Housing FInance Agency Initiative - Low Income Assistance

Housing Finance Agency Initiative Offers Assistance to Lower-Income Homebuyers

The federal government announced its new housing finance agency initiative, intended to provide additional assistance to lower and middle income home buyers and renters.

Online PR News – 27-November-2009 – Austin, TX ( Onlineprnews ) November 27, 2009 — The federal government announced its new housing finance agency initiative, intended to provide additional assistance to lower and middle income home buyers and renters. The hfa initiative offers two types of help to state and local agencies. First, it provides a temporary source of credit and liquidity for these agencies to shore up their financial situation and assist them in managing outstanding bonds. Secondly, it offers a new bond purchase program to allow state and local hfas to provide financing for new projects and rehabilitation of existing properties.

The first portion of the initiative is the temporary credit and liquidity program. Under the new initiative, the department of the treasury will use the backing provided by freddie mac and fannie mae securities to underwrite existing loans; essentially, the federal government will purchase a financial interest in certain loans held by state and local hfas, freeing up additional capital for new loans and allowing hfas a measure of financial stability that recent market conditions may have endangered.

The second portion, referred to as the new issue bond program, will directly offer temporary financing to hfas. This will allow the state and local agencies to provide new mortgages to lower income borrowers who might not be able to obtain financing through other means. It is expected that this initiative will provide hundreds of thousands of mortgages to first-time homebuyers. Refinance opportunities will also be made available to homeowners caught in the credit crunch.

The hfa initiative is expected to provide more affordable interest rates to lower income home buyers by subsidizing those rates at the state and local level, allowing more families the opportunity to purchase their own home. While these programs are temporary, they are expected to have a significant effect on home sales. Additionally, since the funding for these programs will come from loans and bonds, rather than tax dollars, the programs are expected to pay for themselves throughout their duration.

"The housing finance agency initiative will help more families purchase their first home," joe cline of austin-based affinity properties said. "this will provide much needed stability for the entry-level housing market in austin and throughout texas, and give a boost to the real estate market in general." Economic experts agree with this assessment, noting the need for a stabilizing influence at the lower end of the housing market has never been more urgent. State and local hfas are expected to submit plans for participation in the initiative to the federal government within the next few weeks.

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Housing slowdown not evenly distributed in Denver area

By John Rebchook on November 17, 2009 · Comment · Email This · ShareThis

Denver-area single-family home building in the Denver-area is down by 44 percent in the first nine months of this year, and townhome and condo activity has dropped a whopping 58.88 percent in the first nine months of the year. But even as the year spirals to the worst on record for building permit activity, the pain is not evenly spread.

In Denver, for example, in the first nine months of the year, builders pulled only 292 permits for single-family homes, a 56.8 percent decline from the 676 in the first three quarters of 2008. Townhome and condo activity in Denver, however, fared relatively well. Builders pulled 147 single-family attached permits through September, only 17 percent fewer than the 177 issued in the first nine months of 2008.

Read more from John Rebchook at his blog, InsideRealEstateNews.com. Rebchook wrote about residential and commercial real estate for 26 years at the Rocky Mountain News.

Housing Bottom?

Housing Bottom? "Not Even Close," Barry Ritholtz Says

Posted Nov 24, 2009 02:07pm EST by Aaron Task

Related: XHB, TOL, DHI, PHM, MAS, LOW, USG

A fifth-straight monthly gain for the Case-Shiller Index Tuesday and Monday's stronger-than-expected existing home sales report is giving renewed hope to the housing bulls.

"Disregard them," says Barry Ritholtz, CEO of Fusion IQ, who notes the existing home sales number was juiced by sales of cheap condos and various government programs. Meanwhile, the Case-Shiller results were below expectations.

We are "not even close" to a bottom in housing, says Ritholtz, who estimates national house prices remain 15-20% overvalued, based on the traditional metrics of: median income-to-median sales price, the cost of owning vs. renting, and housing stock as a percent of GDP.

"Until we start seeing a healthy housing market that can stand on its own, without government props, without distressed properties selling 60% off peak levels - that's how you know the bottom is in," says the blogger and Bailout Nation author. (Full disclosure: I edited Ritholtz's book and was paid for my contributions.)

The likely best-case-scenario for housing is several years of sideways action for prices, wherein population growth and a firmer economy combine to sop up the still huge inventory of homes on the market.

"And that's if we're lucky," Ritholtz says, citing the lackluster environment for jobs and wages, as well as CoreLogic's analysis that 23% of all U.S. mortgage holders are under water, as reported in The WSJ. With so many Americans owing more money than their homes are worth, the recent rise in foreclosures and so-called jingle mail is "not nearly done," he warns.

In sum, expect more homes for sale at distressed prices and more downward pressure on prices overall -- unless the "real" economy shows dramatic improvement, which Ritholtz doesn't see anytime soon, as discussed here.

Foreclosures: 'Tide may be turning'

The number of foreclosures inched down in October, the third consecutive month of declines. Filings still higher than a year ago.

By Les Christie, CNNMoney.com staff writer

Last Updated: November 12, 2009: 10:44 AM ET

NEW YORK (CNNMoney.com) -- Could the foreclosure plague be ending?

Foreclosure filings were down 3% in October, the third consecutive month-over-month dip, according to RealtyTrac, the online seller of foreclosed homes.

To be sure, foreclosure rates are still elevated from a year ago: They're up 18% compared with October 2008. But the month-over-month decrease followed a 4% drop in filings during September and a 1% fall in August.

"Three consecutive monthly declines is unprecedented for our report, and, on first blush, an indication that the foreclosure tide may be turning," said James Saccacio, RealtyTrac's CEO, in a prepared statement.

He cautioned, however, that three consecutive singles does not constitute a hitting streak. So there still may be dark days ahead.

"The fundamental forces driving foreclosure activity in this housing downturn -- high-risk mortgages, negative equity, and unemployment -- continue to loom over any nascent recovery," he said. "And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states."

Broad economic distress, such as the rising unemployment rate, has RealtyTrac spokesman Rick Sharga thinking that declining foreclosures may be artificial rather than a real trend. "Processing delays and legislative actions are slowing down foreclosures," not actual improvement in the market, he said.

The slowdowns include banks taking time to judge whether some loans are eligible for the Making Home Affordable program, President Obama's foreclosure-prevention initiative that was passed last spring.

And new state-level regulations have also lowered foreclosure statistics. One such rule that took effect July 1 in Nevada allows homeowners who receive notices of default to demand mandatory mediation with their lenders.

As a result, "There was a 27% drop in filings in October in Las Vegas," said Sharga. "That hasn't happened in, like, forever."

Those factors may have especially delayed bank repossessions. RealtyTrac reported 77,077 REOs in October, down 12.2% compared to September, when nearly 88,000 homes were lost. For the year, there have been a total of 700,929 properties taken back by banks.

Home prices on the increase

One positive trend is that home prices have recorded modest gains over the past few months. As a result, fewer mortgage borrowers owe more than their homes are worth. And that's good news for the foreclosure rate.

Foreclosures require a double trigger, said Sharga. The first is that mortgage borrowers must have experienced a financial setback, such as medical bills, divorce, unemployment and the like.

The second trigger is owing more on the mortgage than the home is worth. Millions of borrowers are in that position: More than 20% of borrowers are underwater, according to Zillow.

Most will continue to pay off their mortgages. However, if a family member loses their job or someone gets sick or the loan resets to a much higher interest rate, that's when the home may be lost.

Homeowners with positive home equity are in less jeopardy. Even if they run into unexpected expenses or periods of unemployment, they can tap their home value, via a home equity loan or cash-out refinance, to tide them over.

The usual suspects

The "sand states," Nevada, California, Florida and Arizona, continued to suffer the worst foreclosure problems. Nevada had the highest foreclosure rate in the nation, one filing for every 80 housing units.

In second place was California, where filings dipped 1% to one filing for every 156 households. The state, by far the most heavily populated, had more filings, 85,420, than any other.

Florida, with 51,911 filings, had the third highest foreclosure rate, one for every 168 households. Arizona was fourth with one for every 200.

Idaho has moved up the list of worst foreclosure states this year; it had a rate of one filing for every 255 households during October, more than double its rate in October 2008 and good for fifth place among states.

Other huge rate increases were recorded by New Mexico, up 371% year-over-year; Hawaii, which recorded a 134% spike; Wisconsin, up 128%; and Maryland, where filings jumped 124%.

Las Vegas is still the worst hit metro area. More than one in every 68 households received a filing during October, fives times the national average.

First Published: November 12, 2009: 3:47 AM ET

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Thursday, November 12, 2009

RealtyTrac: Sharp foreclosure decline in Colorado

Denver Business Journal - by Mark Harden

Colorado saw a sharp decline in home foreclosures in October, both from the previous month and from a year ago, according to RealtyTrac Inc.'s latest monthly "U.S. Foreclosure Market Report."

A total of 5,047 Colorado properties were in some stage of the foreclosure process in October, down 18.75 percent from September and down 6.08 percent from October 2008, according to data released late Wednesday MST by RealtyTrac, an Irvine, Calif.-based marketer of foreclosed properties.

Colorado saw one foreclosure filing for every 421 homes in October, the 11th-highest rate in the nation among the 50 states, down from ninth in September and eighth in August, RealtyTrac said.

But Colorado's relatively high ranking among the states is misleading, because the top few states on the RealtyTrac list accounted for most U.S. foreclosures in October. Colorado's foreclosure rate as calculated by the company was better than the one-in-385 rate for the nation as a whole.

RealtyTrac said four states accounted for 52 percent of the nation’s total housing foreclosure activity in October: California, Florida, Illinois and Michigan.

And Nevada had the highest foreclosure rate as it has for three years, with one in every 80 households in foreclosure, the report said.

The good news for the nation as a whole was a 3.3 percent decline in home-foreclosure filings between September and October -- the third straight month-over-month drop. The bad news is, U.S. foreclosures were up 18.86 percent from the year-ago October.

"Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning," RealtyTrac CEO James Saccacio said in a statement. RealtyTrac.

"However, the fundamental forces driving foreclosure activity in this housing downturn — high-risk mortgages, negative equity, and unemployment — continue to loom over any nascent recovery," Saccacio said. "And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states."

Colorado officials have long disputed the state's often high position on RealtyTrac's monthly lists, arguing that RealtyTrac overcounts its foreclosures in this state partly because Colorado's public trustees report foreclosures at each stage of the process.

Colorado ranked first in RealtyTrac's monthly foreclosure-rate ranking for most of 2006. But Nevada moved into the top spot in 2007 and has held it ever since.

RealtyTrac officials contend their methodology is fair.

"If more than one foreclosure document is received for a property during the month, only the most recent filing is counted in the report," RealtyTrac said in a statement.

RealtyTrac's data covers housing foreclosure data in all three phases of foreclosure — default notices, scheduled auctions and bank repositions — according to the company. RealtyTrac collects data from more than 2,200 U.S. counties, which account for more than 90 percent of the country’s population.

Click here for the full RealtyTrac foreclosure report for October.

Renee McGaw contributed reporting.

Denver again named a top real estate market to watch

Denver again named a top real estate market to watch

Denver ranked in the top 10 of national cities to watch in the recently released Emerging Trends in Real Estate 2010 Report by PricewaterhouseCoopers and the Urban Land Institute. (Download full report.)

Nationally, 2010 is expected to be a challenging year for the commercial real estate industry. However, survey participants believe that the markets performing well before the crash should perform better coming out of it and the laggard markets will continue to suffer. The report noted cities across the country that investors should watch in 2010, including Denver. This marks the third year in a row the report has highlighted Denver among top tier cities.

"Denver marshals its attractive Rocky Mountain lifestyle attributes and works hard to fortify its downtown core into a multifaceted, 24-hour commercial center," officials said in a press release. "While avoiding financial industry implosions, the local economy gets a boost from green initiatives—the city is a national hub for companies in alternative energy, wind-farm manufacturing, and natural gas."

According to the report, real estate investors consider the following aspects:

• Global gateway markets on the East and West coasts—featuring international airports, ports, and major commercial centers.
• Cities and urbanizing infill suburbs with 24-hour attributes—upscale, pedestrian-friendly neighborhoods; con¬venient office, retail, entertainment, and recreation districts; mass transit alternatives to driving; good schools (public and/or private); and relatively safe streets.
• Brainpower centers—places that offer a dynamic combi¬nation of colleges and universities, high-paying industries—high tech, biotech, finance, and health care (medical centers, drug companies)—and government offices.
• Barrier-to-entry markets where geographic constraints—rivers, lakes, oceans, and mountains—limit development and help control overbuilding.
• Often, the most coveted markets have most, if not all, of these elements. In this year’s report, investors also showed a preference for some growth-oriented markets that did not get overheated or overpriced in recent years.
• Investors shy away from:
  • Midwest manufacturing centers—automaker travail deflates interest to new lows;
  • Secondary and tertiary cities—anywhere you can’t fly direct to from the global pathway centers;
  • Hot-growth bubble-burst markets, which collapsed under plunging housing prices; and
  • Fringe areas—the exurbs and places with long car com¬mutes or where getting a quart of milk means taking a 15- minute drive.

Now in its 31st year, the Emerging Trends report is the oldest, most highly regarded annual industry outlook for the real estate and land use industry and includes interviews and survey responses from more than 900 leading real estate experts

Avoid foreclosure: Rent your own home

Fannie Mae implements deed-for-lease program that allows troubled borrowers who don't qualify for loan modifications to stay in their homes.

By Tami Luhby, CNNMoney.com senior writer

Last Updated: November 5, 2009: 5:59 PM ET

NEW YORK (CNNMoney.com) -- Giving troubled borrowers yet another way to avoid foreclosure, Fannie Mae said on Thursday it would allow eligible homeowners to rent their own homes.

The Deed for Lease program lets homeowners transfer the deed back to their lender and then sign a lease to remain in the home. The effort is aimed at borrowers with mortgages owned or guaranteed by Fannie Mae who do not qualify for or cannot sustain a loan modification. Borrowers must live in the home as their primary residence and must be released from any subordinate liens.

The program aims to reduce the number of foreclosed properties being abandoned because they often fall into disrepair and hurt the surrounding homes' values. Also, it keeps a roof over troubled borrowers' heads and a steady stream of income coming from the property. Tenants of homeowners may also be eligible for leases.

"This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," said Jay Ryan, vice president of Fannie Mae, a mortgage-guarantee firm under federal government control.

Homeowners must show they can afford market rent, but that payment cannot be more than 31% of the borrower's pre-tax income. Leases may be up to 12 months, with the possibility of renewal or month-to-month extensions. If the property is sold, the new owner picks up the lease.

"It really buys them time," said Paul Habibi, real estate professor at UCLA's Anderson School of Management.

Stopping foreclosures

But in the long-run the program only delays the inevitable sale of the distressed properties.

While this initiative is not part of the Obama administration's loan modification program, the White House is leaning heavily on Fannie Mae and its sister firm, Freddie Mac, to assist in stemming the foreclosure crisis.

Freddie Mac launched a program in January that allowed borrowers to stay in their homes on a month-to-month basis after they go through foreclosure.

Despite the government and financial industry initiatives, foreclosures hit an all-time high in the third quarter. During that time, 937,840 homes received a foreclosure letter -- whether a default notice, auction notice or bank repossession, according to RealtyTrac.

Last month, Treasury officials announced that 500,000 troubled borrowers have been put into trial modifications under the president's plan. The program calls for eligible homeowners to pay no more than 31% of their pre-tax income toward their mortgages.

At the same time as it tries to ramp up its loan modification program, the administration is looking for ways to help those not eligible for adjustments. In May, officials unveiled a program to incent borrowers and loan servicers to participate in short sales and deeds in lieu. Under that initiative, borrowers get up to $1,500 to assist with relocation expenses and Treasury pays servicers $1,000 when the deal is completed.

Short sales, in which the home is sold for less than the mortgage balance and loan servicers may forgive the difference, and deeds in lieu, in which borrowers voluntarily forfeit the deed and the debt may be erased, are faster and cheaper than foreclosure.

First Published: November 5, 2009: 1:40 PM ET

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Thursday, November 5, 2009

Homebuyer tax credit extended, expanded

Denver Business Journal - by Kent Hoover Washington Bureau Chief

The House of Representatives passed legislation Thursday that would extend and expand the tax credit for first-time home buyers.

The provision was included in a bill that also extends unemployment benefits by an additional 14 to 20 weeks and lets all companies, not just small businesses, carry back current losses to offset profits made as long as five years ago.

The bill passed the House on a 403-12 vote. The Senate passed the legislation 98-0 Wednesday, and President Barack Obama is expected to sign it into law Friday.

The $8,000 first-time home buyer tax credit, which helped home sales rebound this year, was scheduled to expire Nov. 30. The legislation extends it to homes that are under contract by April 30, 2010, and creates a new $6,500 tax credit for owners of existing homes who buy a new principal residence. To take advantage of this credit, buyers must have lived in their old house for at least five of the past eight years.

The legislation also increases the income eligibility limits for the tax credit from $75,000 to $125,000 for individuals, and from $150,000 to $225,000 for joint filers. The cost of the home cannot exceed $800,000.

More than 1.4 million households have benefited from the current tax credit, “the majority of whom have incomes below $50,000,” said Rep. John Lewis, D-Ga.

“This legislation would help even more moderate-income families fulfill the American dream,” he said.

Sen. Johnny Isakson, R-Ga., pushed the Senate to expand the tax credit to “move-up” home buyers. He said this is the last time the tax credit will be extended.

“I urge all Americans, whether they’re first-time buyers who’ve always dreamed of buying a home of their own or someone who’s been gridlocked in the failure of our move-up market, to take advantage of this opportunity,” said Isakson, a former Realtor.

The National Association of Home Builders predicts the extended and expanded tax credit will generate 180,000 additional home sales.

“Today’s action by Congress will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

The National Association of Manufacturers praised Congress for expanding the net operating loss (NOL) carry-back provision to all businesses. Businesses normally can use current losses to offset taxes paid in the previous two years, enabling them to get a tax refund. The economic stimulus bill enacted in February allowed businesses with annual revenue of under $15 million to carry back losses for five years. The new law allows larger businesses to get this break as well.

“This provision is urgently needed,” said Monica McGuire, NAM’s senior policy director for taxation. “More than 20 percent of small and medium-sized NAM members reported NOLs in 2008, and we expect that number to double for 2009. This relief will give manufacturers the ability to transform a future tax benefit to cash today and stem the flow of mounting job losses.”

Also approved by Congress was an extension of federal unemployment benefits by up to 20 weeks, depending on a state’s unemployment rate. Colorado is likely to qualify for a 14-week extension because its unemployment rate is below a 8.5 percent threshold for a longer extension.

Another provision of the legislative package allows businesses to write off certain losses during the recession.

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