Heartened by the recent rise in home prices? Don't get too comfortable. Standard & Poor's, the credit-rating agency that tells investors what mortgage-backed securities are worth, reports that the increase was just an illusion. It predicts the nation is about to see a deluge of new foreclosures that will drive real estate values back down.
Blame the "shadow inventory" – nearly 1.8 million homes that are on the road to foreclosure but for all kinds of reasons haven't gotten there yet.
Many homeowners have fallen behind on their mortgages or stopped paying, but foreclosure has not yet arrived. Mortgage servicers, the folks who send you the bills and file for foreclosure when you can't pay them, are overwhelmed. Courts, too, are backed up. Mortgage modifications and foreclosure moratoriums have put off the day of reckoning for borrowers, but not forever. And unemployment is sabotaging more homeowners every day.
Out of more than $1.6 trillion in existing mortgages that were packaged into mortgage-backed securities by Wall Street, some $425 billion worth are extremely late on their payments, and therefore likely to go into foreclosure. Only a fraction of borrowers who fall seriously behind are able to catch up, with the help of a loan modification. And even then the majority end up falling behind again. That amount of bad mortgage debt has been spiking up every month, slowing down just a little thanks to the government's Home Affordable Modification Program, but still continuing to rise.
Sunday, February 28, 2010
The Coming Foreclosure Flood
Soaring Mortgage Defaults May Kill The Housing Recovery
Delinquencies, foreclosures likely to put a damper on 2010 recovery.
March is usually the month when people in the real estate business start getting hopeful. Spring usually brings out both buyers and sellers and, along with them, higher values for most homes.
But for some of the biggest housing markets in the country, those hopes look to be in vain this year. The problem is the glut of homes that have been repossessed by banks or that seem headed in that direction. The glut is far bigger than it was a year ago.
In fact the outlook is flat-out grim, based on the latest data from First American ( FAF - news - people ) CoreLogic, a housing data firm that tracks 97% of U.S. transactions for the mortgage industry. The percentage of homes that banks have filed foreclosure on or repossessed (and stamped with the dreaded "REO," or "real estate owned," moniker) now account for 3% of all mortgaged homes. That's up from 2.2% a year ago. In some large cities, the rate is two-to-six times the national average.
Wednesday, February 24, 2010
U.S. Economy: New-Home Sales Decline to Record Low (Update1)
By Bob Willis
Feb. 24 (Bloomberg) -- Sales of new homes in the U.S. unexpectedly fell in January to the lowest level on record, a sign that an extension of a government tax credit may not be enough to rekindle demand.
The report underscores Federal Reserve Chairman Ben S. Bernanke’s comments today that the economy is in a “nascent” recovery still in need of low interest rates. Homebuilders face competition from foreclosed properties that have driven down prices at the same time companies are reluctant to create jobs.
“The foreclosure flow is robbing demand from the new-homes market, and that process seems to be strengthening,” said Julia Coronado, a senior economist at BNP Paribas in New York. “The new-homes market just can’t get off the floor. If new homes suffer, construction suffers and jobs suffer.”
Sales were projected to climb to a 354,000 annual pace from an originally reported 342,000 rate in December, according to the median estimate in a Bloomberg survey of 72 economists. Forecasts ranged from 325,000 to 386,000.
Stocks advanced after Bernanke repeated in Congressional testimony that borrowing costs can remain low for an “extended period.” The Standard & Poor’s 500 Index gained 1 percent to 1,105.24 at 4:28 p.m. in New York.
Report: More than one in 10 Texas homeowners behind on payments
I do not know how Mortgage Bankers Association chief saw "end of the unprecedented wave of mortgage delinquencies and foreclosures", but I just see more trouble down the rode in this article.
"The number of homes going through foreclosure slowed in 2009 because of the large number of home mortgage modification programs designed to help troubled borrowers. " but "But foreclosure filings remain high – reaching a record of almost 61,000 in North Texas last year."
Question, if the foreclosure filing remains high, what is the guarantee that these modified loans will not delinquent again with in few months?!
According some experts the loan mods that brokers are selling,...... are new and improved variations on the exotic mortgages that seduce borrowers in the first place." Katz worries that mortgage servicers will take advantage of distressed borrowers with modifications that won't ultimately help them
Here it the article in Dallas Morning News.
Friday, February 19, 2010
Addison develops an edgy side with new apartments
Prospective tenants who walk through the front doors of Addison's new Savoye apartments usually do a double take at the eye-popping design. A wall in the lobby is plastered with bright cushions and big-screen TVs. A metal staircase curves above the round leasing office. And at the top of the stairs is a residents' lounge with enough bling to fill a high-fashion hotel. "The people who come in are pretty blown away by the place," said Carolyn Fredholm, senior community director for the project. "It's not what you expect to see in a community north of LBJ Freeway." Addison city officials wanted a wow factor three years ago when they teamed up on the project with developer United Dominion Realty. The Dallas suburb might not seem old enough for redevelopment, but that's exactly what the town is doing – replacing an aging apartment district on its western edge with new housing, retail and parks. "The design of that project was very important to us," said Addison City Manager Ron Whitehead. "We need more urban residential in town to make everything else work." The 120-acre development with the unwieldy name of Vitruvian Park is just south of Spring Valley Road near Brookhaven Collage. The first phase of the $1 billion redevelopment – almost 400 luxury apartments – will open in two weeks. "We already have 45 leases," said Tom Lamberth, vice president of development for Denver-based UDR, one of the country's biggest apartment builders. "We are off to a good start. "We are primarily attracting people who are part of the North Dallasworkforce," he said.
2010: The Year of the First-Time Buyer?
According to the Chinese calendar, 2010 is the Year of the Tiger. But in real estate, 2010 may come to be known as the “Year of the First-Time Home Buyer.”
Mark Zandi, chief economist at Moody's Economy.com, says there will be 1.84 million homes sold to first-time home buyers in 2010, compared with 1.73 million in 2009.
These buyers will invariably make some mistakes that they will come to regret a few years down the road, some experts say, including failing to use a real estate professional to help them manage the transaction.
Real estate professionals have the time and the knowledge to sift through thousands of listings, creating market analyses to judge pricing and other key features, points out Ray Boss Jr., a practitioner with RE/MAX Realty Group in Maryland.
"I would want someone who is going to look out for my interests first and foremost," says Boss. "Someone who knows the contracts, who has experience negotiating, and who can walk me through the entire process smoothly — step by step — and make sure I get the house that's right for me."
Source: U.S. News & World Report, Kimberly Castro (02/18/2010)
Wednesday, February 17, 2010
Construction Up Along With Builder Confidence
Construction of new homes rose to an annual rate of 591,000 in January, up 2.8 percent from December when the revised rate was 575,000, the Commerce Department announced Wednesday.
Meanwhile, the monthly home builder confidence scale rose two points in February to 17.
The National Association of Home Builders Chair Bob Jones said, "Builders are slightly more optimistic that the housing recovery is finally beginning to take root.”
Builder confidence was highest in the Northeast and the South, weaker in the West and lowest in the Midwest.
Source: The Wall Street Journal, Meena Thiruvengadam (02/16/2010) and CNN, Blake Ellis (02/17/2010)
Saturday, February 13, 2010
4 Reasons to Sell Now
Selling a property in this tough market can seem like a challenge. Here are four factors that actually make this a good time to post a For-Sale sign.
1. Sell low and buy low. Because all property values are down, the loss on the property a home owner sells is really only a paper loss because the next property he buys also will be a bargain. If he buys smartly, when prices come back up in a few years, he’ll be in better shape.
2. Down-payment help is widely available. While nothing-down loans have disappeared, it is easy to find down-payment assistance for lower-income and first-time home buyers. Programs vary all over the country, but one good way to find them is to search online for “down-payment assistance programs” and the name of your region.
3. Your uncle has money to share. Besides the $8,000 first-time home buyer tax credit and the $6,500 move-up credit, there are an array of energy tax credits that can make home improvements pay off in cash.
4. Good help is available. Really talented real estate practitioners, contractors, and designers are available and eager for business.
Source: McClatchy Tribune, Kate Forgach (02/07/2010)
Friday, February 12, 2010
Dallas-Fort Worth home foreclosure filings jump 30%
Home foreclosure filings jumped in the Dallas-Fort Worth area again after falling last month, Addison-based Foreclosure Listing Service Inc. said Thursday.
Lenders posted 5,548 homes for forced sale in the March auctions, up 30 percent from the same month last year.
March filings also were 18 percent above the number of homes posted for this month's auctions.
February postings were 4 percent below the level of February 2008, the first time monthly foreclosure filings had fallen on a year-over-year basis since October 2007.
"I said last month th
at it was welcomed news, but that I was not holding my breath," said George Roddy, president of Foreclosure Listing Service. "And in fact, postings shot right back up, climbing 18 percent in just one month, to above the 5,000 mark this month."
Friday, February 5, 2010
Report: Nearly 6 percent of Dallas-area homeowners behind on mortgage payments
The number of Dallas-area homeowners seriously behind in the mortgage payments has risen to almost 6 percent.
Researchers at First American CoreLogic said Thursday that 5.93 percent of local home mortgage holders in December were at least 90 days late with their payments. That’s up almost two percentage points from a year earlier.
But the percentage of Dallas-area residents who are late with their home loan payments is well below the 8.4 percent nationwide 90-day delinquency rate, the report said.
About 1.4 percent of homes in the area with mortgages were already in foreclosure in December. That compares with a 3.24 percent nationwide foreclosure rate.
In the Fort Worth area, 6.06 percent of home borrowers are behind in payments and 1.47 percent were already in foreclosure in December
Source:
Tuesday, February 2, 2010
D.R. Horton posts profit for first time since 2007
A rush of first-time homebuyers taking advantage of federal tax credits enabled D.R. Horton Inc. to earn its first profit in more than two years. The Fort Worth-based homebuilder earned $192 million in the quarter ended in December thanks to increased sales and a one-time tax benefit.The company said Tuesday that its new home sales orders for the final three months of 2009 rose by 45 percent from the same period a year earlier. And total completed sales were up by more than a third. Horton’s jump in home sales and overall 17.1 percent profit margin was due in part to Horton’s ability to purchase building lots at attractive prices in the last year, CEO Donald Tomnitz said in a conference call with investors and analysts. Tomnitz said the company this year has “a great opportunity to build on what we have started,” and expects to be profitable in the quarters ahead. Horton’s average sales price was up 3 percent in the most recent quarter, with almost 66 percent of its houses going to first-time buyers.
