Mortgage giants Fannie Mae and Freddie Mac announced an extension of their “First Look” programs, granting buyers seeking a primary residence a full 20 days to submit offers on REO properties ahead of investor competition.
Previously, the First Look period was 15 days long. Freddie Mac’s program operates under HomeSteps First Look initiative and Fannie Mae’s version operates under the HomePath system. The expanded 20-day program took effect for HomeStep listings on or after Dec. 17. Fannie Mae’s First Look HomePath program is effective for properties listed on or after Jan. 2, 2014.
The programs are designed to promote owner-occupancy in communities, which the mortgage giants believe contributes to neighborhood stabilization. Some second home purchases are also eligible for HomeSteps First Look program. However, purchases of investments or rental properties are not eligible.
“This is especially important for buyers competing for opportunities in markets where home inventories are shrinking,” says Chris Bowden, senior vice president of HomeSteps. “Expanding the HomeSteps First Look Initiative underscores our commitment to managing HomeSteps’ REO inventory in a way that’s good for taxpayers, homebuyers, neighborhoods, and Freddie Mac.”
Freddie Mac and Fannie Mae offer a 30-day bidding window for buyers in Nevada, a state that has one of the highest foreclosure rates in the country.
SOURCE: Realtor Magazine
Home buyers unable to find a home earlier this year are taking to the market this winter despite the colder weather and limited inventory, according to realtor.com’s Winter Home Buyer Report.
More than 1,300 people looking to buy a home during the winter months told realtor.com that lingering conditions from the past home-buying season, including inventory challenges and all-cash offers, continue to set the tone for them as they enter the winter season.
“This summer and spring home-buying season was particularly challenging for buyers, especially first-time home buyers trying to compete with all-cash offers and bidding wars because of reduced inventory,” said Alison Schwartz, vice president of corporate communications at realtor.com. “In fact, a quarter of the winter home buyers revealed they are in the market now because they were unable to find a home during this last home-buying season.”
While the majority of winter home buyers describe themselves as relocation buyers, downsizers are also a large portion of those looking to buy a house in the next four months, according to the report.
There are advantages to looking for a home in the winter, Schwartz said.
“Motivated sellers, better prices and less competition between buyers are some of the top reasons winter home buyers are interested in purchasing a home during the colder months of the year,” she said.
Here are more highlights from the Winter Home Buyer Report:
Biggest challenges when searching for a home during winter:
- 45 percent of respondents said there is not enough inventory within price range;
- 34 percent said there is not enough inventory on the market;
- 29 percent said winter weather makes house hunting unpleasant;
- 7 percent said there are too many buyers in the market.
Top reasons consumers are looking to buy a home in winter:
- 26 percent of respondents said sellers are more motivated to sell and willing to negotiate;
- 24 percent said they think home prices will be better;
- 24 percent said they were unable to buy a house during spring or summer;
- 20 percent said they think there will be less competition between buyers.
The current purchase status of those surveyed includes the following:
- 28 percent of respondents said they are relocation buyers;
- 19 percent said they are existing homeowners downsizing to a smaller or less expensive home;
- 19 percent said they are first-time home buyers;
- 15 percent said they are current homeowners moving up to a bigger or more expensive home.
Amount of cash winter home buyers are planning to use for their down payment:
- 13 percent of buyers are planning to put down 3.5 percent cash (United States Federal Housing Administration loan);
- 23 percent are planning to put down 10 to 20 percent cash;
- 22 percent are planning to put down 21 to 99 percent cash;
- 19 percent are planning to put down 100 percent cash.
Of those planning to use all cash, the respondents fall into the following categories:
- 29 percent of respondents are downsizing to a smaller or less expensive home;
- 26 percent are relocation buyers;
- 11 percent are moving up to a bigger or more expensive home;
- 11 percent are buying a vacation home.
Source: National Association of Realtors
Existing-home prices are continuing to edge up across the country, but sales aren’t keeping pace. Here are five key indicators for the housing market from the National Association of REALTORS® ‘latest existing-homes report, which reflects September data:
- Home prices: The median price nationally for an existing home in September was $199,200, up 11.7 percent from a year ago. Home prices have had 10 consecutive months of double-digit year-over-year increases.
- Home sales: Sales of existing single-family homes dropped 1.5 percent in September to a seasonally adjusted annual rate of 4.68 million. However, sales remain 10.9 percent above year-ago levels. Meanwhile, existing condo and co-op sales dropped 4.7 percent in September but are 8.9 percent above year-ago levels.
- Distressed homes: Foreclosures and short sales accounted for 14 percent of September sales. That’s up from 12 percent in August. A year ago, distressed home sales made up 24 percent of the market. “Lower levels in the share of distressed sales account for some of the growth in median prices,” NAR notes. In September, foreclosures were sold at an average discount of 16 percent below market value; short sales were being discounted by an average of 12 percent.
- Inventory: Housing inventory in September held steady, with a 5-month supply at the current sales pace. NAR’s report shows that 2.21 million existing homes were available for sale in September. For-sale inventory is 1.8 percent higher than a year ago.
- Days on the market: The median time on the market for all homes was 50 days in September, up from 43 days in August but down from 70 days a year ago. Short sales were on the market for a median of 93 days in September; foreclosures were at 43 days. NAR notes that 39 percent of homes sold in less than a month in September.
SOURCE: Realtor Mag.
Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on Sept. 30, 2013. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down.
This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on NAR staff review of agency agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.
Latest Status Information
(as of Oct. 3, 2013 2PM ET)
Internal Revenue Service (IRS)
The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted. We have received indications that many loan originators are adopting revised policies during the shutdown, such as allowing for processing and closings with income verification to follow, as long as the borrower has signed a Form 4506T requesting IRS tax transcripts. On loans requiring a Form 4506T Fannie Mae and Freddie Mac have also adopted relaxed provisions allowing closings but subject to tax transcript verification before the GSE’s purchase the loans.
Social Security Administration (SSA)
The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing. As with IRS income verification, policies vary among lenders, with many choosing to exercise forbearance during the shutdown period subject to subsequent verification. Fannie Mae and Freddie Mac have also adopted policies to allow for closing subject to subsequent verification and before GSE purchase of the loan.
Department of the Interior – Bureau of Indian Affairs (BIA)
BIA has announced that there will be no processing or recording of property transactions on Leased Indian Tribal Land during the government shutdown.
Additional Status Information
(as of Oct. 1, 2013 7AM ET)
Federal Housing Administration
HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. You can expect some delays with FHA processing.
VA Loan Guaranty Program
Lenders will continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown. Expect some delays during the shutdown.
The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown, since NFIP is funded by premiums and not tax dollars. Changes to the flood insurance program scheduled to take effect on Oct. 1 will be implemented as scheduled.
Rural Housing Programs
For the U.S. Department of Agriculture programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lenders will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.
It is important to note that the traditional definition of “rural” for qualifying communities for assistance will be continued in effect during the shutdown. We expect that language to continue the current definition will be included in whatever funding measure is eventually enacted.
Government Sponsored Enterprises
Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds.
The Making Home Affordable program, including HAMP and HAFA, will not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary.
SOURCE: National Association of Realtors
Home prices rose in June to their highest levels in nearly five years, increasing 2.2 percent, according to the Case-Shiller Home Price Indices released Tuesday. The 20-city index was up 12.1 percent from a year earlier, and the companion 10-city index was up 11.9 percent.
Economists surveyed by Bloomberg had expected the 20-city index to increase 2.3 percent from May and 12.2 percent from a year ago.
Case-Shiller’s national index, reported quarterly by Standard & Poor’s, was up 7.1 percent in the second quarter to 146.32, its highest level since third quarter 2008.
All 20 cities included in the survey improved both month-to-month and year-to-year.
The two surveys have improved monthly and yearly for 13 consecutive months.
The national index has improved in four of the last five quarters, dropping only in the fourth quarter of 2012 in that stretch. The 7.1 percent quarter-over-quarter matched the increase in the second quarter of 2012 as the largest quarterly improvement since the national index began in 1987.
The national index was up 10.1 percent year-over-year, matching the gain in the first quarter as the largest annual jump since the first quarter of 2006.
The 10-city index rose to 173.37, up 3.73 from May, to the highest it has been since August 2008 when it was 173.35. The 20-city index rose 3.41 to 159.54, its highest since September 2008 when it was 161.64
In the same month, according to the National Association of Realtors, the median price of an existing single-family home rose 5.4 percent, up 13.3 percent from a year earlier.
According to the NAR, homes prices were held back by sales of distressed homes. Foreclosures, eight percent of transactions, the NAR said, sold for an average discount of 16 percent below market value in June, while short sales, seven percent of transactions, were discounted 13 percent.
Home values improved as well despite higher mortgage rates, which could have both a positive and negative impact: rising rates themselves might bring prices down as buyers look for affordable monthly payments, but also increase demand as buyers try to lock in rates before further increases. The increased demand against weak inventories would send prices up.
While good news for home sellers, the continued sharp increases—the indices have shown double-digit year-year increases for four months in a row —are likely to revive concerns of a growing housing bubble as personal income growth continues to stagnate.
Still the increase in home values, according to economic theory, should mean improved consumer spending. The “wealth effect” theory holds that consumers spend based on increase in net worth, not income. Home values accounted for about 25 percent of the increase in net worth in the first quarter, according to the latest data from the Federal Reserve.
The Case-Shiller Indices have gone up for seven straight months and 13 times in the last 15; each index dipped last October and November.
The monthly increases were led by Atlanta, where prices rose 3.4 percent from May to June. The price index for Atlanta is at its highest level since July 2010. The price index rose 3.3 in June in Chicago, bringing prices there to their highest level since October 2010. Prices rose 2.8 percent each in San Diego and Las Vegas, while prices were up 2.7 percent in San Francisco.
Prices have increase for 16 straight months in San Francisco to the highest level since February 2008. Prices in Las Vegas have increased for 15 straight months and are at their highest level since February 2009.
Prices were up 1.8 percent in Phoenix, the 21st straight month-over-month gain, and 2.3 percent in Los Angeles, the 16th consecutive monthly improvement.
Year-over-year the price gains were led by Las Vegas, where prices were up 24.9 percent since June 2012 and San Francisco, where prices rose 24.5 percent in the last 12 months. Those year-over-year price increases were followed by Los Angeles, up 19.9 percent, Phoenix, up 19.8 percent, and Atlanta, up 19.0 percent.
Despite the June improvement, the 10-city index is down 234 percent from its June 2006 high of 226.29, and the 20-city index is off 22.7 percent from its July 2006 peak of 206.52.
Home prices rose to their highest levels in almost five years in May, increasing 2.5 percent, according to the Case Shiller Home Price Indexes released Tuesday. The 20-city index was up 12.2 percent from a year earlier and the companion 10-city index was up 11.8 percent.
Economists had expected the 20-city index to increase 2.0 percent from April, a 12.3 percent annual improvement.
For the month, the 10-city index rose 2.5 percent and the 20-city index was up 2.4 percent.
All 20 cities included in the survey improved both month to month and year to year.
The two surveys have improved month-month and year-on-year for 12 consecutive months.
The 10-city index rose to its highest level since September 2008 and the 20-city index to its highest level since October 2008.
The home values found by Case Shiller continued to shrug off discounts in the sales of distressed properties. According to the National Association of Realtors distressed properties – foreclosures and short sales – accounted for 18 percent of home sales transactions in May – 11 percent foreclosures and seven percent short sales. Foreclosures, the NAR said, sold for an average discount of 15 percent below market value, while short sales were discounted 12 percent.
The home values improved too despite higher mortgage rates which could have both a positive and negative impact: rising rates themselves might bring prices down as buyers look for affordable monthly payments, but also increase demand as buyers try to lock in rates before further increases. The increased demand against weak inventories would send prices up.
The NAR reported the median price of an existing single family home rose 5.9 percent in May, an annual gain of 12.6 percent. The monthly Case-Shiller Home Price Indices use the “repeat sales method” of index calculation which includes data on properties that have sold at least twice, in order to capture the appreciated value of each specific sales unit, according to the description of the index on the S&P website.
While good news for home sellers, the continued sharp increases – the indices have shown double-digit year-year increases for three months in a row — are likely to revive concerns of a growing housing bubble.
The Case Shiller indices have gone up for six straight months and 12 times in the last 14; each index dipped last October and November.
Overall, the 10-city index rose to 169.69, its highest level since September 2008 when it was 173.35 while the 20-city index improved to 156.14, the highest level since October 2008 when it was 158.09. The index values in fall 2008 though were continuing to decline while the indices reported Tuesday reflect a market on the rise.
The month-month increases were led by San Francisco where prices rose 4.3 percent, the 15th straight month of price increases in that city. Prices rose more than three percent in May in four other cities: Chicago, up 3.7 percent, Atlanta up 3.4 percent and San Diego and Seattle where prices rose 3.1 percent.
Prices have improved for 20 straight months in Phoenix, 15 straight months in Los Angeles and 14 straight months in Las Vegas.
Year-year the price gains were led by San Francisco where prices rose 24.5 percent since May 2012, followed by Las Vegas, up 23.2 percent, Phoenix, up 20.6 percent and Atlanta, up 20.1 percent. Eight other cities – Detroit, Los Angeles, Miami, Minneapolis, Portland, San Diego, Seattle and Tampa – recorded double-digit year-year price gains.
Despite the May improvement, the 10-city index is down 25.0 percent from its June 2006 high of 226.29 and the 20-city index is off 24.4 percent from its July 2006 peak of 206.52.
In markets with high foreclosure rates, a short sale stigma may exist, and short sales may not be as sought among home buyers. Brokers may be at an advantage if they state in the listing that the nondistressed home they’re selling is “not a short sale,” suggests a new study, which evaluated 5,000 home sales in Boca Raton, Fla.
Homes listed as “not short sales” sold for 2 to 5 percent more than nondistressed homes that did not state that. Homes listed as “not a short sale” also sold faster, selling about 10 to 15 percent faster than other similar properties, according to the study’s author Ken H. Johnson, an associate professor at the Tibor and Sheila Hollo School of Real Estate at Florida International University in Miami.
“In some areas, buyers are probably starting to believe that short sales mean a big hassle because they’ve heard horror stories about waiting months for one or more banks to sign off on the deal,” Johnson says.
Johnson notes that the study’s findings speak to that particular local market in Boca Raton, “but I think you can extrapolate to other areas where we’ve seen a lot of distressed properties and foreclosures in the last few years,” says Johnson. “What we found is that, in those affected areas, there is a short sale stigma.”
SOURCE: Realtor Magazine
Confidence among the nation’s home builders in July jumped to the highest level since January of 2006, according to a monthly index from the National Association of Home Builders. This is the third consecutive monthly gain. The index stands at 57. Fifty is the line between positive and negative sentiment.
“Today’s report is particularly encouraging in that it shows improvement in builder confidence across every region as well as solid gains in current sales conditions, traffic of prospective buyers and sales expectations for the next six months,” noted NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. “This positive momentum could be disrupted by threats on the policy side, particularly with regard to the mortgage interest deduction and federal support for the housing finance system.”
All three components of the index rose in July. Current sales conditions rose five points to 60—the highest level since early 2006. The component gauging sales expectations in the next six months gained seven points to 67, and the component gauging traffic of prospective buyers rose five points to 45—marking the strongest readings for each since late 2005.
“Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten,” noted NAHB Chief Economist David Crowe. “Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften.”Sales of newly built homes rose just over 2 percent from May to June. Single family housing starts were flat. But permits, considered a more reliable indicator, gained 1.3 percent month-to-month.
Home builders have been hampered by a lack of finished lots on which to build, as well as by shortages in skilled labor and building materials. Builders have been raising prices in order to make up for higher costs, and record low interest rates have helped them to be able to do that.
“Builders may be somewhat insulated from rising rates due to price points. New homes typically aren’t “entry level” and buyers that qualify can generally weather a .375 percent to .75 percent change in rates without getting declined due to debt-to-income,” said Matthew Graham of Mortgage New Daily. “I think the confluence of rising prices and falling rates in the 3.25 percent range is what fueled the frenzy. Now we just have the rising prices part, so all things being equal, it should be cooling down.”