In 2010, over 1.5 million people filed bankruptcy, and 2011 is expected to bring much of the same. Filing bankruptcy is one of the most damaging things to a credit score, potentially dropping your score by 150 points or more, reducing your credit creditworthiness and costing you more in increased finance charges and interest rates. Though bankruptcy remains on your credit report for 7 to 10 years, there are steps you can take to start turning your credit around in 12-18 months.
Check your credit report: This is probably the last thing you want to do, but it's important to know exactly your current credit status, while also confirming all information is correct. The longer incorrect information stays on your credit report the longer it could possibly negatively affect your credit score.
Go to www.annualcreditreport.com and pull your credit report. This free report will not contain a credit score, but you just want to make sure everything that should have been discharged in your bankruptcy shows a zero balance. If it doesn't, contact those creditors and the credit bureau to make sure the information gets updated.
Make on-time payments to remaining debts: Many people mistakenly believe that a bankruptcy will wipe out all debts, but some, such as student loans, child support and, in many cases, mortgages will not be discharged. By keeping on top of payments on those remaining loans, you'll receive a credit boost for paying your bills over time.
Get a Secured Credit Card: Secured credit cards let you take baby steps back into the credit game. To offset the card issuer's risk, secured cards require a deposit that serves as your credit line, so if you put down $1,000, you'll have $1,000 in credit available. Apply for a secured credit card through a local bank or credit union, but make sure you do your research first. Many secured credit cards have extremely high fees, and not all report to the bureaus. Make sure the card you are using has the lowest APR, low fees and most importantly reports to the credit bureaus.
Obtain a small loan with your bank or credit union: Many banks and credit unions will allow you to take out a personal installment loan based on the money in your savings account. FICO likes to see a "healthy mix" of credit lines, such as both revolving and installment. Getting an installment loan that is secured by your savings will allow you to start building credit through another resource other than the secured credit card. Remember to ask your bank or credit union if this loan will be reported to all 3 bureaus. The key is to build credit and increase your credit score. If the hard work you are doing is not being reported, you will not see any of the benefit.
And lastly, after several months of responsibly using your secured credit card, (paying on time, keeping balances low, etc) and making your monthly installments on your secured loan on time, you should be able to get approved for an unsecured credit card. Apply for a small gas card, or a department store card, as these are typically easier to obtain.
Once you've shown your ability to pay on time and your credit score has raised accordingly, ask the card issuer to lower your rate, or apply for a card with better terms. There's no one-size-fits-all approach to rebuilding credit after bankruptcy, but with consistent financial discipline and a little patience, you will get easier access to credit again.
From Data Facts
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, September 30, 2011
Thursday, September 29, 2011
The Justice Department is Not doing it's Job
Mortgage fraud up
Reports of possible mortgage fraud grew in the second quarter,
with financial institutions filing 29,558 mortgage loan fraud
suspicious activity reports, the Financial Crimes Enforcement
Network said Wednesday. That is up from 15,727 in the same
quarter of 2010. In the first quarter of 2011, suspicious
mortgage activity reports grew to 25,485 complaints. The surge
in SARs are coming as mortgage lenders sift through the paperwork
in past mortgages. Mortgage servicers remain under heavy scrutiny
following robo-signing allegations and continue to sift through
documents in order to make sure all ducks are in a row. Many of
the reported instances come from defaults, including borrowers
who wrongly presented information about their finances. The
FinCEN network, which works in tandem with the Treasury, said the
surge in activity is also tied to increasing mortgage repurchase
demands and other special filings. SARs are especially surging on
transactions that involve several financial institutions. FinCen
found that 81% of the suspicious activity was related to
circumstances that occurred before 2008. Sixty-three% involved
activities that occurred four or more years ago. "We’re
continuing to see a large number of SARs filed on activity that
occurred more than two years ago, an indication that financial
institutions are uncovering fraud as they sift through defaulted
mortgages," said FinCEN Director James Freis, Jr. "But we also
continue to see indications of ongoing mortgage fraud
activities," he added. "FinCEN’s report released today raises
awareness of the common scams that homeowners and lenders may
encounter when arranging or modifying home financing."
Reports of possible mortgage fraud grew in the second quarter,
with financial institutions filing 29,558 mortgage loan fraud
suspicious activity reports, the Financial Crimes Enforcement
Network said Wednesday. That is up from 15,727 in the same
quarter of 2010. In the first quarter of 2011, suspicious
mortgage activity reports grew to 25,485 complaints. The surge
in SARs are coming as mortgage lenders sift through the paperwork
in past mortgages. Mortgage servicers remain under heavy scrutiny
following robo-signing allegations and continue to sift through
documents in order to make sure all ducks are in a row. Many of
the reported instances come from defaults, including borrowers
who wrongly presented information about their finances. The
FinCEN network, which works in tandem with the Treasury, said the
surge in activity is also tied to increasing mortgage repurchase
demands and other special filings. SARs are especially surging on
transactions that involve several financial institutions. FinCen
found that 81% of the suspicious activity was related to
circumstances that occurred before 2008. Sixty-three% involved
activities that occurred four or more years ago. "We’re
continuing to see a large number of SARs filed on activity that
occurred more than two years ago, an indication that financial
institutions are uncovering fraud as they sift through defaulted
mortgages," said FinCEN Director James Freis, Jr. "But we also
continue to see indications of ongoing mortgage fraud
activities," he added. "FinCEN’s report released today raises
awareness of the common scams that homeowners and lenders may
encounter when arranging or modifying home financing."
Wednesday, September 28, 2011
UnEmployment - Unless you Fix This! The Housing Crisis will Never End...
Unless you fix the unemployment The Housing Market will never get fixed. You can make the mortgages cheap as you want but unless you are working you cannot buy a house.
Unemployment across the nation
For decades, the nation’s economic landscape consisted of a
prospering Sun Belt and a struggling Rust Belt. Since the
recession hit, though, that is no longer the case.
Unemployment remains high across much of the country — the national rate is 9.1% — but the regions have recovered at different speeds. The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.
Several Southern states — including South
Carolina, whose 11.1% unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Let me see? South Carolina is where the NLRB is in court trying to prohibit Boeing from Opening a new plant?
Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states
that were struggling even before the recession. The West has the highest unemployment in the nation. The collapse of the housing bubble left Nevada with the highest jobless rate, 13.4%, followed by California with 12.1%. Michigan has the third-highest rate, 11.2%, as a result of the longstanding woes of the American auto industry. Now, though, of the states with the 10 highest unemployment rates, six are in the South. The region, which relied heavily on manufacturing and construction, was hit hard by
the downturn.
Economists offer a variety of explanations for the
South’s performance. “For a long time we tended to outpace
the national average with regard to economic performance, and a lot of that was driven by, for lack of a better word, development and in-migration,” said Michael Chriszt, an assistant vice president of the Federal Reserve Bank of Atlanta’s research department. “That came to an abrupt halt, and it has not picked up.”
The reordering of the nation’s economic fortunes can be seen in the Brookings analysis, which found that many auto-producing metropolitan areas in the Great Lakes states are seeing modest gains in manufacturing that are helping them recover from their deep slump, while Sun Belt and Western states with sharp drops in home values are still suffering. The areas that have been hurt the least since the recession, the study said, rely on government, education or energy production. Places that were less buoyed by the housing bubble were less harmed when it burst.
In Pennsylvania, the analysis found, the Pittsburgh area — which is heavily reliant on education and health care — is weathering the downturn better than the Philadelphia area. In New York, areas around long-struggling upstate cities like Buffalo and Rochester are recovering faster by some measures than the New York City metropolitan area. And the rate of recovery in Rust Belt areas around Youngstown and Akron, two Ohio cities that were hit hard, has outpaced that of former boomtowns like Colorado Springs and Tucson. In a sign of how severe the downturn has been, the Brookings analysis found that only 16 of the nation’s
100 largest metropolitan areas have regained more than half of the jobs they lost during the recession.
So what happened in South Carolina? Richard Kaglic, a regional economist at the Federal Reserve Bank of Richmond, Va., said the state’s lingering troubles reflect what happened when its construction and manufacturing industries were hit hard by the recession. Mr. Kaglic, who is also a pilot, used an aviation metaphor to explain what he meant. “If your nose is high, if you’re climbing faster and your engine cuts out, you fall farther and it takes you a longer time to recover,” he said. “The conditions we experienced in late 2008, 2009, are as close as you come to an engine-out situation in the economy.” But Mr. Kaglic said that the recent return of manufacturing jobs was giving him hope, and that one reason for the high unemployment
rate was that more people were now seeking work. “I would look at it as our dreams are delayed,” he said, “rather than our dreams being denied.” But for How Long?
Until we get a President that is business friendly and tries to help business grow rather than punish success we will never turn the economy around.
Michael Mack
An American
Unemployment across the nation
For decades, the nation’s economic landscape consisted of a
prospering Sun Belt and a struggling Rust Belt. Since the
recession hit, though, that is no longer the case.
Unemployment remains high across much of the country — the national rate is 9.1% — but the regions have recovered at different speeds. The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.
Several Southern states — including South
Carolina, whose 11.1% unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Let me see? South Carolina is where the NLRB is in court trying to prohibit Boeing from Opening a new plant?
Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states
that were struggling even before the recession. The West has the highest unemployment in the nation. The collapse of the housing bubble left Nevada with the highest jobless rate, 13.4%, followed by California with 12.1%. Michigan has the third-highest rate, 11.2%, as a result of the longstanding woes of the American auto industry. Now, though, of the states with the 10 highest unemployment rates, six are in the South. The region, which relied heavily on manufacturing and construction, was hit hard by
the downturn.
Economists offer a variety of explanations for the
South’s performance. “For a long time we tended to outpace
the national average with regard to economic performance, and a lot of that was driven by, for lack of a better word, development and in-migration,” said Michael Chriszt, an assistant vice president of the Federal Reserve Bank of Atlanta’s research department. “That came to an abrupt halt, and it has not picked up.”
The reordering of the nation’s economic fortunes can be seen in the Brookings analysis, which found that many auto-producing metropolitan areas in the Great Lakes states are seeing modest gains in manufacturing that are helping them recover from their deep slump, while Sun Belt and Western states with sharp drops in home values are still suffering. The areas that have been hurt the least since the recession, the study said, rely on government, education or energy production. Places that were less buoyed by the housing bubble were less harmed when it burst.
In Pennsylvania, the analysis found, the Pittsburgh area — which is heavily reliant on education and health care — is weathering the downturn better than the Philadelphia area. In New York, areas around long-struggling upstate cities like Buffalo and Rochester are recovering faster by some measures than the New York City metropolitan area. And the rate of recovery in Rust Belt areas around Youngstown and Akron, two Ohio cities that were hit hard, has outpaced that of former boomtowns like Colorado Springs and Tucson. In a sign of how severe the downturn has been, the Brookings analysis found that only 16 of the nation’s
100 largest metropolitan areas have regained more than half of the jobs they lost during the recession.
So what happened in South Carolina? Richard Kaglic, a regional economist at the Federal Reserve Bank of Richmond, Va., said the state’s lingering troubles reflect what happened when its construction and manufacturing industries were hit hard by the recession. Mr. Kaglic, who is also a pilot, used an aviation metaphor to explain what he meant. “If your nose is high, if you’re climbing faster and your engine cuts out, you fall farther and it takes you a longer time to recover,” he said. “The conditions we experienced in late 2008, 2009, are as close as you come to an engine-out situation in the economy.” But Mr. Kaglic said that the recent return of manufacturing jobs was giving him hope, and that one reason for the high unemployment
rate was that more people were now seeking work. “I would look at it as our dreams are delayed,” he said, “rather than our dreams being denied.” But for How Long?
Until we get a President that is business friendly and tries to help business grow rather than punish success we will never turn the economy around.
Michael Mack
An American
Thursday, September 15, 2011
How Your Credit Score May Be Stealing Your Money
Burglars and purse snatchers have nothing on your credit score! A low score can be stealing money right out of your pocket every month. This can add up over time to hundreds of thousands of dollars.
Here's how:
Mortgage loans: Let's say you have a 650 credit score and bought a $200,000 house with a 30 year fixed rate loan. You are going to have to finance it at a rate 1-2% higher than the person rocking a 750 credit score. Over the course of 30 years (360 payments) this difference can add up to around $49,000!
Auto Loans: the average American trades cars every 5 years. Based on this estimate, a person buying a $25,000 car with a 650 credit score will pay approximately $5400 more for EACH CAR than the person with a 750 score.
Credit cards: a person with a 650 score has probably had some late payments and may have maxed out their credit cards. They will not get the great terms and plentiful options that a person with a higher score will enjoy. The average household carries $7300 in credit card debt (Yikes!). If we assume this amount, a person with the 650 credit score will pay $552 more in interest per year than a person with the 750 credit score.
Gulp.
So, if you have a 650 credit score, here's how much your credit score will steal from you over a 40 year period:
Mortgage: $49,000
Auto: $43,000
Credit Cards: $22,000
Total amount the 650 credit score has stolen:
$114,000
The figure would be much larger if this money had been invested in a mutual fund. At a 6% rate, this amount of money would have grown to about
half a million dollars.
Remember: protect yourself! Lock your doors, lock your windows, don't talk to strangers, and keep that credit score high!
From Data Facts
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Here's how:
Mortgage loans: Let's say you have a 650 credit score and bought a $200,000 house with a 30 year fixed rate loan. You are going to have to finance it at a rate 1-2% higher than the person rocking a 750 credit score. Over the course of 30 years (360 payments) this difference can add up to around $49,000!
Auto Loans: the average American trades cars every 5 years. Based on this estimate, a person buying a $25,000 car with a 650 credit score will pay approximately $5400 more for EACH CAR than the person with a 750 score.
Credit cards: a person with a 650 score has probably had some late payments and may have maxed out their credit cards. They will not get the great terms and plentiful options that a person with a higher score will enjoy. The average household carries $7300 in credit card debt (Yikes!). If we assume this amount, a person with the 650 credit score will pay $552 more in interest per year than a person with the 750 credit score.
Gulp.
So, if you have a 650 credit score, here's how much your credit score will steal from you over a 40 year period:
Mortgage: $49,000
Auto: $43,000
Credit Cards: $22,000
Total amount the 650 credit score has stolen:
$114,000
The figure would be much larger if this money had been invested in a mutual fund. At a 6% rate, this amount of money would have grown to about
half a million dollars.
Remember: protect yourself! Lock your doors, lock your windows, don't talk to strangers, and keep that credit score high!
From Data Facts
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Monday, September 5, 2011
US to sue Banks
The Federal Housing Finance Agency, which oversees the mortgage
giants Fannie Mae and Freddie Mac, is set to file suits against
more than a dozen big banks, accusing them of misrepresenting
the quality of mortgage securities they assembled and sold at
the height of the housing bubble, and seeking billions of
dollars in compensation.
The Federal Housing Finance Agency suits, which are expected to
be filed in the coming days in federal court, are aimed at Bank
of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank,
among others. The suits will argue the banks, which assembled
the mortgages and marketed them as securities to investors,
failed to perform the due diligence required under securities
law and missed evidence that borrowers’ incomes were inflated or
falsified. When many borrowers were unable to pay their
mortgages, the securities backed by the mortgages quickly lost
value. Fannie and Freddie lost more than $30 billion, in part as
a result of the deals, losses that were borne mostly by
taxpayers. In July, the agency filed suit against UBS, another
major mortgage securitizer, seeking to recover at least $900
million, and the individuals with knowledge of the case said the
new litigation would be similar in scope.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
giants Fannie Mae and Freddie Mac, is set to file suits against
more than a dozen big banks, accusing them of misrepresenting
the quality of mortgage securities they assembled and sold at
the height of the housing bubble, and seeking billions of
dollars in compensation.
The Federal Housing Finance Agency suits, which are expected to
be filed in the coming days in federal court, are aimed at Bank
of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank,
among others. The suits will argue the banks, which assembled
the mortgages and marketed them as securities to investors,
failed to perform the due diligence required under securities
law and missed evidence that borrowers’ incomes were inflated or
falsified. When many borrowers were unable to pay their
mortgages, the securities backed by the mortgages quickly lost
value. Fannie and Freddie lost more than $30 billion, in part as
a result of the deals, losses that were borne mostly by
taxpayers. In July, the agency filed suit against UBS, another
major mortgage securitizer, seeking to recover at least $900
million, and the individuals with knowledge of the case said the
new litigation would be similar in scope.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Wednesday, July 20, 2011
2011 Market is Getting Tougher
*Short Sale flips are tougher to do than ever.
There simply aren’t enough people who can get
bank loans to "cash you out" once you get your s
hort sale approval from the bank. Plus title
companies are very strict on disclosing back to
back flips to both the "A" and "C" lenders.
Anyone who’s an active short sale flipper
knows this is getting tougher to do.
*Rehab flips are tougher to do than ever. Title
problems and "robo-signing" scandals have tainted
the title to many properties and caused uncertainty
about the quality of title when buying an REO. Plus
end buyers for rehabs need bank loans and 28% of
them are being declined for loans.
*Buyers must have a 700+ credit score on average to
qualify for a FHA loan plus a down payment. This
means there are less buyer’s to "cash you out"
using FHA loans.
*Most leads that you will generate into your real
estate business will be houses with little or no
equity. So if you are an "equity" wholesaler you
will have trouble getting "equity" leads in 2011.
My prediction is that this is just 5% of the deals
I'll do in 2011.
*80 -100 million people – roughly 30% of our entire
population cannot qualify for a traditional bank loan.
Cool thing is there's a "golden opportunity" that's
been created because of tighter bank lending standards.
*Credit is tightening in the 2nd half of 2011, not
loosening, according to Inside Mortgage Finance magazine.
*11 million home owners have no equity according to CoreLogic.
*Another 16 million have very little equity.
They are 90% - 100% leveraged.
*52% of all HAMP loan modifications "fall out" within
6 months. Just ask Obama. He knows.
So where are the investment opportunities in 2nd half
of 2011? What can you do about this and still be a
successful investor in 2011?
Do you want to sell your home successfully in 2011?
The answer: Think out of the Box and go where the money is and diversify into
strategies that do not require banks at all. That is is if want to be successful at buying or selling!
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
There simply aren’t enough people who can get
bank loans to "cash you out" once you get your s
hort sale approval from the bank. Plus title
companies are very strict on disclosing back to
back flips to both the "A" and "C" lenders.
Anyone who’s an active short sale flipper
knows this is getting tougher to do.
*Rehab flips are tougher to do than ever. Title
problems and "robo-signing" scandals have tainted
the title to many properties and caused uncertainty
about the quality of title when buying an REO. Plus
end buyers for rehabs need bank loans and 28% of
them are being declined for loans.
*Buyers must have a 700+ credit score on average to
qualify for a FHA loan plus a down payment. This
means there are less buyer’s to "cash you out"
using FHA loans.
*Most leads that you will generate into your real
estate business will be houses with little or no
equity. So if you are an "equity" wholesaler you
will have trouble getting "equity" leads in 2011.
My prediction is that this is just 5% of the deals
I'll do in 2011.
*80 -100 million people – roughly 30% of our entire
population cannot qualify for a traditional bank loan.
Cool thing is there's a "golden opportunity" that's
been created because of tighter bank lending standards.
*Credit is tightening in the 2nd half of 2011, not
loosening, according to Inside Mortgage Finance magazine.
*11 million home owners have no equity according to CoreLogic.
*Another 16 million have very little equity.
They are 90% - 100% leveraged.
*52% of all HAMP loan modifications "fall out" within
6 months. Just ask Obama. He knows.
So where are the investment opportunities in 2nd half
of 2011? What can you do about this and still be a
successful investor in 2011?
Do you want to sell your home successfully in 2011?
The answer: Think out of the Box and go where the money is and diversify into
strategies that do not require banks at all. That is is if want to be successful at buying or selling!
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
We can help you sale your home through your Owner Financing and help you find a buyer!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, June 3, 2011
More Rental Homes are in Need
500 Cities show need for more Rental Homes
In the aftermath of the nation's housing-market collapse and
recession, more than 500 midsize and large cities have seen a
rise in the share of homes that are rented rather than owned,
according to a USA TODAY analysis of Census data. Almost 4
million homes have been lost to foreclosures in the past five
years, turning many former owner-occupied homes into rentals. The
shift to rental housing is potentially long-lasting and portends
changes for neighborhood stability and how people build wealth,
economists say. "The changes are big but glacial," says Mark
Zandi, economist at Moody's Analytics.
The swing from owner- to tenant-occupied homes in the past decade
has been dramatic in some places:
- Of the 100 largest cities, some of those with the largest
shifts were Irvine, Calif., which went from about 40% of occupied
homes rented in 2000 to 49.8% in 2010; Philadelphia, from 40.7%
to 45.9%; and Birmingham, Ala., 46.3% to 50.7%.
- Twenty-five cities — including Baltimore, Minneapolis, Salt
Lake City and Sacramento — swung from having more than half
homeowners in 2000 to majorities of renters in 2010. In one —
Reading, Pa. — 57.6% of occupied homes were rentals in 2010, up
from 49% in 2000.
- Florida, California and Arizona had the most cities where the
share of renter-occupied housing grew by at least 5 percentage
points. All three states have been hit hard by foreclosures.
Nationwide, 34.9% of occupied homes — including houses, condos,
and apartments — were rented in 2010, up from 33.8% in 2000.
The Census data that USA TODAY analyzed for cities covered only
housing within the cities' boundaries, not their much larger
metropolitan areas. Vacant properties, excluding seasonal or
vacation homes, accounted for 7.9% of U.S. housing units in 2010.
It's not clear how many of those have since become rentals or
owner-occupied homes. The renter household market remained
fairly stable from 1990 to 2006, says Daniel McCue, senior
research analyst at Harvard University's Joint Center for Housing
Studies. Since 2006, when housing prices peaked, the number of
renter households in the U.S. has grown an average of 692,000 a
year, while owner households have fallen an average of 201,000 a
year, Census surveys show.
Several factors will boost rental growth for years to come, Zandi
says, including continued foreclosures, continued drops in home
prices that frighten buyers and potential cuts to government
subsidies supporting homeownership. On the other hand, 74% of
renters think owning is superior to renting, said a recent survey
by mortgage giant Fannie Mae. "There's still a pull toward
homeownership, although it's been diminished," McCue says.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
In the aftermath of the nation's housing-market collapse and
recession, more than 500 midsize and large cities have seen a
rise in the share of homes that are rented rather than owned,
according to a USA TODAY analysis of Census data. Almost 4
million homes have been lost to foreclosures in the past five
years, turning many former owner-occupied homes into rentals. The
shift to rental housing is potentially long-lasting and portends
changes for neighborhood stability and how people build wealth,
economists say. "The changes are big but glacial," says Mark
Zandi, economist at Moody's Analytics.
The swing from owner- to tenant-occupied homes in the past decade
has been dramatic in some places:
- Of the 100 largest cities, some of those with the largest
shifts were Irvine, Calif., which went from about 40% of occupied
homes rented in 2000 to 49.8% in 2010; Philadelphia, from 40.7%
to 45.9%; and Birmingham, Ala., 46.3% to 50.7%.
- Twenty-five cities — including Baltimore, Minneapolis, Salt
Lake City and Sacramento — swung from having more than half
homeowners in 2000 to majorities of renters in 2010. In one —
Reading, Pa. — 57.6% of occupied homes were rentals in 2010, up
from 49% in 2000.
- Florida, California and Arizona had the most cities where the
share of renter-occupied housing grew by at least 5 percentage
points. All three states have been hit hard by foreclosures.
Nationwide, 34.9% of occupied homes — including houses, condos,
and apartments — were rented in 2010, up from 33.8% in 2000.
The Census data that USA TODAY analyzed for cities covered only
housing within the cities' boundaries, not their much larger
metropolitan areas. Vacant properties, excluding seasonal or
vacation homes, accounted for 7.9% of U.S. housing units in 2010.
It's not clear how many of those have since become rentals or
owner-occupied homes. The renter household market remained
fairly stable from 1990 to 2006, says Daniel McCue, senior
research analyst at Harvard University's Joint Center for Housing
Studies. Since 2006, when housing prices peaked, the number of
renter households in the U.S. has grown an average of 692,000 a
year, while owner households have fallen an average of 201,000 a
year, Census surveys show.
Several factors will boost rental growth for years to come, Zandi
says, including continued foreclosures, continued drops in home
prices that frighten buyers and potential cuts to government
subsidies supporting homeownership. On the other hand, 74% of
renters think owning is superior to renting, said a recent survey
by mortgage giant Fannie Mae. "There's still a pull toward
homeownership, although it's been diminished," McCue says.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Tuesday, May 31, 2011
Home Prices Fall Below 2009 Bottom
Home prices fell below the 2009 housing bust bottom in the first
quarter, dropping 4.2% from the prior three months, according to
the S&P Case-Shiller national home price index. The 20-city
composite index was at 138.16, falling below the 2009 low of
139.26. It was the third straight quarterly drop for the index,
which was down 5.1% from a year earlier. National prices are now
down 32.7% from their peak set five years ago. The
S&P/Case-Shiller national home price index covers 80% of the
housing market. "This month's report is marked by the
confirmation of a double-dip in home prices across much of the
nation," said David Blitzer, spokesman for Standard and Poor's.
The housing market went through a brief recovery period starting
in mid-2009.
Home prices recovered nearly 5% of their earlier losses. After
homebuyer tax credits, which were in effect during the rebound,
expired last April, the slump resumed. "The rebound in prices
seen in 2009 and 2010 was largely due to the first-time home
buyers tax credit," said Blitzer. "Excluding the results of that
policy, there has been no recovery or even stabilization in home
prices during or after the recent recession." A separate
S&P/Case-Shiller index covering 20 major cities also dropped
during March, its eighth straight monthly decline. This is the
second month of the post-recession double dip for the 20-city
index. Prices peaked in July 2006 and then fell steadily through
April 2009. They then went on a winning streak that ran through
last June and prices, adjusted for seasonal differences, have
plunged every month since.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
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quarter, dropping 4.2% from the prior three months, according to
the S&P Case-Shiller national home price index. The 20-city
composite index was at 138.16, falling below the 2009 low of
139.26. It was the third straight quarterly drop for the index,
which was down 5.1% from a year earlier. National prices are now
down 32.7% from their peak set five years ago. The
S&P/Case-Shiller national home price index covers 80% of the
housing market. "This month's report is marked by the
confirmation of a double-dip in home prices across much of the
nation," said David Blitzer, spokesman for Standard and Poor's.
The housing market went through a brief recovery period starting
in mid-2009.
Home prices recovered nearly 5% of their earlier losses. After
homebuyer tax credits, which were in effect during the rebound,
expired last April, the slump resumed. "The rebound in prices
seen in 2009 and 2010 was largely due to the first-time home
buyers tax credit," said Blitzer. "Excluding the results of that
policy, there has been no recovery or even stabilization in home
prices during or after the recent recession." A separate
S&P/Case-Shiller index covering 20 major cities also dropped
during March, its eighth straight monthly decline. This is the
second month of the post-recession double dip for the 20-city
index. Prices peaked in July 2006 and then fell steadily through
April 2009. They then went on a winning streak that ran through
last June and prices, adjusted for seasonal differences, have
plunged every month since.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, May 20, 2011
Everybody's Looking for the Deal - Real Trac
A new study conducted by Trulia and RealtyTrac found that 56 percent of U.S. renters and 47 percent of current homeowners are at least “somewhat likely” to purchase a foreclosed home.
Along with having some concerns about hidden costs, a risky buying process, and still-declining home values, many potential buyers expect to save money if they buy a foreclosure. In fact, the companies’ survey found that on average, respondents expect to pay 38 percent less for a foreclosed home than a similar home that was not in foreclosure.
RealtyTrac says their expectations are not too far above the average discount of 36 percent it’s currently seeing on sales of bank-owned REO homes.
Ken Shuman, a spokesperson for Trulia, said, “According to our latest data, it is more affordable to buy a home than to rent in 78 percent of major U.S. cities. With concerns of rising inflation and the potential for rising interest rates, now is a good time for people to buy and we may not be in this environment for much longer.”
The Trulia-RealtyTrac survey also polled respondents on the federal government’s efforts to help struggling homeowners. Forty-five percent of those surveyed said the government is not doing enough to prevent foreclosures. Only 17 percent say too much is being done, while 16 per-
cent say they are doing the right amount and 22 percent were undecided.
The widespread prevalence of distressed homeowners facing foreclosures in today’s market is one reason why negative sentiment toward the government may be so high, according to the companies’ report.
Almost one-third (30 percent) of homeowners said they themselves have, or they know someone who has experienced trouble with their mortgage situation and applied for a loan modification, stopped making their payments, been foreclosed on, simply walked away, or sold their home through a short sale transaction.
As more cities across the nation experience double dips in home prices, more than half (54 percent) of those surveyed believe recovery in the housing market will not happen until 2014 or later.
In a previous survey conducted six months ago, 42 percent of American adults said they thought the market would turn around by 2012 or had already turned around. Now, only 23 percent continue to hold this sentiment.
“Most Americans, as our latest survey revealed, overestimated how quickly the housing market would bounce back, but when it does, it will likely be a long and gradual process,” said Pete Flint, co-founder and CEO of Trulia. “Looking at the recent double dips in home prices, I expect the rest of 2011 to be volatile for real estate….In my eyes, we have another 18 months until we start to see signs of price stability in the housing market.”
Trulia and RealtyTrac have regularly conducted these surveys since 2008 to track consumers’ attitudes toward foreclosed homes and the housing market recovery.
“Our survey reflects a growing perception among potential homebuyers that the housing recovery is still a long way off,” commented Rick Sharga, RealtyTrac SVP. “Demand remains weak, loans are increasingly difficult to qualify for, and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover.”
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Along with having some concerns about hidden costs, a risky buying process, and still-declining home values, many potential buyers expect to save money if they buy a foreclosure. In fact, the companies’ survey found that on average, respondents expect to pay 38 percent less for a foreclosed home than a similar home that was not in foreclosure.
RealtyTrac says their expectations are not too far above the average discount of 36 percent it’s currently seeing on sales of bank-owned REO homes.
Ken Shuman, a spokesperson for Trulia, said, “According to our latest data, it is more affordable to buy a home than to rent in 78 percent of major U.S. cities. With concerns of rising inflation and the potential for rising interest rates, now is a good time for people to buy and we may not be in this environment for much longer.”
The Trulia-RealtyTrac survey also polled respondents on the federal government’s efforts to help struggling homeowners. Forty-five percent of those surveyed said the government is not doing enough to prevent foreclosures. Only 17 percent say too much is being done, while 16 per-
cent say they are doing the right amount and 22 percent were undecided.
The widespread prevalence of distressed homeowners facing foreclosures in today’s market is one reason why negative sentiment toward the government may be so high, according to the companies’ report.
Almost one-third (30 percent) of homeowners said they themselves have, or they know someone who has experienced trouble with their mortgage situation and applied for a loan modification, stopped making their payments, been foreclosed on, simply walked away, or sold their home through a short sale transaction.
As more cities across the nation experience double dips in home prices, more than half (54 percent) of those surveyed believe recovery in the housing market will not happen until 2014 or later.
In a previous survey conducted six months ago, 42 percent of American adults said they thought the market would turn around by 2012 or had already turned around. Now, only 23 percent continue to hold this sentiment.
“Most Americans, as our latest survey revealed, overestimated how quickly the housing market would bounce back, but when it does, it will likely be a long and gradual process,” said Pete Flint, co-founder and CEO of Trulia. “Looking at the recent double dips in home prices, I expect the rest of 2011 to be volatile for real estate….In my eyes, we have another 18 months until we start to see signs of price stability in the housing market.”
Trulia and RealtyTrac have regularly conducted these surveys since 2008 to track consumers’ attitudes toward foreclosed homes and the housing market recovery.
“Our survey reflects a growing perception among potential homebuyers that the housing recovery is still a long way off,” commented Rick Sharga, RealtyTrac SVP. “Demand remains weak, loans are increasingly difficult to qualify for, and the shadow inventory of several million distressed properties is weighing down the market. All of these things need to improve before housing can recover.”
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Wednesday, May 18, 2011
More Underwater as Home Values Post Sharpest Drop Since 2008: Zillow
Home values in the United States fell faster in the first
quarter of 2011 than they have in any quarter since 2008,
when the housing market experienced its worst performance,
according to a new report from Zillow.
The Seattle-based company’s index of residential property
values fell 3 percent nationally during the first three
months of this year when compared to the fourth quarter of
2010.
As a result, negative equity hit a new high-water mark by
the end of the first quarter, with 28.4 percent of
homeowners with mortgages owing more on the loan than their
home is worth, Zillow said. The company’s underwater ratio
is up from 27 percent in the fourth quarter of 2010.
Zillow’s first-quarter index reading of home values came in
at $169,600, 8.2 percent below where it was a year earlier.
The company says home values have fallen 29.5 percent since
they peaked in June 2006.
Meanwhile, foreclosures rose throughout the first quarter as
banks unfroze moratoriums and allowed foreclosures to
resume. Foreclosures had fallen in late 2010 due to the slew
of temporary suspensions brought about by the “robo-signing”
controversy.
But by March, Zillow says activity had picked up once again,
with one out of every 1,000 homes in the country lost to
foreclosure during the month.
With the substantial home value declines, as well as
increasing negative equity and foreclosures, Zillow says it
is unlikely that home values will reach a bottom in 2011.
First-quarter data has prompted Zillow to revise its
forecast, now predicting a bottom in 2012 “at the earliest.”
“Home value declines are currently equal to those we
experienced during the darkest days of the housing
recession,” said Dr. Stan Humphries, chief economist for
Zillow. “With accelerating declines during the first
quarter, it is unreasonable to expect home values to return
to stability by the end of 2011.”
Humphries says he did expect a “substantial payback” from
the federal government’s homebuyer tax credit initiative,
which buoyed the housing market last year. But he warns that
diminished demand post-tax credit, as well as rising
foreclosures and high negative equity rates “make it almost
certain that we won’t see a bottom in home values until 2012
or later.”
Zillow says very few markets were exempt from home value
declines in the first quarter. Ninety-seven percent of the
132 markets covered by Zillow logged home value declines.
Only the Fort Myers, Florida; Champaign-Urbana, Illinois;
and Honolulu, Hawaii metro areas experienced quarterly
increases, with home values rising 2.4 percent, 0.8 percent,
and 0.3 percent, respectively. Home values in the Sarasota,
Florida metro remained flat.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
quarter of 2011 than they have in any quarter since 2008,
when the housing market experienced its worst performance,
according to a new report from Zillow.
The Seattle-based company’s index of residential property
values fell 3 percent nationally during the first three
months of this year when compared to the fourth quarter of
2010.
As a result, negative equity hit a new high-water mark by
the end of the first quarter, with 28.4 percent of
homeowners with mortgages owing more on the loan than their
home is worth, Zillow said. The company’s underwater ratio
is up from 27 percent in the fourth quarter of 2010.
Zillow’s first-quarter index reading of home values came in
at $169,600, 8.2 percent below where it was a year earlier.
The company says home values have fallen 29.5 percent since
they peaked in June 2006.
Meanwhile, foreclosures rose throughout the first quarter as
banks unfroze moratoriums and allowed foreclosures to
resume. Foreclosures had fallen in late 2010 due to the slew
of temporary suspensions brought about by the “robo-signing”
controversy.
But by March, Zillow says activity had picked up once again,
with one out of every 1,000 homes in the country lost to
foreclosure during the month.
With the substantial home value declines, as well as
increasing negative equity and foreclosures, Zillow says it
is unlikely that home values will reach a bottom in 2011.
First-quarter data has prompted Zillow to revise its
forecast, now predicting a bottom in 2012 “at the earliest.”
“Home value declines are currently equal to those we
experienced during the darkest days of the housing
recession,” said Dr. Stan Humphries, chief economist for
Zillow. “With accelerating declines during the first
quarter, it is unreasonable to expect home values to return
to stability by the end of 2011.”
Humphries says he did expect a “substantial payback” from
the federal government’s homebuyer tax credit initiative,
which buoyed the housing market last year. But he warns that
diminished demand post-tax credit, as well as rising
foreclosures and high negative equity rates “make it almost
certain that we won’t see a bottom in home values until 2012
or later.”
Zillow says very few markets were exempt from home value
declines in the first quarter. Ninety-seven percent of the
132 markets covered by Zillow logged home value declines.
Only the Fort Myers, Florida; Champaign-Urbana, Illinois;
and Honolulu, Hawaii metro areas experienced quarterly
increases, with home values rising 2.4 percent, 0.8 percent,
and 0.3 percent, respectively. Home values in the Sarasota,
Florida metro remained flat.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Tuesday, May 17, 2011
Commercial Real Estate Hurting Small Banks
The delinquency rate on commercial mortgage-backed securities hit
a record 9.62% in April, according to a report by Trepp, a firm
that tracks commercial real estate and banking data. Analysts
expect that to rise above 10% by year end. On the bright side,
that forecast marks a slight improvement over prior estimates
that cmaxalled for defaults to top 12%. The bulk of the rising
delinquencies are falling squarely on the shoulders of small and
regional banks, forcing dozens to close. Thirteen banks failed
in April, with nearly all them heavily exposed to commercial real
estate. It's a familiar pattern that U.S. regulators say they've
been observing for several months.
Small to regional banks -- defined as banks holding less than
$100 billion in assets -- have $784 billion in commercial real
estate loans on their books, according to the Independent
Community Bankers Association of America. That's about 71% of the
total market. At the height of the bubble, small-to-midsized
banks underwrote more than $200 billion in risky land and
construction loans, where the collateral on the loan wasn't
office space but vacant land or incomplete construction sites.
Among the 13 banks shut down last month, commercial real estate
loans made up 79% of their non-performing loans, defined as loans
in default or close to default. Non-performing residential real
estate loans made up only 15% of those loan portfolios. For
example, Cortez Community Bank in Florida, which was shuttered by
the FDIC on April 29, had 76% of its loans in commercial real
estate. Another failed bank, Nexity Bank of Alabama, had a loan
portfolio that was 87% commercial real estate loans.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
a record 9.62% in April, according to a report by Trepp, a firm
that tracks commercial real estate and banking data. Analysts
expect that to rise above 10% by year end. On the bright side,
that forecast marks a slight improvement over prior estimates
that cmaxalled for defaults to top 12%. The bulk of the rising
delinquencies are falling squarely on the shoulders of small and
regional banks, forcing dozens to close. Thirteen banks failed
in April, with nearly all them heavily exposed to commercial real
estate. It's a familiar pattern that U.S. regulators say they've
been observing for several months.
Small to regional banks -- defined as banks holding less than
$100 billion in assets -- have $784 billion in commercial real
estate loans on their books, according to the Independent
Community Bankers Association of America. That's about 71% of the
total market. At the height of the bubble, small-to-midsized
banks underwrote more than $200 billion in risky land and
construction loans, where the collateral on the loan wasn't
office space but vacant land or incomplete construction sites.
Among the 13 banks shut down last month, commercial real estate
loans made up 79% of their non-performing loans, defined as loans
in default or close to default. Non-performing residential real
estate loans made up only 15% of those loan portfolios. For
example, Cortez Community Bank in Florida, which was shuttered by
the FDIC on April 29, had 76% of its loans in commercial real
estate. Another failed bank, Nexity Bank of Alabama, had a loan
portfolio that was 87% commercial real estate loans.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you. Commercial Property Too!
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Thursday, May 5, 2011
Home Prices Have Double Dipped
Home prices nationwide have double dipped, with prices plunging below their March 2009 bottom, the Clear Capital research firm reports.
The company's monthly Home Data Index shows home prices double dipping 0.7 percent below the previous record low set in March 2009.
Sales of bank-owned (REO) properties hit 34.5 percent of the market, helping to send quarterly home prices down 4.9 percent and 5.0 percent when compared with March 2010.
National home prices have fallen 11.5 percent in the past nine months, a rate not seen since 2008.
"With more than one-third of national home sales being REO (bank owned), market prices are being weighed down, as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales," says Clear Capital's Alex Villacorta, according to CNBC.
Looking forward, market watchers will play close attention to the index in spring — a more-active buying season — to see if organic demand for housing can push the index back into growth territory.
"In light of the compounding effects of winter’s seasonal slowdown and increased distressed sale activity, the market now faces the true test of whether prices can rebound in the historically active spring season," Villacorta says, this time according to Housing Wire, a financial news service for the mortgage industry.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
The company's monthly Home Data Index shows home prices double dipping 0.7 percent below the previous record low set in March 2009.
Sales of bank-owned (REO) properties hit 34.5 percent of the market, helping to send quarterly home prices down 4.9 percent and 5.0 percent when compared with March 2010.
National home prices have fallen 11.5 percent in the past nine months, a rate not seen since 2008.
"With more than one-third of national home sales being REO (bank owned), market prices are being weighed down, as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales," says Clear Capital's Alex Villacorta, according to CNBC.
Looking forward, market watchers will play close attention to the index in spring — a more-active buying season — to see if organic demand for housing can push the index back into growth territory.
"In light of the compounding effects of winter’s seasonal slowdown and increased distressed sale activity, the market now faces the true test of whether prices can rebound in the historically active spring season," Villacorta says, this time according to Housing Wire, a financial news service for the mortgage industry.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Thursday, April 14, 2011
Big Banks Get Foreclosure Orders
Regulators Detail Steps Lenders Must Take to Revamp Processes; Fines Are Still to Come
In a Wall Street Journal Article posted today U.S. regulators hit the nation's largest banks with a first round of sweeping penalties for improper home-foreclosure practices, issuing detailed orders to revamp the way they deal with troubled borrowers.
The orders issued on Wednesday to 14 financial institutions didn't include fines. Officials said they are coming.
"There will be civil money penalties; the question is timing and amount. But we're not letting that clock run forever," Acting Comptroller of the Currency John Walsh told reporters. The orders were issued by his office, the Federal Reserve and the Office of Thrift Supervision.
The bank regulators' action came as Obama administration officials and representatives of state attorneys general met with the bank representatives in an ongoing effort to reach a broader deal over alleged mortgage-servicing abuses, which brought foreclosures to a near halt last fall. All sides want a settlement that can resolve the issue so foreclosures can proceed again, which could help the sickly housing market.
Some attorneys general and administration officials have pushed for banks to pay more than $20 billion in civil fines or to devote a comparable amount to modifying mortgages held by distressed borrowers.
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Several officials said the regulators' action wouldn't undermine the broader settlement talks. "This doesn't change what we are doing," said Iowa Attorney General Tom Miller in an interview. Mr. Miller, who is spearheading the 50-state investigation, said, "We are moving ahead full speed."
Outside observers said the orders could make it harder for state attorneys general to extract greater concessions from the banks.
"The biggest stick in this fight just settled, so there's going to be a lot less pressure on the banks to agree to a radical resolution to resolve the state complaints," said Jaret Seiberg, an analyst in Washington with MF Global.
Mark Zandi, chief economist at Moody's Analytics, said the agreement appears to require only "modest changes" to banks' foreclosure process and is unlikely to have a big impact on the housing market or broader economy. Still, Mr. Zandi added, "the foreclosure process will remain bogged down and a true bottom in the housing market elusive" until the banks reach a complete settlement with the state attorneys general.
Bank executives said the changes ordered would be anything but modest. "It's very demanding and there is a lot that we have to do," said one bank official. "It will be fairly expensive and a big resource drain."
The regulators issued the orders to the nation's four largest banks—Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. Also receiving orders were Ally Financial Inc., HSBC Holdings PLC, MetLife Inc., PNC Financial Services Group Inc., SunTrust Banks Inc., U.S. Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.
Bank of America, Wells Fargo, J.P. Morgan and Citigroup were ordered to revamp mortgage-lending practices.
Under the orders, banks have 60 days to establish plans to clean up their mortgage-servicing processes to prevent documentation errors.
The orders also direct banks to take steps to ensure they have enough staff to handle the flood of foreclosures, that foreclosures don't happen when a borrower is receiving a loan modification and that borrowers have a single point of contact throughout the loan-modification and foreclosure process.
Banks must hire an independent consultant to conduct a "look back" of all foreclosure proceedings from 2009 and 2010 to evaluate whether they improperly foreclosed on any homeowners and require each company to establish its own process to consider whether to compensate borrowers who have been harmed.
Critics, including other regulators, believe this process and other aspects of the orders leave too much discretion to banks.
J.P. Morgan, in a statement, acknowledged that the consent orders "are targeted directly at weaknesses in our processes and controls." The New York bank took a charge of $1.1 billion in the first quarter to reflect higher mortgage-servicing costs that resulted from a string of new regulations enacted after the financial crisis.
Other banks said many of the required changes already are under way. "This is an unprecedented measure and a tough message to take, but it will make mortgage servicing practices better across the board," Wells Fargo said. The San Francisco bank said it already has taken numerous actions to address the issues, including hiring 10,000 employees since 2009 to deal with foreclosure issues.
PNC Financial Services sought to distance itself from the industry's mess, saying that it represents just 1.5% of the mortgage-servicing business. A spokesman for the Pittsburgh bank said that its internal review had determined that the bank didn't foreclose on customers without a "valid reason or appropriate documents."
Even before the orders became public, critics charged that the bank regulators were letting servicers off too easy and were undercutting the broader talks.
The OCC, which has been the target of most criticism, defended the enforcement orders. "They require substantial corrective actions," Mr. Walsh said. "The banks are going to have to do substantial work, bear substantial expense to fix the problems that we identified" as well as to identify and compensate homeowners that suffered financial harm.
The Federal Deposit Insurance Corp. in a statement called the orders "only a first step" and declared its full support for the broader talks. "The enforcement orders announced [Wednesday] complement, rather than pre-empt or impede, this ongoing collaboration," it said.
By VICTORIA MCGRANE, ALAN ZIBEL and ROBIN SIDEL —Ruth Simon contributed to this article.
http://online.wsj.com/article/SB10001424052748703551304576260952761726790.html?mod=WSJ_RealEstate_LeftTopNews
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
In a Wall Street Journal Article posted today U.S. regulators hit the nation's largest banks with a first round of sweeping penalties for improper home-foreclosure practices, issuing detailed orders to revamp the way they deal with troubled borrowers.
The orders issued on Wednesday to 14 financial institutions didn't include fines. Officials said they are coming.
"There will be civil money penalties; the question is timing and amount. But we're not letting that clock run forever," Acting Comptroller of the Currency John Walsh told reporters. The orders were issued by his office, the Federal Reserve and the Office of Thrift Supervision.
The bank regulators' action came as Obama administration officials and representatives of state attorneys general met with the bank representatives in an ongoing effort to reach a broader deal over alleged mortgage-servicing abuses, which brought foreclosures to a near halt last fall. All sides want a settlement that can resolve the issue so foreclosures can proceed again, which could help the sickly housing market.
Some attorneys general and administration officials have pushed for banks to pay more than $20 billion in civil fines or to devote a comparable amount to modifying mortgages held by distressed borrowers.
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Several officials said the regulators' action wouldn't undermine the broader settlement talks. "This doesn't change what we are doing," said Iowa Attorney General Tom Miller in an interview. Mr. Miller, who is spearheading the 50-state investigation, said, "We are moving ahead full speed."
Outside observers said the orders could make it harder for state attorneys general to extract greater concessions from the banks.
"The biggest stick in this fight just settled, so there's going to be a lot less pressure on the banks to agree to a radical resolution to resolve the state complaints," said Jaret Seiberg, an analyst in Washington with MF Global.
Mark Zandi, chief economist at Moody's Analytics, said the agreement appears to require only "modest changes" to banks' foreclosure process and is unlikely to have a big impact on the housing market or broader economy. Still, Mr. Zandi added, "the foreclosure process will remain bogged down and a true bottom in the housing market elusive" until the banks reach a complete settlement with the state attorneys general.
Bank executives said the changes ordered would be anything but modest. "It's very demanding and there is a lot that we have to do," said one bank official. "It will be fairly expensive and a big resource drain."
The regulators issued the orders to the nation's four largest banks—Bank of America Corp., Wells Fargo & Co., J.P. Morgan Chase & Co. and Citigroup Inc. Also receiving orders were Ally Financial Inc., HSBC Holdings PLC, MetLife Inc., PNC Financial Services Group Inc., SunTrust Banks Inc., U.S. Bancorp, Aurora Bank, EverBank, OneWest Bank and Sovereign Bank.
Bank of America, Wells Fargo, J.P. Morgan and Citigroup were ordered to revamp mortgage-lending practices.
Under the orders, banks have 60 days to establish plans to clean up their mortgage-servicing processes to prevent documentation errors.
The orders also direct banks to take steps to ensure they have enough staff to handle the flood of foreclosures, that foreclosures don't happen when a borrower is receiving a loan modification and that borrowers have a single point of contact throughout the loan-modification and foreclosure process.
Banks must hire an independent consultant to conduct a "look back" of all foreclosure proceedings from 2009 and 2010 to evaluate whether they improperly foreclosed on any homeowners and require each company to establish its own process to consider whether to compensate borrowers who have been harmed.
Critics, including other regulators, believe this process and other aspects of the orders leave too much discretion to banks.
J.P. Morgan, in a statement, acknowledged that the consent orders "are targeted directly at weaknesses in our processes and controls." The New York bank took a charge of $1.1 billion in the first quarter to reflect higher mortgage-servicing costs that resulted from a string of new regulations enacted after the financial crisis.
Other banks said many of the required changes already are under way. "This is an unprecedented measure and a tough message to take, but it will make mortgage servicing practices better across the board," Wells Fargo said. The San Francisco bank said it already has taken numerous actions to address the issues, including hiring 10,000 employees since 2009 to deal with foreclosure issues.
PNC Financial Services sought to distance itself from the industry's mess, saying that it represents just 1.5% of the mortgage-servicing business. A spokesman for the Pittsburgh bank said that its internal review had determined that the bank didn't foreclose on customers without a "valid reason or appropriate documents."
Even before the orders became public, critics charged that the bank regulators were letting servicers off too easy and were undercutting the broader talks.
The OCC, which has been the target of most criticism, defended the enforcement orders. "They require substantial corrective actions," Mr. Walsh said. "The banks are going to have to do substantial work, bear substantial expense to fix the problems that we identified" as well as to identify and compensate homeowners that suffered financial harm.
The Federal Deposit Insurance Corp. in a statement called the orders "only a first step" and declared its full support for the broader talks. "The enforcement orders announced [Wednesday] complement, rather than pre-empt or impede, this ongoing collaboration," it said.
By VICTORIA MCGRANE, ALAN ZIBEL and ROBIN SIDEL —Ruth Simon contributed to this article.
http://online.wsj.com/article/SB10001424052748703551304576260952761726790.html?mod=WSJ_RealEstate_LeftTopNews
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Tuesday, April 12, 2011
Foreclosure fraud: The homeowner nightmares continue
FORTUNE — Over the past several months regulators have finally noticed what consumer attorneys have been saying for years: the big banks have routinely committed fraud in their foreclosure filings and their records of how much people owe are too often wrong. And the mortgage modification process, which was meant to help homeowners, has been exposed as an abject failure.
Salvageable mortgages are being foreclosed because the banks, wearing their “mortgage servicer” hats, find it more profitable to foreclose than modify loans. And even when the banks sincerely try to modify loans, they often seem incompetent.
In early March, a settlement proposal surfaced claiming to represent what the 50 states’ attorneys general think the big banks should do to fix the problems. Although not all of the AGs are in agreement yet – some think it’s too harsh and others too weak – it was the first peek inside the settlement negotiations. The proposal mostly amounted to saying “thou shalt obey the law and not abuse borrowers.” One term was “sworn statements shall not contain information that is false or unsubstantiated.” That is, “Thou shalt not commit perjury.”
Given how basic the term sheet was, it was hard to imagine how the big banks could make a good faith counter-proposal that was significantly weaker. And yet a recently leaked document shows they did.
The banks’ counter-proposal, dated March 28th, rewrites the “banks can’t commit perjury” term as the banks “shall implement processes reasonably designed to ensure the factual assertions made in…sworn statements…are accurate and complete…” and “sworn statements shall not contain information that is false or unsubstantiated in any material respect.”
Translation: It’s not perjury if we make a reasonable effort not to lie under oath and we don’t consider the lie to be important.
What kind of lie in a sworn statement isn’t “material?” What about a small detail, like the date? Well, consider documents Bank of America and Wells Fargo filed in a case brought by homeowners in Hawaii — the securitized trusts trying to foreclose on the loans were supposedly given the mortgages before the trusts existed. Are those dates material?
Wells Fargo, responding to a request for comment, did not address the impossible date issue: “The borrowers lost their home following a protracted judicial foreclosure, the issues raised in their petition [i.e. the claim that documents were fraudulent] were argued and ruled upon by the courts twice already and the most recent petition was actually denied by the Hawaii Supreme Court on March 17.” Bank of America (BAC) did not respond to a request for comment. The attorney for the homeowners, Gary Victor Dubin, disputes Wells Fargo’s (WFC) characterization.
Bottom line: Wells filed a document to give a trust a mortgage before the trust existed. Would the banks’ proposed settlement language make that okay?
Or perhaps the banks are suggesting that they could be wrong about precisely how much a borrower owes. If the borrower is in default, they might say, we’re right to foreclose. Does it really matter if our math is precisely correct? Well, yes. For starters, the bad math might mean the borrower shouldn’t be facing foreclosure.
For example, the Matthews family of Missouri would not be facing foreclosure if JPMorgan Chase (JPM) hadn’t collected some $3,000 for an insurance policy the Matthews didn’t need — the Matthews already had insurance — and if Chase’s computer system would acknowledge the Matthews’ payment should be $1,216, not the $1,611 Chase started charging to pay for the insurance.
When asked about the Matthews’ account, a Chase spokesman responded: “The customer’s account has been corrected, reducing the payment back to the proper amount, and we are reaching out to the customer to resolve the past issues. In the meantime we will amend her credit and remove foreclosure actions from her record.” However, the Matthews countered that it remained unresolved.
Again, the bottom line: Chase’s computer system had the wrong payment in place and that caused the Matthews to face foreclosure wrongly.
A mess of records
Like the language regarding perjury, the attorneys general and the banks have a different view of the banks’ need to keep accurate records of what people owe. The attorneys’ general term sheet says the banks “…shall maintain procedures to ensure the accuracy and timely updating of borrowers’ account information…” The banks’ counter offer again inserts the weasel words “reasonably designed,” as in “procedures reasonably designed to ensure accuracy…”
One theme running through the banks’ counter proposal is their unwillingness to be responsible for their employees’ actions.
For example, the AG term sheet flatly says “Servicer’s employees shall not instruct, advise or recommend that borrowers go into default in order to qualify for [a mortgage modification].” The banks’ counter offer says “Servicer shall instruct its employees not to advise …”
Inserting that “shall instruct” is all about plausible deniability: Look, we told our employees not to tell borrowers to default, who cares if we were winking and nodding when we told them that?
Telling people to default before a modification can be considered is insidious, because it triggers many preventable foreclosures. As it is, during trial modifications when the borrowers promptly make the full, modified payment — the only payment they’re supposed to make — the banks consider the payment late because it’s less than the original amount, and charge a late fee. If the borrower is already three months delinquent when he starts the mortgage modification, the fees have grown so much that the borrower ends up in a big hole.
The bank then starts on the foreclosure path while considering the modification — the so-called “Dual Track” — and the borrower ends up foreclosed on.
I’ve spoken to many borrowers who were told to default. Most recently, I’ve been chatting with Joe, a homeowner in Georgia who works in the financial industry. Joe and his family have been struggling with SunTrust Bank (STI) since 2009. At that time, they wanted to refinance their house. The couple’s credit was stellar, rates were low, they had a long and deep relationship with the bank, and they were willing to pay closing costs. Seemed like a no-brainer.
Unfortunately they owed more than the house was worth, so the bank wouldn’t do the deal. Instead, in January 2010 the bank told him to seek a mortgage modification. When an appropriate program became available in July, Joe submitted his application package. But SunTrust didn’t reply at all until December, and in January 2011, it told him he didn’t qualify for a modification because he was still current on his mortgage.
Meanwhile, the family blew through their life savings. Joe’s income was reduced, his wife fell ill and could no longer work, and her medications were expensive. But they stayed current on their mortgage through December 2010.
Despite that heroic effort to stay current, Joe is now facing foreclosure. The bank told him to default in January, and it’s now made a modification offer that reduces his payment by a mere $250 a month — not enough for him to be able to save his house, and half of what he could have saved by doing the 2009 refi. And if the refi had gone through, they would still have their life savings, and their credit would still be great.
Joe has asked SunTrust to explain its math in calculating what kind of modification he qualifies for, but it refused. The AG proposal would solve this problem, but the banks’ counteroffer wouldn’t. In fact, most recently, SunTrust demanded that Joe give it some $7,000 — three months of trial payments. But SunTrust wouldn’t tell him how the money would be applied, whether for fees, principal, or interest, until it decided — if it decided — at the end of that time to give him a permanent modification. Nor would it tell him what the terms of a permanent offer would be if it were made. SunTrust refused to put anything in writing. Joe wouldn’t pay on that basis, of course.
Joe recorded his conversations with SunTrust, which he shared with Fortune. SunTrust said: “While we are not at liberty to discuss a specific client relationship or our internal policies and procedures, generally speaking we work with clients on a case-by-case basis regarding potential loan modifications taking into account investor guidelines and the fact that every situation is different.”
The AGs must not lose sight of people like Joe, a former marine who served during the first Gulf War, and condemn troubled borrowers as unsympathetic “deadbeats.” The banks are relying on that stereotype to carry the day for them.
If the banks won’t deal, throw the book at them. Just like it’s been thrown at baseball great Barry Bonds for his comparatively trivial alleged perjury. If we can prosecute Bonds but not the banks, what kind of country are we?
http://finance.fortune.cnn.com/2011/04/07/foreclosure-fraud-the-homeowner-nightmares-continue/
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Salvageable mortgages are being foreclosed because the banks, wearing their “mortgage servicer” hats, find it more profitable to foreclose than modify loans. And even when the banks sincerely try to modify loans, they often seem incompetent.
In early March, a settlement proposal surfaced claiming to represent what the 50 states’ attorneys general think the big banks should do to fix the problems. Although not all of the AGs are in agreement yet – some think it’s too harsh and others too weak – it was the first peek inside the settlement negotiations. The proposal mostly amounted to saying “thou shalt obey the law and not abuse borrowers.” One term was “sworn statements shall not contain information that is false or unsubstantiated.” That is, “Thou shalt not commit perjury.”
Given how basic the term sheet was, it was hard to imagine how the big banks could make a good faith counter-proposal that was significantly weaker. And yet a recently leaked document shows they did.
The banks’ counter-proposal, dated March 28th, rewrites the “banks can’t commit perjury” term as the banks “shall implement processes reasonably designed to ensure the factual assertions made in…sworn statements…are accurate and complete…” and “sworn statements shall not contain information that is false or unsubstantiated in any material respect.”
Translation: It’s not perjury if we make a reasonable effort not to lie under oath and we don’t consider the lie to be important.
What kind of lie in a sworn statement isn’t “material?” What about a small detail, like the date? Well, consider documents Bank of America and Wells Fargo filed in a case brought by homeowners in Hawaii — the securitized trusts trying to foreclose on the loans were supposedly given the mortgages before the trusts existed. Are those dates material?
Wells Fargo, responding to a request for comment, did not address the impossible date issue: “The borrowers lost their home following a protracted judicial foreclosure, the issues raised in their petition [i.e. the claim that documents were fraudulent] were argued and ruled upon by the courts twice already and the most recent petition was actually denied by the Hawaii Supreme Court on March 17.” Bank of America (BAC) did not respond to a request for comment. The attorney for the homeowners, Gary Victor Dubin, disputes Wells Fargo’s (WFC) characterization.
Bottom line: Wells filed a document to give a trust a mortgage before the trust existed. Would the banks’ proposed settlement language make that okay?
Or perhaps the banks are suggesting that they could be wrong about precisely how much a borrower owes. If the borrower is in default, they might say, we’re right to foreclose. Does it really matter if our math is precisely correct? Well, yes. For starters, the bad math might mean the borrower shouldn’t be facing foreclosure.
For example, the Matthews family of Missouri would not be facing foreclosure if JPMorgan Chase (JPM) hadn’t collected some $3,000 for an insurance policy the Matthews didn’t need — the Matthews already had insurance — and if Chase’s computer system would acknowledge the Matthews’ payment should be $1,216, not the $1,611 Chase started charging to pay for the insurance.
When asked about the Matthews’ account, a Chase spokesman responded: “The customer’s account has been corrected, reducing the payment back to the proper amount, and we are reaching out to the customer to resolve the past issues. In the meantime we will amend her credit and remove foreclosure actions from her record.” However, the Matthews countered that it remained unresolved.
Again, the bottom line: Chase’s computer system had the wrong payment in place and that caused the Matthews to face foreclosure wrongly.
A mess of records
Like the language regarding perjury, the attorneys general and the banks have a different view of the banks’ need to keep accurate records of what people owe. The attorneys’ general term sheet says the banks “…shall maintain procedures to ensure the accuracy and timely updating of borrowers’ account information…” The banks’ counter offer again inserts the weasel words “reasonably designed,” as in “procedures reasonably designed to ensure accuracy…”
One theme running through the banks’ counter proposal is their unwillingness to be responsible for their employees’ actions.
For example, the AG term sheet flatly says “Servicer’s employees shall not instruct, advise or recommend that borrowers go into default in order to qualify for [a mortgage modification].” The banks’ counter offer says “Servicer shall instruct its employees not to advise …”
Inserting that “shall instruct” is all about plausible deniability: Look, we told our employees not to tell borrowers to default, who cares if we were winking and nodding when we told them that?
Telling people to default before a modification can be considered is insidious, because it triggers many preventable foreclosures. As it is, during trial modifications when the borrowers promptly make the full, modified payment — the only payment they’re supposed to make — the banks consider the payment late because it’s less than the original amount, and charge a late fee. If the borrower is already three months delinquent when he starts the mortgage modification, the fees have grown so much that the borrower ends up in a big hole.
The bank then starts on the foreclosure path while considering the modification — the so-called “Dual Track” — and the borrower ends up foreclosed on.
I’ve spoken to many borrowers who were told to default. Most recently, I’ve been chatting with Joe, a homeowner in Georgia who works in the financial industry. Joe and his family have been struggling with SunTrust Bank (STI) since 2009. At that time, they wanted to refinance their house. The couple’s credit was stellar, rates were low, they had a long and deep relationship with the bank, and they were willing to pay closing costs. Seemed like a no-brainer.
Unfortunately they owed more than the house was worth, so the bank wouldn’t do the deal. Instead, in January 2010 the bank told him to seek a mortgage modification. When an appropriate program became available in July, Joe submitted his application package. But SunTrust didn’t reply at all until December, and in January 2011, it told him he didn’t qualify for a modification because he was still current on his mortgage.
Meanwhile, the family blew through their life savings. Joe’s income was reduced, his wife fell ill and could no longer work, and her medications were expensive. But they stayed current on their mortgage through December 2010.
Despite that heroic effort to stay current, Joe is now facing foreclosure. The bank told him to default in January, and it’s now made a modification offer that reduces his payment by a mere $250 a month — not enough for him to be able to save his house, and half of what he could have saved by doing the 2009 refi. And if the refi had gone through, they would still have their life savings, and their credit would still be great.
Joe has asked SunTrust to explain its math in calculating what kind of modification he qualifies for, but it refused. The AG proposal would solve this problem, but the banks’ counteroffer wouldn’t. In fact, most recently, SunTrust demanded that Joe give it some $7,000 — three months of trial payments. But SunTrust wouldn’t tell him how the money would be applied, whether for fees, principal, or interest, until it decided — if it decided — at the end of that time to give him a permanent modification. Nor would it tell him what the terms of a permanent offer would be if it were made. SunTrust refused to put anything in writing. Joe wouldn’t pay on that basis, of course.
Joe recorded his conversations with SunTrust, which he shared with Fortune. SunTrust said: “While we are not at liberty to discuss a specific client relationship or our internal policies and procedures, generally speaking we work with clients on a case-by-case basis regarding potential loan modifications taking into account investor guidelines and the fact that every situation is different.”
The AGs must not lose sight of people like Joe, a former marine who served during the first Gulf War, and condemn troubled borrowers as unsympathetic “deadbeats.” The banks are relying on that stereotype to carry the day for them.
If the banks won’t deal, throw the book at them. Just like it’s been thrown at baseball great Barry Bonds for his comparatively trivial alleged perjury. If we can prosecute Bonds but not the banks, what kind of country are we?
http://finance.fortune.cnn.com/2011/04/07/foreclosure-fraud-the-homeowner-nightmares-continue/
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Wednesday, April 6, 2011
Mortgages are cheap - if you can get one?
According to the Federal Reserve, nearly a quarter of people who apply for loans are turned down. The denial rates tell only half the story. Many potential buyers aren't even applying for loans because they assume they can't get one. That shows up in credit scores for loans financed with backing from Fannie Mae and Freddie Mac. The average credit score has risen to 760 from 720 a few years ago. For FHA loans, the average score has gone to 700 from 660. Loans made to borrowers with sub-620 scores are almost nonexistent. Another factor keeping people out of the mortgage market is that lenders now require much more up-front cash. The median down payment for purchase is about 15%. During the housing boom, it approached zero. On most loans, banks want 20% down. On $200,000 purchases, that's $40,000, an insurmountable obstacle for many young house hunters.
Or, in New York City, where the median home price is $800,000, buyers need $160,000 up front. Industry insiders say all these factors have reduced the pool of buyers, lowering demand for homes and hurting prices. "We feel it really reduces the demand for houses," said Mike D'Alonzo, president of the National Association of Mortgage Brokers. "It's an unbelievable buyer's market, but there hasn't been as much activity as you would expect because not as many people qualify for loans." And it's about to get harder for buyers. Federal regulators proposed rules last week that are designed to discourage risky lending but that will also likely further restrict lending.
Banks would be required to keep 5% of some loans, specifically those with less than 20% down payments, on their books rather than selling them all off as securities. As a result, banks make be unlikely to issue loans where less than 20% is put down. So much for first-time buyers. "We think the new rules are appalling," said the NAHB's Howard. "Only the wealthy will be able to buy homes at low interest cost." It could also further erode consumer demand for homes. The immediate impact, should the new regulations get adopted, should be minor, according to Steve O'Connor, spokesman for the Mortgage Bankers Association. That's because Fannie, Freddie and FHA loans are all exempt from the requirements and they represent more than 90% of the market right now. The government, however, wants to reduce the presence of all three agencies in favor of private lenders, and banking experts fears the long-term impact of abandoning the field to mostly private companies.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Or, in New York City, where the median home price is $800,000, buyers need $160,000 up front. Industry insiders say all these factors have reduced the pool of buyers, lowering demand for homes and hurting prices. "We feel it really reduces the demand for houses," said Mike D'Alonzo, president of the National Association of Mortgage Brokers. "It's an unbelievable buyer's market, but there hasn't been as much activity as you would expect because not as many people qualify for loans." And it's about to get harder for buyers. Federal regulators proposed rules last week that are designed to discourage risky lending but that will also likely further restrict lending.
Banks would be required to keep 5% of some loans, specifically those with less than 20% down payments, on their books rather than selling them all off as securities. As a result, banks make be unlikely to issue loans where less than 20% is put down. So much for first-time buyers. "We think the new rules are appalling," said the NAHB's Howard. "Only the wealthy will be able to buy homes at low interest cost." It could also further erode consumer demand for homes. The immediate impact, should the new regulations get adopted, should be minor, according to Steve O'Connor, spokesman for the Mortgage Bankers Association. That's because Fannie, Freddie and FHA loans are all exempt from the requirements and they represent more than 90% of the market right now. The government, however, wants to reduce the presence of all three agencies in favor of private lenders, and banking experts fears the long-term impact of abandoning the field to mostly private companies.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, March 25, 2011
Cash Has Always Been King...But Never More Important Than Today..
For many home buyers, mortgage financing is hard to come by these days. Lenders have tightened up credit requirements in an about-face from the lax lending of pre-crisis days that put people into mortgages they couldn’t afford and fueled record-high delinquencies.
Evidence of constricted mortgage credit was highlighted in the latest Housing Pulse report from Campbell Surveys and Inside Mortgage Finance as cash transactions set a new record, accounting for 33.7 percent of home purchases in February.
A separate study conducted by the National Association of Realtors (NAR) shows the same trend. NAR also found that all-cash sales were a record 33 percent in February. By comparison, they were 27 percent in February 2010, according to NAR’s historical data.
The Housing Pulse report notes that the increase in cash purchases last month paralleled a rise in activity among investors, who for the most part have their sights set on distressed properties that can be scooped up at a discount.
Investors bought 23.5 percent of the homes sold in February, up from 19.9 percent just two months earlier, according to the industry survey. Real estate agents participating in the Housing Pulse survey of February transactions confirmed the surge in investors.
“We are seeing investors come back into the market. One investor told me that one house he wanted came on Wednesday p.m and had nine offers by Thursday a.m.,” stated an agent in New Jersey.
“There are a number of investors and businesses buying up the short sale and REO properties and renovating them and then selling them as traditional sales,” reported an agent from Arizona.
NAR’s February report on existing-home sales noted that the median sales price on previously owned homes dropped 5.2 percent in February compared to the price points of a year earlier to hit a nine-year low.
The trade group attributed the decline to a larger number of distressed properties in the sales pool – 39 percent in February – thanks to investors with cash in their hands snapping up homes at bargain prices.
There are conflicting views within the industry as to the effect increased investor activity in the distressed property marketplace has on communities struggling to recover from the housing crisis. A separate article here on DSNews.com examines both sides of the debate over whether property investors are solving or contributing to neighborhood blight.
While investor appetite is strong for REOs and short sales that carry a discount price tag, the selection of properties that fall into this class has contracted somewhat.
The Housing Pulse Distressed Property Index (DPI) registered a slightly lower reading in February than in January, marking its first decline since last fall.
The report notes that the drop was not likely the result of a healing housing market, rather is appears to be linked to delays in the listing and sale of distressed properties as mortgage servicers continued to deal with legal and regulatory fallout surrounding title and paperwork issues following the robo-signing mess.
The Housing Pulse survey polls over 3,000 real estate agents from across the country each month to provide insight into home sales and mortgage usage patterns.
The survey also found that average transactions per real estate agent fell from 2.1 in January to 1.7 in February – a sign the home sales are slipping at a time of the year when they typically begin to increase. The report notes this may be an indicator that the spring buying season will start with a deficit.
By Carrie Bay DSN News
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Evidence of constricted mortgage credit was highlighted in the latest Housing Pulse report from Campbell Surveys and Inside Mortgage Finance as cash transactions set a new record, accounting for 33.7 percent of home purchases in February.
A separate study conducted by the National Association of Realtors (NAR) shows the same trend. NAR also found that all-cash sales were a record 33 percent in February. By comparison, they were 27 percent in February 2010, according to NAR’s historical data.
The Housing Pulse report notes that the increase in cash purchases last month paralleled a rise in activity among investors, who for the most part have their sights set on distressed properties that can be scooped up at a discount.
Investors bought 23.5 percent of the homes sold in February, up from 19.9 percent just two months earlier, according to the industry survey. Real estate agents participating in the Housing Pulse survey of February transactions confirmed the surge in investors.
“We are seeing investors come back into the market. One investor told me that one house he wanted came on Wednesday p.m and had nine offers by Thursday a.m.,” stated an agent in New Jersey.
“There are a number of investors and businesses buying up the short sale and REO properties and renovating them and then selling them as traditional sales,” reported an agent from Arizona.
NAR’s February report on existing-home sales noted that the median sales price on previously owned homes dropped 5.2 percent in February compared to the price points of a year earlier to hit a nine-year low.
The trade group attributed the decline to a larger number of distressed properties in the sales pool – 39 percent in February – thanks to investors with cash in their hands snapping up homes at bargain prices.
There are conflicting views within the industry as to the effect increased investor activity in the distressed property marketplace has on communities struggling to recover from the housing crisis. A separate article here on DSNews.com examines both sides of the debate over whether property investors are solving or contributing to neighborhood blight.
While investor appetite is strong for REOs and short sales that carry a discount price tag, the selection of properties that fall into this class has contracted somewhat.
The Housing Pulse Distressed Property Index (DPI) registered a slightly lower reading in February than in January, marking its first decline since last fall.
The report notes that the drop was not likely the result of a healing housing market, rather is appears to be linked to delays in the listing and sale of distressed properties as mortgage servicers continued to deal with legal and regulatory fallout surrounding title and paperwork issues following the robo-signing mess.
The Housing Pulse survey polls over 3,000 real estate agents from across the country each month to provide insight into home sales and mortgage usage patterns.
The survey also found that average transactions per real estate agent fell from 2.1 in January to 1.7 in February – a sign the home sales are slipping at a time of the year when they typically begin to increase. The report notes this may be an indicator that the spring buying season will start with a deficit.
By Carrie Bay DSN News
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
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Wednesday, March 23, 2011
New Home Sales Falls to Low Equal to 2003
New U.S. single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, a government report showed on Wednesday, suggesting the housing market slide was deepening.
The Commerce Department said sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January. Sales plunged to all-time lows in three of the four regions last month.
Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate.
Compared to February last year sales were down 28 percent.
An oversupply of homes exacerbated by an increasing flood of properties falling into foreclosure is frustrating recovery in the housing market.
Data on Monday showed a steep drop in sales of previously owned homes in February, with prices tumbling to a near nine-year low.
CNBC Investor Guide to Spring Real Estate 2011 - See Complete Coverage
The median sales price for a new home tumbled 13.9 percent last month to $202,100, the lowest since December 2003. Compared with February last year, the median price fell 8.9 percent. Persistent price declines could dampen hopes of a pick-up in sales during spring.
At Februarys sales pace, the supply of new homes on the market rose to 8.9 months worth, the highest since August, from 7.4 months worth in January. There were 186,000 new homes available for sale last month, matching the prior months inventory.
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The Commerce Department said sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January. Sales plunged to all-time lows in three of the four regions last month.
Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate.
Compared to February last year sales were down 28 percent.
An oversupply of homes exacerbated by an increasing flood of properties falling into foreclosure is frustrating recovery in the housing market.
Data on Monday showed a steep drop in sales of previously owned homes in February, with prices tumbling to a near nine-year low.
CNBC Investor Guide to Spring Real Estate 2011 - See Complete Coverage
The median sales price for a new home tumbled 13.9 percent last month to $202,100, the lowest since December 2003. Compared with February last year, the median price fell 8.9 percent. Persistent price declines could dampen hopes of a pick-up in sales during spring.
At Februarys sales pace, the supply of new homes on the market rose to 8.9 months worth, the highest since August, from 7.4 months worth in January. There were 186,000 new homes available for sale last month, matching the prior months inventory.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
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Tuesday, March 22, 2011
February Home Sales Dive to 9-year Low
WASHINGTON (Reuters) - Sales of previously owned U.S. homes fell unexpectedly sharply in February and prices touched their lowest level in nearly nine years, implying a housing market recovery was still a long off.
The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.
Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January, which was revised slightly up to 5.40 million.
The median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002.
"If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market," said NAR chief economist Lawrence Yun.
Compared with February last year, sales were down 2.8 percent.
Oversupply of homes and a relentless wave of foreclosures are pressuring prices, holding back recovery in the sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s.
Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, up from 37 percent the prior month. All-cash purchases made up a record 33 percent of transactions in February.
Sales last month fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 10.0 percent.
At February's sales pace, the supply of existing homes on the market rose to 8.6 months' worth from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.
WASHINGTON | Mon Mar 21, 2011 10:34am EDT
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The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.
Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January, which was revised slightly up to 5.40 million.
The median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002.
"If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market," said NAR chief economist Lawrence Yun.
Compared with February last year, sales were down 2.8 percent.
Oversupply of homes and a relentless wave of foreclosures are pressuring prices, holding back recovery in the sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s.
Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, up from 37 percent the prior month. All-cash purchases made up a record 33 percent of transactions in February.
Sales last month fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 10.0 percent.
At February's sales pace, the supply of existing homes on the market rose to 8.6 months' worth from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.
WASHINGTON | Mon Mar 21, 2011 10:34am EDT
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Monday, March 21, 2011
New Home Construction Falls
WASHINGTON — Builders broke ground last month on the fewest homes in nearly two years and cut their requests for permits to start new projects to a five-decade low. The decline in construction activity is the latest evidence that the U.S. housing industry is years away from a recovery.
Home construction plunged 22.5 percent in February from January to a seasonally adjusted 479,000 homes, the Commerce Department said Wednesday. It was the lowest level since April 2009 and the second-lowest on records dating back more than a half-century.
The decline followed a surge in highly volatile apartment construction in January, which pushed the overall construction rate up to more than 600,000 units — the fastest rate in 20 months. Still, the building pace has been far below the 1.2 million units a year that economists consider healthy.
Single-family homes, which make up roughly 80 percent of home construction, fell 11.8 percent in February. Apartment and condominium construction dropped 47 percent, reversing much of January's gains.
Building permits, an indicator of future construction, fell 8.1 percent last month to the lowest level on records dating back to 1960. Permit requests for single-family homes saw the biggest decline. Apartments and condos remained flat.
Falling prices, sluggish sales and the weak construction rate all point to a housing market that is "stuck at a bottom of a steep hill," according to Moody's Analytics Economic Research.
"There are really large structural problems with the housing market," said Dan Greenhaus, chief economic strategist with Miller Tabak + Co. "This is not a run-up in oil prices. This is a multiyear build up in the housing market that is going to take more than several months or several quarters to get through."
For a housing recovery to take hold, the job market needs to improve and builders need to gain access to hard-to-get credit.
"Credit is flowing freely to large companies but not so much to the small builders," said Patrick Newport, U.S. economist for IHS Global Insight. "If builders cannot get financing to build new homes, housing will remain in the dumps."
Analysts said year-end building code changes in California, Pennsylvania and New York caused an artificial spike for permit requests in December and housing starts in January. Builders in those states rushed to file new permits before those changes went into effect.
Even with those gains, the housing market has struggled. Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
The drop in home construction activity was felt coast to coast. It fell 48.6 percent in the Midwest, 37.5 percent in the Northeast, 28 percent in the West and 6.3 percent in the South.
The volatile housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
The trade group said Tuesday that its index of industry sentiment for March improved slightly to 17. That was the first gain in five months after four straight readings of 16. Still, any reading below 50 indicates negative sentiment about the housing market's future. The index hasn't been above that level since April 2006.
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Home construction plunged 22.5 percent in February from January to a seasonally adjusted 479,000 homes, the Commerce Department said Wednesday. It was the lowest level since April 2009 and the second-lowest on records dating back more than a half-century.
The decline followed a surge in highly volatile apartment construction in January, which pushed the overall construction rate up to more than 600,000 units — the fastest rate in 20 months. Still, the building pace has been far below the 1.2 million units a year that economists consider healthy.
Single-family homes, which make up roughly 80 percent of home construction, fell 11.8 percent in February. Apartment and condominium construction dropped 47 percent, reversing much of January's gains.
Building permits, an indicator of future construction, fell 8.1 percent last month to the lowest level on records dating back to 1960. Permit requests for single-family homes saw the biggest decline. Apartments and condos remained flat.
Falling prices, sluggish sales and the weak construction rate all point to a housing market that is "stuck at a bottom of a steep hill," according to Moody's Analytics Economic Research.
"There are really large structural problems with the housing market," said Dan Greenhaus, chief economic strategist with Miller Tabak + Co. "This is not a run-up in oil prices. This is a multiyear build up in the housing market that is going to take more than several months or several quarters to get through."
For a housing recovery to take hold, the job market needs to improve and builders need to gain access to hard-to-get credit.
"Credit is flowing freely to large companies but not so much to the small builders," said Patrick Newport, U.S. economist for IHS Global Insight. "If builders cannot get financing to build new homes, housing will remain in the dumps."
Analysts said year-end building code changes in California, Pennsylvania and New York caused an artificial spike for permit requests in December and housing starts in January. Builders in those states rushed to file new permits before those changes went into effect.
Even with those gains, the housing market has struggled. Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.
The drop in home construction activity was felt coast to coast. It fell 48.6 percent in the Midwest, 37.5 percent in the Northeast, 28 percent in the West and 6.3 percent in the South.
The volatile housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
The trade group said Tuesday that its index of industry sentiment for March improved slightly to 17. That was the first gain in five months after four straight readings of 16. Still, any reading below 50 indicates negative sentiment about the housing market's future. The index hasn't been above that level since April 2006.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, March 18, 2011
Rents May See Doudle-Digit Increase
(CNNMoney) -- Renters beware: Double-digit rent hikes may be coming soon.
Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years.
"The demand for rental housing has already started to increase," said Peggy Alford, president of Rent.com. "Young people are starting to get rid of their roommates and move out of their parent's basements."
By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode.
Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years -- to a national average that will top $800 per month.
In the hottest rental markets, the increases will likely top the 10% mark annually for the next couple of years, according to Lesley Deutch of John Burns Real Estate Consulting. In San Diego, she anticipates rents will rise more than 31% by 2015. In Seattle rents will climb 29% over that period; and in Boston, they may jump between 25% and 30%.
This is a sharp change from the recession, when many Americans couldn't afford to live on their own. More than 1.2 million young adults moved back in with their parents from 2005 to 2010, said Deutch. Many others doubled up together.
As a result, landlords had to reduce prices and offer big incentives to snag renters.
Now that the recession is easing, many of these young people are ready to find new digs, mostly as renters, not owners. Plus, the foreclosure crisis continues unabated, and the millions losing their homes are looking for new places to live.
Apartment developers many not be able to keep up with this heightened demand, which will force prices upwards, according to Chris Macke, a real estate analyst with CoStar, which tracks multi-family housing trends.
"There will be an envelope of two or three years," said Macke, "when the rise in demand for rentals will exceed the industry's ability to meet it."
Plus, Alford added, "there's been a shift in the American Dream. We're learning from our surveys that a huge proportion of people are choosing to rent."
They've experienced the downsides of home ownership -- or seen friends and family suffer -- and don't want to take the risks or pay the higher costs of home ownership.
Where home ownership costs are particularly high, there are many more renters than owners. In Manhattan, for example, only about 20% own their homes; in San Francisco, about of third of the population does; in Los Angeles, less than 40%; and in Chicago, about 44%.
There's one factor that could rein in rent increases: the huge number of foreclosed homes that could hit the market over the next few years.
In many markets, like Phoenix and Las Vegas, there are neighborhoods filled with recently built, single-family homes going for fire-sale prices. When the cost of owning homes falls well below the costs of renting them, more people will buy.
"That's always been the biggest competition for rentals," said Deutch
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
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Already, rental vacancy rates have dipped below the 10% mark, where they had been lodged for most of the past three years.
"The demand for rental housing has already started to increase," said Peggy Alford, president of Rent.com. "Young people are starting to get rid of their roommates and move out of their parent's basements."
By 2012, she predicts the vacancy rate will hover at a mere 5%. And with fewer units on the market, prices will explode.
Rent hikes have averaged less than 1% a year over the past decade, according to Commerce Department statistics, adjusted for inflation. Now, Alford expects rents to spike 7% or so in each of the next two years -- to a national average that will top $800 per month.
In the hottest rental markets, the increases will likely top the 10% mark annually for the next couple of years, according to Lesley Deutch of John Burns Real Estate Consulting. In San Diego, she anticipates rents will rise more than 31% by 2015. In Seattle rents will climb 29% over that period; and in Boston, they may jump between 25% and 30%.
This is a sharp change from the recession, when many Americans couldn't afford to live on their own. More than 1.2 million young adults moved back in with their parents from 2005 to 2010, said Deutch. Many others doubled up together.
As a result, landlords had to reduce prices and offer big incentives to snag renters.
Now that the recession is easing, many of these young people are ready to find new digs, mostly as renters, not owners. Plus, the foreclosure crisis continues unabated, and the millions losing their homes are looking for new places to live.
Apartment developers many not be able to keep up with this heightened demand, which will force prices upwards, according to Chris Macke, a real estate analyst with CoStar, which tracks multi-family housing trends.
"There will be an envelope of two or three years," said Macke, "when the rise in demand for rentals will exceed the industry's ability to meet it."
Plus, Alford added, "there's been a shift in the American Dream. We're learning from our surveys that a huge proportion of people are choosing to rent."
They've experienced the downsides of home ownership -- or seen friends and family suffer -- and don't want to take the risks or pay the higher costs of home ownership.
Where home ownership costs are particularly high, there are many more renters than owners. In Manhattan, for example, only about 20% own their homes; in San Francisco, about of third of the population does; in Los Angeles, less than 40%; and in Chicago, about 44%.
There's one factor that could rein in rent increases: the huge number of foreclosed homes that could hit the market over the next few years.
In many markets, like Phoenix and Las Vegas, there are neighborhoods filled with recently built, single-family homes going for fire-sale prices. When the cost of owning homes falls well below the costs of renting them, more people will buy.
"That's always been the biggest competition for rentals," said Deutch
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Thursday, March 10, 2011
Foreclosure Activity Decreases 14 Percent in February 2011, According to RealtyTrac
RealtyTrac, a leading online marketplace for foreclosure properties, released its U.S. Foreclosure Market Report for February 2011, which shows foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on 225,101 U.S. properties in February, a 14% decrease from the previous month and a 27% decrease from February 2010—the biggest year-over-year decrease since RealtyTrac began issuing its report in 2005. The report also shows one in every 577 U.S. housing units with a foreclosure filing during the month.
“Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” said James J. Saccacio, chief executive officer of RealtyTrac. “While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures. We expect to see the numbers bounce back, but that will likely take several months. And monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.”
Foreclosure Activity by Type
A total of 63,165 U.S. properties received default notices (NOD, LIS) for the first time in February, a 16% decrease from the previous month and a 41% decrease from February 2010. Default notices hit a 48-month low in February and were 55% below a peak of 142,064 in April 2009.
In states with a judicial foreclosure process (LIS), default notices decreased 19% from January and were down 48% from February 2010. In states with a non-judicial foreclosure process (NOD), default notices decreased 13% from January and were down 31% from February 2010.
Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 97,293 U.S. properties in February, a 10% decrease from the previous month and a 21% decrease from February 2010. Scheduled foreclosure auctions hit a 27-month low in February and were 38% below a peak of 158,105 in March 2010.
Scheduled judicial foreclosure auctions (NFS) decreased 7% from January and were down 49% from February 2010. Scheduled non-judicial foreclosure auctions (NTS) decreased 11% from the previous month and were down 7% from February 2010.
Lenders foreclosed on 64,643 U.S. properties in February, down 17% from January and down 18% from February 2010. Bank repossessions (REO) hit a 22-month low in February and were down 37% from their peak of 102,134 in September 2010.
Bank repossessions in states with a judicial foreclosure process decreased 24% from January and were down 35% from February 2010, while bank repossessions in states with a non-judicial foreclosure process decreased 14% from January and were down 8% from February 2010.
Nevada, Arizona, California post top state foreclosure rates
Nevada posted the nation’s highest state foreclosure rate for the 50th straight month in February—one in every 119 Nevada housing units had a foreclosure filing during the month—despite a 22% decrease in foreclosure activity from the previous month. There were a total of 9,553 Nevada properties with a foreclosure filing in February, down 13% from February 2010.
Arizona posted the nation’s second highest state foreclosure rate, one in every 178 housing units with a foreclosure filing, and California posted the nation’s third highest state foreclosure rate, one in every 239 housing units with a foreclosure filing.
One in every 273 Utah housing units had a foreclosure filing in February, the nation’s fourth highest foreclosure rate, and one in every 298 Idaho housing units had a foreclosure filing during the month, the nation’s fifth highest foreclosure rate.
Other states with foreclosure rates ranking among the top 10 in February were Georgia, Michigan, Florida, Colorado and Hawaii.
10 states account for more than 70 percent of national total
With 56,229 properties with a foreclosure filing, California accounted for 25% of the national total in February. The state’s foreclosure activity decreased 16% from January—following two straight monthly increases in foreclosure activity—and was down 18% from February 2010—the 15th straight month where the state registered a year-over-year decrease in foreclosure activity.
Florida foreclosure activity decreased 13% from January and was down 65% from February 2010, but the state’s 18,760 properties with a foreclosure filing was still the nation’s second highest for the month. Florida foreclosure activity hit a 46-month low in February and was down 71% from a peak of 64,588 in April 2009.
Arizona documented the nation’s third highest state total in February, 15,485 properties with a foreclosure filing. Arizona foreclosure activity decreased 2% from the previous month and was down 7% from February 2010.
Michigan foreclosure activity decreased 16% from January and was down 30% from February 2010, but the state’s 14,003 properties with a foreclosure filing was still the nation’s fourth highest.
Georgia posted the fifth highest state total, tallying 12,807 properties with a foreclosure filing in February—up fractionally from the previous month and up 5% from February 2010.
Other states with foreclosure activity totals among the nation’s 10 highest in February were Texas (11,562), Illinois (9,592), Nevada (9,553), Ohio (8,598) and Wisconsin (4,478).
Florida cities absent from top 20 metro foreclosure rates for second straight month
For the second month in a row, no Florida cities posted foreclosure rates in the top 20 among U.S. metropolitan areas with a population of 200,000 or more. That was in contrast to 2010, when the state accounted for nine of the top 20 metro foreclosure rates.
Some of the metro areas filling the spots vacated by Florida cities included Racine, Wis., at No. 12, Salt Lake City at No. 16, Atlanta-Sandy Springs-Marietta at No. 17, and Detroit-Warren-Livonia at No. 18.
Nevada, California and Arizona cities continued to dominate the top 20, accounting for all top 10 metro foreclosure rates and 15 of the top 20 metro foreclosure rates in February. The Las Vegas-Paradise, Nev., metro area continued to register the nation’s highest metro foreclosure rate, one in every 106 housing units with a foreclosure filing in February.
The other Nevada metro area in the top 10 was Reno-Sparks, at No. 9 with one in every 184 housing units with a foreclosure filing during the month.
Seven California metro areas posted foreclosure rates in the top 10, led by Modesto at No. 2, with one in every 140 housing units with a foreclosure filing, and Stockton at No. 3, with one in every 141 housing units with a foreclosure filing. Also in the top 10 were Riverside-San Bernardino-Ontario at No. 5 (one in 144 housing units); Vallejo-Fairfield at No. 6 (one in 147 housing units); Merced at No. 7 (one in 153 housing units); Bakersfield at No. 8 (one in 166 housing units); and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 189 housing units).
The Phoenix-Mesa-Scottsdale metro foreclosure rate ranked fourth highest: one in every 143 metro housing units had a foreclosure filing in February.
For more information, visit www.realtytrac.com.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
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American Eagle Realty
www.american-eagle-realty.com
502-969-1801
“Foreclosure activity dropped to a 36-month low in February as allegations of improper foreclosure processing continued to dog the mortgage servicing industry and disrupt court dockets,” said James J. Saccacio, chief executive officer of RealtyTrac. “While a small part of February’s decrease can be attributed to it being a short month and bad weather, the bottom line is that the industry is in the midst of a major overhaul that has severely restricted its capacity to process foreclosures. We expect to see the numbers bounce back, but that will likely take several months. And monthly volume may never return to its peak in March 2010 of more than 367,000 properties receiving foreclosure filings.”
Foreclosure Activity by Type
A total of 63,165 U.S. properties received default notices (NOD, LIS) for the first time in February, a 16% decrease from the previous month and a 41% decrease from February 2010. Default notices hit a 48-month low in February and were 55% below a peak of 142,064 in April 2009.
In states with a judicial foreclosure process (LIS), default notices decreased 19% from January and were down 48% from February 2010. In states with a non-judicial foreclosure process (NOD), default notices decreased 13% from January and were down 31% from February 2010.
Foreclosure auctions (NTS, NFS) were scheduled for the first time on a total of 97,293 U.S. properties in February, a 10% decrease from the previous month and a 21% decrease from February 2010. Scheduled foreclosure auctions hit a 27-month low in February and were 38% below a peak of 158,105 in March 2010.
Scheduled judicial foreclosure auctions (NFS) decreased 7% from January and were down 49% from February 2010. Scheduled non-judicial foreclosure auctions (NTS) decreased 11% from the previous month and were down 7% from February 2010.
Lenders foreclosed on 64,643 U.S. properties in February, down 17% from January and down 18% from February 2010. Bank repossessions (REO) hit a 22-month low in February and were down 37% from their peak of 102,134 in September 2010.
Bank repossessions in states with a judicial foreclosure process decreased 24% from January and were down 35% from February 2010, while bank repossessions in states with a non-judicial foreclosure process decreased 14% from January and were down 8% from February 2010.
Nevada, Arizona, California post top state foreclosure rates
Nevada posted the nation’s highest state foreclosure rate for the 50th straight month in February—one in every 119 Nevada housing units had a foreclosure filing during the month—despite a 22% decrease in foreclosure activity from the previous month. There were a total of 9,553 Nevada properties with a foreclosure filing in February, down 13% from February 2010.
Arizona posted the nation’s second highest state foreclosure rate, one in every 178 housing units with a foreclosure filing, and California posted the nation’s third highest state foreclosure rate, one in every 239 housing units with a foreclosure filing.
One in every 273 Utah housing units had a foreclosure filing in February, the nation’s fourth highest foreclosure rate, and one in every 298 Idaho housing units had a foreclosure filing during the month, the nation’s fifth highest foreclosure rate.
Other states with foreclosure rates ranking among the top 10 in February were Georgia, Michigan, Florida, Colorado and Hawaii.
10 states account for more than 70 percent of national total
With 56,229 properties with a foreclosure filing, California accounted for 25% of the national total in February. The state’s foreclosure activity decreased 16% from January—following two straight monthly increases in foreclosure activity—and was down 18% from February 2010—the 15th straight month where the state registered a year-over-year decrease in foreclosure activity.
Florida foreclosure activity decreased 13% from January and was down 65% from February 2010, but the state’s 18,760 properties with a foreclosure filing was still the nation’s second highest for the month. Florida foreclosure activity hit a 46-month low in February and was down 71% from a peak of 64,588 in April 2009.
Arizona documented the nation’s third highest state total in February, 15,485 properties with a foreclosure filing. Arizona foreclosure activity decreased 2% from the previous month and was down 7% from February 2010.
Michigan foreclosure activity decreased 16% from January and was down 30% from February 2010, but the state’s 14,003 properties with a foreclosure filing was still the nation’s fourth highest.
Georgia posted the fifth highest state total, tallying 12,807 properties with a foreclosure filing in February—up fractionally from the previous month and up 5% from February 2010.
Other states with foreclosure activity totals among the nation’s 10 highest in February were Texas (11,562), Illinois (9,592), Nevada (9,553), Ohio (8,598) and Wisconsin (4,478).
Florida cities absent from top 20 metro foreclosure rates for second straight month
For the second month in a row, no Florida cities posted foreclosure rates in the top 20 among U.S. metropolitan areas with a population of 200,000 or more. That was in contrast to 2010, when the state accounted for nine of the top 20 metro foreclosure rates.
Some of the metro areas filling the spots vacated by Florida cities included Racine, Wis., at No. 12, Salt Lake City at No. 16, Atlanta-Sandy Springs-Marietta at No. 17, and Detroit-Warren-Livonia at No. 18.
Nevada, California and Arizona cities continued to dominate the top 20, accounting for all top 10 metro foreclosure rates and 15 of the top 20 metro foreclosure rates in February. The Las Vegas-Paradise, Nev., metro area continued to register the nation’s highest metro foreclosure rate, one in every 106 housing units with a foreclosure filing in February.
The other Nevada metro area in the top 10 was Reno-Sparks, at No. 9 with one in every 184 housing units with a foreclosure filing during the month.
Seven California metro areas posted foreclosure rates in the top 10, led by Modesto at No. 2, with one in every 140 housing units with a foreclosure filing, and Stockton at No. 3, with one in every 141 housing units with a foreclosure filing. Also in the top 10 were Riverside-San Bernardino-Ontario at No. 5 (one in 144 housing units); Vallejo-Fairfield at No. 6 (one in 147 housing units); Merced at No. 7 (one in 153 housing units); Bakersfield at No. 8 (one in 166 housing units); and Sacramento-Arden-Arcade-Roseville at No. 10 (one in 189 housing units).
The Phoenix-Mesa-Scottsdale metro foreclosure rate ranked fourth highest: one in every 143 metro housing units had a foreclosure filing in February.
For more information, visit www.realtytrac.com.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, March 4, 2011
HSBC Suspends All U.S. Foreclosures
HSBC Holdings PLC has suspended all foreclosure actions in the United States, according to the company’s annual regulatory filing with the Securities and Exchange Commission (SEC).
HSBC says it decided to temporarily halt foreclosure proceedings after examinations by federal regulators uncovered what the company described as “deficiencies” in its handling of legal paperwork related to foreclosure cases.
HSBC is headquartered in London and is Europe’s largest bank. It operates in the United States as HSBC Finance and HSBC Bank USA, both of which were subject to the official investigations involving mortgage servicing practices and foreclosure processing.
HSBC says it received cease-and-desist letters from both the Federal Reserve and the Office of the Comptroller of the Currency (OCC) which outlined problems in the company’s processing, preparation, and signing of affidavits and other documents supporting foreclosures, and in HSBC’s management of third-party law firms retained to carry out foreclosures.
“Management is reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and re-file affidavits where necessary,” HSBC said in its annual report. “We have suspended foreclosures until such time as we have substantially addressed noted deficiencies in our processes.”
HSBC said it is currently in discussions with the Federal Reserve and the OCC regarding the terms of the cease and desist orders, which prescribe actions to address the deficiencies noted in the joint examination, and the company expects consent orders to be finalized soon.
In addition, HSBC said it could face fines and civil money penalties imposed by the regulators and federal agencies.
HSBC is among 14 major servicers subject to the regulatory probe that could face sanctions and fines for faulty foreclosure procedures. Bank of America, Citigroup, and Wells Fargo have also disclosed in regulatory filings that they could face similar enforcement actions. 03/01/2011 By: Carrie Bay DSnews.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
HSBC says it decided to temporarily halt foreclosure proceedings after examinations by federal regulators uncovered what the company described as “deficiencies” in its handling of legal paperwork related to foreclosure cases.
HSBC is headquartered in London and is Europe’s largest bank. It operates in the United States as HSBC Finance and HSBC Bank USA, both of which were subject to the official investigations involving mortgage servicing practices and foreclosure processing.
HSBC says it received cease-and-desist letters from both the Federal Reserve and the Office of the Comptroller of the Currency (OCC) which outlined problems in the company’s processing, preparation, and signing of affidavits and other documents supporting foreclosures, and in HSBC’s management of third-party law firms retained to carry out foreclosures.
“Management is reviewing foreclosures where judgment has not yet been entered and will correct deficient documentation and re-file affidavits where necessary,” HSBC said in its annual report. “We have suspended foreclosures until such time as we have substantially addressed noted deficiencies in our processes.”
HSBC said it is currently in discussions with the Federal Reserve and the OCC regarding the terms of the cease and desist orders, which prescribe actions to address the deficiencies noted in the joint examination, and the company expects consent orders to be finalized soon.
In addition, HSBC said it could face fines and civil money penalties imposed by the regulators and federal agencies.
HSBC is among 14 major servicers subject to the regulatory probe that could face sanctions and fines for faulty foreclosure procedures. Bank of America, Citigroup, and Wells Fargo have also disclosed in regulatory filings that they could face similar enforcement actions. 03/01/2011 By: Carrie Bay DSnews.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Monday, February 28, 2011
House prices to keep falling?
According to Capital Economics, the second leg of the US housing downturn will continue throughout the year and could be nasty if a vicious circle of falling prices and rising foreclosures continues. "The second downward leg in house prices that began last year will continue throughout this year and take prices to a new cycle low, some 5 percent below current levels," Paul Dales, a senior economist at Capital Economics, said. "Incredibly favorable valuations and exceptionally low mortgage rates will not prevent this fall in prices. Valuations and affordability are much less important when demand is constrained by poor economic conditions and the effects of the previous plunges in asset prices," Dales explained. In the US, 25 percent of households are in negative equity with another 25 percent not having enough equity to qualify for a new mortgage, said Dales, who also warned that those who can move are less likely to do so as prices fall. Even rising sales will not stop the fall in prices, he added.
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Saturday, February 26, 2011
Toll Brothers posts profit Is this an Indication of the Future?
Luxury homebuilder Toll Brothers reported a quarterly profit as it offered fewer buyer incentives and benefited from a tax break. The company, whose shares rose more than 3 percent, was also able to finish selling certain less-profitable communities, which boosted its margins. Revenue rose 3 percent to $334.1 million, compared with analysts' estimates of $317.2 million. The company's average home price rose 7 percent to $586,000, but Toll expects that to decline to within a range of $540,000 and $565,000 for the rest of the year. In the fifth year of the housing slump, most homebuilders continue to suffer as they compete in a market oversupplied with cut-rate foreclosures and short sales that are a legacy of a housing boom fueled by subprime lending and speculation.
While Toll's high-end products do not compete as directly with foreclosures as some rivals, which focus on the first-time homebuyer, the company is still struggling to close sales with buyers concerned that the home will lose value. The latest results include a tax benefit of $20.4 million. Without that, the company lost $17 million, compared with a year-earlier loss of $56.8 million, excluding special items.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
While Toll's high-end products do not compete as directly with foreclosures as some rivals, which focus on the first-time homebuyer, the company is still struggling to close sales with buyers concerned that the home will lose value. The latest results include a tax benefit of $20.4 million. Without that, the company lost $17 million, compared with a year-earlier loss of $56.8 million, excluding special items.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Friday, February 25, 2011
Real Estate World is all over the Spectrum
MBA - mortgage applications up
Mortgage applications increased 13.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 18, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 13.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14.8 percent compared with the previous week. The Refinance Index increased 17.8 percent from the previous week. The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 9.6 percent compared with the previous week and was 6.9 percent lower than the same week one year ago. “Ongoing turmoil in the Middle East brought interest rates lower last week. Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week,” said Michael Fr
atantoni, MBA’s Vice President of Research and Economics.
The four week moving average for the seasonally adjusted Market Index is up 1.9 percent. The four week moving average is up 1.6 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index. The refinance share of mortgage activity increased to 65.7 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent from 6.0 percent of total applications from the previous week.
Housing Data is Questionable
"Most consider President's Day weekend as the official start of the spring housing season. There is, therefore, no more crucial time than now to have reliable data at our disposal for home sales, prices and inventories. How else do buyers, sellers and investors know how to proceed? Unfortunately, the housing crash itself has undermined the veracity of those readings. With the boom and the bust came the attention. Housing brought our economy down, and in doing so, boosted itself to the headlines. As with any big story, a cottage industry sprang up around it. Data providers came out of the woodwork, and as online sale and foreclosure web sites proliferated, so too did their ability to add to that data pool.
The result is double edged: On the downside, some data providers are less-than accurate, but on the upside, their sheer numbers provide a system of checks and balances, tempering the most outrageous assertions. So it seems sort of appropriate that today, as a new controversy swarms around potential errors in home sales figures from the National Association of Realtors, the exalted and much-contested S&P/Case-Shiller Home Price Index is released. It reports that home prices are dangerously close to an official double dip. Other data providers have been asserting recently that S&P/Case-Shiller is too bullish (and of course too bearish).
As for the Realtors' data, I find this one more disturbing. While some I have spoken with today call the claim by CoreLogic (a housing data provider) that the Realtors overestimated home sales in 2010 by almost 1.5 million, 'overblown,' the Realtors themselves admit there is a problem. They are 're-benchmarking' their sales calculation process. 'The last re-benchmarking to the existing-home sales series was based on 2000 Census data, so NAR is undertaking a re-benchmarking using independent sources,' says NAR's Walter Molony. 'We are consulting with various outside housing economists, government agencies, and some academic experts on the methodology to determine if there is, in fact, any drift in NAR’s existing home sales data, and, if so, by how much.' Molony says at this point they believe any drift in the data to be 'relatively minor,' and he goes on to say CoreLogic's assumptions may be 'too high.'
Bottom line, though, if NAR overstated sales, then inventories are far higher than we think they are (inventory, or months supply, is based on a calculation of properties for sale and the current sales pace). We already have a great deal of uncertainty in the inventory numbers because of the so-called 'shadow inventory' of foreclosures and bank owned homes. Why do all these numbers matter in the real world of Sunday open houses and local market closings? Because sales and inventories drive prices and they drive expectations...the latter, perhaps, more important in the current market where consumer confidence is all but non-existent."
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Mortgage applications increased 13.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 18, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 13.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 14.8 percent compared with the previous week. The Refinance Index increased 17.8 percent from the previous week. The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 9.6 percent compared with the previous week and was 6.9 percent lower than the same week one year ago. “Ongoing turmoil in the Middle East brought interest rates lower last week. Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week,” said Michael Fr
atantoni, MBA’s Vice President of Research and Economics.
The four week moving average for the seasonally adjusted Market Index is up 1.9 percent. The four week moving average is up 1.6 percent for the seasonally adjusted Purchase Index, while this average is up 1.8 percent for the Refinance Index. The refinance share of mortgage activity increased to 65.7 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6 percent from 6.0 percent of total applications from the previous week.
Housing Data is Questionable
"Most consider President's Day weekend as the official start of the spring housing season. There is, therefore, no more crucial time than now to have reliable data at our disposal for home sales, prices and inventories. How else do buyers, sellers and investors know how to proceed? Unfortunately, the housing crash itself has undermined the veracity of those readings. With the boom and the bust came the attention. Housing brought our economy down, and in doing so, boosted itself to the headlines. As with any big story, a cottage industry sprang up around it. Data providers came out of the woodwork, and as online sale and foreclosure web sites proliferated, so too did their ability to add to that data pool.
The result is double edged: On the downside, some data providers are less-than accurate, but on the upside, their sheer numbers provide a system of checks and balances, tempering the most outrageous assertions. So it seems sort of appropriate that today, as a new controversy swarms around potential errors in home sales figures from the National Association of Realtors, the exalted and much-contested S&P/Case-Shiller Home Price Index is released. It reports that home prices are dangerously close to an official double dip. Other data providers have been asserting recently that S&P/Case-Shiller is too bullish (and of course too bearish).
As for the Realtors' data, I find this one more disturbing. While some I have spoken with today call the claim by CoreLogic (a housing data provider) that the Realtors overestimated home sales in 2010 by almost 1.5 million, 'overblown,' the Realtors themselves admit there is a problem. They are 're-benchmarking' their sales calculation process. 'The last re-benchmarking to the existing-home sales series was based on 2000 Census data, so NAR is undertaking a re-benchmarking using independent sources,' says NAR's Walter Molony. 'We are consulting with various outside housing economists, government agencies, and some academic experts on the methodology to determine if there is, in fact, any drift in NAR’s existing home sales data, and, if so, by how much.' Molony says at this point they believe any drift in the data to be 'relatively minor,' and he goes on to say CoreLogic's assumptions may be 'too high.'
Bottom line, though, if NAR overstated sales, then inventories are far higher than we think they are (inventory, or months supply, is based on a calculation of properties for sale and the current sales pace). We already have a great deal of uncertainty in the inventory numbers because of the so-called 'shadow inventory' of foreclosures and bank owned homes. Why do all these numbers matter in the real world of Sunday open houses and local market closings? Because sales and inventories drive prices and they drive expectations...the latter, perhaps, more important in the current market where consumer confidence is all but non-existent."
"Rising employment and incomes will mean that home sales will continue to edge up from their still depressed levels. The existing market will continue to outperform the new market, as buyers are attracted to heavily discounted foreclosed homes," Dales said. "Rising home sales will not prevent prices from falling either. Even though sales rose in the 1990s, prices still fell," he added. With well over 5 million homes either up for sale or in the foreclosure pipeline, the rental market could be strong, according to Dales. "The good news is that some of the vacant supply may be rented out. After all, the fact that rental demand is rising and rental supply is already tight means that for the next few years the rental market will be the best performing part of the residential market," he said. "For the first time since 1986, rentals yields are likely to rise above their long-run average of 5 percent. Falling house prices, though, will mean that gross rental returns remain below 10 percent," Dales said.
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
Wednesday, February 23, 2011
Home Prices Fall Again
In December, home prices continued to slip, and the declines were very widespread. The Case-Schiller Composite 10 City index (C-10) fell 0.36% on a seasonally adjusted basis, and is down 1.22% from a year ago. The broader Composite 20 City index (which includes the cities in the C-10) fell by 0.41% on the month and is down 2.40% from a year ago.
This is the second month in this second leg down in housing prices that the year-over-year change has been negative for both composites; it will not be the last. Of the 20 cities, only six posted gains on the month. The biggest gains were in DC, up 1.14% on the month, followed by Dallas, up 0.80% and Boston, up 0.61%.
There were 14 metropolitan areas where prices fell on the month. Worst hit were Tampa and Detroit, each suffering a 2.14% decline on the month. They were followed by Phoenix, down 1.03%, Seattle (down 0.95%) and Portland (down 0.62%). Year over year, just two metro areas saw gains and 18 suffered losses. This is the six straight month-to-month decline in the composites. It thus looks like a new downtrend in housing prices is well established.
Look at Seasonally Adjusted Numbers
There is a seasonal pattern to home prices, and thus it is better to look at the seasonally adjusted numbers than the unadjusted numbers. Most of the press makes the mistake of focusing on the unadjusted numbers. While the 2.40% fall in the C-20 year over year in isolation is not the end of the world, it means that most of the small rebound in housing prices we saw from the spring of 2009 to the summer of 2010 has now evaporated.
Eleven cities posted new post peak lows, meaning that the first-time homebuyer bounce in prices has now more than totally evaporated in those areas. From the April 2006 peak of the housing market, the C-10 is down 31.25% while the C-20 is off by 31.17%. Relative to the low of April 2009, the C-10 is now up just 2.43%, and the C-20 has only a 0.80% margin before it is posting new post bubble lows.
The Case Schiller data is the gold standard for housing price information, but it comes with a very significant lag. This is December data we are talking about, after all, and it is actually a three-month moving average, so it still includes data from October and November.
The second leg in the housing price downturn is not over. Housing prices are going to fall again in coming months. The first graph from (http://www.calculatedriskblog.com/) tracks the history of the C-10 and C-20 indexes. Note that on both indexes we are almost back to the post-crash lows. It seems likely to me that we will set new lows before the second leg down is over.
Which Cities Fared Best/Worst?
On a year-over-year basis, with the exception of Washington DC (up 4.11%), the strongest cities are in California. However, even there the year-over-year gains are pretty much gone. San Diego is still in positive territory with a 1.70% rise. However, Los Angeles has fallen back into negative territory with a decline of 0.26%, and San Francisco is down 0.43%. Still, the only other city to hold its year-over-year decline to less than one percent was Boston, down 0.82%.
There were eight metropolitan areas where the year-over-year declines were more than 5%. Detroit fared the worst with a 9.15% decline (you can still have big percentage declines even as one approaches zero). The same is true for Phoenix, down 8.38% over the last year and showing no signs at all of rising from the ashes.
Atlanta has been hit almost as hard as if “Uncle Billy Sherman” was paying another visit to the city, down 8.00%. Portland is down 7.83%, and Chicago, facing an ill wind, it is down another 7.40% from a year ago. In other words, significant year-over-year declines are happening in just about every corner of the country.
The graph (also from this source) below tracks the cumulative declines for each city over time. If the red bar is shorter to the downside than the yellow bar for a city, it indicates that prices in that city rose during 2010.
In every city, prices are below where they were in April 2006, but there is a huge variation. Las Vegas is the hardest hit, with prices down 58.04% from the peak, followed by Phoenix down 55.20%. Three more cities are down more than 40%: Miami down 49.01%, Detroit off 48.16%, and Tampa with a 45.45% decline.
At the other end of the spectrum are Dallas, where prices are down only 6.11%, Charlotte off 8.48% and Denver where they are down 10.02%. (Note: the percentage declines I am quoting are from April 2006, when the national peak was hit; the numbers in the graph are relative to that city’s individual peak, so there is a little bit of difference.)
Homebuyer Credits Long Gone
The homebuyer tax credit was propping up home prices, but now with that support gone, prices are resuming their downtrend. People had until June 30 to close on their houses, and they had to agree to the transaction by April 30. That pulled sales into those months that might otherwise have happened later on. The credit was up to $8,000, so almost nobody would want to close their deal in early July and simply leave that money on the table.
The tax credit is a textbook example of a third party subsidizing a transaction. When that happens, both the buyer and the seller will get some of the benefit. The buyer gets his when he files his tax return next year, the seller gets hers in the form of a higher price for the house.
Since the tax credit is now over, that artificial prop to housing prices has been taken away. Sales of existing houses simply collapsed in July, after the credit expired, and have remained depressed ever since. The extremely high ratio of homes for sale to the current selling pace is sure to put significant downward pressure on prices.
There is still quite a bit of “shadow inventory” out there as well. That is, homes where the owner is extremely delinquent in his mortgage payments and unlikely ever to make up the difference, but that the bank has not yet foreclosed on or foreclosed houses that have not yet been listed for sale.
Take a good hard look at the third graph (also from this source) and tell me what you think is going to happen to housing prices over the next few months. A normal market has about six months of supply available; during the bubble, the months of supply generally ran closer to four months, and prices were soaring. It was not until inventories climbed above the six month mark that prices started to fall. The really collapsed as the months of supply moved into the double digits.
The extensive government support for the housing market — including the tax credit, but also the Fed buying up $1.25 Trillion in mortgage paper to artificially depress mortgage rates — helped boost sales and bring the months of supply back down. Now that support is over, the months of supply are still elevated, and thus housing prices are falling. Unfortunately this graph is not updated with the December price data, and we will not get the months of supply data for existing homes until tomorrow.
The tax credit was not a very effective means of stimulus, but it did help prop up prices, and that is a pretty important accomplishment, even if it proves to be ephemeral. The credit cost the government about $30 billion. A large part of that money went to people who would have bought anyways, but perhaps would have done so in July or August rather than May or June.
New Homes = Big Stimulus
To the extent it rewarded people for doing what they would have done anyway, it did nothing to stimulate the economy. Also, turnover of existing houses really does not do a lot to improve the economy. It is the building of new houses that generates economic activity.
It is not just about the profits of D.R. Horton (DHI: 12.01 -0.79 -6.17%). A used house being sold does not generate more sales of lumber by International Paper (IP: 27.735 -1.285 -4.43%) or any of the building products produced by Berkshire Hathaway (MAS: 13.005 -0.295 -2.22%). It does not put carpenters and roofers to work. New homes do.
While housing prices are important to the economy, the level of turnover in used houses is not. Home equity is, or at least was, the most important store of wealth for the vast majority of families.
The Current State of Home Equity
Houses are generally a very leveraged asset — much more so than stocks. Using your full margin in the stock market still means you are putting 50% down. In housing, putting 20% down is considered conservative, and during the bubble was considered hopelessly old fashioned. As a result, as housing prices declined, wealth declined by a lot more. For the most part we are not talking vast fortunes here, but rather the sort of wealth that was going to finance the kids college educations and a comfortable retirement.
With that wealth gone, people have to put away more of their income to rebuild their savings if they still want to be able to send the kids to college or to retire. The decline in housing wealth is a very big reason why retail sales have been so weak. With everyone trying to save, aggregate demand from the private sector is way down. If customers are not going to spend and buy products, employers have no reason to invest to expand capacity. They have no reason to hire more workers.
Also, as housing prices fell, millions of homeowners found themselves owing more on their houses than the houses were worth. That greatly increases the risk of foreclosure. If the house is worth more than the mortgage, the rate of foreclosure should be zero. Regardless of how bad your cash flow situation is — due to job loss, divorce or health problems, for example — you would always be better off selling the house and getting something, even if it is less than you paid for the house than letting the bank take it and get nothing.
By propping up the price of houses, the tax credit did help slow the increase in the rate of foreclosures. Still, a quarter of all houses with mortgages are worth less than the value of the mortgage today. Another five percent or so are worth less than five percent more than the value of the mortgage. If prices start to fall again, those folks well be pushed under water as well.
The final graph below (from this source) shows where the underwater people are by state. Red means houses underwater, medium and dark blue indicate people with solid equity stakes in their homes.
On the other hand, it is not obvious that propping up the prices of an asset class is really something that the government should be doing. After all, it is hurting those who don’t have homes and would like to buy one.
Support for housing goes far beyond just the tax credit. The biggest single support is the deductibility of mortgage interest from taxes. Since homeowners are generally wealthier and have higher incomes than those who rent, this is a case of the lower middle class subsidizing the upper middle class. Also, even if they are homeowners, people with lower incomes are more likely to take the standard deduction rather than itemize their taxes. The mortgage interest deduction only applies if you itemize.
There has been much discussion of trying to rationalize the tax system and bringing down tax rates, but to do so the base would have to be broadened through the elimination of deductions. The mortgage interest deduction is one of the biggest of these. An attempt that leaves the mortgage interest deduction in place would have to be mere tinkering around the edges. While the concept of lower rates and fewer deductions is a good one, transitioning from here to there in the current weak housing market is going to be difficult to say the least.
The real problem though is that, now that the tax credit is over, prices will find their more natural level. Fortunately, relative to the level of incomes and to the level of rents, housing prices are now in line with their long-term historical averages, not way above them as they were last year.
In other words, houses are fairly priced — not exactly cheap by historical standards, but not way overvalued either. That will probably limit how much price fall over the next six months to a year to about 5% more from here, rather than the 30% decline we saw from the top of the bubble. That, however, is more than enough of a decline to do some serious damage.
A Weak Report, but Not Unexpected
The Case Schiller report was weak, but in line with what the consensus expected. The second leg down in housing prices is underway, but fortunately will probably be a much shorter leg than the first one.
Still, that is bad news for the economy. Used homes make very good substitutes for new homes, and with a massive glut of used homes on the market, there is little or no reason to build any new ones. Residential investment is normally the main locomotive that pulls the economy out of recessions. It is derailed this time around and there seems to be little the government can do to get it back on track.
Case-Schiller: Home Prices Fall Again
By Dirk Van Dijk on February 22, 2011
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
This is the second month in this second leg down in housing prices that the year-over-year change has been negative for both composites; it will not be the last. Of the 20 cities, only six posted gains on the month. The biggest gains were in DC, up 1.14% on the month, followed by Dallas, up 0.80% and Boston, up 0.61%.
There were 14 metropolitan areas where prices fell on the month. Worst hit were Tampa and Detroit, each suffering a 2.14% decline on the month. They were followed by Phoenix, down 1.03%, Seattle (down 0.95%) and Portland (down 0.62%). Year over year, just two metro areas saw gains and 18 suffered losses. This is the six straight month-to-month decline in the composites. It thus looks like a new downtrend in housing prices is well established.
Look at Seasonally Adjusted Numbers
There is a seasonal pattern to home prices, and thus it is better to look at the seasonally adjusted numbers than the unadjusted numbers. Most of the press makes the mistake of focusing on the unadjusted numbers. While the 2.40% fall in the C-20 year over year in isolation is not the end of the world, it means that most of the small rebound in housing prices we saw from the spring of 2009 to the summer of 2010 has now evaporated.
Eleven cities posted new post peak lows, meaning that the first-time homebuyer bounce in prices has now more than totally evaporated in those areas. From the April 2006 peak of the housing market, the C-10 is down 31.25% while the C-20 is off by 31.17%. Relative to the low of April 2009, the C-10 is now up just 2.43%, and the C-20 has only a 0.80% margin before it is posting new post bubble lows.
The Case Schiller data is the gold standard for housing price information, but it comes with a very significant lag. This is December data we are talking about, after all, and it is actually a three-month moving average, so it still includes data from October and November.
The second leg in the housing price downturn is not over. Housing prices are going to fall again in coming months. The first graph from (http://www.calculatedriskblog.com/) tracks the history of the C-10 and C-20 indexes. Note that on both indexes we are almost back to the post-crash lows. It seems likely to me that we will set new lows before the second leg down is over.
Which Cities Fared Best/Worst?
On a year-over-year basis, with the exception of Washington DC (up 4.11%), the strongest cities are in California. However, even there the year-over-year gains are pretty much gone. San Diego is still in positive territory with a 1.70% rise. However, Los Angeles has fallen back into negative territory with a decline of 0.26%, and San Francisco is down 0.43%. Still, the only other city to hold its year-over-year decline to less than one percent was Boston, down 0.82%.
There were eight metropolitan areas where the year-over-year declines were more than 5%. Detroit fared the worst with a 9.15% decline (you can still have big percentage declines even as one approaches zero). The same is true for Phoenix, down 8.38% over the last year and showing no signs at all of rising from the ashes.
Atlanta has been hit almost as hard as if “Uncle Billy Sherman” was paying another visit to the city, down 8.00%. Portland is down 7.83%, and Chicago, facing an ill wind, it is down another 7.40% from a year ago. In other words, significant year-over-year declines are happening in just about every corner of the country.
The graph (also from this source) below tracks the cumulative declines for each city over time. If the red bar is shorter to the downside than the yellow bar for a city, it indicates that prices in that city rose during 2010.
In every city, prices are below where they were in April 2006, but there is a huge variation. Las Vegas is the hardest hit, with prices down 58.04% from the peak, followed by Phoenix down 55.20%. Three more cities are down more than 40%: Miami down 49.01%, Detroit off 48.16%, and Tampa with a 45.45% decline.
At the other end of the spectrum are Dallas, where prices are down only 6.11%, Charlotte off 8.48% and Denver where they are down 10.02%. (Note: the percentage declines I am quoting are from April 2006, when the national peak was hit; the numbers in the graph are relative to that city’s individual peak, so there is a little bit of difference.)
Homebuyer Credits Long Gone
The homebuyer tax credit was propping up home prices, but now with that support gone, prices are resuming their downtrend. People had until June 30 to close on their houses, and they had to agree to the transaction by April 30. That pulled sales into those months that might otherwise have happened later on. The credit was up to $8,000, so almost nobody would want to close their deal in early July and simply leave that money on the table.
The tax credit is a textbook example of a third party subsidizing a transaction. When that happens, both the buyer and the seller will get some of the benefit. The buyer gets his when he files his tax return next year, the seller gets hers in the form of a higher price for the house.
Since the tax credit is now over, that artificial prop to housing prices has been taken away. Sales of existing houses simply collapsed in July, after the credit expired, and have remained depressed ever since. The extremely high ratio of homes for sale to the current selling pace is sure to put significant downward pressure on prices.
There is still quite a bit of “shadow inventory” out there as well. That is, homes where the owner is extremely delinquent in his mortgage payments and unlikely ever to make up the difference, but that the bank has not yet foreclosed on or foreclosed houses that have not yet been listed for sale.
Take a good hard look at the third graph (also from this source) and tell me what you think is going to happen to housing prices over the next few months. A normal market has about six months of supply available; during the bubble, the months of supply generally ran closer to four months, and prices were soaring. It was not until inventories climbed above the six month mark that prices started to fall. The really collapsed as the months of supply moved into the double digits.
The extensive government support for the housing market — including the tax credit, but also the Fed buying up $1.25 Trillion in mortgage paper to artificially depress mortgage rates — helped boost sales and bring the months of supply back down. Now that support is over, the months of supply are still elevated, and thus housing prices are falling. Unfortunately this graph is not updated with the December price data, and we will not get the months of supply data for existing homes until tomorrow.
The tax credit was not a very effective means of stimulus, but it did help prop up prices, and that is a pretty important accomplishment, even if it proves to be ephemeral. The credit cost the government about $30 billion. A large part of that money went to people who would have bought anyways, but perhaps would have done so in July or August rather than May or June.
New Homes = Big Stimulus
To the extent it rewarded people for doing what they would have done anyway, it did nothing to stimulate the economy. Also, turnover of existing houses really does not do a lot to improve the economy. It is the building of new houses that generates economic activity.
It is not just about the profits of D.R. Horton (DHI: 12.01 -0.79 -6.17%). A used house being sold does not generate more sales of lumber by International Paper (IP: 27.735 -1.285 -4.43%) or any of the building products produced by Berkshire Hathaway (MAS: 13.005 -0.295 -2.22%). It does not put carpenters and roofers to work. New homes do.
While housing prices are important to the economy, the level of turnover in used houses is not. Home equity is, or at least was, the most important store of wealth for the vast majority of families.
The Current State of Home Equity
Houses are generally a very leveraged asset — much more so than stocks. Using your full margin in the stock market still means you are putting 50% down. In housing, putting 20% down is considered conservative, and during the bubble was considered hopelessly old fashioned. As a result, as housing prices declined, wealth declined by a lot more. For the most part we are not talking vast fortunes here, but rather the sort of wealth that was going to finance the kids college educations and a comfortable retirement.
With that wealth gone, people have to put away more of their income to rebuild their savings if they still want to be able to send the kids to college or to retire. The decline in housing wealth is a very big reason why retail sales have been so weak. With everyone trying to save, aggregate demand from the private sector is way down. If customers are not going to spend and buy products, employers have no reason to invest to expand capacity. They have no reason to hire more workers.
Also, as housing prices fell, millions of homeowners found themselves owing more on their houses than the houses were worth. That greatly increases the risk of foreclosure. If the house is worth more than the mortgage, the rate of foreclosure should be zero. Regardless of how bad your cash flow situation is — due to job loss, divorce or health problems, for example — you would always be better off selling the house and getting something, even if it is less than you paid for the house than letting the bank take it and get nothing.
By propping up the price of houses, the tax credit did help slow the increase in the rate of foreclosures. Still, a quarter of all houses with mortgages are worth less than the value of the mortgage today. Another five percent or so are worth less than five percent more than the value of the mortgage. If prices start to fall again, those folks well be pushed under water as well.
The final graph below (from this source) shows where the underwater people are by state. Red means houses underwater, medium and dark blue indicate people with solid equity stakes in their homes.
On the other hand, it is not obvious that propping up the prices of an asset class is really something that the government should be doing. After all, it is hurting those who don’t have homes and would like to buy one.
Support for housing goes far beyond just the tax credit. The biggest single support is the deductibility of mortgage interest from taxes. Since homeowners are generally wealthier and have higher incomes than those who rent, this is a case of the lower middle class subsidizing the upper middle class. Also, even if they are homeowners, people with lower incomes are more likely to take the standard deduction rather than itemize their taxes. The mortgage interest deduction only applies if you itemize.
There has been much discussion of trying to rationalize the tax system and bringing down tax rates, but to do so the base would have to be broadened through the elimination of deductions. The mortgage interest deduction is one of the biggest of these. An attempt that leaves the mortgage interest deduction in place would have to be mere tinkering around the edges. While the concept of lower rates and fewer deductions is a good one, transitioning from here to there in the current weak housing market is going to be difficult to say the least.
The real problem though is that, now that the tax credit is over, prices will find their more natural level. Fortunately, relative to the level of incomes and to the level of rents, housing prices are now in line with their long-term historical averages, not way above them as they were last year.
In other words, houses are fairly priced — not exactly cheap by historical standards, but not way overvalued either. That will probably limit how much price fall over the next six months to a year to about 5% more from here, rather than the 30% decline we saw from the top of the bubble. That, however, is more than enough of a decline to do some serious damage.
A Weak Report, but Not Unexpected
The Case Schiller report was weak, but in line with what the consensus expected. The second leg down in housing prices is underway, but fortunately will probably be a much shorter leg than the first one.
Still, that is bad news for the economy. Used homes make very good substitutes for new homes, and with a massive glut of used homes on the market, there is little or no reason to build any new ones. Residential investment is normally the main locomotive that pulls the economy out of recessions. It is derailed this time around and there seems to be little the government can do to get it back on track.
Case-Schiller: Home Prices Fall Again
By Dirk Van Dijk on February 22, 2011
American Eagle Realty, we are a realty company not a legal firm, we can help with all of your real estate needs including foreclosure. American Eagle Realty can help you with solid answers about your rights and options before your house is foreclosed on! We are experts in the Short Sale Process and have the experience needed to work with your bank! Loan Mods, too. Contact us we can help, We have helped others we can help you...
Whether you want buy, rent, or sell a home we can assist you.
American Eagle Realty
www.american-eagle-realty.com
502-969-1801
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