16% of all buyers change their mind from the time they sign the contract to the time they open escrow. Never before has there been such buyer’s remorse. I believe that this is a direct result of the people they know, like and trust, influencing them based on stories they know or believe to be true. We all know someone that has been affected by our recent shift in the real estate market, and it’s easy for someone to have an opinion on whether or not it may be a good or bad time for someone to purchase a home.

11% of all properties fall out of escrow due to low appraisals. There is no doubt that the market continues to place downward pressure on pricing, and the fact that we have these appraisal issues supports that fact. A lot of these appraisal issues may be corrected in time… Many of today’s appraisal’s come in low because the contract price that was agreed upon was 3, 4 or even 6 or more months back. Now that the Lender has approved the short sale, value is no longer there. As the lenders continue to become more organized and systematized, they continue to speed up the short sale process. As the short sale process continues to speed up, we should see less of these appraisal problems.

Bottom line… now more than ever, you need to work with a real estate professional that understands the market, has a deep understanding of value, and one that is intimately familiar with what to expect during the process.

Please feel comfortable giving me a call or sending me an email should you have any questions or simply wish to discuss this further.

By Jim Puzzanghera and Alejandro Lazo, Los Angeles Times -March 30, 2011
Reporting from Washington and Los Angeles—

Major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork, according to government officials involved in the negotiations.

The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to reduce the amount some homeowners owe on their loans, said two officials, who spoke on the condition of anonymity because negotiations are ongoing.

The goal of short sales would be twofold: provide a quicker and more economical way for banks to dispose of distressed real estate and to help stabilize the real estate market by clearing out a backlog of defaulted mortgages that are poised for foreclosure.

They would be used in situations in which borrowers were so underwater that the more costly and time-consuming process of foreclosure would seem to be the only option.

Read the full article here

High residential vacancies are killing many housing markets, as foreclosed homes sit on the market and depress sale prices and property values.

The national vacancy rate at 11.4% according to a release Tuesday from the Census Bureau.

“Vacant homes equal more downward pressure on home prices,” said Brad Hunter, chief economist for Metrostudy, a real estate information provider.

Maine had the highest proportion of empty housing stock, at 22.8%. Other states with gluts of empty houses included Vermont (20.5%), Florida (17.5%), Arizona (16.3%) and Alaska (15.9%).

The way the census calculates the vacancy rates, however, is problematic. It includes properties such as ski lodges, beach houses and pied-à-terres that many real estate statisticians would not.

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These are often summer homes or second homes, but census lumps them together with homes that have been sold but not occupied, empty homes for sale or rent, and homes used by migrant workers. Basically, anything other than a primary residence is considered vacant.

“You can only live in one home,” said William Chapin of the Census Bureau’s Housing Statistics Branch. “If you own five homes that you occasionally live in, four of them will be counted as vacant.”

But Paul Bishop, the vice president for research for the National Association of Realtors, countered that these properties aren’t vacant in the usual sense of the term. “A vacation home is hardly the same situation as a foreclosed home that has been taken back by the bank,” he said.

Read the full article here

Lenders would have to originate mortgages with at least a 20% down payment if they want to repackage the loan to sell to other investors without keeping some of the risk on their books, according to a proposal that U.S. bank regulators endorsed Tuesday.

The Federal Deposit Insurance Corp. board and the Federal Reserve agreed to seek public comment on the proposal, which is intended to restore lending discipline and define the safest form of mortgages that can be completely resold to other investors.

However, the rule is expected to have little near-term effect because not many investors are yet eager to buy repackaged mortgages and because it would not include loans sold to mortgage finance giants Fannie Mae and Freddie Mac.

Last year’s Dodd-Frank financial reform law requires firms that package loans into securities — a practice known as securitization — to keep at least 5% of the credit risk on their books.

Read the full story here

Fixed mortgage rates edged up this week, but even 30-year rates below 5 percent have done little to boost home sales.

Freddie Mac said Thursday the average rate on the 30-year fixed mortgage rose to 4.81 percent from 4.76 percent the previous week. It hit a 40-year low of 4.17 percent in November.

The average rate on the 15-year fixed mortgage increased to 4.04 percent from 3.97 percent. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

Mortgage rates tend to track the yield on the 10-year Treasury note, which rose this week.

Still, low rates haven’t helped the weak housing market. In February, sales of previously occupied homes fell 9.6 percent and new-home sales tumbled to the slowest pace in nearly a half-century.

High unemployment, a record number of foreclosures and tight lending standards have kept people from making purchases. Other would-be buyers are waiting for home prices to bottom out, which most economists predict won’t happen until midyear.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
read the full article here

In the years since the financial crisis, adjustable-rate mortgages, or ARMs, with their low initial interest rates that changed over time, have been considered riskier than fixed-rate loans and shunned by most buyers. But these days more people are being persuaded to give the loans a try.

This time around, lenders are rolling out more conservative ARM products — without the gimmicky extra-low “teaser” rates that adjust every six months, or the “pick-a-pay” and “option” features that allow borrowers to pay less than the monthly interest, only to be hit with a huge bill down the road.

Those ARMs were hallmarks of the subprime mortgage boom that fueled the soaring rate of mortgage defaults and home foreclosures nationwide.

“An adjustable now is basically a prime product,” said Michael Moskowitz, the president of Equity Now, a lender in New York. “There’s definitely a comeback in their popularity.”Read the full article here

Memo to sellers: you’ve got more competition this spring. Price those homes accordingly.

Nationally, the inventory of unsold homes on multiple-listing services increased by 0.6% in February from one month prior. Over the past year, inventory is up by 13%, according to Move Inc. The data covers all single-family homes, condominiums, and town houses listed on nearly all multiple-listing services across the country.

For the month of February, listings increased in 107 markets versus January, and they declined or stayed flat in 39.

Cities with the largest monthly declines in unsold homes listed for sale in February:

Fort Lauderdale, Fla. (-12.5%)
Riverside, Calif. (-8.7%)
Tulsa, Okla. (-6.1%)
Cities with the largest monthly increases in unsold homes listed for sale in February:

San Francisco (6.3%)
San Jose, Calif. (5.5%)
Boulder, Colo. (5.2%)

Washington —— Sales of previously owned homes dropped 9.6% in February and prices fell to their lowest level since 2002, reflecting a continued slump in the U.S. real estate market.

The National Assn. of Realtors on Monday said home resales dropped to an annual rate of 4.88 million from an upwardly revised 5.4 million in January. The data is seasonally adjusted.

Economists surveyed by MarketWatch expected sales to drop to a rate of 5.1 million.

Sales of new and used homes have been down in the dumps since a housing market bubble burst during the recession. High unemployment, combined with stricter lending standards, have made it harder for Americans to buy homes despite low interest rates.

FEDERAL Housing Administration mortgages, the government-insured loans that have surged in popularity in recent years, will be getting slightly more expensive this spring.

The F.H.A. announced this month that it was raising the annual mortgage insurance premium for borrowers by a quarter of a percentage point — to 1.1 or 1.15 percent of the loan amount for 30-year fixed-rate loans, and 0.25 or 0.50 for 15-year or shorter-term loans.

The higher premium applies to F.H.A. loans taken out on or after April 18.

The agency called the change a “marginal increase” that would be “affordable for almost all home buyers who would qualify for a new loan.” But industry experts say that some consumers, especially those considered marginal borrowers, may now be prevented from buying or refinancing a property.

The annual premium for 30-year loans was already changed in November, to 0.85 percent or 0.9 percent; the level used to be 0.50 percent or 0.55 percent. (The annual premium for 15-year or shorter-term loans, previously zero to 0.25 percent, did not change at that time.)

Read the full article here

Banking regulators are pushing for mortgage-lending rules that require homeowners to make minimum 20% down payments on loans classified as lower-risk, according to people familiar with the matter.

The proposal is being floated as a way to rewrite the rules for mortgage lending to prevent a rerun of the housing bubble and financial crisis that resulted from years of easy credit. The Dodd-Frank financial overhaul law enacted last year enabled regulators to define a so-called gold-standard residential mortgage that would be exempt from costly new rules.

At least three agencies—the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency—back a proposal to require home buyers to put down at least 20% of the sales price in order to obtain one of these “qualified residential mortgages.” One proposal would also require borrowers to maintain a 75% loan-to-value ratio for refinances, and a 70% loan-to-value for cash-out refinances in which the borrower refinances into a larger loan, according to people familiar with the matter.

Mortgage-finance giants Fannie Mae and Freddie Mac would also be exempt from the rules while they remain in conservatorship, according to these people. The U.S. took over the firms in 2008, and the Obama administration has proposed eventually winding them down.

View the full article here