The mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgage) dropped 23.3 percent in the past year, ending the third quarter at 4.09 percent, down from a year earlier when the rate stood at 5.33 percent, according to data gathered from TransUnion’s proprietary Industry Insights Report. The mortgage delinquency rate also dropped on a quarterly basis, down 5.3 percent from 4.32 percent in the second quarter, the seventh straight quarterly decline.
All 50 states and the District of Columbia experienced a decline in their mortgage delinquency rate between third quarter 2012 and third quarter 2013. Five states – California, Arizona, Nevada, Colorado, and Utah – experienced declines of 30 percent or more in their mortgage delinquency rate. Three states – California, Florida, and Nevada – had double-digit percentage drops in the last quarter.
TransUnion's latest mortgage report also found that the non-prime population (those consumers with a VantageScore® credit score lower than 700) continues to represent a smaller portion of all mortgage loans, more than 50 percent lower than was observed in 2007. Non-prime borrowers constituted 5.82 percent of all new mortgage originations in the second quarter.
TransUnion is forecasting that the downward consumer delinquency trend will continue in the final three months of 2013. The delinquency rate will likely be just under 4 percent at the end of the year.
Source: CAR Newsline, 11/20/2013
Wednesday, November 20, 2013
Thursday, November 7, 2013
California Homes Now Affordable to only 1/3 of Californians
Housing affordability is on a prolonged downhill slide in California, falling for the sixth time in the third quarter of 2013. As measured by The California Association of Realtors® (C.A.R.) Traditional Housing Affordability Index (HAI), the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in the state fell by four percentage points to 32 percent compared to the first quarter of the year and was down from 49 percent in the third quarter of 2012.
The affordability index had reached an all-time high of 56 percent in the first quarter of 2012 but has trended lower every quarter since. The third quarter of 2013 marked the first time the HAI has fallen below 35 since the third quarter of 2008.
Home buyers needed to earn a minimum annual income of $89,170 to qualify for the purchase of a $433,940 statewide median-priced, existing single-family home in the third quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent. A year earlier it required an annual income of $65,828 to purchase a median priced home of $339,930 in California with an interest rate of 3.64 percent.
Nearly every county experienced a double-digit decline in affordability when compared to last year, reflecting the substantial increase in California home prices on a year-to-year basis. Sacramento, Monterey, and Sonoma counties experienced the largest year-to-year declines, while San Mateo, Marin, and San Francisco counties experienced the smallest.
San Bernardino was the most affordable county in the state with an index of 64 percent. San Mateo was the least affordable at 15 percent.
The affordability index had reached an all-time high of 56 percent in the first quarter of 2012 but has trended lower every quarter since. The third quarter of 2013 marked the first time the HAI has fallen below 35 since the third quarter of 2008.
Home buyers needed to earn a minimum annual income of $89,170 to qualify for the purchase of a $433,940 statewide median-priced, existing single-family home in the third quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent. A year earlier it required an annual income of $65,828 to purchase a median priced home of $339,930 in California with an interest rate of 3.64 percent.
Nearly every county experienced a double-digit decline in affordability when compared to last year, reflecting the substantial increase in California home prices on a year-to-year basis. Sacramento, Monterey, and Sonoma counties experienced the largest year-to-year declines, while San Mateo, Marin, and San Francisco counties experienced the smallest.
San Bernardino was the most affordable county in the state with an index of 64 percent. San Mateo was the least affordable at 15 percent.
Source: DS News, November 7, 2013
Saturday, October 26, 2013
Number of U.S. Mortgages Going Unpaid = 4,594,000
Lender Processing Services provided the media with a “first look” at the company’s mortgage performance statistics for the month of September.
The industry’s foreclosure inventory continued its downward trend, and while delinquencies were up slightly from the previous month, they were down when comparing the numbers year-over-year.
LPS counts a total of 3,266,000 mortgages nationwide that are 30 or more days past due but not yet in foreclosure. That tally represents 6.46 percent of all outstanding mortgages.
September’s delinquency rate is 4.23 percent higher than the rate reported for August, but remains 12.63 percent
below September 2012’s rate. Of the more than 3 million delinquent loans, LPS says 1,331,000 have missed at least three payments but haven’t started the foreclosure process.
Another 1,328,000 mortgages are currently winding their way through foreclosure pipelines, according to LPS’ data. That total puts the nation’s pre-sale foreclosure inventory at 2.63 percent in September, down 1.29 percent from the month prior and down 32.18 percent from last year.
All-in-all, there are 4,594,000 mortgages going unpaid in the United States. Comparatively speaking, the nation’s non-current total stood at 5,640,000 in September 2012.
LPS reports the states with the highest percentage of non-current loans (non-current combines foreclosures and delinquencies as a percentage of all active loans in the state) include: Florida, Mississippi, New Jersey, New York, and Maine.
North Dakota has the lowest percentage of non-current loans among states, followed by South Dakota, Alaska, Montana, and Wyoming.
LPS’ findings are derived from its loan-level database representing approximately 70 percent of the overall mortgage market. The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which is scheduled for release in early November.
Source: DSNews, October 24, 2013
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The industry’s foreclosure inventory continued its downward trend, and while delinquencies were up slightly from the previous month, they were down when comparing the numbers year-over-year.
LPS counts a total of 3,266,000 mortgages nationwide that are 30 or more days past due but not yet in foreclosure. That tally represents 6.46 percent of all outstanding mortgages.
September’s delinquency rate is 4.23 percent higher than the rate reported for August, but remains 12.63 percent
below September 2012’s rate. Of the more than 3 million delinquent loans, LPS says 1,331,000 have missed at least three payments but haven’t started the foreclosure process.
Another 1,328,000 mortgages are currently winding their way through foreclosure pipelines, according to LPS’ data. That total puts the nation’s pre-sale foreclosure inventory at 2.63 percent in September, down 1.29 percent from the month prior and down 32.18 percent from last year.
All-in-all, there are 4,594,000 mortgages going unpaid in the United States. Comparatively speaking, the nation’s non-current total stood at 5,640,000 in September 2012.
LPS reports the states with the highest percentage of non-current loans (non-current combines foreclosures and delinquencies as a percentage of all active loans in the state) include: Florida, Mississippi, New Jersey, New York, and Maine.
North Dakota has the lowest percentage of non-current loans among states, followed by South Dakota, Alaska, Montana, and Wyoming.
LPS’ findings are derived from its loan-level database representing approximately 70 percent of the overall mortgage market. The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which is scheduled for release in early November.
Source: DSNews, October 24, 2013
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Monday, October 21, 2013
California Home Sales Hitting Record Levels
California saw an increase in home sales levels not seen since before the crisis.
An estimated 36,027 new and resale houses and condos sold statewide last month, according to recent data from DataQuick. That was down 15.3 percent from 42,546 in August, but up 5.9 percent from 34,011 sales in September 2012, according to San Diego-based company.
The amount of sold homes was the highest for any September since 40,216 homes sold in September 2009. September sales ranged from a low of 24,460 in 2007 to a high of 69,304 in 2003. Last month’s sales were 16.7 percent below the average of 43,253 sales for all the months of September since 1988.
Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached in the last five years. Financing with multiple mortgages is low, while down payment sizes are stable, according to DataQuick.
The median price paid for a home in California last month was $355,000, down 1.7 percent from $361,000 in August and up 23.7 percent from $287,000 in September 2012.
Last month’s figure was down from 7.8 percent in August and 18.0 percent a year earlier. Foreclosure resales peaked at 58.8 percent in February 2009.
The typical monthly mortgage payment that California buyers paid last month was $1,429, down from $1,456 the month before and up from $1,027 a year earlier. Adjusted for inflation, last month’s payment was 38.1 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 49.9 percent below the current cycle’s peak in June 2006.
An estimated 36,027 new and resale houses and condos sold statewide last month, according to recent data from DataQuick. That was down 15.3 percent from 42,546 in August, but up 5.9 percent from 34,011 sales in September 2012, according to San Diego-based company.
The amount of sold homes was the highest for any September since 40,216 homes sold in September 2009. September sales ranged from a low of 24,460 in 2007 to a high of 69,304 in 2003. Last month’s sales were 16.7 percent below the average of 43,253 sales for all the months of September since 1988.
Indicators of market distress continue to decline. Foreclosure activity remains well below year-ago and peak levels reached in the last five years. Financing with multiple mortgages is low, while down payment sizes are stable, according to DataQuick.
The median price paid for a home in California last month was $355,000, down 1.7 percent from $361,000 in August and up 23.7 percent from $287,000 in September 2012.
Last month’s figure was down from 7.8 percent in August and 18.0 percent a year earlier. Foreclosure resales peaked at 58.8 percent in February 2009.
The typical monthly mortgage payment that California buyers paid last month was $1,429, down from $1,456 the month before and up from $1,027 a year earlier. Adjusted for inflation, last month’s payment was 38.1 percent below the typical payment in spring 1989, the peak of the prior real estate cycle. It was 49.9 percent below the current cycle’s peak in June 2006.
Source: DSNews, October 18, 2013
Sunday, October 20, 2013
Reasons You Should Buy a Home During the Holiday Season
The year-end holiday season is a good time for gift-exchanging, entertaining and general merriment. But what about buying a house? Should you try to do that in November or December, too?
If you're not picky about the home you intend to buy, the answer might be yes.
Sellers tend to avoid the end of the year due to the short days, wintry weather and conventional wisdom that says buyers are otherwise occupied, says Tim Deihl, associate broker at Gibson Sotheby's International Realty in Boston. But those who do choose to sell at year-end are often under pressure and highly motivated to cut a deal.
"A seller who's looking to move a piece of real estate during the holidays is a seller who needs to sell, because nobody in their right mind would pick that as the most convenient time to list their property," Deihl says.
And that's why the year-end might be a smart time to buy: Determined house-hunters can take advantage of sellers' urgency.
| Downside: Fewer homes for sale |
The biggest downside is the limited supply of for-sale homes, which occurs mainly because sellers are so uninterested.
"You won't have tons of inventory to pick through," Deihl warns.
If you can't find a home you like, you might be able to tap into homes that aren't on the market, says Ken Pozek, a real estate agent at Keller Williams Realty in Northville, Mich. One strategy is to research what brokers call "old expires," which refers to homes that were for sale several years ago but weren't sold at that time.
Another approach is for the broker to send letters to homeowners in your preferred neighborhood, trawling for someone who's willing to sell a home that meets your criteria. A third technique is to call brokers who sell a lot of homes in your target area and ask them about homes that aren't yet listed, but are being prepped for sale and are "coming soon."
"If they make the right calls to the right agents, they will trip over those deals," Pozek says.
| Upside: Winter clearance prices |
Less competition from other buyers during the holiday season might mean you'll be able to negotiate a favorable price for a home you want to purchase.
"Those properties oftentimes are priced to sell," Deihl says. "It could be an opportunity to sacrifice a little bit of time during an otherwise very busy time of the year to get a better investment opportunity."
Still, with fewer homes from which to choose, you might have to lower expectations. "If a house comes up that works for you, it should be a pleasant surprise. I wouldn't set a realistic expectation of finding your dream home during that period," Deihl adds.
| Caveat: Seasonally obscured defects |
One pitfall in year-end house shopping is that homes in cold-weather states might have defects hidden by snow, only to be discovered by thaw in spring. That should be a concern for buyers in, say, the Northeast in December, January and early February, Deihl suggests.
"Snow covers a lot of things," he says. "Make sure you understand the landscaping and (feel assured) that the sellers aren't trying to hide something."
Photographs of the home taken earlier in the year and a home inspection can help mitigate some of the risk that a home might be listed in the snowy season to hide its faults.
| Who's working – and who's not? |
Not only sellers and buyers, but also real estate professionals like to take time off from work in November and December. Realtors and mortgage brokers have friends and family, too.
That said, many pros do work during these months, precisely because they know many buyers have vacation time to devote to year-end house hunting, Pozek says.
Either way, it's a good idea to ask your agent what his or her plans are so you won't be caught off guard or left hanging if your calls or emails suddenly aren't answered as quickly as you'd expected.
Individual mortgage brokers also might take some time off at the end of the year. But it would be unusual for a mortgage company or bank to be closed any normal business day other than Thanksgiving, the day after Thanksgiving, Christmas Day and New Year's Day, according to Julie Miller, branch manager at Broadview Mortgage in Tustin, Calif.
"I don't know of any mortgage company or bank that closes for longer than the typical holidays," she says.
| A new home for the holiday |
Buyers can ease into year-end home shopping by completing holiday tasks ahead of time. "Check some holiday things off early, so you don't have to scramble to take care of them while you're scrambling to take care of your mortgage," Deihl suggests.
If you're a serious buyer, you needn't be shy about intruding into sellers' homes at a time normally reserved for family and friends. If a home is for sale, presumably the owners want sincerely interested buyers to see it.
"If a seller is willing to put their house on the market during the holiday season, they really want buyers to come in," Pozek says. "If there is a for-sale sign, it's a welcome sign."
Source: abcnews.go.com, October 20, 2013
Tuesday, October 15, 2013
3 Biggest Headaches for Real Estate if Government Defaults
Impact on overall economy likely to be felt not with a bang but a whimper, at least at first
If House and Senate leaders can’t work out even a temporary solution to the debt-ceiling crisis by Thursday’s deadline, the impact on the overall economy is likely to be felt not with a bang but a whimper, at least at first.
As Congress dickers, there are many strategies to delay the impacts of a government default.
The government can prioritize payments, delaying defaults on Treasurys, and banks will likely be willing to advance funds to many companies and even citizens that are owed money by the government as the standoff continues, CNBC’s John Carney reports.
JPMorgan Chase, for one, says it’s willing to fund as much as $8 billion in government benefits that it processes every week for clients.
But the impacts to housing markets — already limping from the government shutdown that preceded the current crisis — could be more immediate.
Among the top concerns:
1. Homebuyer sentiment
In a climate of uncertainty, would-be homebuyers are likely to keep shopping, but wait to head to the closing table until it becomes clear that the debt-ceiling showdown isn’t snowballing into the worst-case scenario — another financial market meltdown on a 2008 scale. Consumer confidence was already at a nine-month low in October, in part because of worries about the budget impasse.
“So far, for me, it has been stressful having a closing with a farm loan being delayed till Lord knows when,” said Angie Scarborough, an agent with McGraw Realtors in Broken Arrow, Okla. “Just trying to keep both buyer and seller interested in keeping it held together and not having answers is a challenge. Meanwhile, if not for cash investors, I would be job hunting.”
2. Mortgages, mortgages, who needs a mortgage?
The government shutdown has already hindered mortgage lenders’ ability to get records they need to verify borrower income from the IRS and the Social Security Administration. Banks have come up with “workarounds,” including following the example of Fannie Mae and Freddie Mac in requiring IRS verification of income only when borrowers finance multiple properties, CBS Moneywatch reports.
FHA has put nearly half of its workers on leave during the shutdown, but loan applications by owner-occupants can still be routed through automated underwriting systems.
The big question is, with so many mortgages relying on some kind of government backing, what happens to secondary mortgage markets in the event that the debt ceiling is reached?
Although rates on some adjustable-rate mortgage (ARM) loans are tied directly to Treasury yields –which could rise sharply in the event of a default — fixed-rate mortgages will have some cushion.
That’s because despite having required billions in bailout assistance during the downturn, Fannie Mae and Freddie Mac are now generating surplus revenues from guarantee fees they charge lenders, and have been unaffected by the shutdown.
Investors who fund most mortgage loans by purchasing mortgage-backed securities backed by Fannie, Freddie and Ginnie Mae (which securitizes loans insured by the FHA) may expect to see better returns on their money, but are unlikely to flee secondary mortgage markets altogether.
John Lonski, chief economist with the capital markets group at Moody’s Analytics, estimates that if the current 1.53 percent spread between 30-year fixed-rate mortgages and 10-year Treasurys grows to 2.8 percent, rates on 30-year mortgages would be at least 5.5 percent, Marketwatch reports.
3. It’s the economy, stupid
The long-term impacts of a government default are hotly debated, with some conservatives claiming the potential economic harm has been overstated in order to pressure Republican House members from backing down from their demands.
An analysis by Reuters concludes that many people would not notice much right away if the government hits the $16.7 trillion debt ceiling on Thursday.
“The 17th will come, the lights will still be on and everything will look normal for 99 percent of Americans,” budget expert Steve Bell with the Bipartisan Policy Center in Washington, D.C., told Reuters.
The government would start by slashing spending by about a third, which would quickly have noticeable impacts on the economy.
One of the first milestones of serious concern is a $12 billion payment due Oct. 22 to the Social Security pension program. If the government missed debt payments due on Oct. 24 or Oct. 31, “there would be a greater risk of a financial crisis because the value of U.S. government debt could be called into question,” Reuters said.
Forecasting firm Macroeconomic Advisers estimates that the combination of government spending cuts and a severe credit crunch could lead to 3 million layoffs, pushing the jobless rate to close to 9 percent.
Sunday, October 6, 2013
How Has DC Shutdown Really Affected The Mortgage Market?
Lenders have had three days to digest Tuesday's partial Federal government shutdown, and while loan processing has been affected, the impact has not been as severe as originators feared or as has been reported elsewhere. While some loan types at some lenders are at a standstill, they are the exception.
Government-insured loans (FHA, VA, USDA) were naturally at the most risk, but the two biggest agencies are conducting business as usual. "FHA Connection" (the portal through which all FHA loans must pass) is operable; case numbers can be obtained and appraisals can be ordered. VA lending similarly continues to operate as normal. That leaves the USDA as the only agency unable to approve or process loans as the "GUS" underwriting system is down.
There are government-related considerations even for loans not insured by a government agency. For instance, federal flood insurance cannot be obtained due to FEMA closing, so purchase loans in flood zones are delayed. On the borrower's side of the equation, government employees may face extra hurdles in verifying income and employment, though most lenders have set up workarounds.
Even those not employed by the government may still receive income from Social Security. Borrowers needing to acquire copies of their awards letters will have difficulty as the Social Security Administration has greatly reduced their staff. In some cases, lenders must obtain confirmation of their clients' Social Security numbers from the SSA, and closings will be delayed in those cases.
Perhaps the biggest issue lenders face is the inability to obtain tax return verifications (TRV's) from the IRS to document the accuracy of borrowers' W2's and tax returns. Many lenders are allowing loans to be approved and closed without TRV's, which will still have to be processed before those loans can be sent to investors after closing. IRS Form 4506-T (request for tax transcript) is still required to be in the file in most cases, and different lenders have different policies informing how it will be handled after the shutdown ends.
Overall, the impact on mortgage processing and closings has been minimal to date, but jumbo loans and self employed borrowers (or others with complex income tax returns) may find lenders unwilling to close their loans without IRS verification of their income.
While agents, buyers, and sellers can breathe a sigh of relief in most cases, it remains prudent for borrowers to verify any impact on their specific scenario with their loan officer.
Government-insured loans (FHA, VA, USDA) were naturally at the most risk, but the two biggest agencies are conducting business as usual. "FHA Connection" (the portal through which all FHA loans must pass) is operable; case numbers can be obtained and appraisals can be ordered. VA lending similarly continues to operate as normal. That leaves the USDA as the only agency unable to approve or process loans as the "GUS" underwriting system is down.
There are government-related considerations even for loans not insured by a government agency. For instance, federal flood insurance cannot be obtained due to FEMA closing, so purchase loans in flood zones are delayed. On the borrower's side of the equation, government employees may face extra hurdles in verifying income and employment, though most lenders have set up workarounds.
Even those not employed by the government may still receive income from Social Security. Borrowers needing to acquire copies of their awards letters will have difficulty as the Social Security Administration has greatly reduced their staff. In some cases, lenders must obtain confirmation of their clients' Social Security numbers from the SSA, and closings will be delayed in those cases.
Perhaps the biggest issue lenders face is the inability to obtain tax return verifications (TRV's) from the IRS to document the accuracy of borrowers' W2's and tax returns. Many lenders are allowing loans to be approved and closed without TRV's, which will still have to be processed before those loans can be sent to investors after closing. IRS Form 4506-T (request for tax transcript) is still required to be in the file in most cases, and different lenders have different policies informing how it will be handled after the shutdown ends.
Overall, the impact on mortgage processing and closings has been minimal to date, but jumbo loans and self employed borrowers (or others with complex income tax returns) may find lenders unwilling to close their loans without IRS verification of their income.
While agents, buyers, and sellers can breathe a sigh of relief in most cases, it remains prudent for borrowers to verify any impact on their specific scenario with their loan officer.
Source: Ted Rood, Mortgage News Daily , Oct 4, 2013
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