program to Speed ‘Short’ Sales

 

By Amy Hoak, The Wall Street Journal 03/14/2010

Short sales are a valuable tool for struggling homeowners. But they’ve been notoriously difficult to complete, with buyers and sellers often playing a long waiting game before hearing back from lenders.

Now, however, a new government program plus some lender initiatives may make for shorter wait times and a smoother process. “Any structure is better than what we’ve had,” says Kathryn Bovard, a broker/manager for Prudential Americana Group in the Las Vegas area.

Short sales are useful for borrowers who are underwater on their mortgage, owing more on the home than it’s currently worth. In a short sale, the homeowner’s lender accepts less than what the borrower owes on the mortgage in order to complete the sale. Both parties thus avoid the foreclosure process.
Foreclosure Alternatives

The government’s Home Affordable Foreclosure Alternatives (HAFA) program goes into effect April 5.

“It’s an extension of [the Home Affordable Modification Program] to provide a default solution before it gets to the worst,” says Arvin Wijay, chief executive of Retreat Capital, a provider of products and services that facilitate short-sale management and loan modifications. If the borrower doesn’t qualify for a modification, loan servicers will then assess the possibility of a short sale through the HAFA program.

Here are some ways HAFA is expected to improve the traditional short-sale process:

  • Borrowers will receive pre-approved short-sale terms before listing the property, including either a list price approved by the servicer or the acceptable sale proceeds, according to the U.S. Treasury Department. That way, sellers know what lenders will accept before listing the property.
  • There’s a set timeline, with deadlines for lenders and sellers to keep the short-sale process moving.
  • At the completion of a sale, borrowers may get up to $1,500 for relocation expenses and servicers may receive compensation of up to $1,000. Up to $3,000 of proceeds are available to distribute to subordinate lien holders, making it possible to compensate second-mortgage lenders.

Still, some in the industry are skeptical that the new program will be a great help to people.

“The homeowner should be encouraged that the government is doing something,” but people should not expect it “to change the world overnight,” says Fred Weaver, co-owner of Group 46:10, a team of agents who focus on short sales as part of Keller Williams Arizona Realty, in Tempe, Ariz.

Successful implementation also depends on servicers’ staff. “Some servicers are good at finding the right people, and have the right technology,” says Mr. Wijay. Some, he says, are not.

In the past, it was common for one mortgage-servicer employee to be responsible for managing hundreds of short-sale applications. But the method with which short sales are approved is starting to improve at some firms, and some banks have made staffing adjustments to better handle the volume.

“Banks are trying to put programs in place to facilitate more short sales in a shorter period of time,” says Mr. Weaver.

Some of the most recent efforts have allowed borrowers and real-estate agents to use an Internet portal to help improve communication, allowing them to submit paperwork electronically instead of faxing it, a practice that’s under way at GMAC Mortgage and Bank of America, according to Mr. Weaver. And lenders including Wells Fargo have committed to increasing their staff to deal with short sales, Ms. Bovard says.

Lenders “have finally gotten on board with the fact that short sales will be a large part of the market over the next 24 to 36 months,” says Ms. Bovard.

While the popularity of short sales differs by market, in the Las Vegas brokerage that Ms. Bovard runs, 70% of pending sales are now short sales, she says.

According to the latest Campbell/Inside Mortgage Finance survey of real-estate market conditions, short sales were the most popular category of sales for distressed properties. In January, short sales accounted for 15.9% of home-purchase transactions, compared with 13.4% of sales that were damaged bank-owned properties and 13.8% of sales that were move-in-ready bank-owned properties.

Short sales typically sell for 91% of their listing price, according to the survey results. Move-in-ready bank-owned properties typically sell for 99% of their listing price.

Words of Advice

For homeowners considering a short sale, Ms. Bovard says it’s important they speak to their trusted advisers, including their attorney and tax accountant, as well as a real-estate agent who has a short-sale designation.

When looking for a real-estate agent, says Kevin Kauffman, co-owner of Group 46:10, homeowners should ask about the agent’s track record with short sales: “How many have you closed? The follow-up question: How many did you fail on — how many went into foreclosure?”

Also, ask questions about the agent’s strategy in getting the job done, he says.

For buyers, a lot of patience is required to finish one of these deals, says Ms. Bovard. “It’s a long, involved process. But the payoff is getting a tremendous value.”

http://online.wsj.com/article/SB126852717191861875.html#

Permanently modified mortgages grow by 45%, government says

In February, the number of homeowners with permanently reduced monthly payments grew to 168,708, the Obama administration reports, as 91,483 more trial modifications are approved.

By Jim Puzzanghera LA times

11:37 AM PST, March 12, 2010

The Obama administration Friday said its mortgage modification program continued to make progress, with the number of homeowners receiving permanently reduced monthly payments in February increasing by 45% to 168,708.

An additional 91,483 three-month trial modifications have been approved by the companies servicing the mortgages and were awaiting acceptance by the borrowers, the Treasury Department reported. While the numbers continue a steady increase in recent months, only about 15% of homeowners who have started trial modifications have had them made permanent.

The $75-billion Home Affordable Modification Program was launched last year to ease the foreclosure crisis by providing cash incentives to mortgage companies to lower payments for homeowners who were 60 days or more behind on their loans. The goal is to modify 3 million to 4 million mortgages through 2012.

The program began slowly, particularly in converting temporary modifications into permanently lowered payments. In December, Obama administration officials began aggressively pushing banks and other mortgage servicers to make more of the modifications permanent. At the end of November, there were just 31,424 permanent modifications.

But as the number of permanent modifications has increased, the pace of new trial modifications under the program has slowed, according to the report. There were 835,194 active trial modifications in February, compared with 830,438 in January. The median payment for permanent modification is 36% lower than before the modification, with a savings of more than $500 each month, the Treasury Department said.

The Los Angeles- Orange County area had 5.9% of all the program’s trial and permanent modifications, second only to the New York City area’s 6.1%. The Inland Empire was tied for fourth with 4.7% of the activity.

http://www.latimes.com/business/la-fi-mortgage-modifications13-2010mar13,0,5788149,print.story

Foreclosures leveling off

By Les Christie, staff writerMarch 11, 2010

NEW YORK (CNNMoney.com) — The national foreclosure rate fell 2% in February from a month earlier, according to an industry report released Thursday, the latest sign that the pace of foreclosures is slowing.

In January, the foreclosure rate had fallen 10% from December, according to RealtyTrac. And though foreclosures were up 6% in February from a year earlier, even that marks the smallest jump since RealtyTrac began calculating year-over-year increases in January 2006.

Still, RealtyTrac CEO James Saccacio cautioned against calling an end to the foreclosure crisis, citing several factors that could be masking underlying weakness.

“This leveling of the foreclosure trend is not necessarily evidence that fewer homeowners are in distress and at risk for foreclosure, but rather that foreclosure prevention programs, legislation and other processing delays are in effect capping monthly foreclosure activity — albeit at a historically high level,” he said.

Lenders create the processing delays by not putting borrowers in default as soon as they fall behind on their payments. Instead, they evaluate their situations to decide whether they can benefit from the Obama administration’s mortgage modification program.

That means many distressed mortgages are not counted in RealtyTrac’s report; its numbers may be artificially depressed.

Also keeping a lid on foreclosures in February was foul weather, with heavy snow storms leading to court closings.

“If the county clerk’s office is dark, it affects our numbers,” said RealtyTrac’s spokesman Rick Sharga.

It’s possible that March will see a resurgence of foreclosure numbers. “We saw the same thing last January and February,” said Sharga, “then, all hell broke loose in March.”

Six states accounted for 60% of all foreclosure filings. California, with 68,562, led all states and had the fourth highest rate, with one of every 195 households receiving a filing.

http://money.cnn.com/2010/03/11/real_estate/foreclosures_leveling_off/index.htm?hpt=T2