Home Equity Rebound Slows its Pace

DAILY REAL ESTATE NEWS | THURSDAY, OCTOBER 23, 2014

More home owners are eeking out equity again on their properties, but with slowing home appreciation, millions of home owners may still be at risk of foreclosure.

Equity-rich properties – those with at least 50 percent equity – grew to 10.8 million, or 20 percent of all properties with a mortgage, in the third quarter, according to RealtyTrac’s third quarter U.S. Home Equity & Underwater Report. That percentage is up from 19 percent of properties in the second quarter of 2014.

Another 8.5 million properties – or 16 percent of all homes with a mortgage -- are teetering on the edge of equity, with between 10 percent of negative equity and 10 percent of positive equity.

But many home owners have yet to regain equity. There are 8.1 million U.S. residential properties seriously underwater – in which the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market vale, according to RealtyTrac. The number of properties with negative equity has fallen to the lowest level since RealtyTrac began tracking such data in 2012. The peak was in the second quarter of 2012 when 12.8 million properties – or 29 percent of all properties with a mortgage – were seriously underwater.

“The decrease in underwater properties is promising but the estimated $1.4 trillion in negative equity means that the flood waters are not receding as quickly as they were before, corresponding to slowing home appreciation,” says Daren Blomquist, vice president at RealtyTrac. “Slower price appreciation means 8 million home owners seriously underwater could still have a long road back to positive equity.”

To paint a picture of the typical underwater home owner, RealtyTrac found it’s often a home owner who bought or refinanced during the housing bubble years (from 2004 to 2008), owns a home worth less than $200,000, and who lives in the Sun Belt or Rust Belt.

On the other hand, the highest percentage of equity rich home owners were those who bought or refinanced between 1994 and 1998; have properties valued at $500,000 or more; and tend to live in New York, California, and Washington, D.C.

The States With the Highest Levels of Negative Equity

The following states had the highest percentage of residential properties seriously underwater in the third quarter, according to RealtyTrac:

• Nevada: 31%
• Florida: 28%
• Illinois: 26%
• Michigan: 25%
• Rhode Island: 22%

The metro area (with population of 500,000 or more) with the highest percentage of properties seriously underwater was Las Vegas at 34 percent.

The Equity-Rich Markets

The following metros had the highest percentage of equity-rich properties – those with at least 50 percent equity or more – during the third quarter:

• San Jose, Calif.: 45%
• San Francisco: 41%
• Honolulu: 36%
• Los Angeles: 32%
• New York, N.Y.: 31%

Source: RealtyTrac

http://realtormag.realtor.org/daily-news/2014/10/23/home-equity-rebound-slows-its-pace

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Could This Mortgage Product Change Lending?

DAILY REAL ESTATE NEWS | MONDAY, OCTOBER 06, 2014

Two mortgage executives are hoping to overhaul the 15-year mortgage, making it more readily available to low and moderate-income people. They say the changes will help borrowers build equity at a much faster pace than they would with a standard loan.

Edward Pinto, a resident fellow at the American Enterprise Institute, and Bruce Marks, who heads the Neighborhood Assistance Corp. of America, have created a new product called the Wealth Building Home Loan. The new product has generated buzz since being introduced at a mortgage conference in North Carolina in early September. The loan will initially be available through NACA’s 37 offices, with plans to pilot it at other institutions in the coming months. NACA acts as mortgage originator for Bank of America.

Curious what else is new on the mortgage front?

The Wealth Building Home Loan is a 15-year mortgage with a fixed interest rate that requires little or no down payment and has no additional fees. In originating the loans, underwriters pay more attention to a borrowers’ income than the borrowers’ credit score. They will also ensure that borrowers have enough money left over after they make their mortgage payment to cover other monthly expenses, reducing the risk of foreclosure in case a financial setback strikes.

Typically, the monthly payment on a 15-year loan is higher than a 30-year loan, since the loan amortizes faster. In order to make the monthly payments more affordable, however, the Wealth Building Home Loan will have an offering rate that is about three-quarters of a percentage point below the 30-year FHA rate. Borrowers can bring the rate down even further. For example, for every 1 percent of the loan amount the borrower has as a down payment, the interest rate will be lowered by half a percentage point, with the possibility of bringing it to zero.

The Los Angeles Times cites an example of a $6,000 down payment on a $100,000 mortgage at 3 percent, which would bring the rate to zero. That means all of the borrower’s monthly payment would go toward the principal, not interest.

Pinto and Marks say the aim was to create a product that would allow low and moderate-income borrowers to build wealth, and get them away from high-risk loans.

"This is an opportunity to spend a little more each month but build wealth much more rapidly," Pinto says. "But even better, there is only a small probability of going into foreclosure. If house prices should go down, you're covered because you have some equity to fall back on."

Source: “Loan Gives Low-Income Borrowers a Chance to Build Equity Fast,” The Los Angeles Times (Oct. 5, 2014)

http://realtormag.realtor.org/daily-news/2014/10/06/could-mortgage-product-change-lending

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Get a Discount on Your Mortgage

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 18, 2014

Lending giants Bank of America Corp. and Citigroup reportedly will offer mortgages at discounted rates to stir more lending among low-income borrowers and those with subprime credit histories. The loans will be originated through a program by the Neighborhood Assistance Corp. of America, a national nonprofit group that primarily assists low- to moderate-income borrowers.

Credit Standards Easing

• For Some Borrowers, It's Now Easier to Get a Mortgage
• Wells Fargo Relaxes Standards for Jumbo Loans
• Lenders Show Divergence in Standards

Under the new program, the discounts, which will be offered on fixed-rate mortgages, will be greater than what banks usually reserve for borrowers with high credit scores, significant assets, and large down payments. To get the discount in the new loan program, the borrowers will have to pay mortgage points, which are upfront fees that lower the interest rate on a mortgage.

For example, if borrowers pay a mortgage point — which is equal to 1 percent of the total loan amount taken — they typically receive a discount of 0.25 percent on the mortgage interest rate. However, under the new loan assistance program, the banks will offer a 0.5 percent discount for a single mortgage point.

NACA, the originator of loans under the program, doesn't require borrowers to have down payments or to pay closing costs. It also approves borrowers for mortgages as soon as 12 months after a default on a loan. NACA conducts in-depth reviews of applicants' payment histories and requires income and asset documentation, according to CEO Bruce Marks.

The banks' move to work with NACA follows on the heels of a $16.65 billion settlement reached by Bank of America with government regulators in August, as well as a $7 billion settlement Citigroup reached in July. The settlements were reached following accusations that the banks sold risky mortgage securities during the run-up to the housing crisis. Neither bank admits to wrongdoing. But the settlements do require that the banks assist struggling home owners, such as lending to low-income borrowers.

The banks, however, say that their decision to issue NACA loans isn't related to the settlements.

Source: “Citigroup and Bank of America Offer Mortgages with Discounted Rates,” The Wall Street Journal (Sept. 16, 2014)

http://realtormag.realtor.org/daily-news/2014/09/18/get-discount-your-mortgage

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Low Mortgage Rates Are Lingering

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 12, 2014

The average percentage rates for fixed-rate mortgages inched up slightly this week, but continue to hover near yearly lows.

Mortgage Rates' Impact:

• These Analysts Are Still Bullish on Housing
• Economists Grow More Optimistic About Housing's Outlook
• Understanding and Combatting the Rate Lock-in Threat

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 11:

• 30-year fixed-rate mortgages: averaged 4.12 percent, with an average 0.5 point, up slightly from last week’s 4.10 percent average. Last year at this time, 30-year fixed-rate mortgages averaged 4.57 percent.
• 15-year fixed-rate mortgages: averaged 3.26 percent, with an average 0.5, rising from last week’s 3.24 percent average. A year ago, 15-year fixed-rate mortgages averaged 3.59 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 2.99 percent, with an average 0.5 point, rising from last week’s 2.97 percent average. Last year at this time, 5-year ARMs averaged 3.22 percent.
• 1-year ARMs: averaged 2.45 percent, with an average 0.4 point, rising from last week’s 2.40 percent average. A year ago, 1-year ARMs averaged 2.67 percent.

Source: Freddie Mac

http://realtormag.realtor.org/daily-news/2014/09/12/low-mortgage-rates-are-lingering

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More Households Optimistic About Home Prices, Finances

DAILY REAL ESTATE NEWS | THURSDAY, AUGUST 28, 2014

The majority of households believe home prices will rise within the next 12 months, according to the Federal Reserve’s newly released Report on the Economic Well-Being of U.S. Households. The survey is based on more than 4,000 American responses from 2013 about their household finances, including housing.

Public Perceptions:

• Survey: 70% Say Housing Crisis Isn't Over
• Young Renters Say They Want to Own, But ...
• Consumers More Optimistic About Home Values

“The outlook for the housing market among home owners appeared generally positive, as many home owners expected house prices in their neighborhoods to increase,” the report notes.

Twenty-six percent of home owner respondents say they expect an increase in their home value by 5 percent or less, and 14 percent expect an increase in values of greater than 5 percent. Less than 10 percent of home owners expect home prices in their neighborhoods to decline over the 12 months, according to the survey.

Many home owners are still banking on home prices. After all, 46 percent of households believe the value of their home is lower than the value in 2008, according to the report. On the other hand, 27 percent of households felt their home’s value is higher than in 2008; 20 percent say their home’s value is likely about the same; and 7 percent say they weren’t sure.

Overall, the survey found that while many households are faring well financially, a great deal are still showing signs of financial stress. More than 60 percent of respondents said that their families were either “doing OK” or “living comfortably” financially, while one-fourth of respondents said they were “just getting by” financially and 13 percent said they were struggling. The Great Recession is still being felt by many: 34 percent reported they were somewhat worse off or much worse off financially than they had been five years earlier in 2008.

Many renters expressed an interest in home ownership, but said they are facing several barriers, such as saving for a down payment and the inability to qualify for a mortgage.

For example, 49 percent of renters in the 18-to-29 age group say the biggest reason why they rent rather than own a home is because they cannot afford the down payment; it was the age group that was most likely to report down payment woes. Meanwhile, 45 to 59 year old renters were the largest share of renters to say they could not qualify for a mortgage and that’s why they are renting. 

Source: Federal Reserve

http://realtormag.realtor.org/daily-news/2014/08/28/more-households-optimistic-about-home-prices-finances

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Wells Fargo Relaxes Standards for Jumbo Loans

DAILY REAL ESTATE NEWS | THURSDAY, AUGUST 07, 2014

Wells Fargo & Co., the nation's largest mortgage lender, is easing some of its lending standards for the high-priced "jumbo mortgages" that it acquires from other banks too large to receive guarantees from government-backed mortgage companies, like Fannie Mae and Freddie Mac, Reuters reports.

Are Banks Loosening Up?

• Lenders Show Divergence in Standards
• Are Mortgages Becoming Easier to Obtain?
• It's Taking Less to Get an FHA Loan

"The purchase market is softer than we thought that it would be," John Shrewsberry, Wells Fargo's chief financial officer, told analysts on a July conference call. "We're not seeing breakout returns to pre-crisis levels of enthusiasm around home ownership."

To make up for the industry-wide drop in mortgage volumes, Wells Fargo began to lower the minimum credit score on fixed-rate jumbo mortgages from 720 to 700 in late July. Wells Fargo also says it's more willing to purchase jumbo loans from other lenders that go toward the purchase of a second home.

On the refinancing front, Wells Fargo officials say they will purchase mortgages where the balance exceeds the size of the borrower's previous loans, also known as "cash-out refinancing," Reuters reports.

The latest loosening of credit comes a few months after the bank announced it would begin to issue home loans to borrowers with credit scores as low as 600 who were eligible for insurance with the Federal Housing Administration. Previously, the bank required a minimum credit score of 640 on FHA-insured loans.

Source: “Wells Fargo Loosens Standards for Jumbo Mortgages,” Reuters (Aug. 6, 2014)

http://realtormag.realtor.org/daily-news/2014/08/07/wells-fargo-relaxes-standards-for-jumbo-loans

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Sparking Buyer Urgency? Redfin Debuts ‘Hot Home’ Tool

DAILY REAL ESTATE NEWS | FRIDAY, JUNE 27, 2014

The brokerage Redfin has launched “Hot Homes,” a feature that identifies the homes that are likely to sell within two weeks. The homes will be highlighted throughout Redfin.com and on a map so that home shoppers get an idea of which homes they particularly need to act fast.

The most desirable homes are selling in two weeks or less, according to Redfin Fastest Markets Report, which means buyers need to be prepared to move fast.

More on market momentum:

Survey: Spring Confidence to Heat Summer Market

10 Markets Where Homes Are Selling the Fastest

So, what makes a home “hot”? Redfin says a home will be added to its “hot homes” list when it identifies that there is an 80 percent of chance that the home will have an accepted offer within two weeks of it being listed. Redfin’s algorithm analyzes numerous attributes about the homes, including square footage, bedrooms, bathrooms, lot sizes, views, and location, as well as buyer preferences for those attributes.

“It’s hard to tell when you have to jump,” says Glenn Kelman, CEO of Redfin, about the new website feature. “Which home will get three offers this weekend, and which will still be for sale in September? … Redfin crunches more than 500 different attributes of the house, the neighborhood – and what home buyers are looking for in that neighborhood. Our goal as Redfin agents is to make sure you never miss a shot at your dream home.”

Source: Redfin

http://realtormag.realtor.org/daily-news/2014/06/27/sparking-buyer-urgency-redfin-debuts-hot-home-tool

www.RebeccaSellsAZ.com

5 Tips for the Ultimate Backyard

DAILY REAL ESTATE NEWS | FRIDAY, MAY 30, 2014

These days, the backyard has become an extension of a home’s living space. Staging a home’s backyard is a great way to set your listing apart and help buyers imagine the possibilities.

From the traditional grill and picnic table to lavishly landscaped patios and decks with lounge areas, buyers’ love affair with the backyard continues to hold true. Here are five ideas from PLANET, a professional landscape network and trade association for the landscape industry, for helping your sellers transform their yard into the ultimate retreat or entertaining space this summer.

1. Add an Outdoor Kitchen. Outdoor kitchens have been growing in popularity for years and are often the center of family life in the summer. They can be as extensive as a complete kitchen made of stone, brick, or concrete pavers with a stove, stone or brick oven, counters, and even a sink or refrigerator, or they can be as compact as a patio with a grill and table. There are a wide variety of options for every space, purpose, and price range. 

2. Add Outdoor Lighting. Outdoor lighting highlights a home’s landscape, special trees, as well as walkways and porches, providing both curb appeal and safety. “Nightscaping” makes gathering spaces usable and enjoyable for entertaining after dark. Landscape professionals can design lighting to complement or highlight important areas of the yard, or there are a variety of basic do-it-yourself options, such as adding a set of solar walkway lights.

3. Add a Fire Feature. A portable fire pit or chiminea, or building a stone fireplace into the deck or patio extends the time people can spend in their backyards, making a cozy entertaining space on summer nights or well into the fall and winter.

4. Add a Water Feature. Water features, ranging from small fountains to ponds, streams, or water walls, create a sense of peace and calm, helping people connect with nature, and may attract wildlife.

5. Create a Wildflower or Herb Garden. Wildflowers or herbs make great container gardens or ground cover. They are beautiful and smell great. Many home chefs grow their own herbs and many landscape companies now create edible gardens for clients. These gardens are also a benefit for the environment and for wildlife, providing food and safe cover for small animals.

Source: "Tips From the Pros: Ultimate Backyard," PLANET

Read More

Transform a Yard Into an Outdoor Sanctuary

http://realtormag.realtor.org/daily-news/2014/05/30/5-tips-for-ultimate-backyard

www.rebeccasellsaz.com 

Survey: Gov’t Shutdown Deflating Housing Optimism

DAILY REAL ESTATE NEWS | TUESDAY, OCTOBER 08, 2013

Though Americans have expressed optimism about the housing recovery over the last few months, their feel-good attitudes took a turn for the worse in the run-up to the government shutdown, Fannie Mae reports in its latest National Housing Survey. 

"Our September National Housing Survey results show that the improvements in consumer housing attitudes witnessed in recent months softened ahead of the government shutdown," says Doug Duncan, Fannie Mae's senior vice president and chief economist. "Americans' awareness of policy uncertainty leading up to the October 1st shutdown, and the pending debt-ceiling debate, appears to have grown as indicated by an apparent cautionary holding pattern in overall consumer housing and personal finance sentiment."

The percentage of Americans who say they believe home prices will increase over the next 12 months fell from 55 percent in August to 52 percent in September. And 63 percent say they believe mortgage rates will keep rising, and all-time high for the survey and an uptick from 60 percent in August.

Still, 72 percent say it’s a good time to buy a house, and 38 percent say it’s a good time to sell, according to the survey. 

Source: “Housing Market Optimism Tempered by Shutdown,” Mortgage News Daily (Oct. 7, 2013)

Read More

NAR: What Does the Government Shutdown Mean to Housing?

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New Evidence of a Housing Bubble?

DAILY REAL ESTATE NEWS | THURSDAY, SEPTEMBER 12, 2013

The National Association of REALTORS®' home price affordability index dropped below a long-term trend line, once again igniting fears of a housing bubble. But some experts say the worries are being blown out of proportion. 

The latest reading of the index, which reflects July data, marked the lowest level of home affordability since July 2009 and the fourth month that the index has come in below trend. The index measures the household income needed to qualify for a traditional mortgage for a median-priced single-family home. 

Higher mortgage rates and home prices are causing affordability to drop. Home prices have surged 13.4 percent compared to a year ago, and mortgage rates are at their highest averages since February 2012. Wages are rising — but not as fast as home prices. 

The West has posted some of the biggest drops in affordability, as home prices have climbed 18.4 percent in the region in the last year. 

NAR’s affordability index peaked in January at 210.7, and it has been falling ever since. It now stands at 157.8. An index reading above 100 indicates that median income is higher than needed to qualify for a mortgage. "A score of 157.8 officially indicates that a household earning the median income has 57.8 percent more income than needed to get a mortgage on a median-priced home,” CNBC reports. 

But a recent paper by three economists from Robert Morris University in Pennsylvania suggests that when the index falls below trend for at least three months, it may be an indication of the beginning of a housing bubble. The economists point to the beginning of 2004, when home affordability fell below its long-term trend. Some say that marked the beginning of the last housing bubble. Housing affordability stayed below the long-term trend until December 2008, the economists note. 

Housing affordability this year dropped below the long-term trend in April and has stayed there through July, CNBC reports. But even signs of a housing bubble don’t mean home prices are doomed to crash, analysts say. 

NAR experts write at the Economists’ Outlook blog that housing affordability likely could strengthen in the coming months “as prices have decreased from a month ago and most likely reached their seasonal peak for the year. Even with rates increasing, certain metro areas have healthy inventory levels, and consumers can still look to purchase before those historically low rates are a thing of the past.” 

Source:  “Latest Housing Affordability Data,” NAR’s Economists’ Outlook Blog (Sept. 6, 2013) and “Yep, it's another housing bubble,” CNBC (Sept. 10, 2013)

Read more:

Housing Bubble Concerns Brew in Key Markets
Economist Quashes Housing Bubble Rumors

http://realtormag.realtor.org/daily-news/2013/09/12/new-evidence-housing-bubble

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Return to 'Buyer's Market' Still Years Away

DAILY REAL ESTATE NEWS | THURSDAY, JUNE 06, 2013

It may be two to three more years before prospective home buyers get a break from escalating property prices and tight supply, according to experts speaking at a National Association of Real Estate Editors conference Wednesday. 

That is the time frame for institutional speculators, who currently are dominating the market, to pull out of their investments and still make a profit, explained Bill Rayburn of the mortgage technology firm FNC.  The market also will need to see the return of individual home buyers in order to normalize, he said, which will be propelled by employment gains.

Source: "Better Times for Home-Buyers Will Take a Few Years, Experts Say," Los Angeles Times (June 5, 2013)

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Seller's Market Emerges This Spring: Are You Ready?

http://realtormag.realtor.org/daily-news/2013/06/06/return-buyers-market-still-years-away

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