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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Without jobs, housing rebound may take years

With the job market in dire straits, household incomes declining and foreclosures dragging down home values, the housing market may take years to recover, according to the annual State of the Nation's Housing report released Monday by Harvard University's Joint Center for Housing Studies.

What's required for a housing rebound now: jobs.

The jobless rate is one of the biggest drags on the housing market today, according to the report. And many economists predict unemployment will remain high as discouraged workers head back into the labor force and job gains come slowly.

"If history is a guide, what happens with jobs will matter the most to the strength of the housing rebound," said Eric S. Belsky, executive director of Harvard's Joint Center for Housing Studies, in a news release. Jobs keep homeowners out of foreclosure and help others feel confident enough to form households.

Another problem: Affordability issues are still lingering, said Nicolas P. Retsinas, the center's director. According to the report, 40.3 million households spent more than 30% of their income on housing in 2008, and 18.6 million spent more than half of their income, up from 13.8 million in 2001.

"Notwithstanding the fall of prices and tempering of rents, there are serious affordability challenges," Retsinas said.

Real median household incomes are poised to end 2010 lower than they were in 2000, according to the report. The household median income was $49,800 in 2008, down from $52,400 in 2000, the report said, citing the most recent data available.

Meanwhile, an estimated one in seven homeowners has a home worth less than they owe on their mortgage, and 5 million need their home price to rebound by 25% before they're again above water.

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Dallas-Fort Worth home foreclosure filings drop 7 percent

North Texas home foreclosure filings are down again.

The number of homes facing foreclosure in the Dallas-Fort Worth area next month is 7 percent below where it was a year ago, according to statistics released Friday from Foreclosure Listing Service.

July’s foreclosure filings include 5,654 D-FW residential properties, the Addison-based foreclosure tracking firm said.

Foreclosure filings in April and May were also lower than a year ago, giving hope that record home loan defaults in the D-FW area are easing.

“While this is certainly not an indication that the residential foreclosure crunch is over, it is welcomed news that we have seen a decline for three months in a row in same-month to same-month postings,” Foreclosure Listing Service president George Roddy said in a statement.

Source/ The Dallas Morning News/By STEVE BROWN /

Case-Shiller predicts Dallas-Fort Worth home prices will fall slightly for the year

Dallas-area home prices – buoyed in recent months by a resurgence of buyers – are now expected to fall slightly this year, according to a new forecast.

So far in 2010, home prices in North Texas are up almost 4 percent from a year ago. During the same period, pre-owned home sales have increased almost 12 percent.

But with homebuyer tax credits running out and foreclosures continuing, researchers at analysts Case-Shiller and Fiserv are cautioning about a double dip in nationwide residential prices.

"The first-time homebuyer tax credit has expired, the Federal Reserve has stopped buying residential mortgage-backed securities and the projected number of foreclosures remains extremely high," Fiserv chief economist David Stiff said in the report. "As a result, markets with recent price increases may see small price declines before prices finally stabilize at the end of this year or early 2011."

In the Dallas area, home prices are forecast to fall 1.8 percent this year from 2009 levels, the analysts predict.

That's less than the 3.1 percent dip Case-Shiller and Fiserv researchers are anticipating for the entire county, but any decline would be a setback for the local market.

Analysts say not to be overly concerned about the negative Dallas-area price forecast. "Because most Texas metro areas – and, in fact, most of the South – did not have the boom-bust in housing, there was no real home price decline," Moody's Analytics director Edward Friedman said. "Instead, prices are essentially in equilibrium.

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Congress considers tax credit extension for some home buyers.

Congress is considering an extension for would-be home buyers who are racing to close home sales in order to receive a federal tax credit.

The real-estate industry has warned that tens of thousands of buyers who rushed to buy homes to qualify might not close before the deadline imposed by Congress, meaning they could miss out on receiving credits worth thousands of dollars without action from Congress.

Congress last fall extended an $8,000 tax credit for first-time home buyers and added a smaller $6,500 credit for current homeowners who were buying a primary residence. To qualify for the credit, buyers had to sign purchase contracts by April 30 and must close on the transaction by June 30.

But there are so many transactions in the pipeline that the companies responsible for handling the sales, including mortgage lenders, appraisers and title insurers and real-estate brokers, say the last-minute home-buying rush in April has created bottlenecks.

On Thursday, Senate Majority Leader Harry Reid (D., Nev.) said he would back a measure to extend the June 30 closing date to Sept. 30 for buyers who had met the April contract deadline.

The National Association of Realtors estimates that between 55,000 and 75,000 home buyers who are under contract won't be able to close in time to claim the tax credit. The trade group is lobbying Congress to extend the June 30 deadline only for those buyers who met the April deadline.

"Everybody who got under contract at the end of April deserves to get the tax credit," says Stephen Adamo, president of Weichert Financial Services, a division of real-estate brokerage Weichert Realtors. "For reasons out of their control, they're in jeopardy of losing it."

That is causing heartburn for buyers like Alan Nickelson, a first-time home buyer who went into contract on a three-bedroom home in Kent, Wash., days before the tax-credit deadline in April. While he was pre-approved for a loan and will make a 20% down payment on the $275,000 home, he says the transaction has been held up because of home inspections and work repairs required by the appraiser.

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Mortgage rates drop

Bond yields fell and mortgage rates followed after a relatively weak employment report, allowing the 30-year fixed-rate mortgage to hover near its record low set late last year, Freddie Mac's chief economist said on Thursday.

The 30-year fixed-rate mortgage averaged 4.72% for the week ending June 10, down from 4.79% last week and 5.59% a year ago, according to Freddie Mac's weekly survey of conforming mortgage rates.

The 15-year fixed-rate mortgage set a record low for the fourth week in a row, averaging 4.17% this week, down from 4.20% last week and 5.06% a year ago. Freddie Mac started tracking the mortgage in August 1991.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.92%, down from 3.94% last week and 5.17% a year ago. And 1-year Treasury-indexed ARMs averaged 3.91%, down from 3.95% last week and 5.04% a year ago; the ARM hasn't been lower since the week ending May 27, 2004, when it averaged 3.87%.

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More Dallas-area homeowners were late on mortgages in April

The number of Dallas-area homeowners with late mortgage payments hit a record again in April.

The 6.3 percent of home mortgage holders who were three months or more behind in their payments in April was up two percentage points from a year earlier, according to researchers at CoreLogic Inc.

That’s higher than the Texas 90-day loan delinquency rate of 5.9 percent but remains well below the 8.9 percent nationwide level, according to the California analytics firm.

In addition, 1.56 percent of Dallas area home loans were in foreclosure during April – about half the national rate. Homes where the payments are 90 days or more late are considered most likely to go into foreclosure.

For the first half of 2010, almost 32,000 residential foreclosure filings have been recorded in the four-county Dallas-Fort Worth area, 10 percent more than in the same period of last year.

Source-Dallas Morning News - Steve Brown

The housing-market recession is not over

After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market -- but maybe they're being too optimistic.

In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries, Zillow.com's chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.

The four myths:

1. The housing recession is over. It's not, Humphries said. He estimates the bottom in home prices won't come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation.

2. After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. "Once we hit bottom, the bottom is going to be a long and flat affair across the markets," he said. "What we're going to see once we hit bottom is the second phase of the housing recession... that second phase is one of being flat."

3. The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn't envision foreclosure activity stabilizing until late 2011.

4. The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. "The biggest impact [in home sales] we believe were low prices... low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration."

Still, it's easy to understand why many homeowners want look on the bright side.

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Costs of Owning Surprises Some Buyers

A small survey of first-time home buyers found that more than half of the families were surprised at how expensive it was to own a home, even though 88 percent believed they had done a good estimate of the costs.

The study for BBVA Compass, a lender based in Alabama, concluded that most lenders don’t warn buyers that there will be costs beyond principal, interest, taxes, and insurance.

Among those costs are utilities. The U.S. Department of Energy reported that the typical family spends $1,900 a year – $158 per month – on things like heat, air conditioning and power.

The National Association of Home Builders calculated that the typical buyer of a new home spends about $8,640 within the first 12 months for furnishings, appliances, and home repairs and fix-ups, while the typical buyer of a resale home spends $6,540.

Source: United Feature Syndicate, Lew Sichelman (06/06/2010)

A Real Estate Recovery in 2013

Economists speaking at the recent annual meeting of the National Association of Real Estate Editors said the housing market likely will not recover until 2013.

Stan Humphries, Zillow chief economist, said home prices continue to decrease, and he sees the "tremendous amount of shadow inventory" delaying recovery. "We think the market will be flat in nominal terms for three to five years," remarked Humphries. "We are not going to hit bottom and see a V-shaped recovery."

Meanwhile, Fannie Mae chief economist Doug Duncan said it will be another three years before new household formation and housing starts pick up. Duncan believes home prices will fall another 1 percent to 3 percent before bottoming out in the third quarter.

Both Humphries and Duncan said the federal home buyer tax credits shifted demand so that buyers took action earlier than they would have otherwise. "We're going to see a payback in July and August," noted Humphries.

Source: Inman News, Glenn Roberts Jr. (06/07/10)

Texas to lead other states in housing rebound, analyst says

AUSTIN – Texas will be the first state to recover from the housing market downturn, one of the country's top homebuilding analysts predicts.

"The Texas markets are much healthier," said Mike Inselmann, founder of Metrostudy Inc., which tracks homebuilding across the country. "We are the most active state."

Houston and Dallas-Fort Worth already lead the nation in homebuilding and population growth. And Texas didn't suffer from the plunge in housing prices seen in many major U.S. markets, Inselmann told real estate journalists meeting Thursday in Austin.

The ready supply of new housing in Texas kept prices from overheating, he told members of the National Association of Real Estate Editors.

"Dallas-Fort Worth, going back to 1995, never got to 10 percent" gains in annual home prices, Inselmann said.

By contrast, many markets on the West Coast and East Coast saw home prices more than double in just a few years.

"We did not have that housing bubble," he said.

Inselmann said the U.S. home market is "on the bottom and edging up."

Nationwide, home starts are expected to be up about a quarter this year from 2009.

But the recent expiration of the federal homebuyer tax credit, which fueled thousands of home sales, makes it hard to gauge where the market is going.

"It's going to be slow and sloppy in the recovery," he said.

Builders say the market has already slowed since the tax credit, for as much as $8,000 toward the purchase of a home, expired at the end of April.

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This week's Real Estate stories

Real-estate experts discussing market trends at the National Association of Real Estate Editors conference in Austin this week seldom did so without also contemplating the role of employment statistics.

The recent wave of foreclosures, for example, is largely driven by the loss of jobs and income, said Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties.

And when it comes to the need for new-home construction and overall housing demand, expectations for the future largely depend on the employment picture in the local area, said Mike Inselmann, president of Metrostudy, a provider of housing information.

In many metropolitan areas, it takes the creation of two jobs to create one new household, he said. That is, "100,000 jobs create 50,000 households in most markets," he said.

Eventually, growth in household formation will affect apartment demand, said Henry Cisneros, former secretary of the U.S. Department of Housing and Urban Development. Rentals are often entry-level housing for new workers forming households, and since a limited supply of apartments has been added to the market recently, there could be a need for that type of development as the economy mends, he said.

Read more real-estate news in this week's pages, including tips on how to get your home purchase closed before the tax-credit deadline and a Realty Q&A on short sales.

While you're at it, read about the latest jobs report on MarketWatch, and learn why the numbers might not be as positive as they look at first blush.

Housing and employment trends often are linked, and for good reason: Not having a job will keep people from buying a home or renting an apartment. Even the worry that a job might be lost can keep a household from forming.

And as the country has painfully witnessed, the ability to keep a job often determines whether someone is able to keep a home.

Source -Marketwatch -- Amy Hoak, Real Estate writer

When buying a short sale, there are no easy answers

Question: A bank in Ft. Lauderdale has the final say on the sale of a house my daughter wants to purchase. The Realtor sold my daughter on making an offer on this townhouse, which is owned by someone who owes more than the place is worth. The day on which she was promised an answer has come and gone, but she has heard nothing from the bank. When she questioned it, she was told she is at the bank's mercy and she would receive an answer whenever the bank got around to it. The sale is scheduled to close soon, but still no word.

On several occasions, the listing agent has advised my daughter's agent that my daughter should hear something on such and such date, but that date rolls around with nothing. Not even a call from the Realtor. She is told that is the way it is and to get used to it. I have told my kid to move on and quit messing around with these jerks. They have zero empathy and show zero care. They have not changed spots even though we taxpayers bailed them out.

My daughter wants the townhouse, qualifies for the loan and has the 20% down plus the cash she needs to close. She has a high credit score with never a glitch or financial misstep in her 37 years. She has a good and secure middle-level management job. No financial reason exists for her not to be accepted. Does she have any rights? I find this beyond unbelievable both from a business and moral standpoint. - A.P.S.

Answer: Unfortunately, your daughter has no rights, at least not in this case. Whether or not the bank accepts the short-sale price is between the bank and the owner.

I can't tell you exactly why the bank is dragging its feet, but I do know that lenders want to make absolutely certain that their borrowers aren't trying to get out of mortgages they still can afford. Many people are hiding assets and otherwise lying to their lenders to get out from under loans on which they can still make the payments but choose not to.

Lenders also want to be sure the house in question is not worth more on the open market than what your daughter is offering. In the long run, it may be less expensive for the lender to foreclose, take back the property and sell it than it is to allow the proposed short sale to go through. And unfortunately, it is still all about making money for some lenders.

Only after the lender is satisfied with the answers to these two questions will it turn its attention to your daughter and whether or not she is a qualified borrower. Meanwhile, she can call off the deal anytime she likes and find another place. It may not be the house she wanted initially, but these things have a way of working out for the best. Nine times out of ten, the houses people eventually buy turn out to the best choices after all.

Read more about the short sale here >

Surge in Pending Home Sales Continues

Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®.

The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February.

Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.”

NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.

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Pending home sales rise ahead of subsidy's end

The pending home sales index rose 6% in April after an upwardly revised 7.1% increase in March, the National Association of Realtors reported. The benchmark covers signed contracts, not final sales, which usually lag by a month or two.

"Tax incentives have made the housing market look better than it really is," wrote Neil Dutta, an economist for Bank of America's Merrill Lynch.

The federal government has been subsidizing home sales with tax credits of up to $8,000 for qualified buyers who signed a sales contract by the end of April. Transactions must close by June 30 to qualify.

The real estate lobbying organization warned that some buyers would not be able to close by the end of June because of backlogs and has asked Congress for flexibility in the deadline.

The pending sales index is at the highest level since October, just before a previous tax credit expired. The index is up 22% compared with April 2009.

The tax credit brought more than 1 million buyers into the market, according to Lawrence Yun, chief economist for the NAR.

Other economists have said the tax credit likely accelerated purchases but probably didn't lure many additional buyers into the market.

"The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs," Yun said.

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