Expanded Home Buyer Tax Credit to Cost $10.8 Billion

October 30, 2009

Majority Leader Harry Reid’s office just sent an outline of the Senate Democrats’ plan to extend and expand the home buyer tax credit. Much of this was covered in my previous blog post. But there’s one new detail that hasn’t been reported elsewhere. It will cost $10.8 billion. That’s a bit more expensive than the existing credit, which will have cost taxpayers about $8.5 billion by the time it expires Nov. 30.

tax credit

Some more details:

*The credit is available for homes that go under contract by April 30, 2010 and close within 60 days after that.

*It will be attached to a bill to extend unemployment benefits, but it’s unclear when that bill will be voted on.

* First-time buyers (those who have not owned a home for three years) can claim an $8,000 credit. Homeowners who buy a new principal residence after living in their current home for at least the last five years can claim up to $6,500.

*Income limits: $125,000 a year for individuals, $225,000 a year for married couples.

* The proposal will include anti-fraud measures, including minimum age requirements and additional authorities for the IRS.

Moody’s Economy.com chief economist Mark Zandi hasn’t yet come up with a cost figure for the current proposal, but he said the $10.8 billion figure “that sounds in the ball park.”

Source: BusinessWeek

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Written by djumper · Filed Under Real Estate Blog 

Thirty Year Fixed Mortgage Rates Continue to Decline

October 30, 2009

The weekly average rate borrowers were quoted on Zillow Mortgage Marketplace for 30-year fixed mortgages decreased ten basis points last week to 4.87%, down from 4.97% the week prior, according to the Zillow Mortgage Rate Monitor, compiled by real estate website ZIllow.com. Rates for 15-year fixed mortgages fell six basis point to 4.32% from 4.38%, and 5-1 adjustable rate mortgages fell seven basis points to 3.80%, from 3.87% the week prior.

The volume of mortgage requests last week fell 9.6% from the prior week. Of last week’s requests, 45% were for refinance loans, 53% were for purchase loans and 2% were for home equity loans. The prior week, 47% of requests were for refinance loans, 51% were for purchase loans and 2% were for home equity loans.Mortgage1

Rates for 30-year fixed purchase mortgages rose, with the average rate on Zillow Mortgage Marketplace at 4.92%. Thirty-year fixed mortgage rates varied by state. Missouri mortgage rates, and Illinois mortgage rates decreased the most, from 5.17% to 4.93% in Missouri and from 5.13% to 4.91% in Illinois. New York mortgage rates (5.03%) and Connecticut mortgage rates (4.96%) were the highest in the country, while Oregon mortgage rates (4.83%), Washington mortgage rates (4.84%), California mortgage rates (4.84%) and Texas mortgage rates (4.84%) were the lowest.

For more information, visit www.Zillow.com.

Source: RISMedia

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Written by djumper · Filed Under Real Estate Blog 

4 Ways to Stage Your Home and Create a Well-Rounded First Impression

October 29, 2009

Feeling good about a home and a neighborhood is part and parcel of making the decision to buy, so staging a home should involve more than just raising the charm factor. Look for ways to also make the house say “safe and secure” to ensure a more well-rounded first impression.

In the course of my adult life, I’ve lived in 14 different residences, six of which have been single-family homes that I bought. Like most people, each time I had my list of must-haves in terms of living space, floor plan flow, structure, amenities, etc. But as I was also new to the area for half of those decisions, I was also interested in knowing more about the neighborhood and surrounding environment and would always envision myself coming home after dark. Even the most charming tree-lined street takes on a different character when the sun goes down.House

Home as a sanctuary has moved from cultural trend to the essence of what makes a house a home. The term “sanctuary” covers everything from the basic need of shelter, a place of refuge, security, as well as a home that fits the lifestyle of the family living there. Gone are the days when showing a house with a home security system or solid deadbolts might signal the buyer to think the neighborhood was unsafe. Today, a home properly equipped to address general security issues is expected and has become the norm. Making a home more secure doesn’t have to be expensive or time consuming.

Here are some options for sellers to consider:

1. Hedging your bet-Trimming the bushes at the front entry and near the windows of the home adds curb appeal and opens sight lines around entrances.
2. Security with style- Choose attractive storm doors and entry doors with more secure locking options.
3. Light it up- Motion-activated lighting, timer controls and dusk-to-dawn options paired with path lighting and landscape lighting means the curb appeal of the home doesn’t go down with the sun.
4. High-tech peace of mind-Easy-to-install, whole-home wireless security systems and monitoring means you can control locks, lights and cameras from a computer or cell phone.

A buyer in the market for a new home today has more options than ever, and each has his or her own list of must-haves. Leverage the opportunity to show a home’s strength by marrying curb appeal and charm with a few upgrades that deliver on peace of mind.

Melissa Birdsong is vice president for Trend, Design & Brand, Lowe’s Companies, Inc.

For more information, please visit www.lowes.com.

Source: RISMedia

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Written by djumper · Filed Under Real Estate Blog 

Could Home Prices See a Double Dip?

October 29, 2009

Home price numbers have ended their free-fall, but a lot housing experts are still concerned about a possible double-dip.

Integrated Asset Services, which tracks troubled properties, says its House Price Index fell .2% in August. It’s the second down month in a row for the index, which saw a 2.8% rise in this year’s first quarter.For Sale

The slowdown, however slight, is ominous, says Dave McCarthy, president and CEO of Integrated Asset Services. That’s because there’s a “shadow inventory” of foreclosed properties that remain unlisted and unsold that could throw a monkey wrench in the housing recovery. “We know there’s a sizable inventory of bank-owned homes out there that will be listed at some point, and that could ignite a new wave of stress in the housing market,” McCarthy says.

According to Integrated, several of the nation’s hardest-hit areas may already be feeling the strain. The index reports two of the country’s most distressed counties—San Joaquin in California (Stockton) and Lee in Florida (Fort Myers)—both of which were down nearly 50% from their high-water marks, fell another 7% in August.

Integrated’s numbers are very similar to those reported by real estate info site Zillow.com. It’s numbers, released today, say housing prices nationally were down .1% in August, versus July. Zillow was only slightly less downbeat than Integrated on prices going forward. “Nationally, we may see September turn in a positive month-over-month change in home values but, thereafter, values are expected to start dropping again, and we expect them to keep dropping until sometime in the spring of this coming year, at which time we will have reached a true bottom in home values nationally,” Stan Humphries, the firm’s chief economist says.

Humphries is particularly concerned about the expiration of the $8,000 first time home buyer tax credits on Dec. 1. Without them, buyers may be less anxious to buy.

The Southern California market, which led the nation into the boom and the bust, is still showing signs of improvement, says researcher MDA DataQuick. September was the 15th month in a row with a year-over-year sales gain, although last month’s was the smallest of those increases, the company says.

The median price paid for a Southern California home was $275,000 last month, the same as in August and down 10.9 percent from $308,500 in September 2008. It was the smallest year-over-year decline since November 2007. The region’s overall sale price has held steady on a month-to-month basis since the 7-year low of $247,000 hit in April of this year. The median price peaked at $505,000 in mid-2007.

Source: BusinessWeek

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Written by djumper · Filed Under Real Estate Blog 

BusinessWeek: Which Lenders Made the Worst Home Loans?

October 28, 2009

The worst mortgage loans were made in 2006, according to research by data provider MDA DataQuick. And those loans are begining to blow up now. According to DataQuick’s numbers, the lenders with the most foreclosure related filings in this year’s third quarter in California—-a hot bed of dicey loans were:
Countrywide (now Bank of America) with 7,583 default filings.

Washington Mutual, 5,146.

Wells Fargo, 4,425.

Bank of America loans not made by Countrywide accounted for 1,979 more filings and World Savings, now a part of Wells Fargo, had an additional 4,237. The numbers show the extent to which just a handful of big banks are bearing the burden of the mortgage crisis.

Mortgage1While World Savings, formerly Golden West Financial, had the highest percentage of loans from that 2006 period default at 11.9%, its stinky loans were nothing compared to the subprime orginators’ dismal record. Here are some of the numbers for them:

The default percentage at ResMAE Mortgage was 73.9 percent, Ownit Mortgage 69.5 percent, BNC Mortgage 61.4 percent, Argent Mortgage 59.9 percent and First Franklin 59.4 percent.

Some of this bad news is circular because First Franklin was acquired by Merrill Lynch which was subsequently bought by Bank of America. If you’re having trouble getting a loan officer from B of A on the line, now you know why, he’s busy!

The overall number of mortgage default notices filed against California homeowners fell last quarter compared with the prior three-month period. A total of 111,689 default notices were sent out during the July-through-September period, down 10.3 percent from the prior quarter, but still up 18.5 percent from the third quarter 2008. DataQuick cites changes in lender foreclosure policies and an uptick in the number of mortgages being renegotiated.

The firm says lenders may have intentionally slowed down the pace of foreclosures. “If so, it’s not out of the goodness of their hearts,” said John Walsh, DataQuick president. “It’s because they’ve concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interest.”

Source: BusinessWeek

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Written by djumper · Filed Under Real Estate Blog 

U.S. Home Prices for August 2009 off 11.3% From Year Ago

October 28, 2009

Data through August 2009, released by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, one of the leading measures of U.S. home prices, show that the annual rate of decline of the 10-City and 20-City Composites improved compared to last month’s reading. This marks approximately seven months of improved readings in these statistics, beginning in early 2009. The annual returns of the 10-City and 20-City Composite Home Price Indices, declined 10.6% and 11.3%, respectively, in August compared to the same month last year. Nineteen of the 20 metro areas and both Composites showed an improvement in the annual rates of decline with August’s readings compared to July. Cleveland was the only exception.

“Broadly speaking, the rate of annual decline in home price values continues to improve,” says David M. Blitzer, chairman of the Index Committee at Standard & Poor’s. “The two Composites and 19 of the 20 metro areas showed an improvement in the annual rates of return, as seen through a moderation in their annual declines. Looking at the monthly data, 17 of the MSAs and both Composites saw price increases in August over July. While many of the markets remain down versus this time last year, the relative rate of decline has shown some real improvement. California, in particular, has seen some real positive prints in recent months. We see this general trend whether you look at the as-reported data or the seasonally adjusted figures. Once again, however, we do want to remind people of the upcoming expiration of the Federal First-Time Buyer’s Tax Credit in November and anticipated higher unemployment rates through year-end. Both may have a dampening effect on home prices.”Mortgage

The index levels for the 10-City and 20-City Composite Indices show that as of August 2009, average home prices across the United States are at similar levels to where they were in the autumn of 2003. From the peak in the second quarter of 2006 through the trough in April 2009, the 10-City Composite is down 33.5% and the 20-City Composite is down 32.6%. With the relative improvement of the past few months, the peak-to-date figures through August 2009 are -30.2% and -29.3%, respectively.

In terms of annual declines, all metro areas and the two composites remain in negative territory, albeit most showing an improvement over the previous month’s figures. Dallas and Denver are continuing their trend from the past month, edging closer into positive territory with August figures of -1.2% and -1.9%, respectively. In addition, both New York and San Diego have emerged out of double-digit declines. New York was down 9.6% in August and San Diego was down 8.9%.

In the monthly data, only Charlotte, Cleveland and Las Vegas reported monthly declines in August over July. Minneapolis and San Francisco reported positive returns greater than +2.0%, and nine of the MSAs plus the two Composites reported monthly returns greater than +1.0%.

Source: RISMedia

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Written by djumper · Filed Under Real Estate Blog 

Home Prices Rise Again … But Don’t Get Used to It

October 28, 2009

Home prices rose 1% in August from the seasonally-adjusted July level — the third month in a row of increases, according to S&P/Case Shiller home price index.

The 20-city index was down 11.3% on a year-over-year basis but the drop is only that severe because prices are measured against values in August 2008, before the economic meltdown pushed up unemployment and dragged down home prices. A few months from now we’ll be comparing prices to post-Sept. 15, 2008 prices and the actually year-over-year change could very well be in positive territory.

MortgageBut the $8,000 tax credit for first time buyers that’s set to expire Nov. 30 has made it difficult to evaluate the seasonally-adjusted gains posted during the summer. Buyers were rushing to take advantage of the program and that drove sales. If the Congress doesn’t vote to extend the credit, sales could drop in coming months.

Source: BusinessWeek

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Will Risky FHA Loans Prompt Another Big Bailout?

October 27, 2009

The excellent BusinessWeek cover story last year by Chad Terhune and Robert Berner laid out the fact that the nation’s housing market was becoming ever more dependent on the Federal Housing Administration and yet some of the same scoundrels who made risky subprime loans were now originating new loans, this time with the federal government’s backing.

ForeclosureNow the actions of those wolves are beginning to show. Last week the FHA announced that its capital levels may dip below the dangerous 2% level. In hearings on Oct. 8 before the House Financial Services Subcommittee on Housing and Community Opportunity, Edward Pinto, an independent financial consultant and former Fannie Mae exec, testified that the agency may need a major taxpayer bailout within the next two to three years.

The FHA now insures more than 25% of the mortgages in the country. That’s up from just 3% in 2006, as it picked up much of the slack from all the lenders that went out of business. But as Pinto noted, the FHA’s numbers are worrisome. The agency’s percentage of loans in foreclosure has nearly doubled over the past ten years to 4.4%. Its volume of loans has quadrupled since 2006, while its top loan limit climbed to $729,000 from $362,000 in the past year. The agency accounts for 90% of the so-called high loan to value loans, those where home buyers have less than 10% of the purchase price as a down payment. The less money homebuyers have at risk, the more likely they are to default.

Pinto said the FHA needs to drastically change its lending requirements, raising downpayments, lowering loan limits and requiring lenders to insure a part of the loan to keep them honest.

Even the go-go cheerleader for the industry, the Mortgage Bankers Association is calling for Congress to put on the brakes. David G. Kittle, Chairman of the association, testified that lenders originating FHA loans need more rigorous licensing and registration requirements, as well as net worth and minimum bonding requirements. “Net worth requirements serve to assure that a originator has a stake in the industry,” he said.

David H. Stevens, Assistant Secretary for Housing and FHA Commissioner, conceded that the agency expects higher losses than previously estimated. He noted that the FHA has not loosened its underwriting standards and in fact has experienced a significant improvement in credit quality of newly insured borrowers, from an average FICO score of 633 two years ago to 693 today. He wants to hire the agency’s first Chief Risk Officer. He’s also boosting net worth requirements of mortgage originators from $250,000 to $1 million. The FHA is changing some of its terms for borrowers, for example, not letting them roll their closing costs onto the balance of the loan, a trick that further reduced their equity in the home.

Source: BusinessWeek

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Written by djumper · Filed Under Real Estate Blog 

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