SOUTH CENTRAL WISCONSIN HOMES REAL ESTATE

Homes Could Have Been, and Can Be Saved!

2012-02-07T08:59:00.000-06:00

I am glad to see this is happening now, but why did it take so long, and its too little to late for all who have lost their homes and family life as they new it. All I can say is, lets look forward to a positive out come for those who still have a chance. I pray this is a trend that will be sustained!

Census: Recession takes big toll on young adults

2011-09-23T10:10:00.000-05:00

WASHINGTON (AP) — Young adults are the recession's lost generation.

In record numbers, they're struggling to find work, shunning long-distance moves to live with mom and dad, delaying marriage and raising kids out of wedlock, if they're becoming parents at all. The unemployment rate for them is the highest since World War II, and they risk living in poverty more than others — nearly 1 in 5.

New 2010 census data released Thursday show the wrenching impact of a recession that officially ended in mid-2009. There are missed opportunities and dim prospects for a generation of mostly 20-somethings and 30-somethings coming of age in a prolonged period of joblessness.

"We have a monster jobs problem, and young people are the biggest losers," said Andrew Sum, an economist and director of the Center for Labor Market Studies at Northeastern University. He noted that for recent college graduates getting by on waitressing, bartending and odd jobs, they will have to compete with new graduates for entry-level career positions when the job market does improve.

"Their really high levels of underemployment and unemployment will haunt young people for at least another decade," Sum said.

Richard Freeman, an economist at Harvard University, said young people "will be scarred and they will be called the 'lost generation' — in that their careers would not be the same way if we had avoided this economic disaster."

The latest figures also show a rebound in the foreign-born population to 40 million, or 12.9 percent, the highest share since 1920. The 1.4 million increase from 2009 was the biggest since the mid-decade housing boom and could fuel debate in this election season about immigration strategy.

Most immigrants continue to be low-skilled workers from Latin America, with growing numbers from Asia also arriving. An estimated 11.2 million people are in the U.S. illegally.

People age 65 and older tended to return to or stay in their jobs, accounting for the few employment gains in recent months. About 1 in 6 older people is now in the labor force. That's the highest level since the 1960s, before more generous Social Security and Medicare benefits made it more attractive to retire.

Employment among young adults 16-29 was 55.3 percent, compared with 67.3 percent in 2000; it's the lowest since the end of World War II.

Young males who lacked a college degree were most likely to lose jobs due to reduced demand for blue-collar jobs in construction, manufacturing and transportation during the downturn. Among teenagers, employment was less than 30 percent.

The employment-to-population ratio for all age groups from 2007-2010 dropped faster than for any similar period since the government began tracking the data in 1948. In the past year, 43 of the 50 largest metropolitan areas continued to post declines in employment: Charlotte, N.C., Jacksonville, Fla., Las Vegas, Phoenix, Los Angeles and Detroit. Each experienced a severe housing bust, budget deficit or meltdown in industries such as banking or manufacturing.

Without work, young adults aren't starting careers and lives in new cities.

Among adults 18-34, the share of long-distance moves across state lines fell last year to roughly 3.2 million people, or 4.4 percent, the lowest level since World War II. For college graduates, who historically are more likely to relocate out of state, long-distance moves dipped to 2.4 percent.

Opting to stay put, roughly 5.9 million Americans 25-34 last year lived with their parents, an increase of 25 percent from before the recession. Driven by a record 1 in 5 young men who doubled up in households, men are now nearly twice as likely as women to live with their parents.

Marriages fell to a record low last year of just 51.4 percent among adults 18 and over, compared with 57 percent in 2000. Among young adults 25-34, marriage was at 44.2 percent, also a new low.

Broken down by race and ethnicity, 31 percent of young black men lived in their parents' homes, compared with 21 percent of young Latino men and 15 percent of young white men. At the state level, New York had the highest share of young men living with their parents at 21 percent, followed by New Jersey and Hawaii, all states with higher costs of living. Most of the cities with low percentages of young adults living at home were in the Midwest.

Younger women across all race and ethnic groups had fewer children compared with 2008. Births declined 6 percent among 20-34 year-olds over the two-year period even though the number of women in this group increased by more than 1 million, according to an analysis of census data by Kenneth Johnson, sociology professor and senior demographer at the University of New Hampshire. Never before has such a drop in births occurred when the population of young adults increased in at least 15 years.

"Are people just delaying births, or does this represent a real loss of babies that won't be replaced? During the Great Depression, there was a permanent loss of births — they were never made up," Johnson said.

Homeownership declined for a fourth consecutive year, to 65.4 percent, following a peak of 67.3 percent in 2006.

"Many young adults are essentially postponing adulthood and all of the family responsibilities and extra costs that go along with it," said Mark Mather, an associate vice president at the private Population Reference Bureau. He described a shift toward a new U.S. norm, one that's commonly seen in Europe, in which more people wait until their 30s to leave the parental nest.

"Some of these changes started before the recession but now they are accelerating, with effects on families that could be long term," Mather said.

The District of Columbia plus 14 states had the largest ratios of college graduates to high-school dropouts, more than 3 to 1. Several of these places, including the District of Columbia and states with larger immigrant populations, had the widest income gaps between rich and poor.

The number of Hispanic children in poverty rose by half a million to 6.1 million last year, making up a majority of the increase in total child poverty. Hispanics now comprise 37 percent of children in poverty, compared with 30 percent for whites and 27 percent for blacks.

"We are really at a crossroads," said William H. Frey, a demographer at the Brookings Institution. "These new young immigrants and their children need a pathway to the middle class — good educations, affordable housing and jobs — at the same time federal and state budgets are strapped for funds. While we face tough choices, the quality of our future labor force depends on meeting their needs."

Other census findings:

—About 1 in 4 families with children is headed by single mothers, a record. Among young families with a head of household younger than 30, the poverty rate jumped from 30 percent in 2007 to 37 percent. In contrast, poverty remained at a low 5.7 percent for families with a head of household 65 or older.

—The number of households receiving food stamps swelled by 2 million to 13.6 million, meaning that nearly 1 in 8 receives the government aid. Among households receiving food stamps, more than half have children.

The 2010 numbers are from the American Community Survey, which queries 3 million households. In some cases, figures are supplemented with data from the Current Population Survey to establish historical trends.

By HOPE YEN, Associated Press–1 day ago

Do Reality Show's Offer the Real Picture?

2011-07-25T10:28:00.005-05:00

When is Reality just Entertainment?

I am like a lot of people who are amused and entertained by "Reality TV Shows", but you have to ask yourself, are they Real?

There have been numerous shows that I will not take the time to list. However, I do want to focus on a few in which the story link I have included discusses, the idea of flipping foreclosures for profit in today's market.

In the past, "Flip That House" featured at least three demographic locations that I recall, South Carolina, Georgia and finally Texas. Each one had its own unique twist. One I thought was fairly down to earth, another I thought was fluff, and the other was so ego filled and aggravating you watched it out of morbid curiosity until you could not stand it anymore. One of the shows featured companies was in serious financial and legal trouble last I read quite some time ago.

Then came "Flipping Out." Another show that I believe was watched more for the excentric behavior of the feature person, than the focal point of the shows content.

And now there is a new show coming out on Spike TV called "Flip Men." It speaks of "an entrepreneurial duo living in Salt Lake City who try to make big bucks in the foreclosure market."

Does this really happen today, yes it does. How successful it is depends on many factors. First is the ability to purchase, selecting the right property (not all distressed properties are deals), then of course location is key, purchase price has to be correct with renovation and carrying costs in line for a profit margin, lastly the ability and likely hood for it to sell it as quickly as possible.

One thing mentioned in the article was purchases being made sight unseen. Although we have first hand experience with this occurring, it is rare and never a good idea unless you have a tremendous amount of trust in the party representing your interests. Even then they must have the knowledge and capability to guide you or the out come can be disastrous.

So, if you are seriously considering making a living, some extra money, or just looking to capitalize on the opportunities out there for investment, work a Realtor. We are the people who know what is happening in our market place, can guide you on what would be the proper direction to take, even if it means telling you this is not for you. Not everyone is cut out or capable to be a flipper or investor.

In the mean time, watch the shows for the entertainment factor, and if you feel moved to try it, give us a call, we are here to help!

We can turn a Negative into a Positive!

2011-07-21T10:51:00.003-05:00

If the Bank Owns Your Town, then Who Owns the Bank?

So often in today's everyday news these are the stories we see. This unfortunately is becoming a more familiar sight around the country. However, our demographic although hit hard, does not compare to Plainfield New Jersey yet.

The worst area I have seen devastated by the economy and severe housing decay has to be Detroit Michigan (Related Video). When you research stories of Detroit, you will finds titles like; "Detroit in Ruins, An Empire in Ruins, Detroit's Urban Decay." So, when you think we have it so bad, take a look at other communities who have been hit much harder.

That said, one thing I have come to believe is, negative thoughts, doom and gloom outlooks, and the perception that the future will hold nothing good will attract just those sorts of things. I am a firm believer that positive thoughts and actions will bring positive results. For some reason society always feeds into the down side of world events, and rarely focuses enough on the positives and uplifting events and stories. We have to be able to look forward to good things or we will soon start to resemble a depressed third world country.

Creative idea's, entrepreneurship, ambitious goals, the will to produce something manufacturing American made products are what built this country to it's greatness. First order of business is we need to get our people back working, it is "Chicken Soup for the Soul" strengthening your mind and your body while building self worth.

If history repeats itself, now is the time to start. We can turn the economic health of this country around, but we have to do it together, and we have to do it now!

Does the Real Estate Outlook Paint an Accurate Picture?

2011-07-18T14:39:00.001-05:00

Presentation of Information can determine how one interprets the future of housing!

I todays article Real Estate Outlook: Housing Market Struggles by Carla Hill from RealtyTimes, it states many points that I believe to be on the mark, but some of the information may skew the way one interprets how the real issue is being perceived.

It speaks about the 20 percent down and closing costs to buy a home as if it is what's holding the market back, making buyers become sidelined as a result. Remember, greedy sub-prime lenders offering no money down deals, 80/20 loans, and many other vehicles that never required any skin in the game are what started this whole real estate bubble to burst in the first place. Today, many lenders are making up revenue by extremely high closing costs which in many cases are not being explained what they really cover.

Much of what is plaguing today's economy issues boils down to consumer confidence which is touched on in the article. If people have a job, are secure in it, and are willing to take the necessary leap to buy a home (preferably with a down payment), then they will find it is a much better financial choice than renting. That said, there are still circumstances where renting is a better option even if the monthly obligation is higher, job relocation possibilities, etc...

Demographics also plays a huge roll in market conditions statistics and how accurate a story presents the facts. Of course if the author is speaking national average or poling real estate industry professionals, that still does not necessarily depict an accurate account. Many poles are skewed from the lack of participation desired. All it does is offer a first glance look at what may be possible, but should never be considered conclusive.

I do believe Carla does a very good job on her stories and accuracy of presenting the information she researches. That said, we are still entitled to agree to disagree from time to time!

The Market Appears to be Turning a Corner

2011-07-14T09:55:00.005-05:00

Positive Activity in the Right Direction!

Yes, there has been activity in the right direction, and we believe it is the market finally turning a corner. Of course there is still a long road ahead of us, but none the less the road is a positive one.

One significant indicator for us are the listings coming on by traditional sellers, aka "Non-Distressed Sellers." We have also seen an increase in buyers where there were nearly none to be had for a long time. Also, opportunities from lenders with the roll out of new lending programs, many of which maintain extremely attractive interest rates.

In this down turn, the one positive that has always been there was for the investor who has the capitol to buy up properties with cash deals "Cash is King." That will still hold true for some time, but now the market is moving back toward more "normal" activity.

So, if you have been waiting, as we have said since this downturn started;

BUYERS - "It's a great time to Buy a home!"
SELLERS - Downsizing or moving up, "It's a great time to Sell your home to obtain a deal on the next one!"

Feel free to give us a call if you have any questions, we are here to help!

By: Joe and Donna Panico

Critical Signs in Foreclosure Talks

2011-04-21T09:48:00.000-05:00

Hopes are fading for a far-reaching settlement between regulators and banks over improper home foreclosures as some regulators press ahead to reach their own settlements with banks that others involved in the talks deem weak.

The dispute pits federal regulators against state attorneys general, who are seeking stiff penalties and comprehensive changes in the way banks foreclose on homeowners and modify loans. Advocates of tougher sanctions accuse federal banking regulators, including the Office of the Comptroller of the Currency and the Federal Reserve, with going easy on the banks.

Federal regulators are on the verge of sending their orders, and federal and state officials are scrambling to maintain an uneasy alliance as talks reach a critical point and test whether there can be a universal settlement.

Banks' inability to move properties through the foreclosure process could further delay any housing-market recovery. Over the past two months, differences between federal and state officials emerged over the proper remedies to potentially fraudulent foreclosure-filing practices. Those divisions have raised the prospect that states and federal agencies may ultimately issue their own orders independently.

Already, there are signs of discontent. A letter sent Monday to the Federal Reserve from 22 current and former members of the board's Consumer Advisory Council called the proposed consent orders "profoundly disappointing" and said they leave "too much discretion" to mortgage companies. They fail to impose penalties, the letter said, for their wrongful conduct. A Fed spokeswoman declined to comment.

Meanwhile, officials on all sides played down concerns that federal regulators' pending enforcement actions could undercut states' and other federal agencies' efforts to push for stronger sanctions. "The steps that have been taken by regulators … should coordinate well with the progress we're making with the state attorneys general," said Housing Secretary Shaun Donovan in an interview.

A spokesman for the OCC said the pending orders "create a framework for remedial action, but there's no reason that additional procedures sought from the states can't fit within that framework. … Nothing that we're doing is intended to impede any action by the state attorneys' general."

The orders are expected to give banks 60 days to establish plans for ensuring their mortgage-servicing processes provide clearer controls to prevent the kind of documentation errors that brought foreclosures to a halt last fall. The action plans also will require servicers to hire more staff to better aid borrowers through loan modifications.

Federal regulators aren't yet issuing financial penalties. But if they are to reach a coordinated settlement, their orders put pressure on state attorneys general and other federal officials to hash out a deal within the 60-day time frame that regulators have given banks to prepare their action plans. It isn't clear whether state attorneys general are prepared to strike a deal within that time frame.

There already are some signs of splintering within the 50-state group. Some state officials agree with the Obama administration's view that a quick settlement has the best chance of providing immediate outreach to troubled homeowners. But others have expressed concerns that the price of that deal would be too low by providing "broad amnesty" to servicers.

"We are going to make a very concerted effort at a comprehensive settlement that does not nip and tuck at the edges," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading the effort.

Under terms of the pending enforcement actions by the OCC and Fed, mortgage servicers also will be required to put in place procedures designed to give troubled homeowners a single point of contact during a loan modification and ensure that foreclosures don't happen when a borrower is receiving a loan modification.

But those terms, some of which were included in a "term sheet" that state attorneys general delivered last month, highlight a difference in approach between bank regulators and the states. For example, state officials have proposed requiring more aggressive write-downs of second-lien mortgages when first mortgages are modified, while a draft order from federal regulators is less specific. It simply mandates banks to maintain policies "for considering modification" of any second mortgage.

State officials have proposed a more extensive overhaul because banks' problems go beyond flawed foreclosure filings. Instead, they extend "much earlier in the process" where homeowners haven't been properly evaluated for loan modifications, Mr. Donovan said, referring to examinations conducted by the Federal Housing Administration. "Those steps weren't taken in far too large a number of cases."

The Justice Department has led the effort to coerce an unwieldy mix of state attorneysgeneral and federal agencies to hash out a deal. People familiar with the talks say internal disagreements have at times left them outmaneuvered by the banks, which have resisted calls for any broad loan-principal write-downs.

"It sure looks like [regulators] are setting up the banks to be able to go out and say to the attorneys general, 'You can't touch us,'" says Margot Saunders, a lawyer with the National Consumer Law Center.

By NICK TIMIRAOS - WSJ

—Ruth Simon
contributed to this article.

Six common mistakes that home sellers make

2011-04-13T08:16:00.000-05:00

Selling a home during this real estate downturn can be stressful on the seller. It’s not unusual for some homes to sit on the market for months on end, and many areas are still working through a backlog of foreclosure inventory, which also drives down home prices. Fact: 36 percent of homes nationwide sold for a loss in January. As we enter spring’s home shopping season, buyers are in the driver’s seat in many markets, and they know it. That’s why if you’re planning on putting your home on the market, it’s crucial to understand the time-honored mistakes sellers make, and how to avoid them.

Pricing for yesteryear
Nationally, home values have fallen 27 percent since the market peaked in 2006. In some markets, total declines are in the 50-60 percent range. Yet, many sellers are tempted to list their home for sale based on what they paid for the home, not on their area’s current market conditions. If you set a price too high, your house will sit. This will inevitably lead to price reductions, which could signal to buyers there is much more room for negotiation. In the past 30 days, 23 percent of homes listed for sale on Zillow have had their price reduced.

Tip: Arm yourself with information on comparable home sales, price reductions in your area, and find out how long homes are typically on the market. Then you can have an informed discussion with your agent about the appropriate price for your home, given local market conditions.

Focusing on comps
Don’t concentrate solely on the recent sales of homes in your area. Make sure you look at the listing price for homes that are on the market right now. These homes are your competition. Based on your competition, would a potential home buyer think they are getting a good deal on your home, or theirs?

Tip: Go see the homes for sale in your neighborhood. Ask your agent what current buyers are looking for in a home these days and ask yourself objectively how your home stacks up against the competition.

Hiring the wrong agent
Choosing the right real estate agent is a crucial part of the selling process. You need to find someone who demonstrates knowledge of your area, expertise in the process, and strong marketing skills. You also want to make sure your communication styles mesh. Yet, many people just hire someone based on one friend’s recommendation and wind up frustrated during the process.

Tip: Before choosing an agent, research online agent ratings and reviews. Knowing the experience several people have had with a particular agent will help you make a more informed decision. Make sure to interview at least three agents before making a final decision.

Limiting your marketing exposure
Real estate is often thought of as a local business, but when marketing your home it’s essential to think broadly. Limiting your exposure to a few local web portals makes it hard for home shoppers to find your listing.

Tip: Make sure your agent is active on the top online home shopping websites and has experience using technology to market your home (e.g., Twitter, Facebook). Even if you aren’t active online, 90 percent of buyers use the Internet to search for a home, according to National Association of Realtors. Don’t forget to use your own social networks to build online buzz.

Ignoring web appeal
When marketing your home online, display as many photos of your property as possible. Help buyers visualize themselves in your space by posting lots of interior shots. Focus on what people care about, namely, the kitchen, living spaces, and even the bathrooms. Make sure to clean up and de-clutter, it’s amazing how many messy rooms are shown in listing photos. And remember — as more and more people use mobile apps to shop for homes — 23 million homes are viewed on Zillow mobile real estate apps each month (that’s nine homes per second) — the quantity and quality of photos matter. High-resolution is best.

Tip: Ask your agent what kind of camera he or she plans to use when photographing your home. Make your main display photo the one that best represents your home.

Don’t follow buyers around when showing
Whenever possible, don’t be home when showing. Lurking sellers make buyers nervous — they don’t feel comfortable inspecting the house when they feel like they’re being watched. It’s easier for buyers to visualize the home being theirs when they have a chance to critique and discuss the home among themselves.

Tip: Unless there’s a real reason for it, don’t ask your agent to be present for all showings. Other agents want privacy with their buyers and they don’t usually have time to work around your agent’s schedule.

By Jill Simmons Zillow.com via MSNBC

Number of unlisted 'shadow' homes dips

2011-04-01T08:17:00.003-05:00

The U.S. had 1.8 million distressed homes in January that had yet to be listed for sale, a "shadow inventory" that is expected to weigh on home prices for years.

Market researcher CoreLogic said Wednesday that the shadow inventory had shrunk slightly the past year, from 2 million homes in January 2010.

The dip was driven by an improving economy, which helped more people stay current on their mortgages, strengthening in some home prices last year and more loan modifications, says Sam Khater, CoreLogic senior economist.

Khater expects the numbers to keep falling with an improving economy. But risks remain, including renewed declines in U.S. home prices and any hit to the national economic recovery.

Even if the biggest increases are over, the situation "will be shaky for some time," Khater says.

As defined by CoreLogic, the shadow inventory includes homes that are more than 90 days delinquent on the mortgage, are in the foreclosure process or are already bank owned.

CoreLogic expects all of the shadow inventory to eventually become foreclosed homes. Foreclosed homes sell at a 20% to 30% discount to non-foreclosed homes so they represent an especially "virulent" threat to home prices, says Stan Humphries, chief economist at Internet real estate portal Zillow.com.

The nation's universe of distressed homes is even bigger than the shadow inventory.

CoreLogic says that supply also includes homes whose mortgages are 90 days or more past due that may become current and those with mortgages 90 days or more past due that are already listed for sale.

When adding them up, and considering the current pace of sales, CoreLogic estimates that it'll take more than 21 months in New Jersey, Illinois and Maryland to sell the homes that are 90 days or more delinquent.

The long time frames underscore the scope and magnitude of the U.S. housing recession. "It's hitting far and wide in America," Humphries says.

Some states that were hit early and hard by the real estate bust -- and are now seeing more robust sales -- don't have as much of an overhang of distressed homes.

Source: USA TODAY By Julie Schmit via iStockAnalyst

China: Subsidized, Not Subprime

2011-03-29T09:24:00.000-05:00

China's property sector is a larger but less worrisome animal than its U.S. cousin.

In 2010, investment in residential real estate accounted directly for 12% of China's gross domestic product, up from 10% in 2009 and a record. Throw in demand for construction material, and real estate's contribution is even larger. By contrast, the peak of spending on U.S. residential investment in 2005 was equal to just 6% of GDP.

A larger role for real estate in the Chinese economy means the consequences of a bust should be more serious than in the U.S. And recent years offer a worrying precedent. A crackdown on speculation saw growth in real-estate investment fall from 31% a year at the end of 2007 to 3% at the beginning of 2009. The hit to construction spending, as much as the fall in exports, crunched China's GDP growth to a decade low of 6.5%.

At first sight, history appears ready to repeat itself as prices run up sharply. The official house-price data tend to underestimate changes. But data from Soufun Holdings, which runs China's leading property website, show average prices in first-tier cities like Beijing and Shanghai rising considerably faster than disposable incomes.

Meanwhile, breakneck construction in 2009 and 2010 has created an overhang of supply—including the ghost blocks of high-end residential apartments bought for speculative purposes that loom large in the bears' arguments. The government continues to clamp down on speculators. That double whammy will at some point bring the price surge to an end and take the wind out of real-estate developers' sails.

But when private investment fell away in 2008, there was nothing to take its place. This time round, the government plans a huge investment in affordable housing. The thin margins available in affordable construction are cold comfort for listed developers, but plans to build 10 million new budget residences in 2011 should to an extent cushion China's economy from a sharp slowdown in private-sector construction.

In the U.S., post-crash housing is still weighed down by overbuilding in certain hot spots. In China, urbanization and rihttp://si.wsj.net/public/resources/images/BF-AA738_Chinah_D_20110325185108.jpgsing wages mean most construction is better underpinned by demand. And houses are generally paid for with cash, not credit. In the U.S., mortgage debt reached 103% of GDP in 2007. In China, long-term loans to households, a proxy for mortgage borrowing, is 16% of GDP. Even throwing in loans to real-estate developers and a share of loans to local government investment vehicles—some of which are invested in property—takes the total only to 50%.

A slowdown in prices, if not an outright decline in some cities, is a distinct possibility. That will hurt private developers. A sharp enough correction will cause the banks pain and hit consumer confidence and spending. But it shouldn't signal economic disaster as it did in the U.S.

By TOM ORLIK WSJ

Welcome to Debtors' Prison, 2011 Edition

2011-03-28T15:42:00.004-05:00

Some lawmakers, judges and regulators are trying to rein in the U.S. debt-collection industry's use of arrest warrants to recoup money owed by borrowers who are behind on credit-card payments, auto loans and other bills.

More than a third of all U.S. states allow borrowers who can't or won't pay to be jailed. Judges have signed off on more than 5,000 such warrants since the start of 2010 in nine counties with a total population of 13.6 million people, according to a tally by The Wall Street Journal of filings in those counties. Nationwide figures aren't known because many courts don't keep track of warrants by alleged offense. In interviews, 20 judges across the nation said the number of borrowers threatened with arrest in their courtrooms has surged since the financial crisis began.

The backlash is a reaction to sloppy, incomplete or even false documentation that can result in borrowers having no idea before being locked up that they were sued to collect an outstanding debt. The debt-collection industry says such errors are extremely rare, adding that warrants usually are sought only after all other efforts to persuade borrowers to pay have failed.

Earlier this month, Washington state's House of Representatives passed by a 98-0 vote a bill that would require companies to provide proof a borrower has been notified about lawsuits against them before a judge could issue an arrest warrant. All 42 Republicans voted for the legislation, which is expected to pass the state's Senate and be signed into law by the governor. A trade group representing debt collectors supports the bill and says the changes are needed because some companies are abusing Washington's existing law by improperly arresting borrowers.

In Florida, training this week for dozens of new judges and sitting judges who are moving to courts with the power to lock up borrowers includes a session about potential abuses of debt-related warrants. "Before we take away a person's freedom, we want to ensure that there are procedural safeguards," said Peter Evans, a Palm Beach County, Fla., state-court judge who proposed the session.

Some judges elsewhere are issuing fewer debt-related arrest warrants because law-enforcement officials complained those cases gobble up resources needed to pursue violent offenders.

Illinois regulators are investigating the use of warrants by debt collectors and other financial firms doing business in that state. In September, the Illinois Department of Financial and Professional Regulation issued an order seeking to revoke the license of Easy Money Express Inc. The Paducah, Ky., payday lender won arrest warrants against at least four customers. One spent five days in a Carbondale, Ill., jail last March after failing to pay a $275 debt, court filings show. The lender "exploited the court system to obtain the arrest and incarceration of its customers," said Sue Hofer, a spokeswoman for the agency. The company declined to comment but is fighting the state's proposed ban.

At the national level, the Federal Trade Commission began scrutinizing in July the use of arrest warrants in debt-collection lawsuits. An FTC spokesman declined to comment on whether the inquiry has led to formal investigations by the agency, which oversees the debt-collection industry and enforces a U.S. law that restricts how borrowers can be pursued for debts.

Arrest warrants generally can be issued if a borrower defies a court order to repay a debt or doesn't show up in court. Retailers, credit-card issuers, landlords and debt collectors are the most frequent seekers of such orders, according to court filings and interviews with judges and lawyers.

Encore Capital Group Inc., the largest publicly traded debt-buying firm by revenue, last year began requiring law firms handling its cases to follow a "code of conduct" that includes this sentence: "Under no circumstances should a firm cause a consumer to be taken into custody involuntarily."

J. Brandon Black, Encore's president and chief executive, said the San Diego company decided to stop threatening borrowers with jail because the practice made Encore look bad. The company filed 425,000 lawsuits against borrowers last year, up 27% from 334,000 in 2009.

Last year, officials in McIntosh County, Okla., south of Tulsa, issued about 1,500 debt-related arrest warrants, up from about 800 a year before the crisis, according to a court clerk. More than 950 borrowers got similar warrants in Salt Lake City courts last year. Maricopa County, Ariz., officials issued 260 debt-related warrants in 2010.

Few orders result in jail time. For example, in Piatt County, Ill., just five borrowers were arrested last year out of the 13 hit with debt-related arrest warrants. The sheriff said he puts a higher priority on tracking down people accused of violent crimes.

"I wish I could do it more," said Piatt County Circuit Judge Chris Freese, who has heard hundreds of debt-collection cases. "It's often the only remedy to get people into court and paying their debts."

In one of those cases, Emmie Nichols, 26 years old, was arrested in June at her mother's house after lawyers for Capital One Financial Corp. won an arrest warrant against her for skipping a court hearing about $1,159.87 she owed on a credit card from the company. The $500 bond that freed Ms. Nichols from the county jail was turned over to Capital One as a partial payment of the debt, court filings show. A Capital One spokeswoman declined to comment on Ms. Nichols. Some judges are worried that the jump in debt-related arrest warrants is creating a modern-day version of debtors' prison. The practice ended in 1833 after decades of controversy, since borrowers owing as little as 60 cents could be held indefinitely in squalid jails until they paid off their debt.

Earlier this year, Vanderburgh County, Ind., Superior Court Judge Robert Pigman asked Indiana's highest court to review the legality of debt-related warrants after law-enforcement officials complained they can't quickly access arrest orders for dangerous criminals because their computer system is clogged with debt cases. The Indiana Supreme Court hasn't responded to the request.

In September 2009, Jeffrey Stearns, a concrete-company owner, answered a knock at the door from a Hancock County, Ind., deputy sheriff. The deputy was holding a warrant to arrest Mr. Stearns for not paying $4,024.88 owed to a unit of American International Group Inc. on a loan for his pickup truck.

After being handcuffed in front of his four children, Mr. Stearns, 29 years old, spent two nights in jail, where he said he was strip-searched and sprayed for lice. Court records show he was released after agreeing to pay $1,500 to the loan company. "I didn't even know I was being sued," he said, though he doesn't dispute owing the money. "It's the scariest thing that ever happened to me."

Mr. Stearns said he never got the summons or two orders to show up before a judge that a deputy sheriff said in court filings were delivered to him. Hancock County Sheriff Mark Shepherd couldn't be reached for comment. Mark Herr, an AIG spokesman, declined to comment on Mr. Stearns but said the lending unit was sold in November.

By JESSICA SILVER-GREENBERG WSJ

NAR Issues Call to Action to Uphold MID

2011-03-28T15:26:00.004-05:00

The National Association of REALTORS® is encouraging its members to reach out to Congress to persuade them to cosponsor H.R. 25, a bipartisan House resolution offered by Rep. Gary Miller (R-Calif.) that affirms the value and importance of the mortgage interest deduction. The association issued a call to action this morning to help REALTORS® send a message to their representatives on this issue.

“We know in Congress that there’s a lot of questioning of whether home ownership matters,” 2011 NAR President Ron Phipps said in a video promoting the effort. “We really need to remind Congress that the mortgage interest deduction is a critical element of … the experience of home ownership.”

As currently constructed, this bill expresses the sense of Congress that the current law governing the MID must be retained, and argues that restricting the current law in any way would undermine progress in the still-fragile housing recovery.

Source: NAR

For Habitat, Foreclosures Small Issue

2011-03-25T15:28:00.000-05:00

At a time when most lenders are overwhelmed by crushing caseloads of delinquent home loans and foreclosures, Habitat for Humanity International is telling a different story.

Habitat for Humanity is the Americus, Ga.-based nonprofit company that builds thousands of homes for lower-income Americans each year. Habitat also originates mortgages on the homes and, in most cases, holds the loans on its books. In 2010, it ranked as the one of the nation's largest builders, constructing nearly 4,600 new homes nationwide. The group also fixed up and resold more than 1,400 homes.

Most of Habitat's borrowers have household incomes below their area's median income – a population often at risk for foreclosure. Yet Habitat says foreclosures are minimal.

A recent study led by the Cox School of Business at Southern Methodist University, which was commissioned by the Dallas branch of Habitat, found that foreclosures in Habitat's Dallas market were less than 2% last year. Although the report only looked at the Dallas office of Habitat, the findings mirror those found in other Habitat offices across the country, the organization says.

As politicians and economists disagree on whether and to what degree lower-income Americans should be encouraged to own homes—some even blame lenders outreach to lower-income borrowers for the housing collapse—the case of Habitat indicates these borrowers can receive mortgages without high default levels.

"They deserve to have the opportunity to build wealth through real-estate appreciation just like anyone else," said Jack McCabe, a housing analyst with McCabe Research & Consulting in Deerfield Beach, Fla. "That's been the American dream."

But that doesn't mean catering to families on tight budgets is easy. Cash-strapped borrowers need plenty of hand holding and support. They need an easy way to get back on track when they slip behind due to emergencies or special occasions, said Lynette Pearl, director of home owner and neighborhood support for the Dallas Habitat chapter.

In Dallas, worried home owners are urged to call anytime to discuss financial issues, and it's not unusual for the organization to receive dozens of calls a day as troubled home owners leave multiple messages.

"We don't have a problem with our families getting behind as long as they're talking with us," said Bill Hall, the Dallas Habitat's chief executive.

Becoming a Habitat home owner is not easy. Applicants must show a solid work and credit history. Once selected, recipients undergo home-ownership education that covers the added costs of owning over renting, how to pay bills and home maintenance.

Habitat is known for requiring home owners to help build their home. While the demands differ for each market – the national average is 300 hours – Habitat says home owners are less likely to walk away from homes they helped construct.

"Before they actually move into the house, they're invested," Ms. Pearl said.

In Dallas, homes cost between $80,000 and $100,000. Recipients receive interest-free mortgages for 30 years and mortgage payments range between $500 and $800 per month, which includes taxes and insurance, depending on income.

The organization doesn't build McMansions – it's known for no-frills homes erected on free or low-cost land lots. Local governments often donate land in ailing neighborhoods, hoping the new owners will help revitalize the community.

The Dallas report estimates that for every $1 the organization spends, $3.18 of economic impact is generated. Much of this impact is felt directly in troubled neighborhoods, stabilizing vales and preventing foreclosures.

Unlike traditional lenders, Habitat checks back several times with new owners.

The Dallas chapter noticed that its late payments spike in September – when families spend money on school clothes and supplies – and in the winter, when they shop for holiday gifts. It partnered with a local nonprofit to distribute free supplies. The group also helps its families get free tax preparation: Delinquent home owners often use their tax refund to catch up on missed payments.

That's different from traditional lenders, who slap on late fee upon late fee, making it hard for the borrower to get back on track. Of course, Habitat's late payers don't get off entirely. The Dallas Habitat, which sells its loans to a local bank, covers any missed payments and tacks on a late fee equal to 4% of the principal: The average payment is $8 for each late month.

"It's only meant to remind them that they're late. It' not meant to punish them," Mr. Hall said. We aren't here to knock you down and foreclose. We're here to help you through it."

To be sure, large lenders and servicers including Bank of America and JP Morgan don't have the time or manpower to field calls every time an owner missing a monthly payment. But they could learn from Habitat's business model: screen buyers, educate in advance, make home owners work for their down payment and get them to pay what they can, when they can.

"These are practices that I think any bank should implement, particularly after looking at the foreclosures in the last five years," said Paul Hendershot, lead author of the Dallas Habitat report and an adjunct University of North Texas professor.

By DAWN WOTAPKA WSJ

Proposal Would Pay Defaulters to Leave Homes

2011-03-25T15:14:00.004-05:00

The nation’s five largest U.S. mortgage service providers were asked by regulators in a private meeting chaired by the Federal Deposit Insurance Corp. this week to consider an industry-wide “cash-for-keys” program, in which they would pay borrowers who have stopped making their payments up to $21,000 each to leave their home, the Financial Times reports.

In the proposal, banks would offer delinquent borrowers, who are more than 90 days behind on their payments, an incentive to leave the home quickly and in good condition. If banks agreed to the “cash-for-keys” program, they would pay defaulters up to $1,000 to get independent financial advice and up to $20,000 as a “fresh start” payment toward living costs in a new home, the Financial Times reports, quoting unnamed sources.

The idea was raised by Sheila Blair, the FDIC chairman, but is not an official government proposal, the Financial Times noted. Some banks strongly rejected the idea.

Source: “U.S. Banks in ‘Cash for Keys’ Foreclosure Talks,” Financial Times (March 25, 2011) (log-in required) via Realtor.org

February Existing-Home Sales Decline following Sustained Gains

2011-03-22T12:04:00.007-05:00

Washington, DC, March 21, 2011

WASHINGTON (March 21, 2011) – Existing-home sales fell in February following three straight monthly increases, according to the National Association of REALTORS®.

Existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 9.6 percent to a seasonally adjusted annual rate of 4.88 million in February from an upwardly revised 5.40 million in January, and are 2.8 percent below the 5.02 million pace in February 2010.

Lawrence Yun NAR chief economist, expects an uneven recovery. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.”

A parallel NAR practitioner survey² shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010.

All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010. Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010. The balance of sales were to repeat buyers.

The national median existing-home price³ for all housing types was $156,100 in February, which is 5.2 percent below February 2010. Distressed homes – sold at discount – accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010. “The decline in price corresponds to the record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers should look into loan availability as soon as they decide they want to buy. “Despite very affordable mortgage interest rates, credit remains a challenge – buyers should check their personal credit, and mortgage availability in their area,” he said.

“REALTORS® are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it’s important to learn up front what a lender might be willing to offer as well as specific programs that might be available in your location,” Phipps said.

Total housing inventory at the end of February rose 3.5 percent to 3.49 million existing homes available for sale, which represents an 8.6-month supply⁴ at the current sales pace, up from a 7.5-month supply in January.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.95 percent in February from 4.76 percent in January; the rate was 4.99 percent in February 2010.

Single-family home sales fell 9.6 percent to a seasonally adjusted annual rate of 4.25 million in February from 4.70 million in January, and are 2.7 percent below the 4.37 million pace in February 2010. The median existing single-family home price was $157,000 in February, which is 4.2 percent below a year ago.

Existing condominium and co-op sales dropped 10.0 percent to a seasonally adjusted annual rate of 630,000 in February from 700,000 in January, and are 3.1 percent lower than the 650,000-unit level one year ago.

The median existing condo price⁵ was $150,400 in February, down 11.1 percent from February 2010.

Regionally, existing-home sales in the Northeast fell 7.2 percent to an annual pace of 770,000 in February and are 8.3 percent below February 2010. The median price in the Northeast was $230,200, down 9.5 percent from a year ago.

Existing-home sales in the Midwest dropped 12.2 percent in February to a level of 1.01 million and are 9.0 percent lower than a year ago. The median price in the Midwest was $122,000, which is 5.4 percent below February 2010.

In the South, existing-home sales fell 10.2 percent to an annual pace of 1.84 million in February but are unchanged from February 2010. The median price in the South was $134,600, down 3.9 percent from a year ago.

Existing-home sales in the West declined 8.0 percent to an annual level of 1.26 million in February and are 2.4 percent below a year ago. The median price in the West was $190,000, which is 5.2 percent below January 2010.

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

NOTE: NAR also tracks monthly comparisons of existing single-family home sales and median prices for select metropolitan statistical areas, which is posted with other tables at: www.realtor.org/research/research/ehsdata. For information on areas not included in the report, please contact the local association of REALTORS®.

¹Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 to 90 percent of total home sales, are based on a much larger sample – more than 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.

The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

Benchmark Revisions: All major statistical data series go through periodic reviews and revisions to ensure that sampling and methodology keep up with changes in the market, such as population changes in sampled areas, to ensure accuracy. NAR began its normal process for benchmarking sales earlier this year; there will be no change to median prices. In the past we’ve benchmarked to the decennial Census, most recently to the 2000 Census, because it included home sales data.

However, the data are no longer included in the Census, so we’re looking at more frequent benchmarking using a new approach with independent sources to improve our process and modeling. As always, we are consulting with various outside housing economists, government agencies and academic experts for a consensus on the methodology; NAR is committed to providing accurate, reliable data. Publication of the revisions is expected this summer.

²Distressed sales, first-time buyers, investors, all-cash transactions and data for contract cancellations, etc., are from a survey for the REALTORS® Confidence Index, scheduled to be posted March 31.

³The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.

⁴Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, condos were measured quarterly while single-family sales accounted for more than 90 percent of transactions).

⁵Because there is a concentration of condos in high-cost metro areas, the national median condo price generally is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.

REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.

The Pending Home Sales Index for February will be released March 28, and the 2010 Vacation and Investment Home study will be published March 30. Existing-home sales for March is scheduled for April 20; all release times are 10:00 a.m. EDT.

Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data in this release, other tables and surveys also may be found by clicking on Research.

For more information, contact: Walt Molony 202/383-1177 wmolony@realtors.org

FDIC sues 3 former top executives of failed Washington Mutual, biggest US bank failure

2011-03-21T11:51:00.004-05:00

FDIC sues 3 former top executives of failed WaMu

Federal bank regulators have sued three former top executives of Washington Mutual, the biggest U.S. bank ever to fail, accusing them of negligence in allowing risky mortgage lending.

The Federal Deposit Insurance Corp. filed the civil lawsuit Wednesday against former WaMu CEO Kerry Killinger, ex-Chief Operating Officer Stephen Rotella and David Schneider, who headed the bank's home loans division. The FDIC also named Killinger's and Rotella's wives in the suit filed in federal court in Seattle.

The FDIC said the three executives pushed for expansion of WaMu's risky lending even though they knew or should have known that its loan standards and controls were inadequate. The Seattle-based bank, with $307 billion in assets, collapsed in September 2008 at the height of the financial crisis and was sold for $1.9 billion to JPMorgan Chase & Co. in a deal brokered by the FDIC.

Killinger, Rotella and Schneider, "through their gross negligence, breached their duties of care," the FDIC alleged in the suit. The agency said they acted with "reckless disregard." Among other things, they adopted imprudent lending policies and caused the bank to make home loans "with little or no regard for borrowers' ability to repay them," the FDIC said.

The FDIC has been seeking about $900 million in damages in private negotiations with the executives. The suit filed Wednesday didn't specify the amount the agency was seeking in the case.

Killinger and Rotella disputed the FDIC's allegations Thursday. In a statement on Killinger's behalf, his attorneys called the suit "baseless and unworthy of the government" and "political theater."

Rotella issued a statement saying, "This action runs counter to the facts about my relatively short time at the company. It is also unfair and an abuse of power."

An attorney for Schneider couldn't immediately be reached for comment.

The FDIC also alleged that Killinger and Rotella transferred assets to their wives in order to keep them out of the reach of their current and future creditors. The FDIC asked the court to freeze those assets, which it said were fraudulently transferred.

The suit was the FDIC's most high-profile legal action so far seeking to recover losses from banks that failed during the financial crisis. The agency has shut down 347 banks since January 2008.

Last July the FDIC sued four former executives of failed California-based IndyMac Bank, seeking $300 million in damages.

The FDIC's board has approved civil lawsuits against 158 bank executives, employees and directors, seeking to recoup about $2 billion in bank losses that the regulators say were the result of negligence or misconduct. FDIC attorneys have been in settlement talks with many of the executives.

In addition, the FDIC has opened criminal investigations into about 50 executives and directors of collapsed banks around the country.

An investigation by a Senate subcommittee into WaMu's collapse found that its lending operations were rife with misconduct, including fabricated loan documents. It concluded that management failed to stem the deception despite internal probes.

At a hearing by the panel last April, Killinger deflected the criticism and laid blame on the government. He argued that even before the financial crisis struck, the government treated the bank unfairly.

By Associated Press | Mar 17, 2011 via NEWSER

Nearly 20% of Florida homes are vacant

2011-03-18T14:09:00.004-05:00

NEW YORK (CNNMoney) -- It's not always easy to feel sorry for sunny Florida. But they just got hit with another blow.

On Thursday, the Census Bureau revealed that 18% -- or 1.6 million -- of the Sunshine State's homes are sitting vacant. That's a rise of more than 63% over the past 10 years.

Having this amount of oversupply on the market will keep home prices depressed and slow any recovery.

During the housing boom, Florida was among the hottest real estate markets in the nation. Homes were snapped up by the state's growing population as well as hordes of investors confident that prices would continue to soar.

"You'd drive through downtown Miami and see 30 or 40 cranes sticking up in the air," said Michael Larson, a housing market analyst for Weiss Research.

The bust brought an end to that. Development ground to a halt. Retirees stopped relocating. And prices started falling and vacancies rising.

"Housing went from being the preeminent investment of choice to toxic waste," added Richard DeKaser, an economist with the Parthenon Group.

Who's buying homes? The rich

The vacancy problem is more dire in Florida than in any other bubble market: In California, only 8% of units were vacant, while Nevada, the state with the nation's highest foreclosure rate, had about 14% sitting empty. Arizona had a vacancy rate of about 16%.

In Florida, the worst-hit county is Collier -- home of Naples -- with a whopping 32% of homes empty. In Sarasota County, 23% of the housing stock sits vacant, while Lee County (Cape Coral) has a 30% vacancy rate. And Miami-Dade County has a vacancy rate of about 13%.

The housing recovery will take years, perhaps many years, to complete, according to Ingo Winzer, a housing market analyst and founder of Local Market Monitor.

Not helping is the the fact that the state's rate of population growth slowed in the second half of the last decade to just 5.7%. Still, the 2000s saw the state population grow overall by nearly 18%, the Census Bureau reported.

"It will take about eight years just to put the vacancy numbers back into the single digits," said DeKaser.

The inventory overhang has sent home prices plunging. The median price for homes sold in January was just $122,000, according to the Florida Association of Realtors. That was down 7% from 12 months earlier and less than half the price at the peak of the market.

Winzer thinks prices in Florida will drop even more, another 5% in 2011 and 3% in 2012. "Even after that, they're not going to rebound, they'll just sit on the bottom," he said.

Housing markets: Best recovery bets

Celia Chen, a housing market analyst for Moody's Analytics, is also downbeat in her forecasts for Florida. Not only will prices fall another 11%, she said, but the bottom won't hit until mid-2012, about a year later than the nation as a whole. Some metro areas won't get back to their pre-recession peaks until long after the present owners are old and gray.

She doesn't expect Naples, for example, to come all the way back until the late 2030s. Other Florida metro areas with a 20-year wait or longer include Punta Gorda, Palm Bay and North Port.

"If you're buying in Florida for retirement," said Winzer, "maybe you buy next year when prices will be near the bottom. If you're buying for investment -- don't."

By Les Christie, staff writer CNNMoney

Tax Time Less Taxing for Home Owners

2011-03-16T10:50:00.003-05:00

With a little more than one month before income taxes are due, many of the nation’s 75 million home owners may be appreciating the value of home ownership just a bit more as they take advantage of the tax benefits of owning a home.

“Owning a home offers myriad benefits throughout the year, but some of the financial advantages of home ownership are most apparent at tax time,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “As many of today’s hard-working American families are feeling a financial squeeze, the tax benefits that can come from owning a home can be a welcome relief.”

A number of tax deductions and credits are still available for home owners; these include deductions – with specific limits – for mortgage interest and capital gains on home sales, and credits for certain energy-efficient home improvements. Even with these benefits, home owners pay 80-90 percent of all U.S. federal income taxes.

“It’s been suggested that many of today’s tax incentives for home ownership primarily benefit wealthy individuals, but that’s simply not true,” said Phipps. “As today’s public debate continues about what home ownership means for families, communities, and the nation’s economy, there’s no question that for many, owning a home is still the best way to begin building wealth.”

Ninety-one percent of home owners who claim the mortgage interest deduction earn less than $200,000 a year, and the ability to deduct the interest paid on a mortgage can mean significant savings at tax time. For example, a family who bought a home in 2010 with a $200,000, 30-year, fixed-rate mortgage, assuming an interest rate of 4.5 percent, could save nearly $3,500 in federal taxes when they file this year.

“REALTORS® see the very real positive impact of home ownership every day with our clients,” said Phipps. “Recent proposals to reduce or eliminate the mortgage interest deduction and remove government support of the housing finance market could have disastrous consequences for the economy, not to mention making it harder or nearly impossible for millions of families to own their own homes. We believe America must continue to invest in home ownership, for the future of our families and our nation.”

Source: NAR

Top Housing Official to Take Lobbying Job

2011-03-16T10:43:00.000-05:00

David H. Stevens, who last week said he would step down as commissioner of the Federal Housing Administration, will be named the next chief executive of the Mortgage Bankers Association.

Mr. Stevens emerged as a key adviser on housing-finance policy during a two-year stint in the Obama administration. At the MBA, he will succeed John A. Courson, who is departing in an unexpected shake-up at a trade association that has been through a tumultuous period.

Mr. Courson, a former mortgage banker, took the helm of the group in 2008. Mr. Stevens will assume the post in May.

The housing bust has hit the once-powerful trade association hard, with many lenders failing and others being absorbed by healthier rivals. Last year, the MBA sold its Washington, D.C., headquarters—a 10-story glass building bought at the height of the real-estate bubble—at a loss after it struggled to attract tenants. While membership has stabilized over the past year, the association has been forced to pare staff and has seen its lobbying clout diminishon Capitol Hill.

"This is an opportunity to provide leadership and a clear vision, a renewed sense of direction for the MBA and its members," Mr. Stevens said in an interview Tuesday.

Mr. Courson inherited many of the challenges facing the MBA when he took the top post and had his contract extended in the past few months, according to people familiar with the matter. He declined to comment through an MBA spokesman.

Mr. Stevens must shore up the group's relations with its largest members, some of which are said to be dissatisfied with the MBA's waning influence in Washington. He will also have to soothe smaller, independent banks that have grown concerned about a playing field they perceive as increasingly tilted in favor of the biggest few.

"The MBA is trying to find somebody that has stature to try to hold everybody together," said a mortgage-industry official. Others have expressed concern that the MBA has been frozen out of discussions in Washington because it has been associated with many of the problems that caused the housing bust.

Under the administration's ethics rules, Mr. Stevens won't personally be allowed to lobby former colleagues for at least two years. He will also take additional steps to recuse himself from any contact with the MBA or its members on government business until he departs the FHA at the end of the month, said a spokesman for the Department of Housing and Urban Development. "We think it's important to ensure that there's not even an appearance of conflict of interest," the spokesman said.

Mr. Stevens, 54 years old, formerly held top positions at Wells Fargo & Co. and Freddie Mac. At the FHA, he had a front-row seat on key debates about the future of Fannie Mae and Freddie Mac and the design of various mortgage-modification programs.

He also has been involved in the administration's effort to forge a settlement between federal and state officials and the largest U.S. banks regarding alleged mortgage-servicing abuses.

Mr. Stevens said Tuesday that it was important for the organization to remind policy makers that the MBA supports an industry that finances American housing. Some critics have painted the industry "with a broad brush and it's important to restore balance," he said.

He also said he looked forward to advocating best practices and protocols that would rebuild trust and integrity within the industry. Over the past year, Mr. Stevens has repeatedly warned the MBA's members that they face a "trust deficit" and that they must do more to help troubled homeowners and to accept greater regulation from federal and state officials. "Washington doesn't trust this industry at all," he said at an MBA conference last spring.

At the FHA, Mr. Stevens inherited a government agency that was facing a dramatic surge both in market share and in souring loans. He pushed to eject lenders that weren't meeting the agency's lending standards and raised fees borrowers must pay in order to rebuild the agency's dwindling reserves. But he resisted more dramatic steps to increase borrowing costs for home buyers.

The new position could pit Mr. Stevens against his former administration on a number of policy debates. For example, the mortgage industry opposed efforts, backed by Democrats and the Obama administration, to allow judges to restructure mortgage debt through bankruptcy protection, a process dubbed "cramdown" by the industry. Currently, the industry is strongly resisting efforts that could require banks to write down mortgages as part of any settlement over foreclosure abuses.

By NICK TIMIRAOS And ALAN ZIBEL - WSJ

Preparing for Moving Day

2011-03-15T10:41:00.002-05:00

Creating an Eco-Friendly Home

2011-03-15T10:40:00.000-05:00

Builder Confidence Edges Up One Point in March

2011-03-15T09:48:00.002-05:00

March 15, 2011 - After four consecutive months hovering at the same low level, builder confidence in the market for newly built, single-family homes improved by a single point in March, rising to 17 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest level the HMI has reached since May 2010, when the survey period corresponded with the final days of the federal home buyer tax credit program.

"Builders are cautiously looking forward to the spring home buying season in hopes that improving economic conditions will help bring more buyers to the table," said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev. "However, the same factors that have been weighing down the market are still very much in play, particularly competition from short sales and foreclosures, consumers' inability to sell their existing home, appraisals that are coming in below construction cost due to the inappropriate use of distressed properties as comps, and restrictive lending conditions for both buyers and builders."

"While many home buyers are still holding off on making a purchase, builders did indicate slightly increased optimism about the future with a two-point gain in the HMI component gauging sales expectations for the next six months," added NAHB Chief Economist David Crowe. "In fact, prevailing indicators portend some improvement in the overall economy, which should generate modest housing market gains later this year." But, he added, "Unfortunately, most small builders report that they are no more able to obtain credit for new construction today than they have been in the past year, and this is a major impediment that is keeping them from putting their crews back to work."

Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor.

Two out of three of the HMI's component indexes held unchanged in March, including the component gauging current sales conditions (holding at 17) and the component gauging traffic of prospective buyers (holding at 12). Meanwhile, the component gauging sales expectations in the next six months rose two points in March to 27, its highest level since May 2010.

Regionally, HMI results were mixed in March. While the Northeast posted a one-point decline to 20, the Midwest held flat at 12, the South gained two points to 20 and the West gained four points to 17.

Source: NAHB

Orman on 'New American Dream'

2011-03-14T10:04:00.000-05:00

Source MSNBC

We paid cash for our million-dollar home

2011-03-11T08:57:00.002-06:00

This home in Coral Gables, Fla., recently sold for just under $1 million -- to an all-cash buyer.

NEW YORK (CNNMoney) -- Laura Dominguez-Vasquez and her husband, Luis, recently sold their Coral Gables, Fla., home to all-cash buyers for just under $1 million. They're now shopping for a new home and intend to pay cash as well.

The busy professionals have three kids, aged 14 to 20, and they don't have the time or inclination to mess around with homebuying. "The process has to be painless," she said.

The Vasquezs are not unique; cash buys are becoming common. The number of homes bought with cash jumped to 32% in January compared to 26% a year earlier, according to the National Association of Realtors.

In Southern California, about 30% of the sales in January were cash, according to DataQuick Information Systems. Same thing in Denver. In Phoenix and Las Vegas, cash sales topped 50% of all deals."

I'm personally closing about 30 deals a month and at least 30% of them are all cash," said Ruth Pugh, a San Diego-area agent.

Who's buying homes? The rich

One big factor forcing people to pay cash is weak appraisals. Before a sale, banks evaluate nearby homes to see how much a property should be valued at. But in one-time bubble markets, such as Miami, prices are still weak and appraisers are using foreclosures -- which sell at big discounts -- as the basis for their valuations.

As a result, appraisals are low and banks are refusing to finance the full amount needed to complete sales. So if you want the house, you have to bring cash.

"You don't want to have to count on the banks and the appraisal process," said Dominguez-Vasquez.

Plus, sellers are often more willing to accept offers -- even lower ones -- from cash buyers because there is little chance of the deal falling through. "It makes cash deals more attractive to sellers and makes it easier to for buyers to negotiate," said Dominguez-Vasquez."

Bargain prices for condo buyers are also forcing the all-cash trend higher. For example, Jaime and Enriquetta Pena paid $90,000 cash for a two-bedroom, two-bath condo in Long Beach, Calif.

"They had saved for a while," said Joe Mendez, the couple's Coldwell Banker real estate agent. "They're ecstatic that they were able to purchase something without getting a mortgage."

Some condo buyers just can't get financing because the condo communities fall short of requirements of Fannie Mae and Freddie Mac, the two government agencies that guarantee most of the mortgages issued in the United States.

At least 70% of the units in a development have to be owner-occupied or in contract before the agencies will back loans. That means that in buildings where sponsors still own most of the units, buyers can't get mortgages.

Even buyers who can obtain financing choose not to simply because the approval process is long, complicated and painful. Anthony Waller intended to finance his purchase but changed his mind after he started talking to lenders.

"The main reason I paid cash is that I'm part of a family company," said Waller, who is a project manager for Waller Marine, a naval architecture firm . "The banks wanted to look into every aspect of our company finances. It becomes very onerous."

He wound up paying $1.3 million for a 10,000-square-foot home in northwestern Houston -- and didn't have to produce all the reams of company paperwork a mortgage lender would have required.

10 foreclosure hot spots

Of course, many cash sales involve investors. There is such a glut of foreclosures on the market that they can snap them up cheap and not have to worry about interest or payments.

"Some of the homes are in poor shape and may not even qualify for financing," said Michael Litzner, a real estate broker on Long Island, N.Y. "In other cases, the banks take a lower price than from someone who would have to get financing."

Brian Fuller is one such investor based in California. In the past, he bought mostly at foreclosure auctions. Now he buys repossessions and short sales, paying all cash.

"We found there was just too much competition at auctions," he said.

And the prices may be a bit cheaper. In January, the median price for all homes sold in California was $270,000 but only $190,000 for homes sold for cash, according to DataQuick.

The National Association of Realtors does not break out selling prices for cash deals vs. financed purchases, but finds that "anecdotally, they would be in the lower price ranges," said Walter Molony, a NAR spokesman.

That should continue to bring cash buyers to the market.

"Everyone has been saying 'Cash is king.' Well, some people are listening," said Ruth Pugh.

By Les Christie, staff writer CNNMoney

Republicans Object to Mortgage Settlement Proposal

2011-03-10T09:14:00.000-06:00

House Republicans on Wednesday raised numerous objections to a draft proposal by state attorneys general to settle allegations that mortgage companies broke state laws when handling foreclosures.

In a letter being sent to Treasury Secretary Timothy Geithner on Wednesday, the lawmakers said they have “significant concerns” about the settlement proposal, floated to banks last week by state attorneys general and several regulators.

Last week, state attorneys general and federal agencies delivered a 27-page proposed set of rules that would reshape the way mortgage servicers deal with troubled borrowers.

The proposal was drafted in response to revelations that banks used ”robo-signers” who didn’t review documents their colleagues prepared. The proposed rules cover every aspect of the foreclosure process, including the appropriate fees that mortgage servicers can charge, the way that they evaluate homeowners for modifications, and the way banks must demonstrate loan ownership when they proceed to foreclosure.

State and federal officials are moving to address longstanding complaints from consumers and housing advocacy groups that getting assistance is an extremely difficult process for consumers. Republican lawmakers and banks, however, call the proposed rules an effort by the government to micromanage industry practices.

“The settlement would transform the mortgage servicing industry and fundamentally change the rules that have historically governed relationships among borrowers, servicers and investors,” wrote the lawmakers, led by Rep. Scott Garrett (R., N.J.). “The breadth and scope of the draft settlement proposal raise significant concerns about its effect on the financial system.”

In the letter, the lawmakers asked Geithner for a detailed response to their questions by next Friday.

Also signing the letter are the House Financial Services Committee’s chairman, Rep. Spencer Bachus (R., Ala.), and fellow lawmakers Rep. Randy Neugebauer (R., Texas), Patrick McHenry (R., N.C.) and Pete Sessions (R., Texas.)

The lawmakers also said they were concerned about the role being played by the fledgling Bureau of Consumer Financial Protection, which they said “does not yet have any regulatory or enforcement authority.” The proposed servicing rules would put that agency in charge of overseeing specific steps over how banks evaluate borrowers for loan modifications.

Officials have been discussing whether to impose large financial penalties on servicers. Those penalties could include requirements that banks write down more than $20 billion of loan balances for borrowers who owe more on their properties than their homes are worth.

The Republican lawmakers questioned that concept, asking, “What is the legal basis for using funds collected in an enforcement action to benefit parties who have not been harmed by the purported wrongdoing?”

By Alan Zibel and Nick Timiraos WSJ

Foreclosures plunge 27% - biggest drop on record

2011-03-10T08:37:00.004-06:00

NEW YORK (CNNMoney) -- Is our long national foreclosure nightmare ending?

The number of foreclosure notices filed in February dropped 14% compared with a month earlier and 27% compared with a year earlier, according to RealtyTrac.

That was the biggest year-over-year decline the company has ever recorded. But the improvement may be exaggerated, according to RealtyTrac CEO James Saccacio, who traced some of the decline to the fallout over robo-signing issues.

"Allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets," he said. "The industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures."

Another contributing factor was the harsh winter weather that covered much of the country during the month. That delayed some of the paperwork processing and the serving of notices of default, notices of auction sales and other filings.

There were still more than 225,000 filings during the month, or one for every 577 homes. The banks repossessed 64,643 homes from delinquent borrowers, down significantly from the peak of about 102,000 last September.

The foreclosure fall flew in the face of other housing market reports that made it clear that housing is far from being out of the woods. S&P/Case-Shiller reported that prices are going down, and Zillow, the real estate website, said nearly 30% of borrowers with mortgages owe more than their homes are worth.

Looking to the future, the 50 state attorney generals seem to be making progress in their pursuit of a financial settlement with the banks over the robo-signing mess.

"We believe some of the servicers have slowed foreclosures as they wait to see how the settlement talks play out," said RealtyTrack spokesman Rick Sharga.

Worst-hit states

Three of the four "Sand States," Nevada (one filing for every 119 housing units), Arizona (one in 222) and California (one in 239) held their places at the top of the list of hardest hit states. Utah is the new number four, followed by Idaho, Georgia and Michigan.

Florida (one in 472), however, has slipped down the list to number eight. Filings dropped more than 65% year-over-year.

Part of the reason for Florida's improvement may have been the fall-out from the robo-signing issue. Foreclosures involve court hearings in the Sunshine State and many cases have been delayed by judges.

"Judicial foreclosure states recorded the most severe drops in foreclosures," said Sharga.

By Les Christie CNNMoney

How cheap houses spell bad news

2011-03-09T09:20:00.003-06:00

Houses look more affordable than ever. But prices will have to fall further before many Americans can actually afford to buy one.

The end of 2010 brought the start of a double dip that left U.S. home prices down 31% from their mid-decade peak. The latest slide puts the price of the average dwelling far below its long-run average as a share of per capita income, according to Paul Dales of Capital Economics in Toronto.

Housing is "exceptionally undervalued" by this measure, Dales writes. He says houses are trading at a 21% discount to their average price as a multiple of income, going by the S&P Case-Shiller national composite index.

Cheap houses and low interest rates seem to point toward a housing renaissance. A buyer who takes home the median per capita income can acquire the median-priced house while spending just 13% of disposable income on monthly housing bills, Capital Economics estimates. That's another low.

Yet low monthly payments alone won't be enough to keep house prices from spiraling downward again over the next year or two. The issue isn't what houses fetch now, it's what they might be worth in the near future – and how many people might be able to foot that bill. Both of those numbers look to be headed sharply lower.

Consider that mortgage rates, though about a percentage point above last fall's deflation scare low, remain 2 percentage points below their long-run average. With the bond markets at loose ends about the price to be paid for U.S. fiscal laxity, a further rise in mortgage rates looks likely.

Higher rates raise monthly financing costs, cutting the amount buyers can put toward principal payments – and driving down prices in lockstep. Why step in front of that steamroller now?

The other bad news for house prices lies in weak employment and wage trends and tightening standards for financing – which may help explain who has been buying houses lately.

With banks increasingly demanding substantial down payments, even supposedly affordable houses are a stretch for many. The median sales price of a new house in 2010 was $222,600, according to Census Bureau data. That means saving a $45,000 nut, plus closing costs, on the median per capita income of $26,530.

At the average U.S. personal saving rate of 5.8%, doing so would take 29 years. Even using the household median income figure of $49,777, you're looking at 15 years or so just to get the down payment on hand.

Prices for existing houses, which have been accounting for the vast majority of sales, are lower, which makes the savings math a bit less daunting. Even so, those numbers say the pool of potential homebuyers is not terribly large right now, not with unemployment running near 9% and the labor force thinner than it has been in 26 years.

And so it is that more than two-thirds of existing home sales since last summer were made to cash buyers or investors, while a mere 6% of purchases were made by first-time homebuyers, Dales says.

First-timers accounted for a tax-assisted 41% of house sales in 2009 and between 35% and 39% from 2005 to 2008, according to the National Association of Homebuilders.

So like it or not, house prices are going to keep falling until jobs become plentiful, wages start rising and the outlook for rates becomes clearer. That is, until it becomes clear that a good portion of the population can actually afford those affordable prices.

by Colin Barr CNNMoney

Is there assistance for second time home buyers?

2011-03-08T19:22:00.000-06:00

Source MSNBC

There is money to be made in foreclosures for those who choose their property carefully.

2011-03-07T10:13:00.001-06:00

Buying a foreclosure (FCL), or a property that the bank has taken away from the owner because he or she stopped paying the mortgage, is often touted as a way for both owner-occupants and investors to get a great deal on a property. However, the potential financial rewards of buying a foreclosure don't come without their share of hard work and headaches. Read on to learn about the problems these properties commonly possess and the difficulties you may encounter in purchasing one.

Problems With the Property

The most important thing to understand before jumping into the foreclosure market is that these properties were given up by owners who couldn't afford the payments anymore. If the previous owner could not afford to make the payments, it is likely that they also have not maintained or fixed anything in months at the minimum. Also, some people, embittered by their situations and wanting to take out their frustrations, will deliberately trash the property before they are forced out. After the occupants leave, foreclosures sit abandoned, often inviting criminal activity.

The following are some of the specific problems you may have to fix before you or your renters move in:

Maintenance and Cleanliness

Filth and stench. Bank-owned properties are sometimes disgustingly dirty because of time spent sitting empty, intentional neglect of cleanliness by the previous owners or occupancy by vagrants. When the place is locked up with no air circulating for months, built-up dirt can cause the entire home to smell.
Unpermitted changes. Being strapped for cash, the previous owners may have made changes to the home without getting the proper permits or hiring good labor. A common example is converting the garage into living space so more people can live in the home and help pay the mortgage. These changes may be undesirable to future owners or create headaches for the new owners with city government officials due to the lack of proper permits.
No electricity. With no one living in the home, the electricity may be off unless the bank has intentionally kept it on. With no electricity, it can be hard to see what you are buying in some rooms, particularly basements and windowless bathrooms.
Water damage. A small leak under the kitchen sink can lead to a mold problem, and a roof leak or burst pipe can lead to major water damage. With no one around to take care of small problems as they occur, small problems can turn into big ones, and big problems can turn into disasters.
Way behind on basic maintenance. If the previous owners couldn't afford their mortgage payments, you can bet that they also could not afford repairs, such as roof leaks, termite damage, a broken garbage disposal or anything else.
Unfinished upgrades and poor repairs. If the previous owners started to improve the home but then fell on hard times, there may be partially finished work in the house. The bathrooms may be redone while the kitchen has not been updated in 40 years, or there may be new floors in the living room while the bedrooms have filthy carpet. Also, if any repairs were made, they may have been done by the owners themselves or by unlicensed professionals - in other words, people who may not necessarily have done the work correctly.
Dead or overgrown yards. Depending on the climate where the home is located, the lawn and landscaping may be totally dead or extremely overgrown. Banks usually do not pay for gardeners to maintain the yard.
Personal property left behind. Sometimes foreclosed homeowners get locked out of the property before they can move their belongings, and in some cases they do not take everything with them. Many real estate owned (REO) properties contain furniture, trash, clothes and other items that you will be responsible for disposing of when you become the property's owner.

Vandalism and Neglect

Vandalism. Sometimes when a property sits vacant, especially if it is in a moderate-to-high crime area, bored punks will tag the property, smash windows and do other things to cause damage.
Broken windows. Broken windows can be common in REOs for several reasons. As mentioned previously, vandalism could be a cause. Also, when banks lock out owners while taking possession of the property, the former owners may break a window to get back in and retrieve their belongings. Windows may also get broken for a normal reason, like an errant baseball, but with no one living in or actively monitoring the property, the window is unlikely to get fixed. At best, broken windows may get boarded up by the bank or by concerned neighbors.
Damage to walls. Previous owners who took poor care of the property or wanted to inflict damage on it at the bank's expense may have put holes in walls and/or torn off the baseboards and crown molding.
Removal of valuable items. To get revenge against the bank and to make an extra buck, the previous homeowners might have removed items that had value, including appliances, fixtures, the kitchen sink, bedroom doors, closet doors, copper pipes and more. Anything the homeowners do not take might be taken by thieves. Either way, many REOs are missing things that generally come with seller-owned properties.

Location Issues

Poor/subpar location. Where there is one foreclosure, there may be others in the same block or neighborhood. Lower-income neighborhoods are more likely to have foreclosures, because they are more likely to have homeowners who were given predatory loans or who don't have the resources to endure economic hardship.

However, as a result of the subprime mortgage meltdown, sometimes even nicer neighborhoods have a high number of foreclosures. You have to look at the usual indicators of value to determine if the high number of current foreclosures might be indicative of a longer-term problem or if it is only a temporary issue because of the current economic climate.

Problems With the Purchase

Despite all these potential problems, foreclosures can still be a good deal. If you are willing to fix problems that most people do not want to deal with, you can buy a home at a significant discount. However, you may encounter additional issues when it comes to actually purchasing the property and getting it ready to move in.

Issues With Lenders

Financing. Lenders will not give you money for a home they consider uninhabitable or that appraises below the purchase price. If you are an investor paying cash, of course, this will not be a problem.
Significant time delays in dealing with the bank that owns the property. Common sense says that banks should want to unload REOs as quickly as possible, but in reality banks sometimes drag their heels in considering offers and throughout the escrow process.
No seller disclosures. Since no one from the bank has ever lived in the house, they are unlikely to have any knowledge of existing problems with the property. You will have to uncover everything yourself, either during the home inspection, by asking neighbors or through experience after you become the homeowner.
Competition between owner-occupants and investors to buy the property. Because foreclosures can be great deals, they are attractive to investors looking to flip properties or use them as rentals. Since investors can make all-cash offers with fewer or no contingencies and fast closings, their offers may be more attractive to the bank than those from would-be owner-occupants.

Issues With the Property

Feasibility of repairs. If you are a potential owner-occupant, you may not realistically have enough time, energy or cash to make the repairs. Before proceeding with the purchase, realistically assess your handyman skills, calculate how much cash you will have to fix up the property after your down payment, closing costs and moving expenses and get rough estimates for repair times and costs.
Inspection reveals hidden defects, or that visible issues are worse than they appear. This can happen with any property, but unlike traditional sellers, banks always sell properties as-is and will not make any significant repairs. As long as the purchase offer includes an inspection contingency, the buyer's loss will be limited to the cost of the inspection and a little bit of time.
Double housing costs. Foreclosures are not often move-in ready, and for potential owner-occupants, a foreclosure that needs significant repairs can mean double housing costs (rent on the old place plus a mortgage on the new place) until the property is ready. The other possibility is that the new owner-occupants will have to live in a construction zone or stay with friends/family for a while in order to avoid paying double for housing.

Conclusion

There is money to be made in foreclosures - but you should know what you are getting into ahead of time and choose your property carefully. Don't overlook the fundamentals that make a property desirable just because the purchase price is a bargain.

by: Yahoo Real Estate

Majority Believe 2011 Housing Prices Will Hold Firm

2011-03-07T09:27:00.006-06:00

Americans are more confident about the stability of home prices than they were at the beginning of 2010, even though they lack confidence in the strength of the economy, according to a survey from mortgage giant Fannie Mae:

78% believe housing prices will hold steady or increase over the next twelve months, up from 73% in January 2010

Almost two-thirds still believe the economy is on the wrong track, virtually unchanged (61%) from the beginning of last year

The Fannie Mae Fourth Quarter National Housing Survey, conducted between October 2010 and December 2010, polled home owners and renters to assess their confidence in home ownership as an investment, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy.

“More Americans believe that housing prices will remain stable over the next year,” said Fannie Mae Chief Economist Doug Duncan. “We also are seeing encouraging signs in the positive attitudes toward home ownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.”

Hispanics, African-Americans upbeat on home ownership

Younger Americans, Hispanics, and African-Americans are generally more positive about owning a home than the general population. Fifty- nine percent of Generation Y (ages 18-34) believes buying a home has a lot of potential as an investment, even though this age group suffered the steepest decline in their home ownership rate during the housing crisis—from nearly 40% when home prices peaked to under 40% in 2009.

More than one-third of Hispanics (34%) and African Americans (35%) say they will buy a home in the next three years, compared to only one in four (23%) of all other Americans.

During 2010, survey respondents increasingly expressed a strong belief that it will be harder for future generations to obtain a mortgage. Three-quarters of those surveyed (74%) believe it will be harder to get a mortgage in the future, up from just over two- thirds at the beginning of 2010.

Source: Fannie Mae

Regulators Push 20% Down Payments on Homes

2011-03-03T08:56:00.000-06:00

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.

The behind-the-scenes debate over the proposal could have far-reaching implications for how Americans finance loans, because it addresses how much equity new borrowers should have in their homes.

It is unclear whether the proposal will garner support among other regulators and be acceptable to the White House and Congress. Altogether, six federal agencies—the three supporting the proposal plus the Department of Housing and Urban Development, the Federal Housing Finance Agency and the Securities and Exchange Commission—must sign off on the proposal before it is released for public comment. It could not be determined Tuesday whether all the agencies would support the 20% down-payment standard.

At a congressional hearing Tuesday, HUD Secretary Shaun Donovan said no deal has been reached yet, and that any plan could instead spell out options.

At a separate hearing Tuesday, Treasury Secretary Timothy Geithner said, "We've got to be careful that we get it right." He added, "I'm not sure how much longer it's going to take, but it's going to take a bit longer than we initially expected."

Meanwhile, some lawmakers expressed concerns that the new rules might make it too hard for homeowners to qualify for less risky, and less costly, loans.

Sen. Kay Hagan (D., N.C.) told Federal Reserve Chairman Ben Bernanke that several lawmakers "are really concerned about not making it so restrictive that we can't have as many well-qualified loans as possible."

The proposal was crafted in response to a provision in Dodd-Frank that aimed to improve mortgage-lending standards. Loans that don't meet the standards for "qualified residential mortgages" and are sold to investors as securities will be subject to a "risk retention" rule, which could raise borrowing costs for homeowners.

The risk-retention rule requires banks to keep 5% of the value of all mortgages they securitize on their books. During the housing boom, many lenders passed on all of their mortgages, and all of the risk, to investors. It was designed to force lenders to have "skin in the game" when selling groups ofmortgages packaged as securities.

Critics of the risk-retention rule said it could raise costs for traditionally safer lending products such as long-term, fixed-rate loans with full income documentation. A coalition of consumer advocacy groups and the real-estate industry have warned that defining the rule too narrowly could raise borrowing costs for millions of creditworthy borrowers.

Regulators must issue a rule defining "qualified residential mortgages" by April, and had initially planned to publish a draft proposal late last year. But the process has been delayed by a disagreement about whether to include in the rule national standards for loan servicers, such as how to modify loans for troubled borrowers. The new proposal reflects a compromise among the regulators to include some standards for how and when banks modify loans.

By VICTORIA MCGRANE And NICK TIMIRAOS - WSJ

Home prices: The double-dip is near

2011-03-03T08:49:00.001-06:00

NEW YORK (CNNMoney) -- That big sucking sound you heard last week? That was the air being taken out of the housing market by a slew of bad reports followed by some dire predictions by an industry bubble-spotter.

On Tuesday, we found out that home prices were near their post-bust lows. Two days later the government reported that January saw a double-digit dip in the number of new homes sold.

Then Robert Shiller, the Yale economist and co-founder of the S&P/Case-Shiller home price indexes, dropped this bomb: "There's a substantial risk of home prices falling another 15%, 20% or 25%," he said.

That's a stunning enough pronouncement to make house hunters consider putting purchases on hold. And that may not be a dumb move: If prices are near a double dip -- meaning they fell after the bust, rose a bit during recovery and are now heading back down -- there may be better deals ahead.

"There will be differences by market, but generally, you may get a big discount by waiting a year [to buy]," said Dean Baker, co-director of the Center for Economic and Policy Research, who thinks the price drop will be closer to 10% or 15%.

Most (and least) affordable cities to buy a home

Baker looks at the ratio between local home prices and annual rents to judge whether markets are overvalued. If the median-priced home sells for more than 15 times the median annual rent, there's a good chance prices may come down.

On a national level, Shiller and other economists compare home price changes with income growth over the years. Before the bust, home prices had been outpacing earnings since the late 1990s.

Just to get that back to a normal ratio -- which we last saw in 1998 -- home prices would have to drop another 15%, according to Anthony Sanders, a director of Real Estate Entrepreneurship at George Mason University.

"Even after the bubble burst, the ratio of income to home prices is still way too high," he said.

Naturally, many disagree with these assessments. Karl Case, who co-founded the home price index with doom-sayer Shiller, believes that the market will "bounce along the bottom all year." If that's the case, buyers who take the plunge now shouldn't expect big profits if they sell in the next few years, but they shouldn't have to take a major hit either.

Besides, a home purchase is more than a potential investment, especially for families planning to stay put for a while. The big plus for them is the pleasure of living in their own homes.

"People should base their decision on affordability, lifestyle choices and home preferences, not on investment," said Lawrence Yun, the National Association of Realtors' chief economist.

Some stable areas, such as Texas and the Midwest, will probably not experience price plunges at all, but other markets, such as Seattle, Portland and inland California, could still fall substantially, according to Baker.

See your local forecast

Even for the markets most likely to rebound, projected returns are minimal. Fiserv, which provides financial information and analysis, projects that the best performing market over the next two years will be Tacoma, Wash. -- and it will only record a price increase of 12%. That means those in average markets can only hope for single-digit returns.

With home-price gains so modest, it doesn't pay to buy unless you're pretty sure you'll stay for five years or more. "With high transaction costs, buying and selling, it probably will not work out financially," Baker said.

Nicolas Retsinas, of the Harvard Joint Center for Housing Studies, recently advised his own daughter about buying a home. She was returning to Providence, R.I., but it might only be for a few years.

He told her to rent -- not that it mattered. "Whose kids listen to them anyway?" he asked.

Even those with longer time horizons should not take it for granted that their purchases will pay off. Home prices could stagnate well into mid-decade.

Despite the gloom, many Americans remain confident about home buying. A survey released Monday by Fannie Mae revealed that 65% of people believe it's a good time to purchase, with 78% expecting prices will rise or remain the same over the next 12 months.

12 cities: Where to rent and where to buy

And buyers may take heart from some positive recent indicators, such as an up tick in the sales of existing homes in January; a drop in vacant rental homes; and more investors snapping up properties.

There's also been an upswing in the number of high-end homes -- those costing more than $750,000 -- being sold, according to Yun. The wealthy buyers of these properties have lots of choices of where to place their money and many are investing in real estate.

"The smart money is making their move," said Yun.

By Les Christie, staff writer CNNMoney

If Congress Revamped Mortgage Interest Deduction, Most Taxpayers Would Come Out Ahead

2011-03-01T18:23:00.002-06:00

The deduction for interest on home mortgages may be the most beloved of all tax subsidies. A politician needs only to muse about repealing or restructuring the deduction to be set upon by suburban mobs (led, perhaps, by real estate agents and mortgage lenders).

But a new analysis by my Tax Policy Center colleagues Ridathi Chakravarti and Dan Baneman finds that most taxpayers would barely notice the change in their tax bill even if Congress dramatically restructured the subsidy. And with some changes, many of us would end up paying lower taxes than we do today.

In the unlikely event Congress simply repeals the mortgage deduction, the average tax bill would increase by $710. But those who earn between $30,000 and $40,000 would pay an average of about $70 more while those making more than $1 million would pay an additional $4,000.

But the deduction isn’t going to be repealed. And if it was, some of the added revenue would surely be used to buy down income tax rates. More likely, Congress will scale back the deduction or replace it with a new design such as a tax credit. With some of these alternatives, typical middle-income households would likely pay less tax, not more. And many will see no change at all.

What’s going on? Mostly, the mortgage deduction is the classic upside-down tax subsidy. It gives the biggest tax breaks to the highest earners who borrow the most money to buy the most expensive houses. Because it is a deduction, someone in the 35 percent tax bracket pays an after-tax cost of only $65 for every $100 they borrow (even less if you figure state taxes). But someone in the 10 percent bracket pays $90—if they itemize. However, because the deduction is only available to those who do itemize and a surprising number of moderate-income homeowners don’t, many taxpayers get no subsidy at all.

Let’s look at a couple of reform options. Say Congress caps the mortgage deduction at $500,000 and allows it only for primary residences (today, you can deduct mortgages up to $1 million and use the write-off for second homes). Since very few middle-income people have $1 million mortgages, you won’t be surprised to learn that almost no households making $100,000 or less would pay higher taxes. Even among those making $100,000 to $200,000, only about 12 percent would pay more. A typical household in this income class would pay about $185 more.

By contrast, about one–quarter of those making $200,000 to $500,000 and 28 percent of those making $500,000 to $1 million would pay higher taxes. If you are pulling in $500,000 to $1 million, (fewer than 1 percent of all taxpayers do) you’d typically pay about $1,900 more in taxes.

What if Congress decided to not only limit the subsidy to $500,000 loans but also turned the deduction into a 20 percent non-refundable credit? Since the credit benefits moderate-income households and most of them would be unaffected by the cap, the vast majority of taxpayers would be paying roughly the same tax bill as they pay today.

For instance, those making $50,000 to $75,000 would pay on average $80 less. Only those making more than $100,000 would pay significantly more. Households in the $100,000 to $200,000 range would pay about $650 more on average, although interestingly only half would face any tax hike at all. Those making more than $1 million would pay an extra $2,800 on average. Of course, some would pay much more.

All of these estimates assume current law where the Bush-era tax cuts expire at the end of next year. But the pattern is the same if you assume the tax cuts are extended. Indeed, typical middle-class households would do even better under the cap and credit if the 2001 and 2003 tax cuts are extended.

Higher taxes, of course, are only one result of these changes. Homeowners would likely see at least a short-term adjustment in the value of their homes as well. But it is hard to know how much and for how long. And research by TPC’s Ben Harris suggests it would depend a lot on where you lived. Of course, a cap and credit would probably result in somewhat higher prices for moderate-priced homes but lower prices for mini-mansions. The price of real mansions might not change much at all since the increase in taxes would be trivial for many uber-rich buyers.

So before you grab a pitchfork at the mere mention of a change in the mortgage deduction, take a look at TPC’s analysis. You may be surprised.

Posted by Howard Gleckman Forbes

Getting a Mortgage Before the Door Shuts

2011-02-28T10:15:00.001-06:00

If you have been sitting on the fence trying to decide whether to buy a new house or refinance a mortgage, you should act soon. New loans are starting to get costlier.

The mortgage market is facing pressures from new laws and regulations, still-declining home prices and the ongoing need for government-owned mortgage players to shore up their finances. The Mortgage Bankers Association predicts mortgage originations, which reached $3 trillion in 2005, will be less than $1 trillion this year, the lowest level since 1997.

"The price of mortgage money is going to go up, and the availability of mortgage money may also be impinged," says Keith Gumbinger, vice president at HSH Associates, which tracks mortgage data.

The silver lining is that the rate for a 30-year fixed loan is hovering around 5% for those with good credit. That is up about a percentage point from last year's lows but is still an attractive rate by historical standards, though expected to keep climbing as the economy improves.

Home prices in some areas are still falling, but they are bottoming out or firming up in others. It may not be the perfect time to buy a home—but better mortgage options today may be a worthy trade-off to the possibility of lower prices tomorrow.

Still not convinced? Consider the following:

• New costs.Fannie Mae and Freddie Mac, which provide liquidity to the mortgage market by buying mortgages and selling securities backed by them, are adding new fees to loans to people with the best credit and raising existing loan fees. Freddie's new fees start March 1, while Fannie's kick in April 1.

Neither Fannie nor Freddie have been assessing fees on most loans for borrowers with credit scores above 720, even if the down payment was small. But citing a need to address risk and price their services appropriately, they will assess a fee of 0.25% to 0.5% of the loan value on borrowers with credit scores of 720 or higher who put down less than 25% of the purchase amount. The current fee for those with credit scores of 700 to 719 who put down less than 20% of the purchase price will double to a full percentage point of the loan value from half a point.

Brokers expect the higher fees will translate into slightly higher mortgage rates.

In addition, the Federal Housing Administration, saying it needs to bolster its capital reserves, is raising its required annual mortgage-insurance premium for FHA loans by 0.25% of the loan value. As a result, FHA loans—which are aimed at first-time home buyers and those with moderate incomes—will include an upfront mortgage insurance payment of 1% of the loan amount and an annual premium of 1.1% to 1.15% when the increase goes into effect on April 18.

For regular loans, private mortgage insurance—which is required when you put down less than 20% of the home's value—is tougher to get than it once was. Generally, it is available only for buyers who make a down payment of at least 5% and have a credit score of 700 or higher.

• Dodd-Frank fallout. The Consumer Financial Protection Bureau, established by the Dodd-Frank financial overhaul, opens its doors for business in July and is expected to take a close look at how interest rates and closing costs are disclosed to borrowers. That could create new costs that lenders are likely to pass along to consumers. In addition, a Federal Reserve rule that takes effect April 18 will change how mortgage brokers are paid, a move intended to curb practices such as steering home buyers to higher-cost loans.

The new rules, which limit the kinds of compensation brokers can receive, have brokers in a tizzy. The brokers claim the changes will raise mortgage costs and put some of them out of business, shrinking the market. How it will play out isn't clear, but given both the changes and the Fannie and Freddie pricing, mortgage prices may vary more than usual, say those in the industry—making it wise for borrowers to shop for rates even more aggressively.

• More restrictions. Earlier this month, the Obama administration proposed a wide-ranging overhaul of the mortgage market, including phasing out Fannie Mae and Freddie Mac, requiring a down payment of at least 10% and reducing the share of FHA loans, which are almost 30% of the market now, up from a historical market share of 10% to 15%.

In addition, the administration recommended letting Fannie and Freddie loan limits for high-cost areas fall back to $625,500. The limits were temporarily increased to $729,750 in 2008 when the market for "jumbo" loans—those above the loan limits—all but disappeared, and that increase is now scheduled to expire Sept. 30. (The $417,000 loan limit for homes in most other markets would remain the same.)

What those proposals will mean depends on where you live. In Manhattan, where the average home price is still around $1 million, a drop in the loan limit means more buyers will need jumbo mortgages, says Melissa Cohn, CEO of Manhattan Mortgage Co. Those currently have rates that are about half a percentage point higher than conventional loans.

Richard Peek, president of the Florida Association of Mortgage Professionals, says much of his business right now is in FHA loans, which allow down payments of as little as 3.5%. Requiring a 10% down payment, he says, would put homes out of reach for many Florida customers.

—karen.blumenthal@wsj.com

Five Signs That Say 'Buy'

2011-02-28T10:12:00.000-06:00

Jobs. Some parts of the country were less affected by the recession than others. Prospective buyers should review job-growth data from the U.S. Bureau of Labor Statistics, at www.bls.gov. Unlike many backward-looking economic statistics, jobs data are only about a month old and can "clearly show the direction of the local economy," says Carolyn Beggs, chief operating officer of real-estate data provider Local Market Monitor Inc. The National Association of Home Builders also posts state and local employment data, at NAHB.com.

You also want to see a brightening personal-income picture for the previous six-month period. Those numbers are available via the U.S. Dept. of Commerce's Bureau of Economic Analysis, at www.bea.gov.

Recent sales

activity. Three factors should be taken together: housing inventory, sales volume and prices.

A large inventory of homes with few actual transactions are negative indicators, according to Jeffrey Jackson, chairman of Mitchell, Maxwell & Jackson Inc., an appraisal company in New York. On the other hand, if inventory is falling and transactions are picking up, that is a good sign.

State and local boards of realtors often publish monthly inventory statistics. Inventory breakdown by metro area also can be found at the U.S. Census Bureau's website, in the American Community Survey (www.census.gov/acs/www/). Be sure to compare current inventories with long-term averages.

Also, check out the rental vacancy rates in your area, and judge them against historical rates, which you can find at the Census Bureau's website (www.census.gov) or via local real-estate professionals.

Construction.While not as reliable as jobs or sales-trend data for getting a read on a local housing market, the number of permits recently issued for local builders is useful for gauging builder sentiment and, by extension, future housing activity.

You can get recent permit information from your county or municipal building department, or via the National Association of Home Builders (www.nahb.com).

Mortgage

availability. If you live in an area where most people use mortgages, it is especially important now to gauge local lending patterns. In the aftermath of the financial crisis, most national banks tightened lending standards. But some local banks haven't been hit as hard by the housing crash and are more willing to lend, even for higher-priced homes.

For instance, some smaller lenders in the New York and New Jersey area, such as Lake Success, N.Y.-based Astoria Federal Savings, are actively courting new "jumbo"-mortgage customers. Astoria Federal says it believes jumbo-loan borrowers pose less risk than other borrowers because they can demonstrate ample income and often opt for hefty down-payments.

Anecdotal evidence. It might sound old-fashioned in an era of electronic data, but driving around neighborhoods, checking out open houses and talking to local agents still are good ways to gather local-market intelligence.

The key is to do this kind of research only after you have gathered hard data, so that you don't misread the signs. For example, foreclosed homes can generate multiple bids and quick sales, often in all-cash deals—but that doesn't mean the market is healthy.

—M.P. McQueen WSJ

Home sales jump

2011-02-28T10:02:00.001-06:00

Investors, not first time buyers are what propped sales.

Home loans in default drag on

2011-02-23T08:47:00.002-06:00

Foreclosures could stretch to 2 years

The average U.S. borrower in the throes of foreclosure hasn't made a mortgage payment in 17 months, up from nearly 11 months two years ago — and the time frame may get even longer.

Banks and mortgage servicers, who collect payments for lenders, are taking more time to complete foreclosures because of huge volumes of defaulted mortgages. Other factors include time-consuming reviews for loan modifications and additional delays that followed revelations late last year about improperly filed foreclosure documents in tens of thousands of cases.

Last year, the number of days that the average borrower in foreclosure went without making a payment stretched from 410 in January to 507 in December, says LPS Applied Analytics, which tracks 37 million mortgages. Before the foreclosure crisis, the norm was more like 250 days, says Herb Blecher, LPS senior vice president.

"Loans are spending longer in the process," Blecher says.

About 2.2 million homes were in foreclosure at the end of January, according to LPS.

The delays may translate into higher prices in some markets for foreclosed homes as inventories shrink, real estate experts say. They will also push some foreclosures further into the future, meaning they'll weigh on housing markets longer. "There's a trade-off. On the plus side, you trim inventories. But ultimately, these units have to be foreclosed," Christopher Thornberg of Beacon Economics says.

Some companies have assigned more workers to handle distressed loans in recent months, but they're still not likely to have enough to quickly process foreclosures, Thornberg says.

Government initiatives that were begun in 2009 to increase loan modifications also slowed lenders' efforts to modify loans, says Diane Pendley, managing director of Fitch Ratings.

The government programs were "very complex and kept changing," which added to the work required to do a modification and increased the time that seriously delinquent borrowers could live payment-free before losing their home, she says.

Pendley estimates that delinquent borrowers now stay in their homes an average of 19 to 20 months without paying before they're forced to leave. By year end, the average will rise to 22 to 23 months, the longest on record, she says.

Postponing foreclosure helps borrowers financially, but "everyone else is being hurt," Pendley says. They include owners of mortgage loans, taxpayers who cover losses for government-backed mortgage companies and local governments that are owed property taxes, which often aren't being paid, either.

Companies are also slowing foreclosures so that they don't glut the market with homes for sale, which would depress prices, says Patrick Butler, head of asset disposition for Foreclosure.com.

By Julie Schmit USA TODAY

UPDATE 1-U.S. close to punishing banks over foreclosures

2011-02-18T08:25:00.001-06:00

* Bank regulators found mortgage servicers broke laws

* Probe included BofA, Citi, Wells Fargo

(Adds FHA commissioner's testimony, paragraphs 5-9)

WASHINGTON, Feb 16 (Reuters) - U.S. bank regulators are finalizing punishments against mortgage servicers after a probe found "critical deficiencies" with the industry's foreclosure processes.

John Walsh, the acting head of the Office of the Comptroller of the Currency, said a national probe of foreclosure paperwork and procedures found that mortgage servicers broke laws, and that a small number of homeowners were wrongly evicted.

"These deficiencies have resulted in violations of state and local foreclosure laws, regulations, or rules and have had an adverse affect on the functioning of the mortgage markets and the U.S. economy as a whole," Walsh said in congressional testimony obtained on Wednesday by Reuters.

Walsh did not identify any servicers, but his testimony noted that the probe included Bank of America , Citibank , JPMorgan , and Wells Fargo , among others.

In separate testimony on Wednesday, David Stevens, the commissioner of the Federal Housing Administration, said the penalties could range from fines paid to the government to loan modifications to banks forgiving some of the principal balance on the loan.

"There are a variety of discussions. There are different views," Stevens told lawmakers on the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, noting that no final decisions have been made.

Pressed on the timing of any announcement, Stevens replied: "I would say a month timeframe is probably in the reasonable range if we are to reach some sort of conclusion."

SIZE OF PENALTIES?

Asked if the magnitude of the potential penalties could reach the range of billions or even tens of billions of dollars, Stevens declined to comment.

"What are the potential costs that each individual agency and state attorney general could ultimately assess against these institutions? We need to understand what that total potential estimation could be, and off of that, that is what we will have to work on to determine if there is a way we can come together and make this less disruptive in the market," Stevens said.

Walsh has said in the past that regulators have the power to seek monetary penalties against the servicers and to issue criminal referrals.

The biggest U.S. mortgage servicers have been accused of taking possibly illegal shortcuts in some foreclosure proceedings, such as using "robo-signers" to sign hundreds of unread documents a day and advancing foreclosures without proof they held the mortgages.

The allegations have been a reputational and financial hit for the companies. They are facing repurchase demands from investors in mortgage-backed securities and multiple probes from bank regulators and all 50 state attorneys general.

Walsh said in testimony prepared to be delivered on Thursday before the Senate that mortgage servicers emphasized speed and cost efficiency over quality and accuracy in their foreclosures.

He noted that the bad behavior varied across the industry. He also said that despite servicers' deficiencies, U.S. examiners found that the foreclosures involved seriously delinquent loans and that servicers generally maintained documentation of ownership.

Walsh said only a "small number" of foreclosure sales should not have proceeded. He cited cases of military families and foreclosures in which the loan had been approved for a trial modification. (Reporting by Karey Wutkowski; additional reporting by Corbett B. Daly; Editing by Gary Hill and Dhara Ranasinghe) REUTERS

Banks Want Higher Down Payments From Buyers

2011-02-16T13:17:00.000-06:00

Banks are increasingly telling borrowers that if they want to buy a home, they need to come with a higher down payment. Banks are requiring higher down payments in order to help mitigate the bank's risk as home prices continue to fall. Plus, banks say larger down payments discourage delinquencies.

The Obama administration last week called for gradually increasing down payments to a minimum of 10 percent on conventional loans that can be bought or guaranteed by Fannie Mae and Freddie Mac.

The median down payment in nine major U.S. cities rose to 22 percent in the fourth quarter of 2010 on properties purchased through conventional mortgages--the highest in median down payment since the data started being tracked in 1997, according to a Wall Street Journal and Zillow.com analysis.

In the late 1990s, median down payments once averaged 20 percent in the nine metro cities Zillow analyzed, but in 2001 started inching downward as banks began requiring little or no down payment in some cases during the housing boom.

Now banks want more, believing that the more a buyer has invested, the less likely they are to default.

Borrowers who can’t afford the higher down payments are seeking assistance elsewhere, such as loans for veterans or those backed by the Federal Housing Administration (which require 3.5 percent down payment), or loans by the United States Department of Agriculture for rural areas.

Source: “Banks Push Home Buyers to Put Down More Cash,” The Wall Street Journal (Feb. 16, 2011)

Read More:
Down Payments Under 30% Risky?

Don't sweat rising mortgage rates

2011-02-15T14:49:00.000-06:00

Will rising interest rates slam the door on a fragile housing recovery?

No -- though that only underscores just how grim the housing picture is.

The rate on the 30-year conforming mortgage has risen to a recent 5.1% from 4.2% last October (see chart, right), tagging along behind an even larger rise in the yield on the 10-year Treasury note over that period.

The jump in the mortgage rate has added around $50 to the monthly tab on a 30-year, fixed-rate mortgage on a median-price house ($170,000 or so) purchased with 20% down, estimates Paul Dales of Capital Economics in Toronto.

Those figures could yet rise further in coming weeks. Many observers expect the yield on the 10-year Treasury rise to 4% or above from a recent 3.6%, amid questions about whether U.S. policymakers have the guts to rein in the galloping U.S. budget deficit. Higher Treasury rates generally translate into higher mortgage rates.

Yet houses are cheap enough that mortgage rates could even rise further without drastically damaging the affordability picture, Dales says. He figures they could rise another point or two without really darkening the affordability picture, which for the past few years has been practically the only bright spot in the housing market.

The recent increase in mortgage rates means buying the median house consumes 14% of median income – up from 13% at the October low. That's barely half of the 25% of income Americans were ill-advisely funneling into house purchases at the top of the housing bubble.

He also expects low house prices to limit the fallout of higher costs that will result from the Obama administration's makeover of the deeply troubled U.S. mortgage finance system.

"Relatively low house prices mean that affordability remains very high by historical standards," says Dales.

Unfortunately, that doesn't mean a housing recovery is anywhere in sight. Few Americans have either the means or the inclination to plunk down $34,000 for a down payment on a house now, regardless of how reasonable the monthly payment might be.

That unwillingness to invest in housing only stands to increase now that house prices are falling in earnest again. House prices fell in 19 of the 20 biggest regions in November, S&P said in its latest survey of national house prices, and the Case Shiller indexes are down around 30% from their 2006 peaks, within a few points of their recent lows.

With the job picture still weak, foreclosures piling up and lending standards much tighter than they were a few years back, there's no reason to believe the housing market will regain its footing any time soon -- even if there are a few hardy souls willing to bet once again on adjustable rate mortgages.

"High affordability will still not prevent house prices from falling further," says Dales.

Posted by Colin Barr CNNMoney

ING Sells Real-Estate Unit for $1 Billion

2011-02-15T08:49:00.001-06:00

AMSTERDAM—ING Groep NV said Tuesday it will sell its real-estate investment-management business for around $1 billion, in a deal that will cut its exposure to troubled real-estate activities and free up capital to repay the Dutch state.

ING said it will sell most of ING REIM to U.S. commercial real-estate brokerage CB Richard Ellis Group Inc., in a deal valued at $940 million.

In a smaller transaction, Clarion Partners, a U.S.-based private-market real-estate investment manager, will be acquired by Clarion's management and private equity firm Lightyear Capital LLC for $100 million.

The Dutch financial-services company said the deals, which also include $100 million worth of stake sales in some REIM funds, will result in a gain of €500 million ($674.4 million) after tax. It expects the transactions to close in the second half of 2011, subject to regulatory approval.

ING REIM suffered heavy losses in the financial crisis due to the slump in international real-estate markets. ING had been searching for a buyer since last summer. It has roughly €65 billion in assets under management and operates in 20 countries on four continents.

The sale, which mostly confirmed earlier media reports, isn't officially part of the disposal program imposed on ING by the European Commission—the European Union's executive arm—as a condition of receiving billions of euros in government aid during the financial crisis.

Still, Chief Executive Jan Hommen said the deal underpins ING's aim to reduce its exposure to real estate, and that it will further simplify ING's operations and strengthen its capital base.

ABN Amro analyst Jan Willem Weidema said the divestment is a good deal, noting that the sale price was on the higher end of his expectations.

Mr. Weidema added that it will allow ING to free up more capital, helping it to repay the €5 billion it still owes the Dutch state and which it plans to repay this year.

Meanwhile, ING REIM's Australian operations won't be sold and ING said it will seek a phased withdrawal from these activities.

ING will report full-year results Wednesday. Analysts expect the company will return to a fourth-quarter net profit, helped by the strong performance of ING's banking business.

Combining the acquired ING business with CB Richard Ellis's "will provide us with a significantly enhanced ability to meet the needs of institutional investors across global markets with a full spectrum of investment programs and strategies," said CB Richard Ellis Chief Executive Brett White. He also said the firms' investment-program offerings "are highly complementary."

The U.S. company also will acquire about $55 million of commercial real-estate coinvestments from ING and might acquire interests in other funds managed by ING's Europe and Asia divisions, the company said.

CB Richard Ellis said it expects to see costs totaling about $150 million related to the transaction. Earlier this month, the company said its fourth-quarter profit jumped 48% as it posted double-digit gains in every business line except development services.

By MAARTEN VAN TARTWIJK - WSJ —Nathan Becker contributed to this article.

The American Dream, Is it just a dream?

2011-02-11T21:50:00.001-06:00

Scam Uses Foreclosed Homes as Rentals

2011-02-11T10:45:00.000-06:00

Police: Family victim of scam

Jennifer Landrum, 31, shows a bogus rental agreement at a home in Palm Bay that her family has been renting since October. Her husband and five children are victims of a scam artist, police said. They have arrested Dewey Moore Jr. in the case. / Tim Shortt, FLORIDA TODAY

Most Metro Areas See Home Prices Stabilizing

2011-02-11T10:27:00.004-06:00

Home sales rebounded in 49 states during the fourth quarter with 78 markets – just over half of the available metropolitan areas – experiencing price gains from a year ago, while most of the rest saw price weakness, according to the latest survey by the National Association of REALTORS®.

Total state existing-home sales, including single-family and condo, jumped 15.4 percent to a seasonally adjusted annual rate of 4.8 million in the fourth quarter from 4.16 million in the third quarter, but were 19.5 percent below a surge to an unsustainable cyclical peak of 5.97 million in the fourth quarter of 2009, which was driven by the initial deadline for the first-time buyer tax credit.

In the fourth quarter, the median existing single-family home price rose in 78 out of 152 metropolitan statistical areas(MSAs) from the fourth quarter of 2009, including 10 with double-digit increases; three were unchanged and 71 areas had price declines. In the fourth quarter of 2009 a total of 67 MSAs experienced annual price gains.

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009. The median is where half sold for more and half sold for less. Distressed homes, typically sold at discount of 10 to 15 percent, accounted for 34 percent of fourth quarter sales, little changed from 32 percent a year earlier.

Lawrence Yun , NAR chief economist, is encouraged by the trend. “Home sales clearly recovered in the latter part of 2010 and are helping to absorb the inventory, including many distressed properties. Even with foreclosures continuing to enter the inventory pipeline, they’ve been selling well and housing supplies have trended down,” he said. “A recovery to normalcy requires steady trimming of the inventories.”

Yun added, “An improving housing market and job growth will go hand in hand. The housing recovery will mean faster job growth.” He projects about 150,000 to 200,000 jobs will be added to the economy this year from an anticipated 300,000 additional home sales in 2011.

Yun further noted, “Better than expected sales and/or strengthening in home values can have an even bigger job impact as consumer spending would naturally rise from a housing wealth recovery affecting a vast number of American families.”

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a very favorable affordability environment is a huge factor in the recovery. “Although job growth has been relatively modest and credit is tight, you can’t underestimate the impact of historically high housing affordability conditions,” he said.

“Mortgage interest rates recently hit record lows, median family income has edged up and prices in most areas have been stable following the correction from the housing boom. For people with good credit and long term plans, it’s hard to imagine a better opportunity than what we see today,” Phipps said. “Unfortunately the flow of credit is unnecessarily tight and is constraining the pace of the housing and job growth recoveries.”

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.41 percent in the fourth quarter, down from 4.45 percent in the third quarter; it was 4.92 percent in the third quarter of 2009.

“The healthier local housing markets are also experiencing favorable local employment conditions,” Yun said. Job growth is a major factor in price appreciation in metro areas such as the Washington, D.C., region, where the median existing single-family home price of $331,100 in the fourth quarter is 8.1 percent higher than a year ago; the Boston-Cambridge-Quincy area, at $346,300, up 4.2 percent; and Austin-Round Rock, Texas, at $190,300, up 4.1 percent.

Smaller metro areas sometimes see larger swings in price measurement depending on the types of properties that are sold in a given period. In such markets, full year price data can provide additional context.

In the condo sector, metro area condominium and cooperative prices – covering changes in 57 metro areas – showed the national median existing-condo price was $164,200 in the fourth quarter, which is 6.4 percent below the fourth quarter of 2009. Twenty-two metros showed increases in the median condo price from a year ago and 35 areas had declines; only 11 metros saw annual price gains in fourth quarter of 2009.

“Consumers in the hard hit regions of Nevada, Arizona and Florida were able to scoop up condos at absolute bargain basement prices,” Yun said. Median condo/co-op prices in affected metro areas include Las Vegas-Paradise at $60,700, Phoenix-Mesa-Scottsdale with a fourth quarter median of $68,900, and Miami-Fort Lauderdale-Miami Beach at $81,900.

Regionally, the median existing single-family home price in the Northeast increased 2.3 percent to $240,400 in the fourth quarter from a year earlier. Existing-home sales in the Northeast rose 15.0 percent in the fourth quarter to a level of 797,000 but are 22.8 percent below the surge in the fourth quarter of 2009.

In the Midwest, the median existing single-family home price rose 0.5 percent to $139,200 in the fourth quarter from the same period in 2009. Existing-home sales in the Midwest jumped 18.3 percent in the fourth quarter to a pace of 1.02 million but are 25.4 percent below the cyclical peak one year ago.

In the South, the median existing single-family home price edged up 0.3 percent to $152,400 in the fourth quarter from the fourth quarter of 2009. Existing-home sales in the region rose 11.4 percent in the fourth quarter to an annual rate of 1.82 million but remain 17.8 percent below the surge in the fourth quarter of last year.

The median existing single-family home price in the West declined 2.9 percent to $214,400 in the fourth quarter from a year ago. Existing-home sales in the West jumped 19.9 percent in the fourth quarter to a level of 1.17 million but are 14.2 percent below the cyclical peak in the fourth quarter of 2009.

“A good portion of the sales activity in the West has been driven by investors taking advantage of discounted foreclosures, with high levels of all-cash transactions,” Yun explained.

Source: NAR

2011-02-11T10:21:00.003-06:00

WASHINGTON—The Obama administration unveiled a proposal Friday for winding down mortgage giants Fannie Mae and Freddie Mac, spelling out three options for what could take their place and setting the stage for a debate over the nation's $10.6 trillion mortgage market.

The steps, outlined in a "white paper," are likely to mean higher borrowing costs and more-limited access to home loans for consumers. Treasury Secretary Timothy Geithner said establishing a new system could take five to seven years.

"This is a plan for fundamental reform of the housing market," Mr. Geithner said, cautioning that "we're going to proceed on this path of reform very carefully."

View Document

All of the administration's proposals envision a scaled-back role for the government, and officials emphasized the goal of restoring the market for mortgage-backed securities issued without the government's guarantee.

The initial reaction on Capitol Hill was positive. Rep. Scott Garrett, (R., N.J.), a frequent critic of the administration, said, "I'm encouraged to see the administration included a number of reform ideas that track closely with my own."

One option proposed by the administration includes a new government backstop of certain mortgages under a federal 'reinsurance' model, while another would proposes a more limited backstop that would scale up primarily during times of economic crisis. The third option proposes no such government backstop beyond existing federal agencies such as the Federal Housing Administration.

The government took over Fannie and Freddie 2½ years ago and has committed funds to keep the firms solvent. So far, taxpayers are on the hook for $134 billion, and the bailout is likely to be the most expensive legacy from the 2008 financial crisis.

But the companies have played a critical role in healing the nation's housing markets. Together with federal agencies, they accounted for nine in 10 new loans last year.

The proposal outlines steps to shrink the government's outsize footprint in the mortgage market without seeking congressional approval. Those steps could raise hurdles and costs for borrowers.

The paper proposes gradual increases in minimum down payments so that Fannie and Freddie buy loans with a minimum 10% down payment. Currently, borrowers can make smaller down payments if they purchase mortgage insurance. The paper also recommends raising gradually fees that Fannie and Freddie charge to lenders, in order to make mortgages that aren't government-backed more competitive. It calls for slowly reducing the maximum loan limits the firms can purchase but doesn't specify how far those loan limits should drop.

Current federal law allows the companies to guarantee mortgages of as much as $729,750 in some high-home-price areas and will expire Oct. 1. The administration recommends that Congress not renew the law. The move would drop the ceiling to $625,500. While not being specific, the administration's paper calls for further reductions in that ceiling over the next several years. Mortgages above the ceiling are known as jumbo loans and usually require a higher interest rate.

The administration also says banks should be required to hold more capital to withstand future housing downturns, and the paper calls for "more conservative underwriting standards that require homeowners to hold more equity in their homes."

The paper also calls for reducing the role played by the Federal Housing Administration, a New Deal-era agency that has been at the heart of the administration's efforts to help Americans secure low-down-payment mortgages in the wake of the mortgage market's collapse three years ago. The FHA doesn't lend money to home buyers but insures lenders against default; in exchange for that backing, borrowers must pay annual insurance premiums. The administration says it will increase those fees later this year.

Because the housing market remains fragile, those measures would be phased in gradually. The administration believes Fannie and Freddie are past their peak losses, and the vast majority of those have stemmed from loans it bought as the mortgage boom turned to bust. Rapidly withdrawing the firms from the market today could damage the housing sector and risk making those losses more severe.

The paper also calls for a task force to consider merging federal mortgage agencies. Currently, the Department of Housing and Urban Development houses the FHA, the Department of Veterans Affairs runs the VA loan program and the Department of Agriculture administers a rural-housing loan-guarantee program.

The fight over how to restructure the housing-finance system has roiled Washington, but both parties have been hesitant to propose detailed legislation.

For conservatives, Fannie and Freddie played a starring role in the financial crisis, and any solution that is viewed as replicating their function could face opposition from some Republicans. But moderate Republicans may resist such an approach and could join Democrats who have said a federal role is necessary to ensure broad access to homeownership.

Advancing multiple proposals could help the administration build consensus around one option, and analysts say it may help build the case for a continued government backstop that many administration officials are said to privately favor.

Fannie and Freddie buy mortgages from banks and other lenders, repackage them for sale as securities and make investors whole when borrowers default.

By NICK TIMIRAOS And ALAN ZIBEL - WSJ

Rise in Rates Is Headwind for Housing

2011-02-11T10:11:00.000-06:00

U.S. 30-year mortgage rates have jumped above 5% for the first time since last spring, in a rapid rise that could present a challenge to the still-troubled housing market.

The average rate on 30-year fixed-rate mortgages climbed to 5.05% in the week ended Thursday, according to a widely watched survey by government-backed mortgage company Freddie Mac, up from 4.81% a week ago. It was the highest rate in the survey since April.

Rising mortgage rates are an immediate consequence of the large jump in the U.S. government's borrowing costs in recent weeks. Mortgage rates tend to move in line with the yield on the 10-year Treasury note, which closed Thursday at 3.712%, up from its October low of 2.381%.

The sharp rise in mortgage rates has caught some investors and economists off guard, and will likely be watched closely by the Federal Reserve, which has been buying Treasury bonds in an effort to keep rates down and bolster economic activity.

In some ways, the rate increase reflects positive news: Rates are rising in large part because there are signs the recovery is strengthening. As the economy gains steam, investors demand higher rates to compensate for an expected uptick in inflation. And if the economy can generate stronger job and wage growth, higher rates may not be a problem for housing.

But many worry that the housing market is lagging behind other parts of the economy. One risk is that higher rates could deter buying, putting further pressure on prices and squelching hope of a housing recovery for now. Many analysts expect nationwide home prices to decline 5% to 10% in the months ahead.

Still, rates remain near historically low levels, and the market has withstood much higher rates in the past. By at least one measure, housing affordability has returned to its levels before the housing boom collapsed.

Keith Hembre, chief economist at Nuveen Asset Management in Minneapolis, says rates still need to rise 0.25 to 0.5 percentage point before they become a hindrance. "But it's certainly not helpful," he said.

The run-up has been unusually swift. The national average mortgage rate has jumped to more than 5% from a record low of 4.17% in three months, according to Freddie Mac data.

Freddie Mac's survey rate lags behind the market by several days; other measures are even higher. HSH Associates, a New Jersey data tracker, estimates the national average rate for a 30-year fixed mortgage at 5.17%.

Mortgage applications to purchase homes have fallen 12% in two months as rates have surged, according to an index compiled by the Mortgage Bankers Association. A general rule of thumb holds that every one-percentage-point increase in interest rates effectively raises home costs for buyers by roughly 10%.

With rates at 4.5%, a buyer typically needs income of $84,000, assuming a 10% down payment, to qualify for a $400,000 30-year fixed-rate loan. At a 5.5% rate, the income requirement rises to $92,000.

While some buyers can easily absorb the rate increase, it will squeeze others, especially first-time buyers already grappling with higher fees and bigger required down payments. Demand has been weak in the months since home-buyer tax credits expired in May, even when rates were lower.

It is possible that news of rising rates could spur more people to buy now. There have been tentative signs of a pickup in buyer interest recently, according to a monthly survey of real-estate agents by Credit Suisse home-builder analyst Dan Oppenheim. In a note Wednesday, he said buyers were increasingly attracted by rock-bottom prices, nascent optimism about the economy—and a fear that mortgage rates would rise soon.

"The latest rate rise has kicked a few people off the fence; also, it's given a little bit of a wake-up call for real-estate agents to connect with clients who may have been sitting on the fence or arguing over small differences between the bid and ask" home prices, said Stephen Calk, chairman and chief executive of Chicago Bancorp, which does mortgage business in 35 states. Mr. Calk says he has seen "a little surge in the last week in purchase applications."

Others say activity has slowed dramatically. "Once mortgage rates reached the 4¾ level in December, refinance activity stopped altogether," said Lou Barnes, a mortgage banker at Premier Mortgage Group in Boulder, Colo. He says a belief that prices, while low, will fall further is keeping many would-be buyers from stepping forward.

Higher rates already have snuffed out the refinancing boomlet that took place last summer and autumn as rates sank. Mortgage applications for refinancing are down 59% from their peak in August, according to analysis by research firm Zelman & Associates.

Mortgage originations are expected to fall to lows not seen in more than a decade as higher rates dry up refinancing activity. The Mortgage Bankers Association estimates originations will total $966 billion in 2011, down from $1.5 trillion in 2010 and the lowest since 1997.

Bill Burgess, who lives in a suburb of Chicago, plans to refinance his jumbo adjustable-rate mortgage anyway. Mr. Burgess says he would have preferred to lock in a lower rate six months ago, "but if you had told me I could [get this rate] seven years ago I would have been thrilled."

By MARK GONGLOFF, NICK TIMIRAOS And RUTH SIMON WSJ
—Jonathan Cheng contributed to this article.

30% of mortgages are underwater

2011-02-09T10:10:00.001-06:00

NEW YORK (CNNMoney) -- Sometime, somehow, the foreclosure crisis will ease. But probably not anytime soon.

Home prices dropped 2.6% nationwide during the last three months of 2010, pushing more borrowers underwater, according to a quarterly real estate market survey from Zillow.com.

Now 27% of homeowners with mortgages owe more than their homes are worth. That's up from 23.2% a quarter earlier.

That will surely lead to higher foreclosure rates soon. That's because being underwater is second only to unaffordable payments in leading to foreclosure, according to Zillow's chief economist, Stan Humphries.

Additionally, the report found that more than one-third of all homes were sold at a loss in December. That trend has been on a steady uptick for the past six months, as homeowners try to find ways around foreclosure or out from under their homes.

The so-called "robo-signing" events of the fall also forced the number of underwater mortgages higher.

When banks' foreclosure paperwork came under scrutiny, many halted all repossessions until they could straighten things out. With foreclosures no longer being cleaned out of the system, more homes stayed underwater rather than moving on to foreclosure.

The moratoriums have been only temporary, however, and the defaults that had been stopped up in the foreclosure pipeline could come out in a gush over the next few months.

And any bump in the number of foreclosures adds to the likelihood that more homes will be dumped onto an already bloated market. That would just further depress home prices, continuing the vicious cycle that has plagued the industry for several years.

By Les Christie, staff writer CNNMoney

Home Ownership Offers Plenty of Tax Benefits

2011-02-08T08:46:00.002-06:00

While renting offers zero tax breaks, buying a home offers several tax benefits that can make homeownership more affordable. Real estate professionals need to be careful in providing detailed tax advice to clients to avoid lawsuits, but you can ensure clients have the information they need to understand the all of the tax benefits of home ownership.

The following is a few of the tax benefits to home ownership, according to Stephen Fishman, an author and lawyer who specializes in small business, tax and intellectual property law.

▪ Home mortgage interest deduction : Home owners can take an itemized deduction on interest paid on a mortgage or mortgages of up to $1 million for a principal residence and/or second home. This deduction could potentially reduce the cost of borrowing by one-third or more.

▪ Property tax deduction : Home owners can deduct from their federal income taxes the state and local property taxes that you pay on the home.

▪ Deductible home buying expenses : Several closing costs in a home purchase are also deductible, such as loan origination fees (points), prorated interest on a new loan, and prorated property taxes paid at settlement.

▪ $250,000/$500,000 home-sale exclusion : Home owners who have lived in their home for two of the prior five years prior to its sale do not have to pay income tax on the majority of their profit — $250,000 for single home owners and $500,000 for married homeowners who file jointly.

▪ 14 days of free rental income : Home owners can rent the home up to 14 days during the year and pay no tax at all on the rental income.

Source: “The Tax Benefits of Homeownership,” Inman News (Feb. 4, 2011) (log in required)

THE PERFECT BAILOUT

2011-02-03T09:26:00.005-06:00

Fannie And Freddie Now Send Taxpayer Cash Directly To Wall Street

via Yahoo Finance

As the terror of the financial crisis recedes, many folks have forgotten about the two huge taxpayer-owned mortgage companies, Fannie Mae and Freddie Mac. Full Story

Banks Boost Home-Loan Relief

2011-02-03T08:29:00.007-06:00

Direct Talks With Borrowers Get More Results Than Government's Mortgage-Modification Program

via The Wall Street Journal

The U.S. housing market may take five or six more years to recover, TrimTabs Investment Research warned recently. Madeline Schnapp, director of macroeconomic research at TrimTabs, talks to MarketWatch's Alistair Barr about what that means for the world's largest economy. Full Story

Winter Storm Safety

2011-02-03T08:09:00.005-06:00

A time tested way to prepare for winter emergency situations like we just experienced!

Winter weather can be relentless. Ice, snow, and sleet in their many forms mean homeowners can find themselves homebound.

Outlined below are ten easy steps that can help your family make it through a winter snow-in.

1. Keep warm: Temperatures can drop well below zero during major winter storms. If your electricity fails, do you have a backup plan to keep warm? Blankets, warm clothing, and firewood are all great things to have on hand.

2. Water: We can survive on limited food, but we and our pets must have water. Have bottled or jugged water on hand in the case of emergency.

3. Non-perishable food: If you go without electricity, you may find yourself being unable to store food. Stock up on non-perishables before a big storm. And then buy plenty of fruits and vegetables that can keep without refrigeration.

4. Crank radio: You may need to listen to emergency announcements. Crank and battery-powered radios are an essential.

5. First-aid kit: Alcohol, bandages, anti-bacterial ointment, burn salve, and basic pain killers (aspirin and acetaminophen) are staples of a well-stocked first-aid kit. Also be sure that prescriptions have been filled prior to any big storm system.

6. Sidewalks: Be sure to have a snow shovel and a bag of sand on hand before any big storm. You'll need to clear your driveway as well as sand your walkways. There is nothing worse than taking a spill on ice.

7. Candles and lighter/matches: If lights are out, you'll still need candles or a flashlight to find your way around. Plus, candles offer a great ambiance, even when you're stuck inside!

8. Entertainment: Movies, cards, board games, and books can all make the time pass quickly.

9. Sleds: Okay, this isn't a necessity. But nothing brings out the wish for a sled more than a perfectly snow covered hill. Plan ahead and you'll be ready for some great family bonding.

10. Travel: If you must venture out, be sure you have a full tank of gas, a blanket/sleeping bag, water, and kitty litter. Why kitty litter? If you get stuck, kitty litter may offer enough grit for tires to gain traction.

Use these simple tips to make your next snow day successful. And above all else, be sure to stay off icy roads and inside your home when weather is bad.

by Carla Hill - RealtyTimes

Bank of America Stopped Notices During Foreclosure Freeze

2011-01-31T10:48:00.001-06:00

Jan. 27—When Bank of America stopped conducting foreclosures in October and November, it also stopped sending notices of default to delinquent borrowers, multiple media reports indicated Tuesday.

Some analysts had interpreted a rapid drop in notices of default, which initiate the foreclosure process, as a sign that borrowers were getting caught up on their loans, and the worst of the housing crisis was passing by.

Instead, the decline may be an aberration caused by the massive bank’s moratorium.

“It makes it really difficult to get an understanding of what’s going on in the market, when you have a major player like Bank of America skew the numbers like that,” said Mark Goldman, an instructor on real estate at San Diego State University.

Last summer, Bank of America and other major lenders and loan servicers came under fire for the practice of “robo-signing” documents: Officials signed thousands of foreclosure documents a day without reviewing details.

On Oct. 8, Bank of America halted all foreclosure sales, which end the foreclosure process, while it reviewed its procedures. But Bank of America spokesman Richard Simon told the North County Times the bank would still send out notices of default, the first stage in the foreclosure process.

“To be clear, the bank halted scheduled sales, but other foreclosure processes continue on delinquent accounts,” Simon wrote in an Oct. 22 e-mail.

But reports Tuesday from CNBC and Dow Jones Newswire said the bank had also stopped sending notices of default to borrowers 90 days or more behind on their mortgage payments. Bank of America is the largest servicer of mortgage loans in the nation and in the region: In 2010, it managed 23.7 percent of all loans in the foreclosure process in North San Diego and Southwest Riverside counties, data from real estate analyst ForeclosureRadar showed.

As a result, some analysts misread a rapid decline in the number of notices of default in the region as a sign that borrowers were catching up on their loans. According to ForeclosureRadar, lenders sent 26.1 percent fewer default notices to North County borrowers in November than they had a year earlier, and 24.3 percent fewer to Southwest County borrowers over the same period.

“It’s a cautionary tale about ‘too big to fail,’” Goldman said. “This is just a tiny little aspect of having one corporation that is so gigantic, their management and business practices can influence an accurate understanding of our market conditions.”

By Eric Wolff, North County Times, Escondido, Calif. via houslogic

In Dubai, the state of The World is in dispute

2011-01-29T09:56:00.003-06:00

DUBAI (AFP) – A cluster of 300 artificial islands off Dubai's coast in the shape of a global map is stable, its developer Nakheel insists, despite a court claim alleging that "The World" was neglected and eroding away.

"There is no issue with the stability of The World islands that are approximately 70 percent sold and handed over," a Nakheel spokesman said when asked about the allegations.

"The island purchasers (have) the responsibility to proceed with their developments in due course," he added.

The islands, many of which represent individual countries and which can only be accessed by boat or helicopter, were meant to be one of the Gulf city-state's crowning developments.

Builders have announced plans for a few of the islands, but development has yet to begin on most of them.

A company contracted to provide logistics support to the islands filed a claim with a tribunal that handles cases related to the emirate's troubled Dubai World conglomerate, alleging that third-party developers had not been encouraged to develop the islands, and said they were being hit by erosion.

Nakheel subsidiary The World LLC "did not develop the project as anticipated at the time of the agreement and the project has lain largely undeveloped," according to the claim filed by Penguin Marine Boats Services LLC.

Penguin is contracted to pay "a licence fee of 5 million dirhams ($1.36 million dollars) per annum" to conduct operations, but the lack of development on the islands means it has "been unable to develop its business opportunities," the claim said.

Additionally, "the navigation channels... are presently so ill-defined and the water depths have been so seriously eroded due to reclaimed sand silting up the navigation channels that major reclamation works will henceforth be required," it said.

A lawyer for Penguin Marine, Richard Wilmot-Smith, was quoted by local media as having told the tribunal that "the islands are gradually falling back into the sea."

Nakheel dismissed the allegations as "misleading and mischievous statements."

"The wholly incorrect and unsupported assertion relating to the state of The World islands was made in the context of a legal case brought against The World LLC by a logistics provider," the spokesman said.

"Nakheel will continue to protect the interests of its operations and stakeholders and take such action as is appropriate in the circumstances," he added.

The spokesman said that the case "was dismissed with costs awarded in favour of The World LLC. We are vindicated by the court's decision."

However, a final judgment with reasons for the decision has not yet been posted to the tribunal's website, where judgments appear after they have been issued.

Abu Dhabi-based English-language daily The National said that the tribunal ruled against Penguin but has not yet given its reasons for doing so.

Lawyers for Penguin Marine declined to comment, and the company's general manager Alex Labor said only that "Penguin's position is... what our lawyers said during the trial."

Nakheel, which developed Dubai's iconic palm-shaped islands and the Atlantis luxury hotel among other developments, was hard-hit by the global economic crisis, which led to a sharp fall in Dubai real estate prices.

Nakheel was to split from parent company Dubai World, which rocked global financial markets when it announced in November 2010 that it needed to freeze debt payments, under a debt restructuring plan.

by W.G. Dunlop W.g. Dunlop – Fri Jan 28 Yahoo! News

Remodelers Expect Market Gains During 2011

2011-01-28T08:32:00.003-06:00

January 27, 2011 - The latest National Association of Home Builders' (NAHB) Remodeling Market Index (RMI) edged up to 41.5 in the fourth quarter of 2010, compared to 40.8 in the third quarter. An RMI below 50 indicates that more remodelers say market activity is lower compared to the prior quarter than report it is higher. The RMI has been running below 50 since the final quarter of 2005.

The overall RMI combines ratings of current remodeling activity with indicators of future activity like calls for bids. In the fourth quarter, the RMI component measuring current market conditions stayed flat at 43.3 from 43.4 in the previous quarter. The RMI component measuring future indicators of remodeling business increased, to 39.7 from 38.1 in the previous quarter.

"Remodelers are starting to see an uptick in interest from consumers who are considering future remodeling projects," said NAHB Remodelers Chairman Bob Peterson, CGR, CAPS, CGP, a remodeler from Ft. Collins, Colo. "Home owners are also showing more willingness to undertake larger remodeling projects."

All but one index for future market conditions improved during the fourth quarter. Calls for bids jumped to 47.2 (from 42.9), along with backlog of remodeling jobs at 42.6 (from 37.2), and appointments for proposals at 43.1 (from 41.9). The amount of work committed for the next three months shrank to 25.9 (from 30.3).

"Remodeling activity has been rising slowly since the first quarter of 2010. Expected improvements in the job market and the overall economy are beginning to increase homeowners' confidence and remodelers are seeing indications that business will pick up," said NAHB Chief Economist David Crowe. "More remodeling jobs will unfold as consumers in more secure financial positions enter the remodeling market. A more robust recovery in residential remodeling will depend upon future improvements in labor and credit markets."

Current conditions indices for remodeling improved in two regions: Midwest 54.3 (from 44.9 in the third quarter) and South 45.8 (from 42.3). However, the current indices declined in the Northeast 38.8 (from 41.6) and West 39.7 (from 49.3). Future market indicators grew significantly in nearly all regions: Northeast 49.5 (from 34.0); Midwest 56.1 (from 39.4); and South 47.0 (from 37.9). Only the West region reported some decline at 39.7 (from 41.0). Major additions also expanded to 48.6 (from 45.8), but minor additions dipped slightly to 43.9 (from 46.4), while maintenance and repair stayed flat at 37.0 (from 37.1).

Source: NAHB

Pending Home Sales Continue Uptrend

2011-01-28T08:17:00.003-06:00

Pending home sales rose 2% in December, marking the fifth gain in the past six months, according to the NATIONAL ASSOCIATION OF REALTORS®. NAR’s Pending Home Sales Index measures home sale contracts, which typically turn into home sale closings within one or two months.

NAR chief economist Lawrence Yun credits the rise to good affordability conditions and economic improvement. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” he said.

“In the past two years, home buyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” Yun said. “The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year.”

Regional pending home sales

The PHSI in the Northeast increased 1.8% in December but is 5.3% below December 2009. In the Midwest, the index rose 8.0% in but is 5.1% below a year ago. Pending home sales in the South jumped 11.5% and are 1.7% above December 2009. In the West, the index fell 13.2% and is 10.7% below a year ago.

Pending home sales improved further in December, marking the fifth gain in the past six months, according to the National Association of Realtors®

The Pending Home Sales Index,* a forward-looking indicator, increased 2.0 percent to 93.7 based on contracts signed in December from a downwardly revised 91.9 in November. The index is 4.2 percent below the 97.8 mark in December 2009. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, credits good affordability conditions and economic improvement. “Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” he said.

The PHSI in the Northeast increased 1.8 percent to 73.9 in December but is 5.3 percent below December 2009. In the Midwest the index rose 8.0 percent in December to 84.6 but is 5.1 percent below a year ago. Pending home sales in the South jumped 11.5 percent to an index of 101.9 and are 1.7 percent above December 2009. In the West the index fell 13.2 percent to 105.8 and is 10.7 percent below a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

NOTE: Existing-home sales for January will be reported February 23 along with revisions for the past three years, and the next Pending Home Sales Index will be released February 28. Fourth quarter metro area home prices and state home sales will be published February 10; release times are 10:00 a.m. EST.

Source: NAR

Foreclosures Jump in Unexpected Cities

2011-01-28T07:54:00.001-06:00

The foreclosure crisis is now spreading to cities that were once relatively unscathed from the crisis. Seattle, Houston, and Chicago have joined the list of other cities in the United States plagued by a growing number of foreclosures and home owners unable to make their mortgage payments.

Foreclosure activity increased in 149 of the country’s 206 largest metro areas last year, reported RealtyTrac Inc., a foreclosure listing firm.

In the Houston-Sugar Land-Baytown metro area, the foreclosure rate jumped 26 percent from 2009 — the largest increase in foreclosures among the top 20 metro areas, according to RealtyTrac.

In Seattle-Tacoma-Bellevue, the foreclosure rate increased nearly 23 percent — ranking second in areas with the largest increases. In Georgia, the Atlanta-Sandy Springs-Marietta metro area was third with a 21 percent spike.

In the Chicago-Naperville-Joliet area, foreclosure activity rose 16 percent and home repossessions climbed nearly 20 percent, making it the second-highest city with the largest number of bank repossessions. (Phoenix-Mesa-Scottsdale in Arizona had the highest number of bank repossessions overall.)

Bad mortgages are no longer taking most of the blame for the spike in foreclosures either.

"We've actually had a sea change in what's causing foreclosures, from the overheated home prices and bad loans to a second wave of foreclosures actually caused by unemployment and economic displacement," Rick Sharga, a senior vice president at RealtyTrac, told MSNBC.

As unemployment and the economy improve, Sharga expects metro areas like Houston, Seattle, and Chicago to bounce back quickly. However, he expects the traditional foreclosure hotbeds — California, Florida, Nevada, and Arizona — to take longer to recover. Those states account for 19 of the top 20 metro areas with the highest foreclosure rates in 2010.

The highest overall foreclosure rate in the nation? Las Vegas-Paradise, Nev.: One out of every nine households received a foreclosure-related notice in 2010, which is nearly five times the national average, RealtyTrac reports.

Source: “Foreclosures Spread Into Previously Safe Areas,” MSNBC (Jan. 27, 2011) via NAR

Video: No foregone conclusions for foreclosure crisis

New home sales jump to 8-month high

2011-01-27T10:05:00.005-06:00

NEW YORK (CNNMoney) -- New home sales climbed 17.5% in December to the highest level in eight months, the government reported Wednesday.

Sales of newly built single-family homes rose to an annual rate of 329,000 units last month, from a revised 280,000 units the month before, the Commerce Department said. That was the highest level since April. But compared with 2009, sales are down 7.6%.

The monthly sales figure was higher than the annual rate of 300,000 analysts surveyed by Briefing.com had expected.

"Though it's better than expected, we're still not getting a serious rebound," said Doug Roberts, chief investment strategist for Channel Capital Research. "This is a U-shaped situation, where we can have monthly blips when it's positive, but we're going to be bouncing along the bottom for a while."

Sales may have been boosted by homebuilders clearing out inventories at discounted rates at the end of the year, he said.

8 reasons to invest in your home

"People like to get their books in order at the end of the year," Roberts said. "It's akin to retailers clearing out inventory -- it's not getting any better so they don't want to hold onto it."

To clear out this inventory, Roberts said homebuilders have been offering special deals, like offering to throw in a granite counter-top instead of a standard one.

The median sales price of new homes was $241,500, up from $215,500 the month before, the government reported. At the end of December, 190,000 new homes were for sale, equal to a 6.9-month supply at the current pace.

While inventory was down from the 8-month supply available at the end of November, Roberts said homebuilders worry that foreclosures entering the market could cause supplies to swell.

12 cities: Where to rent vs. buy

"Foreclosures can act as competition to new home sales, so if they really start to resume that could have a negative impact," he said. "When banks take possession, they have to pay insurance and are responsible for taxes -- so everyone is saying they hope the situation improves so they don't have to write down more foreclosures, but they aren't disappearing yet."

Roberts said it will likely take a couple of years -- and maybe even five or six -- for homebuilders to make a significant dent in inventories and for home sales to really begin recovering.

"Housing tends to be a long cycle, where it does really well for a long time and then you go down and stabilize for a long time as well," said Roberts. "For now sales will bounce up and down, but long term I don't think anyone is talking about a shortage of homes out there."

By Blake Ellis, staff reporter CNNMoney

8 reasons to invest in your home

2011-01-26T09:21:00.000-06:00

(MONEY Magazine) -- Not long ago, you could have your big remodeling project and get your money back too. Owners recouped an average of 87% of home improvement costs at resale in 2005, according to Remodeling magazine.

But by 2010 the magazine had pegged the typical payback at just 60%. Hardly the right time to tackle the new kitchen or master bathroom you've been dreaming of, right?

Not so fast, says Kermit Baker, senior research fellow at Harvard University's Joint Center for Housing Studies.

"In many cases, these projects make more sense now than they did at the height of the market," he said.

Assuming you like what you can't change about your home -- the neighborhood, the school district, the proximity to things that matter to you -- and you're planning on staying for five or more years, improving your home is a smart move. Here's why.

1. Funding is cheap

The current economic climate sweetens the pot for people on solid financial footing.

Should I spend $60,000 to renovate my house?

"The Fed doesn't want you to save -- it wants you to put your dollars into circulation," said Keith Gumbinger, mortgage market analyst at HSH.com.

Today's historically low interest rates mean that most home-equity lines of credit are charging their floor rates (your HELOC's probably is around 3% if you've held it for a couple of years, 4% or 5% if the loan is more recent).

And with the typical bank account and money fund paying far less than 1%, drawing down your savings barely costs you anything in lost income -- just don't jeopardize your safety cushion.

2. Eager contractors are discounting

Although the construction industry rebounded somewhat last year, business is still slow. Remember when getting a contractor to call you back was a challenge?

Now the best pros in town will happily bid on your job -- and they'll probably offer you prices that are 10% to 20% below what you would have paid when real estate was going gangbusters, according to Bernard Markstein, senior economist for the National Association of Home Builders.

3. Materials have come down

The cost of building supplies has tumbled too. Plywood is down 23% since its peak in the mid-2000s. Drywall is off 29%, framing lumber 35%.

Not all raw materials prices have fallen that much: Asphalt roofing, which is made from a petroleum byproduct, is down only 7% over the past two years. Insulation -- which has been in high demand because of energy rebates and high fuel prices -- is down a mere 2% since 2006. Still, on the whole, construction supplies are bargains right now.

4. You'll cut your energy costs

You don't have to hire a green builder to see energy savings from a renovation. In a prewar house in the high-energy-cost Northeast, for example, a standard kitchen remodel could cut your utility expenses by $400 a year thanks to new insulation, windows, and appliances.

Even years of such savings will never come close to covering the project's price tag, but think of your lower electric and heating bills as an annual dividend.

5. Fixing up costs less than trading up

With the median home price down 22% since 2006, you might think this is an opportune time to trade up for the new master bathroom or other modern feature you want. After all, why not buy somebody else's remodeling headache at a discount.

But you can't assume that you'll easily sell your house in this tough market and then find a new place that has the exact features you want (and not a bunch of stuff you don't want). And moving remains far costlier than improving, said John Ranco, past president of the Greater Boston Association of Realtors.

For starters, commissions and fees to sell a $400,000 home could run $25,000.

"You can get a lot of remodeling done for that kind of money," said Ranco. "And that doesn't even include the higher price you're paying for the new house, the moving costs, or the inevitable painting and window treatments the new place will need."

6. You can keep that sub-5% mortgage

As long as you're not underwater and haven't wrecked your credit, you've been able to take advantage of recent rock-bottom interest rates to lock in a fixed-rate mortgage below 5%.

Move several years from now, and you'll have to give up that loan, probably for something in the sixes or sevens, said Harvard's Baker. That's not bad, but it could mean hundreds a month in added interest costs.

"If you can remodel your way into staying put long term, you can hold on to that once-in-a-lifetime rate," says Baker.

7. Smart projects still add value

In the post-boom era, the rule of thumb for gauging the potential payback from a home improvement is simple: If you're bringing your house in line with similar homes in the area, you'll most likely earn back the lion's share of the cost when you sell. If you're surpassing the neighborhood, you probably won't.

"Remodeling a 10-year-old kitchen because you don't like its style doesn't pay anymore," says Thomas Collimore, director of investor education for the CFA Institute. "But replacing a 1960s kitchen is a different story."

At least for the foreseeable future, buyers will either lowball their bids or pass on your house entirely unless you've already tackled this kind of deferred renovation.

8. You get to enjoy the results

When it comes time to sell your place, chances are you'll probably wind up having to do the sorely needed renovations you didn't take care of earlier. Not only does that add a huge amount of stress to the process of putting a house on the market, but you still end up spending the money (quite possibly when contractor, materials, and borrowing costs are higher).

Why not get the benefits of a new furnace or an updated powder room for you and your family instead of buying them for the house's next owners? And why not do the projects soon so you get as much time as possible to enjoy the results?

Unlike vacations, luxury cars, or other discretionary expenditures, your remodeling project might recoup a significant chunk of its cost someday.

Even so, home improvements aren't purely investment decisions -- you shouldn't redo a kitchen or bathroom in the hopes of making a profit. But if you want to upgrade the quality of your home life and you can afford the cost, it's money well spent.

By Josh Garskof, contributor CNNMoney

Setting the stage for house-buying season

2011-01-26T09:02:00.001-06:00

The spring real estate market is approaching, and this year there is no federal tax credit to get wary buyers off the fence.

A recent survey of 3,500 U.S. homeowners and renters conducted for the National Association of Realtors by Harris Interactive found that 60 percent of those who would like to own a house worry about job security and creditworthiness.

That said, some area real estate agents say they think the market may be rebounding because prospective buyers fear interest rates are permanently back on the upward trajectory and they need to get in the game.

B. John Duffy, president of Duffy Real Estate on the Main Line, said that sense "may have been fueled by the slight rise in mortgage interest rates," now 4.74 percent from a record low 4.17 percent in November.

In a market where financial motivation is canceled out by financial apprehension, the state of each house for sale becomes even more important to getting a deal done.

Buyers are still looking for "perfection, with comfort," said John B. Badalamenti, an associate broker at Prudential Fox & Roach Realtors in Wayne.

"As a result of the staging craze, buyers have become a bit spoiled," Badalamenti said. "Homes are almost being put on the market as museum pieces. You can bounce a dime off a bed."

Said Carol Sabatelli, an agent with Weichert Realtors in Media: "Right now, you need to pull every trick out of your hat in order to even get a showing."

Staging has become big business and is often recommended for hard-to-sell houses and potentially easy ones alike.

"It is rare to find a home that does not need some suggestions for showing," said Diane Williams, an agent with Weichert Realtors in Spring House. "In fact, I find that sellers ask about it because they are familiar with the TV shows or articles on staging."

When she goes to a listing appointment, Williams - who has a real estate designation qualifying her as an expert in staging - can quickly tell whether the house needs tweaking or major changes. If only minor touches are required, she gives the homeowners "suggestions to make the house more showable."

And, of course, it should be "Q-tip clean," as Williams' staging course recommended.

After-showing feedback is important, too, even though many sellers do not want to hear buyers' opinions.

"Gone are the days when buyers were willing to settle for anything," said Cheryl Miller, of Long & Foster Real Estate in Blue Bell.

"The Wizard of Oz has had the curtain pulled back."

By Alan J. Heavens, Inquirer Real Estate Writer via Philly.com

German Real Estate More Attractive Than UK To Some Investors

2011-01-25T07:47:00.001-06:00

LONDON (Dow Jones)--Germany has overtaken the U.K. as the preferred location for investment in nonlisted real estate funds, according to a survey released Tuesday by the European real-estate investment body Inrev.

"This is a dramatic change in sentiment," said Inrev's director of research and market information Lonneke Loewik.

"While the U.K. remains well represented in the top 10, investors seem wary of higher property prices and a slower economic recovery in the U.K., but attracted by growing confidence in the German and other European markets," she said.

The U.K. is now less attractive than Germany, France and Nordic countries, according to the survey, the seventh of its kind, which was carried out last month and gauges insights from investors, funds managers and fund of fund managers. Inrev, the European Association for Investors in Non-listed Real Estate Vehicles, has 341 members drawn from leading institutional investors, fund managers, promoters and advisors across Europe and represents real-estate assets under management of over EUR135 billion.

In terms of investment strategies, 90% of investors expressed a preference for a single country strategy, an increase of 13 percentage points on 2010. Almost 90% of investors also preferred a single sector strategy, such as retail, office or industrial.

"These statistics suggest that investors believe that possessing a deeper understanding of a particular location or sector could be less risky than the benefits of diversification through a multi-country, multi-sector strategy," Loewik said.

Appetite for the nonlisted real-estate sector has increased over the past two years, with over half of respondents intending to increase their allocation to the nonlisted sector. Access to expert fund managers and the importance of risk/return ratios were seen as key influencing factors.

Though transparency has improved, investors were looking for greater involvement and greater control, with 90% of investors surveyed preferring to be active investors compared with less than 80% last year.

-By Jonathan Buck, Dow Jones Newswires via WSJ

Speed Up Foreclosures to Stabilize Housing?

2011-01-25T07:39:00.001-06:00

The Federal Reserve and banks need to ramp up foreclosures to expose the shadow inventory that awaits, some real estate industry leaders say. Shadow inventory are homes that have been repossessed or are in the process of being foreclosed upon but have not yet hit the market.
About 2 million homes are expected to account for shadow inventory in the United States, yet that number could be higher -- even up to 7 million -- if you include loans that are in default.
The top five cities with the highest shadow inventory are Las Vegas, San Diego, Los Angeles, San Francisco, and Phoenix.
Some industry experts say that shadow inventory threatens the stabilization of home prices and is scaring buyers off.
Therefore, they argue that these properties need to get through the system quickly and that foreclosure moratoriums or any delays will only lead to pent-up release and damage home prices more, according to an article in National Mortgage News.

Source: National Mortgage News via NAR

Cities Where It's Cheaper to Buy Than Rent

2011-01-25T07:35:00.001-06:00

It’s cheaper to buy a home rather than rent one in 72 percent of the 50 largest U.S. cities, according to Trulia’s rent vs. buy index, which compares the total cost of home ownership to the cost of renting.

"Since the start of the 'Great Recession,' many former home owners have flooded the rental market,” Pete Flint, CEO of Trulia, said in a news release about the index. “Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets.”

The index compares the median sales price of homes with the median rent on two bedroom apartments, condos, and townhomes that were listed on Trulia as of Jan. 10, 2011.

Here are the top 10 cities where it’s best to buy than rent, according to the index:

1. Miami
2. Las Vegas
3. Arlington, Texas
4. Mesa, Ariz.
5. Phoenix, Ariz.
6. Jacksonville, Fla.
7. Sacramento, Calif.
8. San Antonio, Texas
9. Fresno, Calif.
10. El Paso, Texas

Source: Inman News via NAR

Some ups and downs to be expected in 2011

2011-01-24T09:32:00.000-06:00

There is a story on ReatyTimes which I found to be very interesting. Although the title is a bit worrisome "Real Estate Outlook: New Home Start Decline", I think when you read the content you will realize it is a sign of the days ahead.

I wonder though when reading this story, there is mention how permits are a guide used to indicate starts, but do not clearly stated is whether the permits are all inclusive for new construction and remodeling. The reason I say this is many new home builders have turned to remodeling to survive. I also have to ask, is there the awareness of new permit activity and certifications being required of builders and remodelors alike. Many of the permits are nothing more than fees and a means to reassess homes without inspection requirements. Soon there will be a change in the terrain of how the building industry does business.

We can expect some up and down news in the future, but we need to stay positive and there are some early indicators that we are on a forward path. Yes things are still very fragile, yes housing starts are still down, and yes jobs, jobs, jobs are the real key to repairing the economy. I for one feel there is still too much outsourcing and not enough manufacturing in the U.S. which is taking many of those jobs from Americans. Still, we will have to keep pressing forward.

Tax Reform Debate: Multifamily Focus

2011-01-24T08:50:00.001-06:00

The year 2011 will almost certainly witness a debate about the future of government spending and tax revenues. During the latter half of 2010, numerous groups, including the president’s deficit commission (the National Commission on Fiscal Responsibility and Reform), presented plans that included proposed overhauls of the nation’s tax code.

While the mortgage interest deduction and employer-provided health insurance exclusion generate the most attention in the press with respect to tax reform discussions, because of their budget size and broad impact, there are many tax expenditures that would be at risk that would affect those in the multifamily sector. These include the Low-Income Housing Tax Credit, the 27.5 year depreciation period for residential rental property, the capital gains tax rate, and perhaps business deductibility of interest expense.

The Low-Income Housing Tax Credit (LIHTC) is the nation’s only production program for the construction of affordable housing. In recent years, the program has been used in connection with the development of approximately 75,000 affordable housing units a year. Created as part of the last major tax reform effort, the Tax Reform Act of 1986, the program is a private-public partnership that utilized a tax credit and market investment to ensure quality affordable housing is available across the nation.

The depreciation period for residential rental property is 27.5 years. Like the LIHTC, this recovery period was defined by the Tax Reform Act of 1986. However, it is listed as a tax expenditure because it is “accelerated,” or a smaller period than the less advantageous 39 year period assigned to commercial real estate.

The capital gains tax rate is also an important element of tax law for multifamily builders. The recent debate over raising the rate of tax on carried interest revealed the economic harm that would occur if the tax rate assessed against the sale of residential rental property was increased. Some tax reforms proposals have suggested taxing all gains at ordinary income rates. Doing so would have an immediate negative impact on the prices of residential rental and commercial real estate properties.

Finally, some commissions, such as the President’s Economic Recovery Advisory Board, which reported in August of 2010, recommended limiting the ability of businesses to deduct interest expense allocable to business debt. Such proposals ignore the differing importance of debt financing for various sectors of the economy, including notably real estate. Financing costs for real estate are very high compared to other economic activities, and the role of debt is critical, especially for small businesses.

Posted by Robert Dietz January 21, 2011 via NAHB.org

December Sales of U.S. Existing Homes Jump to 7-Month High

2011-01-21T09:03:00.002-06:00

Sales of U.S. previously owned homes jumped more than forecast in December as buyers tried to lock in low mortgage rates before the economic recovery pushed borrowing up further.

Purchases of existing houses, which are tabulated when a contract closes, increased 12 percent to a 5.28 million annual rate, the most since May and exceeding the highest estimate of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price dropped 1 percent from a year earlier, and the share of sales represented by foreclosures climbed.

Buyers are returning to the housing market after a government tax credit expired in the middle of 2010, indicating the drop in prices and cheap lending rates are making homes more affordable. At the same time, unemployment in excess of 9 percent and record foreclosures are among concerns that have prompted Federal Reserve policy makers to follow through with a second round of quantitative easing.

“Home sales are improving slowly, but surely,” said Aaron Smith, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “We really need to see job creation pick up to ensure housing continues to recover. Housing clearly is still a weak spot in the economy.”

For all of last year, purchases decreased to 4.91 million, the fewest since 1997.

Improving Economy

Other reports showed a drop in the number of Americans filing claims for jobless benefits, a bigger-than-projected increase in the index of leading indicators and continued factory expansion in the area covered by the Fed Bank of Philadelphia.

Applications for jobless benefits decreased 37,000 in the week ended Jan. 15, the biggest decline since February 2010, to 404,000, Labor Department figures showed.

The Conference Board’s gauge of the outlook for the next three to six months rose 1.0 percent after a 1.1 percent gain in November, the New York-based group said. The December reading, the sixth consecutive monthly increase, exceeded the 0.6 percent gain in the median forecast of economists surveyed.

The Fed Bank of Philadelphia’s general economic index fell to 19.3 from 20.8 last month. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Shares Down

Stocks fell, with the Standard & Poor’s 500 Index dropping a second day, as concern China will raise interest rates weighed on commodity producers, overshadowing better-than-estimated jobless-claims and home-sale reports. The 500 Index fell 0.5 percent to 1,275.8 at 10:30 a.m. in New York. Treasury securities fell, sending the yield on the benchmark 10-year note up to 3.40 percent from 3.34 percent late yesterday.

Existing home sales were forecast to rise to a 4.87 million rate in December, according to the median of 73 forecasts in a Bloomberg News survey. Economists’ estimates ranged from 4.5 million to 5.07 million after November’s 4.68 million pace.

The median price decreased to $168,800 from $170,500 in December 2009.

The number of previously owned homes on the market dropped 4.2 percent to 3.56 million. At the current sales pace, it would take 8.1 months to sell those houses compared with 9.5 months at the end of the prior month.

Month’s supply in the eight months to nine months range is consistent with stable home prices, the group has said.

Higher Rates

The average rate on a 30-year fixed mortgage was 4.74 percent this week, according to figures from Freddie Mac. The rate reached 4.17 percent in early November, the lowest since records began in 1972.

The jump in rates “provided some urgency” to buyers, Lawrence Yun, the Realtors’ group’s chief economist said in a press conference. The initial increase in borrowing costs “generally induces people to make the decision earlier,” said Yun, although a sustained increase may eventually hurt demand.

The share of sales that reflected distressed properties rose to 36 percent in December from 33 percent in prior months, said Yun. Increasing demand for foreclosed properties accounted for the bulk of the gain, he said, which also included more short sales.

The housing industry is trying to stabilize after demand see-sawed due to a buyer tax incentive of as much as $8,000, which required contracts to be signed by April 30 of 2010 and closed by the end of September. Existing-home sales slumped to a 3.84 million rate in July 2010, the weakest in a decade’s worth of record keeping, reflecting the expiration of the credit.

Credit’s Influence

Earlier, purchases had surged to an almost three-year high 6.49 million pace in November 2009, the month the tax credit was originally due to end. It was subsequently extended.

A lack of sales and an overhang of unsold houses are discouraging builders from taking on projects. Housing starts fell in December to a 529,000 annual rate, the lowest level since October 2009, Commerce Department figures showed yesterday.

Lennar Corp., the third-largest U.S. homebuilder by revenue, is among companies bracing for a slow rebound. The Miami-based builder on Jan. 11 reported fourth-quarter profit that beat analyst estimates on cost cuts and earnings from its distressed-investing unit.

“The housing recovery will traverse a long and bumpy road,” Stuart Miller, chief executive officer, said in a conference call that day. Still, “we’ve seen some early signs of gradual stabilization in the market.”

Jobless Rate

An unemployment rate of at least 9.4 percent since May 2009 is fueling a supply of distressed properties. The number of homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, according to RealtyTrac Inc. an Irvine, California-based data seller.

“Activity in residential real estate and new home construction remained slow across all Districts,” the Fed said Jan. 12 in its Beige Book report, based on anecdotal information that central bankers will use to determine policy at their meeting next week

By Shobhana Chandra - Boomerang

2011-01-21T09:02:00.000-06:00

NEW YORK (CNNMoney) -- Sales of existing home jumped in December, marking the fifth month of gains in the past six months, an industry report said Thursday.

Sales of previously-owned homes climbed 12.3% in December to an annual rate of 5.28 million, from 4.70 million in November, according to the National Association of Realtors. The rate was down 2.9% from 12 months earlier.

The rate in December came in much higher than expected. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 4.8 million.

The inventory of homes on the market fell 4.2% in December to 3.56 million units. The median price of all existing homes sold in December was $168,800, down 1% from a year ago.

Bet the farm: Cropland prices soar 20%

2011-01-21T08:59:00.002-06:00

Randy Wuebker would like to buy 600 to 700 acres of Iowa farmland so his kids can carry on the family tradition.
But with skyrocketing land prices, he may have to hold off.

NEW YORK (CNNMoney) -- The Corn Belt was the real estate place to be in 2010.

Land prices in the states centered on Iowa grew at a 15% to 20% clip, annualized, over the last six months of the year, according to Creighton University economist Ernie Goss.

Prices were sent soaring by higher commodity prices, as crop failures in some food-exporting countries boosted the demand for U.S. grains and soybeans. For example, corn rose to $240 a ton in December compared with $166 just 12 months earlier.

"Commodities have been doing quite well," said Goss. "Income is up and everyone wants to salt away some of that cash. They prefer to put it in farmland."

Dave Miller just bought an 80-acre farm to add to his two existing properties in Lucas County, Iowa, which includes more than 300 acres of tillable land. "A lot of farmers buy land in good times," he said. "It becomes their retirement portfolio."

When he sees land going for below-market prices, Miller grabs it if he can. How does he know it's a good deal?

Because cropland prices in Iowa are easy to figure using the "corn suitability rating," which measures soil productivity from 5 (worst) to 100 (best).

"Typically, in Iowa, you pay between $80 and $100 per corn suitability point," he said. "The farm I just bought had a rating of 40."

That means between $3,200 and $4,000 per acre for the property he purchased, or nearly $320,000 -- a lot of money in a state where the median income is $48,000.

But Miller paid the bargain price of $2,100 acre. "That's why I bought it," he said.

In central Iowa, there are farms that score in the 90s because of easy-to-work, flat topography and deep, rich soils. That land can cost more than $10,000 an acre, making the farmers who own that land among the wealthiest in the state. On paper, at least. They'd have to sell the farm and cash out to reap the rewards.

Most established farmers don't want to do that, at least until they're ready to retire. They may be getting rich right now but they don't usually profit from increasing land values unless they sell it.

"Farmers don't like to see this," said Goss. "They're not selling, but their property taxes go up."

It's especially hard on the young. "If I'm a young guy starting out, I'd be worried about the rapidly rising farm values," said Miller.

Randy Wuebker, a 32-year-old father of three from southwest Iowa, is trying to put together a good-sized spread, not just for himself but to pass on to his kids.

"I have two boys and a girl, and I'd like them all to be farmers," he said. "But it's hard. Land is very expensive. We're always looking but we can't justify buying, not with what land is bringing at this time."

With the average price per acre in Iowa at more than $5,000 and typical farms upward of 350 acres, the cropland alone may be worth $1.75 million. That's a huge investment for a young entrepreneurial agronomist looking to, well, grow.

Wuebker was lucky in that, more than 10 years ago, with help from his dad, he contracted with a retiring farmer to rent 240-acres, work it and eventually purchase it at $1,800 an acre.

"At the time, I thought it was a lot of money," he said.

No more. It was appraised at $2,600 an acre in 2006, and Wuebker figures it's worth more than $4,000 today, about four times its value when he first began.

Most farmers think long-term trends will keep values high, although the rate of appreciation should slow. One reason for their optimism is the blossoming alternative-energy industry.

Many farmers already sell some corn for ethanol production and others rent space to power companies for wind turbines.

Wuebker, for example, sells his entire crop to an ethanol plant. With those profits in hand, he keeps going to land sales, intending to make offers. The prices keep starting out higher than he would like to bid -- and then go higher still. So he's holding off for now.

"I don't expect prices to drop dramatically, but I do expect a setback in the near future," he said.

By Les Christie, staff writer January 19, 2011 - CNNMoney

Shadow inventory threatens housing recovery

2011-01-21T08:41:00.003-06:00

NEW YORK (CNNMoney) -- There is a growing glut of foreclosed homes threatening to hit the market over the next couple of years, potentially delaying any recovery.

There were 1.7 million homes either owned by the bank or in some stage of foreclosure at the end of the third quarter of 2010, according to a recent report by Standard & Poor's. It would take 44 months, at the current rate of sales, to sell them off -- a 25% increase from the beginning of 2010. (S&P does not count home loans backed by Fannie Mae and Freddie Mac.)

This so-called "shadow inventory" may depress home values and delay the housing market recovery.

"The problem is you have all these properties coming down the pipeline that are nearly certain to hit the market. That's going to be a negative for the supply-demand equation," said Diane Westerback, Managing Director for S&P and an author of the report.

S&P defines shadow inventory as properties whose borrowers are (or recently were) 90 days or more delinquent on their mortgage payments, ones currently or recently in foreclosure or that are back in the hands of the banks.

Data through Sept. 30 from the Mortgage Bankers Association, which tracks about 80% of the market, suggests there are more than 2 million Americans seriously delinquent on their mortgages and another 2 million bank-owned homes. Plus, RealtyTrac reported last week that a million homes were repossessed in 2010.

Westerback said the biggest contributor to the longer shadow inventory is that banks are taking far longer to foreclose on homes than they once did.

There are several reasons for that. One is that banks have struggled to keep up with the sheer volume. Last year there were nearly 2.9 million homes that received some kind of foreclosure notice.

Many foreclosures have also been delayed as banks make greater efforts to save homes by modifying mortgages. Gathering all the paperwork and working out a deal with all the parties takes time.

The banks have gotten better at this, according to S&P, with modified loans less likely to re-default. In early 2008, 80% to 85% of these loans re-defaulted. By the third quarter of 2009, that had dropped to a 50% to 55% rate.

Of the 20 separate markets S&P analyzed, Miami was the only market of the 20 that S&P analyzed where shadow inventory did not did expand during the first three quarters of 2010.

In Minneapolis, it rose 61% between Dec. 31, 2009 and Sept. 30, 2010, to 35 months from 21. Las Vegas went up 48% to 30 months supply, and Portland, Ore. jumped 47% to 45 months.

In New York, foreclosures are relatively moderate, but many have gotten stuck in the pipeline. As a result, the state now has the longest shadow inventory list, with nearly 10 years worth of homes. Boston's shadow inventory is at 62 months and Miami's is 60.

By Les Christie, staff writer January 20, 2011 - CNNMoney

No. 2 bank overcharged troops on mortgages

2011-01-19T11:19:00.000-06:00

NBC News exclusive: JPMorgan Chase also improperly foreclosed on homes

Visit msnbc.com for breaking news, world news, and news about the economy

As I listen to this story, I am sickened to hear our troops and their families are even subject to this highly stressful and extremely offensive behavior. The action by their lenders are inexcusable, and reprehensible. It is my opinion that they should be responsible for more than just the repayment of over charges, and offering the homes back to the troop families. If any disrepair has happened resulting from the improper foreclosure, the lender should pay for the repairs, and moving expenses, and a significant stipend to ease their financial burden.

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Problems With the Property

Maintenance and Cleanliness

Vandalism and Neglect

Location Issues

Problems With the Purchase

Issues With Lenders

Issues With the Property

Conclusion

Majority Believe 2011 Housing Prices Will Hold Firm

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Bet the farm: Cropland prices soar 20%

Shadow inventory threatens housing recovery

By MARK GONGLOFF, NICK TIMIRAOS And RUTH SIMON WSJ
—Jonathan Cheng contributed to this article.