HUD stepping up sales of seriously delinquent FHA loans

From AOL Real Estate

BY AOL REAL ESTATE, TUESDAY, DECEMBER 11, 2012.

Inman News®

Editor's note: This story is republished with permission of AOL Real Estate. See the original story, "HUD Mortgage Sale Could Help Thousands of FHA-Insured Borrowers but Unfairly Exclude Others."  

By TEKE WIGGIN

The U.S. Department of Housing and Urban Development has begun selling off thousands of seriously delinquent mortgages insured by the Federal Housing Administration, a move that could save many distressed borrowers from losing their homes. But it also leaves thousands more who are saddled with equally distressed FHA mortgages without any help, raising questions about its fairness.

HUD recently announced that it cut loose 9,400 loans in the first sale under its expanded Distressed Asset Stabilization Program, and the federal agency plans to sell at least 30,000 more over the next year. The mortgages are going at steep discounts to private investors and nonprofit organizations, which are expected to modify many of the loans. That could save a sizable pool of homeowners from foreclosure and help keep the FHA, which faces a shortfall next year, from seeking a bailout.

While this represents a step forward in combating the foreclosure crisis, HUD's DASP program touches only a fraction of the distressed homeowners with delinquent FHA-insured loans who are in dire need of assistance. The nearly 40,000 loans that HUD plans to have auctioned off by the end of next year is just a sliver of the 700,000 seriously delinquent mortgages on the FHA's books.

A seriously delinquent mortgage is classified as a loan that is 90 days or more past due. A large swath of the FHA loans -- more than the 40,000 being sold, experts say -- are at least six months past due and in foreclosure. That qualifies them for the DASP, assuming that the mortgages' servicers have exhausted all FHA loss-mitigation programs. So that means that thousands of borrowers with mortgages that are eligible for the DASP -- and, arguably, equally as deserving of it -- won't get it and will continue to drift toward eviction.

Read more:  http://www.inman.com/news/2012/12/11/hud-stepping-sales-seriously-delinquent-fha-loans

Mortgage rates fall to record lows again

By Les Christie @CNNMoney November 21, 2012: 11:02 AM ET

NEW YORK (CNNMoney) -- The nation's extremely favorable mortgage rates sank even lower this week, setting records for both the 30-year and 15-year fixed rate loans.

The 30-year fell to 3.31% from 3.34% last week, according to Freddie Mac(FMCC, Fortune 500), the government controlled mortgage backer. The 15-year rate averaged 2.63%, compared with 2.65% a week ago.

According to Keith Gumbinger, vice president of mortgage information company HSH Corp., the current conditions mean it may make sense for current mortgage borrowers and new homebuyers to look at shorter-term loans.

Related: Most affordable cities for buying homes

"If you're looking for Black Friday deals and door-busters, it's pretty hard to beat the savings," he said. "To really rack up savings, you might also consider a purchase or refinance using a loan with a term shorter than the traditional 30 years."

The numbers add up like this: Homeowners current paying off 30-year loans with rates of 4% spend about $1,098 a month in mortgage payments on a $200,000 balance, paying a total interest cost of $143,739.

Refinancing at 2.63% for 15 years would cost them about $250 a month more, but they would wind up paying just $42,250 in total interest and their payments would end years earlier.

Refinancing into another 30-year loan at 3.31% would cost homeowners only $877 a month, saving $221 from the existing loan. But the total interest paid would come to $115,725 over the life of the loan, a difference of more than $73,000 compared with the 15-year mortgage.

Related: 'I'm trapped in a high-rate mortgage

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Strong sales and tight inventory boost home prices

NAR: Median home price in October up 11.1 percent from a year ago

BY INMAN NEWS, MONDAY, NOVEMBER 19, 2012.

Inman News®

Housing trend image via Shutterstock.

A combination of rising sales and the lowest inventory in six years helped existing-home prices post annual gains for the eighth month in a row in October, the National Association of Realtors said today.

Sales of existing homes were up 2.1 percent from September to October and 10.9 percent from a year ago, to a seasonally adjusted annual rate of 4.79 million.

At $187,600, the national median price for all housing types including single-family homes, townhomes, condominiums and co-ops was up 11.1 percent from a year ago. The national median price last posted eight consecutive months of annual gains before the crash -- from October 2005 to May 2006.

Also released today, a survey by the National Association of Home Buildersshowed builder confidence rose in November for the seventh month in a row to its highest point since May, 2006.

Rising home prices are boosting home equity, and NAR Chief Economist Lawrence Yun thinks the improvement could be even greater next year.

"Rising home prices have already resulted in a $760 billion growth in home equity during the past year," Yun said in a statement. "Given that each percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year."

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NAR estimated there were 2.14 million existing homes listed for sale at the end of October, a 5.4-month supply at the current sales pace. That's the tightest inventory since February 2006, when the months' supply of homes stood at 5.2 months.

October's inventory is down from a 5.6-month supply in September, and represents a 21.9 percent decline from the 7.6-month supply that existed a year ago. Many analysts view a six-month supply of housing as an even balance between buyer and seller demand.

Homes were on the market for a median of 71 days in October, down 26 percent from a year ago when the time to sell an existing home took a median of 96 days.

First-time buyers accounted for 31 percent of purchasers in October, down from last October's 34 percent.

Distressed homes accounted for 24 percent of all existing-home sales in October -- down from 28 percent last October -- with an even split between foreclosures and short sales. Foreclosures and short sales sold for 20 percent and 14 percent, respectively, below market value.

All-cash deals accounted for 29 percent of October's sales -- the same as last year and a percentage point higher than September. Investors accounted for 20 percent of existing home sales in October.

Read More: http://www.inman.com/news/2012/11/19/strong-sales-and-tight-inventory-boost-home-prices

Home sales climb 2% in October

NEW YORK (CNNMoney) -- The pace of sales for previously owned homes rose in October, despite the devastation of Superstorm Sandy, in the latest sign of improvement for the long-battered housing market.

Existing home sales rose to an annual rate of 4.79 million, seasonally adjusted, the National Association of Realtors reported on Monday. That's up 2.1% from September, when the revised annual rate of existing home sales was 4.69 million. And it's an increase of 11% year-over-year, when the annual rate was 4.32 million.

That was also stronger than the forecast from analysts at Briefing.com, which called for an annual rate of 4.7 million existing home sales in October.

The National Association of Realtors said sales had gone up nationwide, "even with some regional impact from Hurricane Sandy," the deadly storm that caused massive disruptionsin the Northeast at the end of October.

Lawrence Yun, the association's chief economist, said the market is being driven by "growing demand with limited inventory" but it could run into strong headwinds from Sandy going forward.

"We expect an impact on Northeastern home sales in the coming months ... in storm-impacted regions," he said.

Related: Most affordable cities for homebuying

Home buyers are being lured by low mortgage rates. Last week, mortgage rates dropped again, pushing 15-year and 30-year fixed-rated loans to record lows.

Read more:  http://money.cnn.com/2012/11/19/real_estate/existing-home-sales/index.html?source=linkedin

Tax break for struggling homeowners set to expire

By Les Christie @CNNMoney November 7, 2012: 8:11 AM ET

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The clock is ticking on a tax break that saves struggling homeowners from paying thousands of dollars to the IRS.

NEW YORK (CNNMoney) -- The clock is ticking on a tax break that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for forgiven amounts in short sales and principal reductions.

"People trying to do short sales are freaked out about it," said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. "They're telling me they'll do whatever it takes to close by the end of the year."

Related: Where homes are affordable

Should the tax break expire, a large number of mortgage borrowers could be affected. More than 50,000 homeowners go through foreclosure each month. Meanwhile, the number of short sales has tripled over the past three years to a rate of about half a million a year. And, under the terms of the $25 billion foreclosure abuse settlement, roughly one million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years.

"If there ever was a no-brainer in housing policy, this would be it," said Jaret Seiberg, a policy analyst for Guggenheim Securities.

READ MORE: http://money.cnn.com/2012/11/07/real_estate/mortgage-forgiveness-tax-break/index.html

Government Set to Sell Foreclosures in Bulk

Published: Monday, 9 Jan 2012 | 9:11 AM ET

By: Diana Olick
CNBC Real Estate Reporter

The Obama administration, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, CNBC has learned.

The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.

There currently are about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are coming.

The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say.

Late-stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one and "the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted," according to LPS.

Knowing this all too well, the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA) at the helm, are engaged in a collaborative effort to face this new wave of foreclosures head on and figure out a way to keep these properties from sitting on the books of the government and sitting empty in the nation's neighborhoods.

As the Federal Reserve alluded to in its white paper on housing last week, "A government-facilitated REO-to-rental program has the potential to help the housing market and improve loss recoveries on reo portfolios." REO's (Real Estate Owned) are bank-owned properties, or, in this case, properties owned by the government-sponsored enterprises and the FHA. Three Fed governors pushed for similar plans in speeches last week, as well.

A pilot sales program will be starting in the very near future, according to administration officials. They are working on what the market potential is, what pricing would be, how government can partner with private investors, and who has the operational experience to manage so many properties.

"I think there is a fair amount of money in the wings waiting to buy, investors doing cash raises to buy properties on a large scale," says Laurie Goodman of Amherst Securities. "But that means they have to build out a rental organization; it means they build out a management company, because if you're accumulating a hundred homes in Dallas that's very different than running a multifamily building."

A number of institutional investors have shown appetite and interest in bulk REO deals, according to officials, but the plan has to incorporate ways to help facilitate financing. That has been one of the biggest roadblocks to deals already in the works between hedge funds and the major banks. Sources close to these private bank negotiations say there is plenty of cash to buy properties, but building out a management structure for the rentals is pricey, and some investors are finding the math doesn't add up to make it worth their while.

Larger investors want to be able to get real scale in any government program, in the range of 50, 100, 500 properties per deal, or $1 billion-plus in assets, say officials close to the plan. That's why the government is looking to test a combination of different approaches. Fannie Mae did a $50 million sale last June, but that was on the small side. Officials are evaluating at what larger asset sales beyond that would look like.

“We expect several pilots that will involve both local investors and institutional investors. The goal here is to reduce supply by converting foreclosed homes into rental units,” says Jaret Seiberg of Guggenheim Securities. “Less supply — even less fear about a flood of foreclosed homes hitting the market — could stabilize [home] prices.”

While much of this program will focus on local areas of distress, officials say they are looking at where the assets are today but are really more focused on where all the foreclosures will be in the future. It's not about the stock of foreclosures currently, it's about the flow of them over time and alternative ways to manage that flow.

Officials say they want to bring back private capital and help support rental opportunities for households, particularly when rent rates are up at the same time home prices are down.

Economic forecast for CO, U.S. in 2012

DENVER - As a financial expert, he says he's 'cautiously impressed' by the economic recovery of Colorado and the United States."

[The economy] still faces a lot of challenges. It started with real estate, heavy debt levels and has recently moved toward concerns about Europe. Despite all of these obstacles, the economy has continued to grow at a fairly modest but steady pace. It's very impressive." Vice President, Economist, and Executive for the Federal Reserve's Denver Branch, Mark Snead said.

Snead is part of an economic forecast panel hosted by Vectra Bank.

The 19th Annual Economic Forecast Breakfast was held Thursday morning. Mark Snead along with President, Development Research Partners, Patricia Silverstein and CEO, Contango Capital Advisors, George Feiger were the keynote speakers at the event.

They say similar to most years, 2012 should provide challenges, bright spots and even the 'unknowns.

'Snead says the economic recovery of the US is very closely tied to housing.

"It's a big problem. It seemingly is an attractable problem but the fundamentals have improved on one side. Affordability is extremely high, the demographic issues that we've had --people moving in together to increase the size of households-- that is probably going to reverse itself. So, the fundamentals look good. The problem is just large amount of inventory overhang and it may take two or three selling seasons to clear that inventory. It's a big problem," he said.



Read More: http://www.9news.com/dontmiss/243450/630/Economic-forecast-for-CO-US-in-2012