Short Sale Percentages by State

Do you have questions about Short Sales?  Call today, I can answer your questions and help navigate you through the Short Sale process.

Mortgages and Veterans

One of the great things about this country is that we do a lot for those who have served us. And in the area of real estate financing, we can do exceptional things.

Understand that the VA (Veterans’ Administration) is, in the mortgage world, like HUD is with FHA financing. They are an insurance company, collecting premiums and using the backing of the Federal government to guarantee the payments to lenders. Because of the government’s guarantee, lenders can stretch traditional guidelines and offer very competitive terms (of course, while adhering to the VA’s guidance).

Some of the more attractive features of a VA loan are:

1. 100% Financing on Home Purchases – Veterans, assuming they are in good standing, can buy a home with no money down. In most cases, the maximum VA loan is $417,000.
2. The Ability to Finance Reasonable Closing Costs – On many VA loans, the closing costs are negotiated into the sales price and the seller pays them. This feature can significantly reduce the cash a veteran needs to buy a home.
3. More Understanding with Regards to Credit Challenges – In an effort to help those who served us, lenders are more liberal towards hiccups in credit.
4. Common-Sense Look at Income – Rather than approve loans strictly by income ratios, VA mortgages incorporate what is called Residual Income. There is a form that actually budgets all expenses (not just housing) to account for family size, heating and electrical usage, and more.
5. Financed Insurance Premium – The VA charges what they call a Funding Fee to set up a fund to reimburse lenders, should a default occur. The Funding Fee varies on loan terms and usage (consult your lender for exact costs), but the good news is that it is typically just added to your loan. Instead of paying thousands of dollars up front, you can pay $10-$50 a month in a higher payment.
6. Refinancing Your VA Loan is Easy – Through the I.R.R.L. (Interest Rate Reduction Loan) Program, getting a better rate (if the market has better rates) does not carry with it all the verifications of income, credit, appraisals, and assets of other loans…and closing costs can be added into the loan! The logic is the VA is already “on the hook” and lowering the payment increases the likelihood of continued payments, so why not be as lenient as possible.

For more detailed answers, contact your local mortgage professional. With three million veterans returning home in the next couple years, the opportunity of VA financing needs to be publicized.

New Foreclosure Wave: What Will Be the Impact?

by THE KCM CREW

We reported two months ago that foreclosures will significantly increase this summer as a result of The National Mortgage Settlement. This month, both Reuters (Americans brace for next foreclosure wave) and CNNMoney (Flood of foreclosures to hit the housing market) concurred. However, we believe this increase in distressed properties will have a much different impact on the housing market than previous increases for three reasons.

1. Demand Will Absorb Much of the Increase in Supply

The last wave of foreclosures entered the market as both consumer confidence and demand for housing was on the decline. That created an overhang of discounted properties that pushed down the prices on non-distressed homes. This new increase in foreclosures is hitting a different type of real estate market. Consumer confidence is stabilizing and the demand for housing is increasing. The impact on prices will be much less dramatic in most markets than it has been in the past.

2. Many Banks Are Doing Necessary Repairs and Renovations

Historically, the typical foreclosure has sold at a discount of 25-30% compared to non-distressed properties. The banks are finally realizing that they may soon own one or more of homes in any neighborhood. For that reason, we are beginning to see banks do the necessary repairs and renovations in order to garner a price closer to the value of non-distressed properties in the marketplace thereby lessening the impact on the value of surrounding homes.

3. Different Regions Will Bear the Brunt

Originally, many thought that the foreclosure fiasco was confined to the four ‘sand’ states (CA, AZ, NV and FL). We now realize that cities like Chicago and Atlanta, along with many others, have also faced the burden of falling prices because of an increase in distressed properties.

This next ‘flood of foreclosures’ will have the largest impact in the judicial states that impeded the foreclosure process over the last few years such as New York, New Jersey and Connecticut. California, Nevada and Arizona will be impacted in a much less dramatic way than in the past.

ASKING PRICES ON THE RISE AS HOUSING RECOVERY EXPANDS

Local Housing Market Recovery Strong in Florida, Sputtering in California

SAN FRANCISCO, April 5, 2012 – Trulia today launched the Trulia Price Monitor and the Trulia Rent Monitor, the earliest leading indicators available of trends in home prices and rents. Based on the for-sale homes and rentals listed on Trulia.com, these Monitors take into account changes in the mix of listed homes, reflecting trends in prices and rents for similar homes in similar neighborhoods through March 31, 2012.

After Free Falling For Years, Asking Prices Rose Nationally 1.4 Percent Quarter-Over-Quarter Nationally, asking prices on for-sale homes – which lead sales prices by approximately two or more months – were 1.4 percent higher in March than one quarter ago. Prices increased month over month 0.9 percent in March and 0.6 percent in February. The Trulia Price Monitor is seasonally adjusted, so these monthly and quarterly increases are on top of typical springtime price jumps. Unadjusted for seasonality, asking prices rose 2.4 percent quarter over quarter.  According to the Monitor, asking prices had been declining prior to February and reached a low in January.  Throughout 2011, asking prices rose slightly in several months of the year, but never more than 0.2 percent in a month. Asking prices in March were 0.7 percent below their level one year earlier.

Asking Prices Jump More Than 10 Percent in Cape Coral, Miami and Phoenix Year-Over-YearThe Trulia Price Monitor revealed that asking prices rose year-over-year in all large Florida metros, and fastest in Cape Coral-Fort Myers and Miami. Asking prices also rose in Phoenix, Pittsburgh and the Detroit area.  Meanwhile, local housing markets in much of the West continue to struggle. Prices fell most in Tacoma and Seattle, followed by Sacramento and Las Vegas. All large California metros saw year-over-year price declines.

Top 10 Metros With Largest Price Increases
#	U.S. Metro	Y-O-Y % Change in Asking Price
1	Cape Coral-Fort Myers, FL	14.8%
2	Miami, FL	14.1%
3	Phoenix, AZ	13.2%
4	Pittsburgh, PA	9.2%
5	Little Rock, AR	6.7%
6	Orlando, FL	6.3%
7	North Port-Bradenton-Sarasota, FL	6.2%
8	Palm Bay-Melbourne-Titusville, FL	6.1%
9	West Palm Beach, FL	5.8%
10	Warren-Troy-Farmington Hills, MI	5.6%

Top 10 Metros with Largest Price Decreases
#	U.S. Metro	Y-O-Y % Change in Asking Price
1	Tacoma, WA	-11.9%
2	Seattle, WA	-9.1%
3	Sacramento, CA	-8.3%
4	Las Vegas, NV	-7.7%
5	Wilmington, DE-MD-NJ	-7.7%
6	Columbia, SC	-7.3%
7	Cleveland, OH	-6.9%
8	Fresno, CA	-6.8%
9	Milwaukee, WI	-6.7%
10	Allentown, PA-NJ	-6.7%

Note: Rankings based on the year-over-year changes in asking price among the 100 largest U.S. metropolitan areas.

Rents Continue To Climb, Rising Nationally 5.0 Percent Year-Over-Year
Asking rents rose over the past year in almost all large metro areas included in the Trulia Rent Monitor. In the largest metros, rents rose 6.2 percent in New York and 6.1 percent in Chicago, but only 0.6 percent in Los Angeles. Rents rose strongly in Miami (12.1 percent) and Denver(9.9 percent), which also experienced large asking price increases. Meanwhile, rental affordability declined in places where rents rose while prices fell, most notably in San Francisco (rents up 11.1 percent), Seattle (9.7 percent), San Jose (9.4 percent) and Boston (9.2 percent).

PRE-APPROVED QUOTES

• “With all eyes on the lookout for signs of home price increases now that sales and construction are improving, the Trulia Price Monitor is the finger on the pulse of price trends almost in real time,” said Jed Kolko, Trulia’s Chief Economist. “Asking prices lead sales prices by two or more months, and sales price indexes have a five-to-eight week lag in reporting. That means the Trulia Price Monitor can detect price movements – such as the 1.4 percent quarter-over-quarter increase in March – at least three months before the major sales-price indexes do."
•  “Asking prices rose in February and March, but this doesn’t mean that the bottom is forever behind us. The robo-signing settlement will accelerate the foreclosure process, pushing more homes onto the market and dragging down prices in areas that suffered most from the housing crash,” said Jed Kolko, Trulia’s Chief Economist. “Meanwhile, some relief is in sight for strapped renters as the wave of new multi-family buildings that broke ground in 2011 will be completed later this year.”

Americans' Expectations Align to Encourage Home Buying

Respondents Expect Significant Rental Price Rise

Keosha Burns

202-752-7840

WASHINGTON, DC – More consumers may be looking to purchase homes with a shift in several key housing market indicators, according to Fannie Mae’s March 2012 consumer attitudinal National Housing Survey.  More Americans now expect both home rental and home purchase prices to increase over the next year.  Nearly half of consumers expect higher rental prices, the highest number recorded since monthly tracking began in June 2010.  Thirty-three percent expect home prices to increase, up 5 percentage points since last month, and the highest percentage recorded in over a year.  In addition, confidence in consumers’ views of their own finances is stabilizing—for three straight months—44 percent believe their personal finances will get better over the next year.  These trends may be providing Americans with an increased sense of urgency to buy a home as 73 percent of Americans now believe it is a good time to buy a home, up from seventy percent in February.

“Conditions are coming together to encourage people to want to buy homes,” said Doug Duncan, vice president and chief economist of Fannie Mae. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.” 

SURVEY HIGHLIGHTS

Homeownership and Renting

• Thirty-three percent of respondents expect home prices to increase over the next 12 months, a five percentage point increase from last month, the highest level over the past 12 months.
• On average, Americans expect home prices to increase by 0.9 percent over the next 12 months (up slightly since last month).
• Thirty-nine percent of Americans say that mortgage rates will go up in the next 12 months, a five percentage point increase from last month.
• The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in over a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.
• On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, a significant increase since February, and the highest number recorded to date.
• Forty-eight percent of respondents think that home rental prices will go up, a three percentage point increase from last month and the highest number recorded to date.
• Sixty-six percent of respondents say they would buy their next home if they were going to move, up one point since last month, while thirty percent say they would rent, up one point versus last month. 

The Economy and Household Finances

• The rise in confidence in the economy’s direction leveled this month, with 35 percent responding that they think the economy is on the right track, consistent with February’s total. The percentage who say the economy is on the wrong track rose slightly from 57 percent to 58 percent.
• Only 12 percent think that their personal financial situation will worsen in the next 12 months, consistent with February as the lowest value in over a year, and tied with January 2011 for the lowest to date.
• Twenty-one percent of respondents say their income is significantly higher than it was 12 months ago, up 1 point versus February, while 63 percent say it has stayed the same - consistent with February’s values
• Thirty-four percent say their expenses have increased significantly over the past 12 months (a slight increase of one percentage point). 

The most detailed consumer attitudinal survey of its kind, the Fannie Mae National Housing Survey polled 1,003 Americans via live telephone interview to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, the economy, household finances, and overall consumer confidence.  Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010).  Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.

For detailed findings from the March 2012 survey, as well as technical notes on survey methodology and the questions asked of respondents associated with each monthly indicator, please visit the Fannie Mae Monthly National Housing Survey site.  Also available on the site are quarterly survey results, which provide a detailed assessment of combined data results from three monthly studies. The Fannie Mae National Housing Survey was conducted between March 1, 2012 and March 28, 2012. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

Locking In Peace of Mind

By VICKIE ELMER

Published: April 5, 2012

WITH mortgage rates inching higher, some borrowers might want to consider a lock-in agreement, which freezes the terms of a loan while it is being processed, potentially saving borrowers thousands of dollars over the life of the mortgage.

This guarantee may be especially important for those who are refinancing, where even a quarter of a percentage point could skew a borrower’s calculations and make a refinancing less financially desirable, said Keith T. Gumbinger, a vice president of HSH.com a financial publisher in Pompton Plains, N.J.

Rates for the 30-year fixed-rate mortgage averaged 3.95 percent nationwide in March, up from 3.89 percent in February, according to Freddie Mac, though that is still significantly lower than the 4.84 average rate in March 2011. The average rate was 3.98 percent on Thursday, versus 3.99 percent the week before.

“We expect fixed-rate mortgages to gradually move higher over the next six months to about 4.25 to 4.5 percent as the country’s economic condition improves,” said Frank Nothaft, Freddie Mac’s vice president and chief economist. “This would be a move from the all-time record low rates we’ve experienced over the last few months but still at historically low levels.”

Rate lock-ins can provide buyers with some peace of mind, not to mention one less thing to think about in an otherwise onerous application process.

Lenders typically will give loan rate guarantee agreements when a borrower has a purchase agreement, but a few will provide them to those who are preapproved for a mortgage, said Rick Allen, the chief operating officer of Mortgage Marvel, an online site.

While shopping for a mortgage lender, Mr. Allen suggests inquiring about loan locks, too. “Get a copy of the rate lock agreement,” he said, noting that this would help borrowers better understand how the process works.

The cost of reserving an interest rate depends both on the duration of the lock and the amount of the loan. “The longer the lock, the more costly it is,” said Mark Lazar, an owner of Allied Financial Mortgage in River Edge, N.J. Most locks are for 30, 45 or 60 days, but some lenders will go as long as six months.

Most lenders offer some version of a free lock, Mr. Gumbinger said, though it may be only for 30 days. Others charge points — or fractions thereof — based on the loan size, which could amount to several hundred dollars. (A point is equal to 1 percent of the loan amount.) Sometimes these charges are refundable at closing, Mr. Gumbinger said.

Borrowers may want to skip a rate lock-in, or delay taking one, if they are unsure when their home purchase will close.

“You need to have a pretty good idea of your closing date,” Mr. Lazar said.

Knowing how long to lock in a rate requires a clear picture of the mortgage process, and a good estimate from your lender on how long it will take to approve the loan and complete all the paperwork and other requirements. For some lenders handling refinancing, this can be 15 or 20 days; others take longer.

Mr. Gumbinger said some lenders may extend an interest rate guarantee for a day or two, but if you need an additional 10 to 15 business days to close, it might cost you a few hundred dollars or a one-quarter point fee. On a $300,000 loan balance that would work out to $750.

Mr. Lazar noted that some lenders will extend a rate lock-in agreement for free, especially if interest rates are unchanged.

What happens if your loan doesn’t get approved by the underwriters? Borrowers will need to inquire about whether the lock fee is refundable, and under what circumstances they could receive their money back.

“Most lenders will refund it if the loan is denied,” Mr. Allen said. If the deal falls apart for circumstances beyond your control, such as a failed home inspection, many lenders will refund the fee, he added. If you decide to back out, expect the lender to keep your cash locked up.

Fast Facts

Calif. median home price: February 2012: $266,660 (Source: C.A.R.)
Calif. highest median home price by region/county February 2012: Marin, $732,140 (Source: C.A.R.)
Calif. lowest median home price by region/county February 2012: Tehama, $85,000 (Source: C.A.R.)

Calif. Pending Home Sales Index: February 2012: 127.8, an increase from the revised 102.4 recorded in January. 
 
Calif. Traditional Housing Affordability Index: Fourth quarter 2011: 55 percent (Source: C.A.R.)

Mortgage rates: Week ending 4/5/2012 30-yr. fixed: 3.98% fees/points: 0.7% 15-yr. fixed: 3.21 fees/points: 0.7% 1-yr. adjustable: 2.78% Fees/points: 0.6% (Source: Freddie Mac)

Supply of Distressed Properties by State

The months it would take to sell off all homes under distress or 90 days or more delinquent based on the current sales pace.