Prepping foreclosed homes for resale can be hazardous

FARMERS BRANCH – Most of the modest houses along this street off Josey Lane are sporting some kind of Christmas decorations.



Contractor Rich Dake looks over the condition of a foreclosed house in Farmers Branch before he and his crew get to work preparing it for resale.



But the only sign of the season at one home reads: "This house has been winterized."



"We put these signs up at all of the properties," said Rich Dake, who cuts off the water and treats the drains in foreclosed houses to prevent freezes.



An attic air conditioner was apparently a good idea to a former resident of a foreclosed home in Farmers Branch.



"Last week, we took three trailer loads of trash out of this place," he said. "You wouldn't believe what I've found."



Stolen appliances, oceans of junk and even the occasional abandoned cat – it's all part of the business of securing and fixing up Dallas-area foreclosed homes.



After more than 20 years in the business of handling foreclosed properties, Dake has a sixth sense about what he's going to discover in an empty house.



"Usually before I even open the door, I can tell what I'm going to find inside."



The three-bedroom house was a bit worse than usual. "It was stacked deep with boxes and trash," said Dake, of Contractor Services Unlimited Inc.



Out back, under a collapsed patio cover, were more piles of junk.



Dake and his work crew emptied the place out, swept and vacuumed the floors, cleaned the kitchen and cut the grass.



The lender that owns the property decided to sell "as is" – complete with cracks in the walls and carpet that's seen better days.



"This is the kind of house an investor will buy, put a little money into it and rent it out," Dake said.



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Nov. existing-home sales up 5.6% to 4.68 million

Sales of existing homes rose 5.6% to a seasonally-adjusted annualized rate of 4.68 million, the National Association of Realtors said Wednesday, a figure that was pretty close to the MarketWatch-compiled economist poll of 4.66 million.

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Mortgage help falls far short, panel says.

Specifically, the program is expected to prevent roughly 800,000 foreclosures -- significantly less than the 3 to 4 million foreclosures that the White House aimed to stop, and vastly fewer than the 8 to 13 million foreclosures expected by 2012, the Congressional Oversight Panel for the government’s much-maligned $700 billion bailout package said in a report about foreclosures.



“Treasury has tweaked its main foreclosure prevention effort, the Home Affordable Modification Program (HAMP), but the changes have not resolved the panel’s core concerns,” the panel said.



The report comes as Treasury Secretary Timothy Geithner is set to testify before the panel on Thursday about the bailout package, known as the Troubled Asset Relief Program. Geithner is expected to be grilled with questions about the government’s mortgage modification program and the $50 billion in TARP funds it allocated for foreclosure prevention.



The Treasury Department refuted the panel’s assertion that the program has largely failed most troubled borrowers.



“This program, in less than two years, has already provided critical support to struggling homeowners,” said Treasury spokesman Mark Paustenbach. “This program will continue to help many more avoid foreclosure. The success of the administration’s efforts must also be measured in how it transformed the mortgage servicer industry. Prior to HAMP, there were few, if any, modifications taking place. HAMP was a game-changer.”



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2011 hopes for Dallas-Fort Worth housing market rest on jobs

Housing industry prognosticators are hoping for modest gains in the North Texas market in 2011.

That's what they were wishing for in 2010, too.

It all depends on the economy, industry forecasters say.

"Jobs are key – not only the number of jobs, but equally important are the kinds and quality of jobs, incomes associated with new jobs and the permanence of the jobs created," said James Gaines, economist at the Real Estate Center at Texas A&M University. "If all the new employment is for low-wage, temporary workers, it won't have much positive impact on the housing market."

With expectations for modest economic growth in 2011, Gaines doesn't look for a sharp rebound in the North Texas housing market.

"Best news is probably that we don't see things getting worse, but we also don't see significant improvement," he said. "Tight credit and slow job gains will keep home sales relatively flat.

"As the job market does improve and more people are employed, there may be a slight increase in volume, but I don't think it will be more than a few percentage points, at best."

The local housing market has a lot of ground to make up.

The number of pre-owned homes sold each month in North Texas has fallen by more than 50 percent from its peak in mid-2006.

And new home sales have plunged more than 60 percent during the same period.

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BofA Restarts Some Foreclosures

Bank of America Corp. said it restarted about 16,000 foreclosure cases across the U.S. on Monday, but it may be weeks before it is known whether the bank's submission of new documents will pass muster with local judges.



The bank instructed its foreclosure attorneys this week to prepare new affidavits in 7,800 cases where court approval is required to foreclose on a home, out of a total of 102,000 frozen by the bank amid documentation concerns. In states where no court approval is required, attorneys were asked to lift the hold on 8,000 delayed foreclosure sales out of 30,000.



The nation's largest bank as measured by assets is scrambling to get its foreclosure engine restarted amid widespread scrutiny of its mortgage practices. It and several U.S. banks halted foreclosures following allegations employees signed hundreds of foreclosure documents a day without carefully reviewing their contents.



Bank of America officials previously said they would resubmit affidavits on pending foreclosures starting Oct. 25, with foreclosure sales resuming in November. But those efforts hit several snags, including the hiring of new law firms to handle new foreclosure paperwork, as the bank refiled just a "handful" of cases as part of an initial pilot test of the process. "We are taking a deliberate and phased approach," said bank spokesman Dan Frahm.



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Walk appeal

The report looked at 94,000 real-estate transactions in 15 markets. In 13 of those markets, higher levels of "walkability" were directly linked to higher home values.

The report, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," was commissioned by CEOs for Cities, a national network of urban leaders from the civic, business, academic and philanthropic sectors.

It's an important point for home-buyers who are trying to identify which homes will hold their value, said Joseph Cortright, the report's author and a senior policy adviser to CEOs for Cities. Cortright is an economist and president of Impresa, a Portland, Ore.-based consulting firm.

Walkable places have some of the best chances of performing well in years ahead, he said.

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Dallas-area home prices are largely unchanged, a U.S. agency reports

Dallas-area home prices were basically unchanged from a year ago in the third quarter, according to the latest U.S. government estimate.

The Federal Housing Finance Agency also said that Fort Worth-area prices were down 1.15 percent from a year ago in its report released Wednesday.

Nationally, prices were down 3.2 percent from third quarter 2009, the agency said. That compares with a 0.3 percent gain in the Dallas area.

The federal home price index is based on mortgages issued by government-sponsored mortgage companies – Freddie Mac, Fannie Mae and FHA. That makes the data different from price reports that use a broader measure.

The National Association of Realtors reported recently that Dallas-Fort Worth area home prices were up 1.6 percent in the third quarter based on sales through the local Multiple Listing Service.

Texas, with its overall 1.1 percent rise, was one of the top states for home price gains in the third quarter, the FHFA said.

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Housing-market bust is changing buyer behavior

Twenty-seven percent of first-time buyers who purchased a home between July 2009 and June 2010 received a gift from family or friends to help with the down payment, according to the National Association of Realtors’ annual Profile of Home Buyers and Sellers survey, released at NAR’s annual conference here.

That’s up from 22% a year earlier, and is the highest percentage in the more than 20 years the survey has been conducted, said NAR spokesman Walter Molony.

Also, 9% of first-time buyers received a loan from a relative or friend in the most recent data, compared with 6% who said the same in the results released last year, according to NAR. The survey included responses from 8,449 home buyers.

It’s likely many parents were motivated to help their children take advantage of a now-expired home-buyer tax credit of up to $8,000, and other favorable conditions, including lower prices and mortgage rates, researchers said. Tougher lending criteria may have also been a factor playing into the trend, Molony said.

First-time home buyers made up a record 50% of all buyers during the period, up from 47% in last year’s figures, according to the report.

While gifts have helped young buyers make down payments for years, “more people are having to do it because even if their credit is good, they need [more of] a down payment,” said Hope Harvey, a property manager and sales broker with Sugar Ski & Country Club, in Banner Elk, N.C.

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'Shadow' inventory of foreclosed homes could add to housing troubles

The Dallas-Fort Worth area has one of the lowest "shadow" inventories of unsold homes among major U.S. cities, according to a new study. But the addition of these houses to the market still significantly adds to the supply.

Shadow inventory homes are properties that have been foreclosed on or are in the process of foreclosure but are not currently listed for sale. Housing analysts say this pending supply will keep prices depressed in many cities.

Nationwide, there were more than 2 million shadow inventory homes in August – an eight-month supply – according to researchers at CoreLogic Inc. In the Dallas area, the shadow inventory was 6.7 months, the California-based mortgage and finance analysts said in a report released Monday.

Among the 50 largest U.S. cities, the average shadow inventory is almost 16 months, CoreLogic found.

The highest shadow home inventory was in the Miami area. All of the Texas markets were near the bottom of the shadow inventory list, with the lowest in Austin.

Statewide, Texas' shadow home inventory is 5.5 months, according to CoreLogic.

"Not surprising that Dallas and Texas, in general, show relatively low shadow inventory," said Dr. James Gaines, economist with the Real Estate Center at Texas A&M University. "We simply didn't get as overextended nor have we had the volume of foreclosures relative to other markets."

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Home Sales Fell 2.2% in October

Sales of previously owned homes fell in October amid weak demand and concerns about the foreclosure process, putting sales for 2010 on pace to close at their lowest level in 13 years.

Existing-home sales declined to a seasonally adjusted annual rate of 4.43 million units last month, down 2.2% from September, the National Association of Realtors said Tuesday.

The figures provide the first sign of the impact that suspensions of foreclosed property sales have had on the housing market. Several banks halted those sales in late September to address questions about the integrity of the foreclosure process.

Housing markets across the country have been fueled by sales of bank-owned properties, and delays had prompted fears of a new round of aftershocks for battered housing markets.

"To the extent people had any concern about being able to get clear title, they're going to stand back on distressed properties," said Douglas Duncan, chief economist at Fannie Mae. He said foreclosure delays were one of many factors that justified the mortgage company's "continued view of weak demand."

Still, foreclosures and other distressed sales accounted for 34% of all sales last month, compared with 35% in September, according to a NAR survey of real-estate agents.

Ivy Zelman, chief executive of research firm Zelman & Associates Inc., said the foreclosure suspensions had contributed "modestly" to October's decline and said she expected a similar impact in November.

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2010 a record year for foreclosure filings in Dallas-Fort Worth

Dallas-Fort Worth home foreclosure filings hit a record in 2010 – but not by much.

For all of this year, 63,835 homes have been posted for foreclosure in the four-county area, Foreclosure Listing Service said Thursday. That's only 4 percent higher than 2009's total.

Foreclosure postings in North Texas were up more than 20 percent in 2009 and 17 percent in 2008.

"The rate of increase has slowed, and it looks like 2010 is kind of the pivotal year as far as foreclosures here are concerned," said George Roddy, president of the Addison-based foreclosure-tracking firm. "But they are still going to be high into 2011."

Filings for December foreclosure sales have already been made, so the full-year numbers are available.

The biggest increase in home foreclosure filings this year was in Denton County, which was up 10 percent from 2009.

Dallas County residential foreclosure filings rose only 2 percent for 2010.

So far, foreclosure moratoriums caused by problems with lender paperwork and procedures haven't affected the rate of D-FW foreclosure filings.

For December's auctions, almost 6,100 North Texas homes are threatened with foreclosure – 16 percent more than a year earlier. It was only the third month in 2010 that postings topped 6,000.

Roddy said it's too early to forecast the results of lenders' foreclosure problems and calls for government intervention in the process.

"It's becoming more muddled as to what the outcome is," he said. "Will it be massive lawsuits?

"And what will the impact be on the consumer and home values?"

Not all the foreclosure postings each month result in home sales by lenders. In more than half the cases, the foreclosure is delayed or the borrower makes a new agreement with the mortgage company.

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Short sales often turn into long stories

It's a good thing first-time homebuyer Harley Summers wasn't in a hurry to get a house.

He bought his Allen home using a short sale that turned out to be anything but short. It dragged out for almost four months.

"It was a very long and frustrating process," said Summers, who wrapped up the deal last week. "The biggest advice I can give to anybody is don't pursue it unless you are an incredibly patient person."

Short sales are the big buzz in today's housing market. They are called short because the buyer gets the property for less than the previous owner still owed.

And that's what makes the transaction so complicated – it requires both the seller and the mortgage company to take a loss.

So why even do such a deal?

"The lenders are trying to reduce their costs if a home goes into foreclosure," said Dallas agent Logan Waller, who specializes in distressed properties. "The lender can see the property value decline by roughly 20 percent when the house is vacated.

"And they have other big expenses associated with a foreclosure."

Sellers are trying to get out of the property without a foreclosure, Waller said. "Their credit is not tarnished as bad with a short sale," he said.

A typical short sale negotiation can drag on for six months.

"We've had some of them in our inventory for a year," he said. "Sometimes we get to the closing table and the seller has disappeared.

"We see it with buyers, too – they give up."

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The housing crisis in 1933, and today

Question: I know that the New Deal created the Home Owners’ Loan Corp. I have been eager to read an article by someone who has looked at the way that mortgage crisis was handled ... and compared it to government efforts in our present crisis. If you are familiar with anything written on this subject I would appreciate your informing me where to find it. If you are not aware of anything, I might suggest that you would be an excellent person to explore it. —M.N.

Answer: Actually, you’re in luck. I do know of one such study; it was done a few years ago by Alex Pollock, a resident fellow at the American Enterprise Institute in Washington and the former president of the Federal Home Loan Bank of Chicago.

Pollock looked back to 1933, when Congress created the Home Owners’ Loan Corp. as a temporary fix “to relieve the mortgage strain and then liquidate.”

While the current mortgage meltdown and resulting — or corresponding, depending on your point of view — housing bust has been described as the worst since the Great Depression, it is nothing when compared to what happened in ‘33, when a financial and economic collapse occurred that is all but impossible to imagine today.

Back then, about half of all mortgage debt was in default. Unemployment reached 25%, thousands of banks and savings and loans had failed and annual mortgage lending had fallen by some 80%. New residential construction had dropped by 80% as well.

The prelude to the crisis might sound familiar. It was a period of grand economic growth and overconfident lending and borrowing. The 1920s featured interest-only loans, balloon payments, an assumption of ever-rising prices and the firm belief in the easy availability of a string of refinancings.

And then came the crash, the defaults, and the markets froze.

By comparison, only 2.95% of mortgages as of Oct.1, 2007, when Pollock wrote his paper, were labeled seriously delinquent, meaning roughly 1.5 million loans 90 days past due or in foreclosure. That’s risen to 9.11%, as of the second quarter this year, according to the latest figures from the Mortgage Bankers Association. Read more on foreclosures drop, but delinquencies rise, in MBA's second-quarter report.

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U.S. home sales drop 1.8% in September

The housing market took another step back in the latest measure. Pending U.S. home sales dropped 1.8 percent in September from August, the National Association of Realtors said Friday.

“This is after two consecutive months of rise – a step backward,” said Lawrence Yun, chief economist of the National Association of Realtors. “We don’t view this as a fundamental shift in the market.

“I’m not sure how much of this latest drop is due to the foreclosure moratorium some banks initiated,” he said at the Realtor’s annual meeting in New Orleans. “The data is consistent with soft activity right after the tax credit.”

Home sales across the country have been in a slide since federal tax credits that boosted purchases expired at the end of April.

Yun said it will be later this year before it’s clear how the home sales market will behave going forward in 2011.

Pending sales in September were down almost a quarter from the same month in 2009, when buyers were scrambling to qualify for the first round of federal tax credits.

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If mortgage rates plunged to zero

Imagine financing a home purchase with a no-interest mortgage. You’d probably never want to move again.

Granted, it’s doubtful you’ll ever have that luxury.

But if rates continue to drop, as some in the mortgage industry suggest they may — especially after the Federal Reserve’s recent statement that it was prepared for more extraordinary measures to pump up the economy — mortgage rates could inch in the direction of 0%. Continued concerns of deflation may also put pressure on mortgage rates.

“So long as the Fed allows the word ‘deflation’ to get bandied about, mortgage rates will ease lower,” said Dan Green, loan officer with Waterstone Mortgage, in Cincinnati, in an email.
How much lower?

“In theory, the only stopping point there is is 0% — that’s where all nominal interest rates have to stop,” said Mike Larson, real-estate analyst for Weiss Research.

Think about it: 0% financing has long worked as an incentive in the auto industry. And home builders have been known to pay down mortgage rates for their buyers, so these days it wouldn’t be unheard of for them to entice people with a 2% or 3% mortgage rate, at least for a period of time, Larson said.

But mortgages are different than car loans.

“Do I think we will see [0% mortgages] in our lifetimes? No, I don’t,” Larson.

Even during times of deflation, try telling an investor that he’d do well to buy a security with zero return, said Keith Gumbinger, vice president of HSH Associates, a provider of consumer loan information. It’d be a hard sell.


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Dallas housing is still one of the chepest in the country...

Even with big price declines in some major cities, Dallas has some of the cheapest housing in the country, according to a new report by Coldwell Banker Real Estate.

The residential sales firm looked at home prices in almost 300 markets for its annual Home Listings Report.

The cheapest place to buy a house is Detroit, where the average four-bedroom, two-bath property will run you only $68,007.

The same size house will cost an average of $1.83 million in Newport Beach, Calif., the most expensive market on Coldwell Banker's list.

In Dallas, a similar home is $180,228 – the 56th-lowest price in the ranking.

Coldwell Banker uses its nationwide home listings to come up with the annual report. Relocating workers sometimes use the study to compare the cost of homeownership in various markets.

"Our study shows that homeownership in the United States is generally affordable, with nearly 30 percent of the studied markets averaging $200,000 or less for a four-bedroom, two-bathroom home," Coldwell Banker CEO Jim Gillespie said in the report.

Coldwell Banker found 25 U.S. housing markets where the average was more than $750,000. In 10 cities, it topped $1 million.

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Investing extra dollars: mortgage vs. stocks

While there’s no one-size answer on whether to retire home debt or invest excess cash elsewhere, there are a couple of rules of thumb on the matter — and plenty of exceptions, depending on your age, cash flow and risk tolerance.

Other considerations aside, to determine which is more advantageous, compare the mortgage rate you have with the return you can get from another investment. Keep in mind the tax benefits of mortgage interest deduction; if you’re in a marginal tax bracket of 20%, for example, a 5% mortgage is more like one at 4% if you’re deducting the interest.

“If you believe over the next 10 years you can achieve a rate of return of X, then if your mortgage is higher than that, you should be paying off your mortgage. If the rate that you think you will be able to get from however you are comfortable investing is higher than your mortgage, then you wouldn’t pay it off,” said Norman Boone, president of Mosaic Financial Partners in San Francisco.

So, for example, if your choice is paying off a 4.5% mortgage or investing in a 2% certificate of deposit, it’s better from an investment standpoint to pay down the mortgage. Conversely, if you’re holding a 4.5% mortgage and you’re confident enough that you can earn 6% annually in the stock market, stocks are the better bet.

Of course having confidence in this unsteady economy could be the challenge: “Most people are probably not going to get a 6.5% return on their portfolio in the next 10 years” as the economy struggles to recover, Boone said.

Their mortgage debt, however, is guaranteed to linger until it is paid in full. And that makes paying down the mortgage — even in with today’s low rates — a wise move right now for some borrowers, especially those nearing retirement.

That said, if you have a longer investment horizon, it could be a different story. The total annualized return on a portfolio of 60% stocks and 40% bonds, rebalanced each year, is 9% over the past 50 years through August, according to Ibbotson Associates, a unit of investment researcher Morningstar Inc.

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Ally's GMAC Mortgage Halts Home Evictions in 23 States

Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.
GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Olecki confirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.

The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.
GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to industry newsletter Inside Mortgage Finance. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

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Dallas-Fort Worth home listings rise 15 percent in a year

The number of for sale signs is growing in North Texas neighborhoods, and an increase in foreclosed houses coming on the market is part of the cause, analysts say.
Sales listings in the Dallas area have grown almost 5 percent in the last three months, according to a new report from Altos Research. The number of houses on the market is 15 percent higher than a year ago, the latest statistics from the Realtors' Multiple Listing Service show.

"When you look at year-over-year inventory counts, we're much higher, and most sellers don't want to first list their properties for sale in August or September," said Altos Research vice president Scott Sambucci. "This would indicate that the new sellers hitting the market are going to be distressed or bank foreclosures to an extent.

"But banks are smart – they aren't going to just throw a bunch of inventory on the market during a seasonally slow time of year," Sambucci said. "So while some of the inventory is REO [real-estate owned], not all of it is."

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Banks' Plans for Foreclosed Homes Will Drive Market

The speed at which house prices fall over the next few months could depend less on mortgage rates and Americans' appetite for home buying than on how banks decide to manage the huge number of foreclosed homes they own or may take from delinquent borrowers in the near future.

Unlike home owners, banks often are much quicker to slash prices to unload properties quickly.

The upshot is that, the more homes being sold by lenders, the faster prices tend to fall. That pattern was clear over the past two years: Price declines that began four years ago accelerated rapidly in 2008 as banks dumped foreclosed properties at fire-sale prices. By January 2009, the share of distressed sales had soared to 45% of all sales nationally; it was even higher in hard-hit markets such as Phoenix, according to analysts at Barclays Capital.

Even though mortgage defaults kept mounting, housing markets began to stabilize early last year as low prices and government interventions broke the downward spiral. Policy makers spurred demand for homes by holding down mortgage rates, offering tax credits for buyers, and extending low-down-payment loans through the Federal Housing Administration.

The government also attacked the supply problem. Regulators relaxed mark-to-market accounting rules, giving banks more flexibility in valuing certain real-estate assets and removing some of the impetus for banks to quickly foreclose. Meanwhile, the Obama administration put in place an ambitious program to modify mortgages.

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Dallas-area home prices rose just 1.2% in June

Dallas-area home prices are still ahead of where they were a year ago, but the rate of increase has dwindled from earlier in 2010.

In June, home prices in Dallas area were up just 1.2 percent from a year ago, according to the latest Standard & Poor's/Case-Shiller Home Price Index.

That's a fraction of the more than 4 percent year-over-year gain the area saw in January.

And the Dallas area's June increase was much less than the 4.2 percent nationwide gain, Case-Shiller found.

"We've been saying all along that we think the second half of the year will not look good – maybe even worse than it really is," said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University.

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Foreclosures drop, but new delinquencies rise...

Still, the Washington-based group's quarterly delinquency report showed that short-term delinquencies are on the rise -- a foreboding number that could signal more foreclosures in the future.

The percentage of mortgage loans somewhere in the foreclosure process was 4.57% in the second quarter, down from 4.63% in the first quarter. The latest percentage is still up from a 4.3% rate a year ago.

However, the proportion of home loans one payment behind is now 3.51%, said Jay Brinkmann, the MBA's chief economist. This percentage peaked in the first quarter of 2009 at 3.77%, before falling to 3.31% by the end of last year.

Brinkmann cited a pair of reasons why some mortgage holders are falling behind.

"First, 30-day delinquencies are very closely tied to first-time claims for unemployment insurance. The number of first-time claims fell through most of 2009 but leveled off in 2010 and have started to rise again," he said in an MBA news release. See story on latest jobless claims.

"This increase in unemployment directly impacts mortgage delinquencies," he said.

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More Texans fall behind on mortgage bills

More Texans have fallen behind in their mortgage payments, the latest industry research shows.

In the second quarter, 9.28 percent of Texas homeowners with loans had late payments, the Mortgage Bankers Association reported Thursday.

That's up from 8.77 percent in the first quarter, according to the Washington, D.C.-based mortgage industry trade group. It was the highest late mortgage rate for Texas since the fourth quarter of 2009.

Fewer Texans – 3.39 percent – were 90 days or more behind in payments at the end of June. Those loans are considered the most likely to go into foreclosure.

The national picture improved.

Nationwide, 9.85 percent of homeowners with loans had one or more late payments. That's a decrease of almost a quarter percentage point from the first quarter of 2010. And 1.11 percent of U.S. home mortgage holders went into foreclosure in the second quarter.

In Texas, 0.7 percent of home loans fell into foreclosure during the same period – a slight improvement from the first quarter.

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Fewer Dallas-Fort Worth homeowners upside down on loans

The number of Dallas-Fort Worth homeowners who owe more than their houses are worth has declined significantly in the last year.

Just over 14 percent of Dallas-area homeowners who have loans were upside down at the end of June, researchers at CoreLogic report. The negative equity rate was 30.45 percent for the D-FW area a year earlier.

In the Fort Worth area, 13.5 percent of homes were underwater with debt at the end of June. About 155,000 D-FW home loans have negative equity, according to the report released Thursday.

Nationwide, 23 percent of residential properties with loans had negative equity in the second quarter, CoreLogic reports. That's down from 24 percent in the first quarter and is the second consecutive quarter of improvement.

Homeowners who owe more than their houses are worth are considered more likely to default on their loans.

"Negative equity continues to both drive foreclosures and impede the housing market recovery," Mark Fleming, chief economist for CoreLogic, said in the report. "With nearly 5 million borrowers currently in severe negative equity, defaults will remain at a high level for an extended period of time."

CoreLogic estimates that 11 million homes nationwide have negative equity. Altogether the owners owe $766 billion more than their properties would sell for. The improvement in negative equity in the D-FW area comes at a time when home prices have increased marginally and the number of sales has risen.

But foreclosure rates in the D-FW area remain high.

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July Existing-Home Sales Fall as Expected but Prices Rise

Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain, according to the National Association of Realtors®.

Existing-home sales¹, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

Sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.

Lawrence Yun, NAR chief economist, said a soft sales pace likely will continue for a few additional months. “Consumers rationally jumped into the market before the deadline for the home buyer tax credit expired. Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September,” he said. “However, given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs.

“Even with sales pausing for a few months, annual sales are expected to reach 5 million in 2010 because of healthy activity in the first half of the year. To place in perspective, annual sales averaged 4.9 million in the past 20 years, and 4.4 million over the past 30 years,” Yun said.

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North Texas foreclosure filings increase after three months of declines

After three straight months of declines, North Texas home foreclosure filings have turned higher again.

More than 5,900 Dallas-Fort Worth homes are threatened with foreclosure sale next month. That's an 18 percent jump from a year ago, Addison-based Foreclosure Listing Service said Thursday.

"I thought we had seen a little mellowing in the foreclosure market – evidently not," said George Roddy, president of the Addison-based foreclosure tracking firm.

Foreclosure postings for September are at their highest level since April.

And so far in 2010, 48,081 foreclosure filings have been recorded in the area, an increase of 7 percent from the same period last year.

Foreclosures in the area are "setting a new record high for this nine-month period," Roddy said. "Year-to-date residential posting activity has increased in each of the four counties located within the D-FW area."

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Dallas-Fort Worth home prices edge higher in report

Dallas-Fort Worth home prices continued to edge higher during the second quarter.

D-FW was one of 100 U.S. metropolitan areas that saw improved home prices from a year earlier, the National Association of Realtors said Wednesday.

Median home sales prices in the area rose 2.1 percent in the second quarter from the same period the previous year, the Realtors said. That beat the nationwide increase of 1.5 percent.

And it was more than double North Texas' first-quarter gain.

Almost two-thirds of the U.S. markets that the Realtors track had year-over-year price rises at midyear.

But analysts aren't overselling the latest numbers, which are compared with the depths of the housing shakeout in 2009.

"The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount," said Realtor economist Lawrence Yun.

"Now as more normal, nondistressed home sales are occurring, the median price in many areas is showing higher values," he said.

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Dallas-Fort Worth home sales drop 29 percent in July

North Texas home sales fell off a cliff in July.

Sales of preowned homes plunged 29 percent from a year earlier after the expiration of federal home buying incentives, which had brought out thousands of buyers.

Condominium and townhouse sales dropped by 37 percent.

July's 5,143 single-family home sales were the lowest monthly total since February, according to the latest report from the North Texas Real Estate Information Systems and the Real Estate Center at Texas A&M University.

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Texas pre-owned home sales rise 14 percent

Second-quarter Texas home sales rose for the third period in a row compared to year-earlier transactions, the Texas Association of Realtors said Monday.

Existing single-family home sales were up 14 percent from second quarter 2009.

Sales increased 12.38 percent in Dallas, 14.9 percent in Fort Worth, 20.32 percent in Irving and 20.77 percent in Garland, according to the quarterly report. Sales also rose by 11.01 percent in Collin County and 18.45 percent in Denton County.

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Fiserv forecast predicts short-term drop in Dallas-area home prices

Dallas-area home prices could dip slightly in the months ahead, if a new housing forecast proves correct.

But the same data from researchers at Fiserv Inc. predicts that home prices here will rise again slightly from 2011 into 2012.

“We expect to see prices bounce up and down around their lows for the next two to three years,” said David Stiff, economist with the Wisconsin-based financial services industry information firm. “This will result in alternating bouts of optimism and pessimism regarding the housing market recovery, similar to what we have seen for the economy as a whole.

“This will make it difficult to know exactly when the housing market has reached its bottom."

Fiserv’s new forecast calls for Dallas-area home prices to fall by 1.1 percent by first quarter 2011 from a year earlier. Then residential prices in the area will rebound by 0.3 percent thorugh first quarter 2012, if the researchers are right.

Other housing industry studies have shown that home prices in North Texas are up by between 2 percent and 3 percent so far in 2010 compared to the same period last year.

And local statistics suggest that the Dallas-Fort Worth residential market is indeed improving.

Home sales in North Texas are up 9 percent from a year ago. And the number of home foreclosure filings has fallen in recent months.

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Mortgage shopping is getting safer

That's changing.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or Safe Act, is aimed at increasing consumer protection and reducing fraud. It sets minimum standards for state licensing and registration of mortgage-loan originators, including education requirements, and mandates criminal background checks for those who originate mortgages.

The deadline for Safe Act compliance was the end of July. That was extended for some states to get licensing and registration processes in place. But by early next year, all are expected to be in compliance.

Plus, the Safe Act requires that consumers have access to a national registry of mortgage-loan originators. Borrowers will be able to access employment history and view disciplinary and enforcement actions against people with whom they're considering doing business. Visit the Nationwide Mortgage Licensing System and Registry, at NMLSConsumerAccess.org.

The law "will enable a consumer to be more confident with whom they're dealing with on the other side. When you call up a mortgage company, you don't know if the individual on the other end has been there a day or 10 years," said A.W. Pickel, president of LeaderOne Financial, a mortgage lender in Overland Park, Kan.

Minimum standards

States have always had their own rules and regulations regarding who can originate mortgages, but they've run the gamut between strict and lax -- or nonexistent, said Bill Howe, president of the National Association of Mortgage Brokers.

In the past, a mortgage broker in Arizona could hire a loan officer, give him some training on how to fill out forms, and he'd be ready to do business, Howe said. But under the Safe Act, Arizona's new rules require the loan officer to have 20 hours of education and pass exams on federal and state laws; each year, he needs another eight hours of continuing education, Howe said.

It's an improvement Howe has wanted for years. "Consumers can know that they're dealing with someone who has a license that can be taken away and [the officer can be] kicked out of the industry and held accountable," he said.

Consumer advocates and the industry alike welcome the improvements. "The safeguards in Safe will force bad apples to fall off the tree," said Ken Markison, associate vice president and regulatory counsel for the Mortgage Bankers Association.

Barry Zigas, director of housing policy for the Consumer Federation of America, said the new standards will weed out loan officers who "either because of lack of training or a lack of integrity might be taking advantage" of consumers.

One concern: When demand increases, it could take months to hire, educate and license loan officers to respond, especially for some companies that do business in multiple states, said Anthony Hsieh, chief executive of loanDepot.com, an online direct lender.

"You can't give mortgage advice or quote rates unless you are licensed," he said. Thus, hiring to address increased activity will likely take longer than in the past.

Still, while true, that's not a negative, said Liz Freeman, a former loan agent who now teaches classes to home buyers and investors and writes about mortgage lending.

"Do you really want someone in the pipeline that fast if they don't have training?" she said. "When things get good again, everyone isn't able to crawl out from under a rock and go into the mortgage industry. That's what this will prevent."

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Report: Fewer Dallas-area homeowners behind on mortgages

Fewer Dallas-area homeowners are seriously behind in their mortgage payments.

In June, 5.41 percent of area residents with a home loan were 90 days or more late in payments, researchers at CoreLogic said Wednesday.

That’s down from a peak 6.09 percent serious loan delinquency rate in February. But it’s still higher than the 4.59 percent rate a year earlier.

Dallas-area mortgage delinquencies are well below the nationwide 8.05 percent average.

Borrowers who haven’t paid their home loan in 90 days or more are considered most likely to lose the property.

The percentage of local homeowners in foreclosure at 1.43 percent is less than half the nationwide average in June, CoreLogic found.

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US home prices pick up in May

Home prices in the US climbed higher than expected in May as the housing market benefited from the last drops of federal stimulus ahead of summer, but tumbling consumer confidence showed growing fears about the economic recovery.

The closely watched S&P/Case-Shiller index showed house prices in the biggest US cities had risen 4.6 per cent in May from the same month a year earlier. That was stronger than economists had predicted and marked the biggest year-on-year increase since 2006.

“While May’s report on its own looks somewhat positive, a broader look at home price levels over the past year still does not indicate that the housing market is in any form of sustained recovery,” said David Blitzer, chairman of S&P’s index committee. “Since reaching its recent trough in April 2009, the housing market has really only stabilised at this lower level.”

From April to May, prices rose consistently across the 20 key markets that Case-Shiller tracks. May is traditionally one of the busiest months for buying homes, and only Las Vegas, where prices have fallen by 6.5 per cent in the past year, registered a monthly decline.

Mr Blitzer cautioned that home prices could “bounce along the bottom for the foreseeable future” and that the expiration of stimuli such as the first-time homebuyer tax credit, which affected house purchases that closed before the start of July, could weigh on the sector.

Home sales and housing starts have both been weak in recent months and high rates of foreclosure and distressed sales are depressing prices.

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Bargains, low mortgage rates boost Dallas-area home sales in 2010

Home sales and prices were up in the first half of the year in most Dallas-area residential districts.

The big question is: Will it last?

Some real estate agents who pound the streets representing buyers and sellers say business is still pretty good – even without the federal tax credits that fueled so much homebuying earlier this year.

"I'm written a ton of contracts in the past 2 ½ weeks," said Scott Schueler of Keller Williams Realty. "The bulk of my business right now is first-time buyers."

The tax credits, which ran out at the end of April, were especially appealing to those first-time buyers. But finance rates at near-record lows are keeping them interested.

"The low interest rates are appealing to everybody," said Lydia Player of Virginia Cook Realtors.

Player said worries about the economy are being trumped by bargains in many neighborhoods.

"People are still feeling a little uncertain about the economy," she said. "But there are so many good deals out there, they can't pass them up.

"The prices of the properties right now are as good as we are going to see," Player said. "The general feeling is we have hit rock bottom."

Widespread rise

Prices are starting to rebound. Median home sales prices were up in the first half of 2010 from a year ago in all but a dozen Dallas-area residential districts tracked by The Dallas Morning News. Overall prices in the area were up an average 7 percent from a year earlier.

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It's Great Time for Housing Deals

Paying off an underwater mortgage and buying a better home could be the best tactic in this troubled market.

"If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?" says Christopher J. Mayer, a Columbia Business School economist.

With 15-year fixed-rate mortgages at about 4.5 percent, it also makes sense to pay off the mortgage and keep the house. "At this point," says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, D.C., "if they don't have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to."

Source: The Wall Street Journal, M.P. McQueen (07/24/2010)/Realtor magazine

Sales Slow But Remain Above Last Year

With the scheduled closing deadline for the home buyer tax credits, existing-home sales slowed in June but remained at relatively elevated levels, according to the National Association of REALTORS®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.

Lawrence Yun, NAR chief economist, said the market shows uncharacteristic yet understandable swings as buyers responded to the tax credits. “June home sales still reflect a tax credit impact with some sales not closed due to delays, which will show up in the next two months,” he said. “Broadly speaking, sales closed after the home buyer tax credit will be significantly lower compared to the credit-induced spring surge. Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74 percent in June from 4.89 percent in May; the rate was 5.42 percent in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0 percent higher than a year ago. Distressed homes were at 32 percent of sales last month, compared with 31 percent in May; it was also 31 percent in June 2009.

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Pricing your home to sell in today's market

That means pricing aggressively -- low enough to compete with foreclosures in some markets. It's a conversation that stings, said Summer Greene, a real-estate agent for a Better Homes and Gardens Real Estate brokerage office in Fort Lauderdale, Fla.

"It's like telling them that their children are ugly," she said.

Many people with homes on the market already are slashing prices to catch buyers' attention. Twenty-four percent of listings on the market as of July 1 had gone through at least one price reduction -- that's a 9% increase from the previous month, according to the most recent data from Trulia.com, a real-estate listings site.

Price cuts are more prevalent in some markets than others, and the average size of the cut varies, too. In Minneapolis, for example, 40% of the listings had at least one reduction and the average reduction was 9% of the listing price. In Las Vegas, 12% of the homes had price cuts, but the reductions averaged 15% off the listing price.

Reducing their price is one way sellers are trying to weather the "tax-credit hangover" that the country is currently in, said Tara Nelson, consumer educator for Trulia.com. Slashing the price is the one thing a seller can do these days to attract attention.

"There's just not a whole lot of incentive right now for buyers to urgently buy," Nelson said. Mortgage rates have been relatively low for a while so buyers aren't concerned they'll miss that window, and inventory has been creeping up since April, she said. To be eligible for the home-buyer tax credit, buyers needed to have a contract on a house by April 30.

The Mortgage Bankers Association said the volume of mortgage applications to purchase a home during the week ending July 9 was its lowest since December 1996 -- despite mortgage rates that are near record lows. See story about mortgage applications hitting a 14-year low.

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Dallas-area home foreclosure postings fall 3%

The latest Dallas-Fort Worth area home foreclosure data shows a fourth month of annual declines.

Lenders posted 4,671 homes for auction at next month’s foreclosure sales, Foreclosure Listing Service said Friday. That’s 3 percent fewer foreclosure filings than a year ago.

And the current postings are 17 percent lower than last month’s total – another good sign.

But analysts remain cautious and point out that home loan defaults in North Texas are still near record levels.

“This foreclosure crisis is not going to get better overnight and I see it continuing at this pace at least through the end of this year,” said George Roddy, president of the Addison-based foreclosure tracking firm. “I remain concerned about this foreclosure crisis for a number of reasons.

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Texas home sale prices rise, but not as fast as in rest of U.S.

When it comes to home price gains, Texas is no longer outpacing the rest of the nation.

Instead, Texas home prices rose at about half the national rate in May, according to the latest estimate by CoreLogic Inc.

May home prices in Texas were 1.5 percent higher than a year earlier, while the nationwide average was 2.9 percent, the California-based research firm said Tuesday.

Dallas-area prices rose by the same amount – 1.5 percent.

While Texas housing inched up, the prices in some costal markets jumped: 7.9 percent in California, 6.8 percent in Virginia and 5.7 percent in Massachusetts.

The states that are seeing higher price gains all suffered steep declines in residential values in recent years. Texas saw only modest home price declines during that time.

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Record-low mortgage rates: Who cares?

Mortgage rates recently hit record lows, boosting affordability for homes. If you even care.

After all, there's a limited pool of Americans who can take advantage. Many would-be buyers are worried about losing their jobs; now that the home-buyer tax credit has expired, they're even less motivated to take the risk of buying a place.

And some existing homeowners can't benefit because their lack of home equity prevents them from refinancing.

The 30-year fixed-rate mortgage averaged 4.58% for the week ending July 1, according to Freddie Mac's weekly survey of conforming mortgage rates -- the lowest since Freddie started keeping track in 1971. See Mortgages. Also, see story on lawmakers extend home-buyer tax credit deadline for some home buyers.

According to data going back even farther, the 20th century low was right after World War II, when the 30-year fixed-rate mortgage averaged about 4.7%, said Michael Larson, real-estate analyst with Weiss Research, citing the book "A History of Interest Rates," by Sidney Homer and Richard Sylla.

If the economy continues to flounder, 4% rates might not be out of the question, he said.

Lower mortgage rates improve affordability: The difference between a 6% and a 5% mortgage rate on a $300,000 mortgage, for example, is about $188 a month, said Greg McBride, senior financial analyst for Bankrate.com.

Still, no matter how low rates go, it's possible the economy's weak state will hinder potential home-buyers.

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Fewer Dallas-area homeowners are far behind on mortgage payments

The number of Dallas-area homeowners who are extremely late with their loan payments has dropped to its lowest level since last October.

In May, 5.67 percent of Dallas-area home-mortgage holders were 90 days or more behind on their loan payments, according to a report by researchers at CoreLogic Inc.

That's down from a peak of 6.09 percent of homes with severe mortgage delinquency in January. It also marks the fourth consecutive month of improvement, according to data released Wednesday.

May's local late loan payment rate is still higher than it was a year ago, when 4.44 percent of borrowers were late by three months or more.

And the percentage of homes in the Dallas area that are falling into foreclosure is still growing. In May, 1.61 percent of Dallas-area residences with mortgages were in foreclosure, up from 1.13 percent in May 2009.

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Recession stopped teardowns, but work's back on in Dallas

Dallas custom homebuilder Kelly Clark is finishing work on his latest project in Dallas' Forest Hills neighborhood.

The $1.45 million house has five bedrooms and six baths and is within walking distance to White Rock Lake.

"We've been working on that house 18 months," said Clark, who's about a month away from finishing. "I shut down construction after the crash and quit building while I waited for the economy to come back.

"No one was going to buy that house in the depths of the downturn," he said. "I started the project back up six months ago."

Since then, he's had more "tire kickers" looking at the 6,127-square-foot home, which replaced a much smaller 1950s home that was knocked down.

Other speculative homes in the popular neighborhood off Garland Road are now sporting sold signs.

And builders across Dallas are once again shopping for lots where they can build pricey, close-in homes.

So-called teardown homebuilding almost shut down last year when the economy and housing market hit the wall.

But as the economy has improved, the rumble of bulldozers knocking down old houses to make way for new construction is starting to be heard again.

"While there are certainly some pockets in the teardown markets that continue to struggle, we have noticed that the East Dallas markets of Lakewood and the M Streets are seeing some increased activity," said housing analyst Ted Wilson of Residential Strategies Inc.

"Likewise, the more moderate price points in the Park Cities and Preston Hollow – primarily under $2 million – are in better shape than they were a year ago."

Close-in Dallas

Residential Strategies estimates that in the first quarter, builders started more houses in close-in Dallas neighborhoods than they had since late 2008.

Construction was up in Lakewood, parts of East Dallas, the Park Cities and North Dallas. At the same time, the number of finished, vacant houses in most of these areas went down.

"The number of finished, vacant units has declined and the corresponding supply has now dropped to under a five-month supply," Wilson said. "That is a good sign indicating that excess inventory is getting mopped up."

Starts of teardown houses are still less than a quarter of what they were in the Dallas area three years ago, Residential Strategies' numbers show. And sales of these houses in the first quarter were almost 70 percent below their peak in mid-2007.

But builders who stuck with the market say it's turning the corner.

Barclay Builders is finishing a $749,000 spec house in Oak Lawn, and owner Michael Lorra is starting work on two more.

"I just poured a foundation for a house in Lake Highlands and am starting one in Lakewood next week," Lorra said. "There is a very limited supply of houses in the markets I work in and good demand."

Lorra bought his Oak Lawn lot on Bradford Drive from another builder who tore down an old house but then dropped the deal.

"It's getting harder to find lots in this neighborhood because most of the houses are in good shape," he said. "Over the past seven and eight years, all the junk houses were basically bought up."

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A Year in Foreclosures: Bank-Owned Properties

Despite government efforts to help homeowners keep their homes, the foreclosure crisis continues to ravage towns and neighborhoods throughout the country. During the first quarter of this year, the number of real estate properties that received at least one foreclosure filing increased by 16% compared with the same period in 2009, according to RealtyTrac.com, which tracks foreclosure filings nationwide. (That includes homes at all stages of foreclosure, from receiving a Notice of Default which basically kicks off the process, through auction, to becoming Real Estate Owned, or REO, which means the property has been foreclosed on and purchased by the bank).

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Short sales, slow sales

Those searching for the best housing bargains on the market might consider buying a short-sale property. But there's an important qualification for buyers interested in going this route: They need plenty of patience.

In a short sale, a homeowner's lender agrees to accept less than is owed on the mortgage for the property. It's a useful alternative for borrowers underwater on their mortgage and on their way to foreclosure. As home prices continue to decline, short sales have become a viable option for those who need to sell.

Higher home prices ahead

Sales of new and existing homes are picking up month over month, and prices may soon follow. But the crosscurrent is whether unemployment will continue to rise, says USC real-estate economist Delores Conway. Stacey Delo reports.

"Over the past three to six months, the servicers have really become aware that short sales are the best way to reduce their losses... when a modification is not an option," said Travis Hamel Olsen, president of National Short Sale Center, a company that facilitates short sales nationwide on behalf of homeowners and real estate agents. The short-sale option also is less damaging to a seller's credit than a foreclosure, he said.

A short sale can also be attractive to a home buyer since the lender will often accept bids on the property that can be 10% or more below the market value, determined by the prices of comparable, nearby properties, Olsen said.

Although the mortgage balance is probably greater than the price a seller could expect in a traditional sale, the lender may be willing to take less than it's owed in a short sale if it can avoid the further expenses of foreclosing and taking over the property. The savings, however, often come at the expense of a home buyer's time.

"Short sales should be called long sales," said Leslie Tyler, vice president of marketing for ZipRealty. "In some cases, it could take months for a buyer to hear back from a lender."

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Continued Strong Pace for Existing-Home Sales

Existing-home sales remained at elevated levels in May on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, according to the National Association of REALTORS^®. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, were at a seasonally adjusted annual rate of 5.66 million units in May, down 2.2 percent from an upwardly revised surge of 5.79 million units in April. May closings are 19.2 percent above the 4.75 million-unit level in May 2009; April sales were revised to show an 8.0 percent monthly gain.

Buyers Face Purchasing Delays
Lawrence Yun, NAR chief economist, said he expects one more month of elevated home sales. “We are witnessing the ongoing effects of the home buyer tax credit, which we’ll also see in June real estate closings,” he said. “However, approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.

“In addition, many potential sales are being delayed by an interruption in the National Flood Insurance Program. Florida and Louisiana, also impacted by the oil spill, have the highest percentage of homes that require flood insurance.”

As the leading advocate for homeownership issues, NAR is supporting Senate amendments to extend the home buyer tax credit closing deadline through September 30 for contracts written by April 30, and to renew the flood insurance program. “Sales and related local economic activity would have been higher without delays in the closing process or flood insurance issues,” Yun noted.

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