Archives for December 2012

Loan Demand for Home Purchases Hits Another High

Mortgage applications for home purchases reached a new high for the year for the third consecutive week, as 30-year mortgage rates sank to a new all-time low, the Mortgage Bankers Association reported Wednesday.

The MBA’s index measuring mortgage application activity for both home purchases and refinancing soared 6.2 percent for the week ending Dec. 7.  Applications for home purchases, viewed as a leading indicator of future home sales, rose 0.7 percent and hit another high point of the year.

Applications for refinancings — which make up the biggest bulk of the MBA’s index — rose 8 percent last week.

Home owners and buyers are rushing to take advantage of record low mortgage rates. Fixed 30-year mortgage rates dropped to the lowest point in history, averaging 3.47 percent for the week ending Dec. 7, down from 3.52 percent the previous week, according to the MBA.

SOURCE: Realtor News

Sun Valley Market Update YTD

Short Sales Make Up Bigger Share of Market

More lenders and home owners are viewing short sales as a better alternative than foreclosure. Reversing a trend in the third quarter, pre-foreclosure sales are now outnumbering sales of bank-owned properties.

Pre-foreclosure sales accounted for about 22 percent of all residential sales in the third quarter, according to the latest data from RealtyTrac. Distressed sales, in general, accounted for about 41 percent of the market share in the third quarter — still a significant make up of the real estate market.

“The shift toward earlier disposition of distressed properties continued in the third quarter as both lenders and at-risk home owners are realizing that short sales are often a better alternative than foreclosure,” says Daren Blomquist, vice president of RealtyTrac.

Short sales increased 15 percent in the third quarter over the previous quarter, according to RealtyTrac.

Pre-foreclosure properties sold for, on average, $191,025 in the third quarter — a 3 percent drop from the second quarter.

The discounts are still big for potential buyers: In the third quarter, the average sales price of a pre-foreclosure property was 27 percent below the average sales price of a non-foreclosure residential property, RealtyTrac reports.

SOURCE: National Association of Realtors®

Fannie Mae Announces Holiday Eviction Moratorium

Fannie Mae announced today that it will suspend evictions of foreclosed single family and 2-4 unit properties from December 19, 2012 through January 2, 2013.  Legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be allowed to remain in the home during this period.

“We’re taking this step in support of families who have faced financial challenges and gone through a foreclosure,” said Terry Edwards, Executive Vice President of Credit Portfolio Management, Fannie Mae. “The holidays are a chance to be with loved ones and we want to relieve some stress at this time of year.  We encourage homeowners having difficulty to reach out for help as soon as possible.”

Previously, Fannie Mae announced a temporary suspension of foreclosure sales and evictions in areas designated for individual assistance by FEMA due to Hurricane Sandy.  That 90-day suspension will last through February 1, 2013.

Homeowners can visit www.knowyouroptions.com for resources on how to prevent foreclosure, including contact information for Fannie Mae’s 12 Mortgage Help Centers located across the country.  Homeowners can also contact Fannie Mae at 1-800-7FANNIE for more information.

SOURCE: Fannie Mae

FHA OKs 2-Year Extension to ‘Anti-Flipping’ Waiver

Good news for single-family home investors, rehabbers and buyers seeking to use low down payment FHA financing: The temporary waiver of FHA’s 90-day “anti-flipping” rule was extended last week through 2014.

The waiver, which facilitates purchases of homes from sellers who have held title to their properties for less than 90 days, continues a policy first adopted by the Obama administration in 2010.

Starting in 2003, FHA had imposed the 90-day standard as part of an effort to rein in rampant quick-flips of houses where investors made minimal or no improvements to rundown, foreclosed or abandoned houses, then sold them days or weeks later at high price markups with the help of inflated appraisals to purchasers using FHA loans.

Those flips frequently involved collusion and fraud by teams of mortgage loan officers, realty agents and appraisers — even straw buyers who defaulted and disappeared without making a single payment — and racked up significant losses to FHA’s insurance fund. Neighborhoods suffered because the properties remained empty and in bad physical condition, depressing values of houses in the immediate vicinity.

Since 2011, FHA has made annual extensions of its waiver. This year, an FHA official told me Friday, the agency opted for a two-year term in order “to provide greater levels of certainty” for lenders and buyers, removing questions about whether, and for how long, the waiver would be continued. Since the first waiver in 2010, according to the official, FHA has successfully insured $11 billion worth of mortgages on 65,250 homes where the seller had held title for less than 90 days.

In a Federal Register notice Nov. 29 announcing the extension, Acting FHA Commissioner Carol J. Galante said the objective is to increase “the availability of affordable homes for first-time and other purchasers, helping stabilize real estate prices as well as neighborhoods and communities where foreclosure activity has been high.”

Among the key requirements that will continue during the latest waiver:

  • All transactions must be arm’s-length, with no identity of interest between the buyer and seller or other participants. Lenders are required to ensure that the seller actually holds title to the property. (In earlier flipping schemes, buy-sell transactions sometimes moved so fast that the seller never acquired legal title.) There should be no “pattern” of previous flips of the property during the 12 months preceding the transaction.
  • In cases where the sales price of the resold property is more than 20 percent more than what the seller paid for it, there must be documentation showing the renovations and repairs that justify the markedly higher resale price. A second appraisal may be used to substantiate the increase in value, but the second appraiser must be selected from FHA’s roster. When no significant renovations occur and the price is 20 percent higher than acquisition, the appraiser must provide “appropriate explanation” for the sudden increase.
  • Inspections are required of all the key components of the building structure and systems when price jumps exceed 20 percent. The inspection report must be provided to the purchaser before closing. If the inspection reveals structural or “health and safety” defects, repairs must be completed before the closing and a final inspection performed to ensure that the repairs have been made.

Real estate professionals and others involved in single-family investment activities welcomed the latest extension and its two-year time span. Kevin Kim, an agent with Windermere Preferred Living in Brea, Calif., said “this definitely benefits my investors, but it’s also good for communities” where high rates of foreclosure have left properties sitting around in deteriorating conditions.

Kim said most of his investor clients do not exceed the 20 percent price-increase threshold — “typically it’s more like 10 to 12 percent” — but they virtually all try to acquire, renovate and resell in less than 90 days.

Cathy Bureau, broker-owner of Green Home Realty in San Antonio, Texas, who specializes in the central areas of the city, says FHA’s two-year extension assures investors that there will be takeout financing for buyers, thereby cutting costs on the “hard money” line of credit financing they use to acquire their houses. At interest rates of 14 to 16 percent, “every day costs money,” she said, so for investors the ability to sell quickly after completing repairs is crucial.

SOURCE: Realtor Daily News

Home Prices Jumped At The Fastest Rate In 6 Years

National home prices, including that of distressed homes, climbed 6.3 percent year-over-year in October, rising for the eighth straight month, according to the latest data from CoreLogic. This is the biggest increase since June 2006.

On a monthly basis however home prices declined 0.2 percent.

“We are seeing an ongoing strengthening of the residential housing market,” said Anand Nallathambi, president and CEO of CoreLogic in a press release. “Reduced inventories and improving buyer demand are contributing to stability and growth in home prices which is essential to the long term health of the housing market and the broader economy.”

Here are some details from the report:

  • Excluding distressed sales, home prices rose 5.8 percent on the year, and 0.5 percent from the last month.
  • The pending home price index (HPI) projects that November home prices including distressed sales will rise 7.1 percent on the year, and decrease 0.3 percent on the month.
  • Meanwhile, home prices ex-distressed sales are projected to rise 7.4 percent on the year, and 0.5 percent on the month.
  • The recovery is “broad-based” and sand (Arizona, Nevada, California) and energy states (North Dakota) are seeing the most home price appreciation.
  • “Including distressed sales, the five states with the highest home price appreciation were: Arizona (+21.3 percent), Hawaii (+13.2 percent), Idaho (+12.4 percent), Nevada (+12.4 percent) and North Dakota (+10.4 percent).”
  • “Including distressed sales, the five states with the greatest home price depreciation were: Illinois (-2.7 percent), Delaware (-2.7 percent), Rhode Island (-0.6 percent), New Jersey (-0.6 percent) and Alabama (-0.3 percent).”
  • “Excluding distressed sales, the five states with the highest home price appreciation were: Arizona (+16.6 percent), Hawaii (+12.2 percent), Nevada (+10.8 percent), Idaho (+9.7 percent) and California (+9.7 percent).”
  • “Excluding distressed sales, this month only three states posted home price depreciation: Delaware (-2.1 percent), Alabama (-1.5 percent) and New Jersey (-0.2 percent).”

Here’s a look at the trajectory of home prices since 2002: