Rate on 30-year fixed mortgage rises to 4.81 pct.
Fixed mortgage rates edged up this week, but even 30-year rates below 5 percent have done little to boost home sales.
Thursday, March 24, 2011
The Seattle Times: Real Estate
Rate on 30-year fixed mortgage rises to 4.81 pct.
Fixed mortgage rates edged up this week, but even 30-year rates below 5 percent have done little to boost home sales.
Wednesday, March 23, 2011
The Seattle Times: Real Estate
New-home sales plunged in February to record low
Sales of new homes plunged in February to The slowest pace on records dating back nearly half a century, a dismal sign for an already-weak housing market.
Tuesday, March 22, 2011
The Seattle Times: Real Estate
Australian builder plans 500 houses in Seattle market
One of Australia's largest homebuilders is entering The U.S. market with a bet on King, Snohomish and Pierce counties.
Monday, March 21, 2011
The Seattle Times: Real Estate
Australian builder plans 500 houses in Seattle market
One of Australia's largest homebuilders is entering The U.S. market with a bet on King, Snohomish and Pierce counties.
The Seattle Times: Real Estate
Home sales fall 9.6 pct in February
Fewer Americans bought previously occupied homes in February, pushing The median home price down to its lowest level in nearly 9 years.
Sunday, March 20, 2011
The Seattle Times: Real Estate
Tiny 'pod' rooming houses spreading
The Seattle developers who built a 21st-century version of The old rooming house have several more in The pipeline.
The Seattle Times: Real Estate
Tiny 'pod' rooming houses spreading
The Seattle developers who built a 21st-century version of The old rooming house have several more in The pipeline.
Saturday, March 19, 2011
The Seattle Times: Real Estate
An old Seattle garden comes to life with new color
There's nothing stodgy about this midcentury garden; pathways are lined with inspired combinations like black mondo grass and white-blooming, ground-hugging dogwood. The dinner-plate-sized brunette leaves of Ligularia 'Britt Marie Crawford' create drama around The backyard pond.
Friday, March 18, 2011
The Seattle Times: Real Estate
Dim homebuilder outlook improves slightly
Homebuilders' pessimistic outlook improved slightly this month, but it remains dim amid falling home prices and a weak pace of construction...
The Seattle Times: Real Estate
Average rate on 15-year mortgage dips below 4 pct.
Fixed mortgage rates tumbled this week and The 15-year loan dipped below 4 percent for The first time in three months. Rates followed The yield on U.S. Treasury bonds, which fell on worries that The crisis in Japan could slow economic growth.
Wednesday, March 16, 2011
New-home construction plunges in February
The Associated Press
WASHINGTON —
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.
Wednesday, March 9, 2011
Underwater mortgages rise as home prices fall
AP Real Estate Writer
WASHINGTON —
About 11.1 million households, or 23.1 percent of all mortgaged homes, were underwater in the October-December quarter, according to report released Tuesday by housing data firm CoreLogic. That's up from 22.5 percent, or 10.8 million households, in the July-September quarter.
The number of underwater mortgages had fallen in the previous three quarters. But that was mostly because more homes had fallen into foreclosure. Underwater mortgages typically rise when home prices fall. Home prices in December hit their lowest point since the housing bust in 11 of 20 major U.S. metro areas. In a healthy housing market, about 5 percent of homeowners are underwater.
Roughly two-thirds of homeowners in Nevada with a mortgage had negative home equity, the worst in the country. Arizona, Florida, Michigan and California were next, with up to 50 percent of homeowners with mortgages in those states underwater.
Oklahoma had the smallest percentage of underwater homeowners in the October-December quarter, at 5.8 percent. Only nine states recorded percentages less than 10 percent. In addition to the more than 11 million households that are underwater, another 2.4 million homeowners are nearing that point.
Saturday, March 5, 2011
Reverse mortgages get more affordable, but be careful
Bankrate.com
Before you borrow
IF YOU'RE in the market for a reverse mortgage, seek independent counseling before you even talk to a lender to learn about loan alternatives or tips on negotiating with a lender. Find a government-approved counselor near you at www.hud.gov/.
CHECK OUT the National Council on Aging's BenefitsCheckUp.org for assistance programs that could make a reverse mortgage unnecessary.TO FIND OUT how much you can potentially receive through a reverse mortgage, check online calculators at aarp.org or reversemortgage.org.
CONSUMERS UNION offers tips about reverse mortgages on its website, www.consumersunion.org. The site's offerings include information about applying for government benefits for seniors, getting advice from local Housing and Urban Development counselors and seeking a so-called private reverse mortgage — a loan from a family member using the senior's home equity as collateral.
These loans, which allow seniors to spend their home equity without selling their home, have historically been cumbersome and expensive. But new options empower seniors to tap smaller amounts of equity in a more affordable way, according to Peter Bell, president of the National Reverse Mortgage Lenders Association, a group that represents lenders and investors.
The biggest change is the introduction of a new reverse mortgage, called the Home Equity Conversion Mortgage Saver option, or HECM Saver. It has a cheaper upfront mortgage insurance premium, or MIP, compared with the traditional HECM reverse mortgage, now known as the standard option.
Mortgage insurance protects lenders from loan losses, though borrowers pay the cost. Most reverse mortgages are insured through the Federal Housing Administration.
The trade-off, due to the lower MIP and other program changes, is a 10 percent to 18 percent reduction in the maximum loan amount allowed on the saver option, and 1 percent to 5 percent on the standard option, depending on the borrower's age and interest rate, Bell says. The lower loan amount allowed on the saver option means the FHA's risk exposure is lessened.
Saturday, February 26, 2011
New-home sales in January drop 12.6 pct
AP Real Estate Writer
WASHINGTON —
New-home sales dropped to a seasonally adjusted rate of 284,000 homes last month, the Commerce Department said Thursday. That's down from 325,000 in December and less than half the 600,000-a-year pace that economists view as healthy.
Bad winter weather likely hampered some sales, although the industry has been struggling since the housing bubble burst in 2006.
Last year was the fifth consecutive year that new-home sales have declined after hitting record highs during the housing boom. Buyers purchased 322,000 new homes last year, the fewest annual total on records going back 47 years. Economists say it could take years before sales return to a healthy pace.
Builders of new homes are struggling to compete in markets saturated with foreclosures. High unemployment and uncertainty over home prices have kept many potential buyers from making purchases.
Poor sales of new homes mean fewer jobs in the construction industry, which normally powers economic recoveries. On average, each new home built creates the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.
New-home sales were uneven across the country. In January, sales fell 36.5 percent in the West and 12.8 percent in the South. But they rose 17.1 percent in the Midwest and 54.5 percent in the Northeast.
The big declines in the West came after a huge increase in December. Buyers had rushed to take advantage of a state tax credit of up to $10,000 on new home purchases in California at the end of the month, said Joshua Shapiro, chief U.S. economist for MFR Inc.
"It would make sense that a surge in such activity took place in California during December and there was payback in January," he said.
Sales of previously occupied homes have not fared much better. While sales rose slightly last month, the seasonally adjusted annual pace of 5.36 million is still far below the 6 million homes a year needed to maintain a healthy market.
Mortgage applications are now near their lowest levels in 15 years.
The average rate on a 30-year fixed mortgage this week dipped to 4.95 percent from 5 percent, Freddie Mac said Thursday. It hit a 40-year low of 4.17 percent in November, and has been trending upward since.
About 188,000 new homes were for sale at the end of January, the lowest level since 1967. The number of homes that have received permits to begin construction has held steady over the past year while the number of those under construction and finished has plummeted.
The median sales price of a new home sold in January was $230,600, down 1.9 percent from the month before. Given the pace of new-home sales, it would take nearly 8 months to clear them off the market. Economists say a six-month supply of homes is healthy.
Wednesday, February 23, 2011
Investors snap up cheap homes, new buyers miss out
AP Real Estate Writer
WASHINGTON —
The number of first-time buyers fell last month to the lowest percentage in nearly two years, while all-cash deals have doubled and now account for one-third of sales.
A record number of foreclosures have forced home prices down in most markets. The median sales price for a home fell last month to its lowest level in nearly nine years, according to the National Association of Realtors.
Lower prices would normally be good for first-time home-buyers. But tighter lending standards have kept many from taking advantage of them. With fewer new buyers shopping, potential repeat buyers are hesitant to put their homes on the market and upgrade.
Cash-only investors are most interested in properties at risk of foreclosure. They can get those at bargain-basement prices.
"The cash-rich investors can come in and get foreclosed properties at incredibly favorable prices," said Paul Dales, senior U.S. economist for Capital Economics. "The average Joe can't take advantage because they simply cannot get the credit to buy."
Sales of previously occupied homes rose slightly in January to a seasonally adjusted annual rate of 5.36 million, the Realtors group said Wednesday. That's up 2.7 percent from 5.22 million in December.
Still, the pace remains far below the 6 million homes a year that economists say represents a healthy market. And the number of first-time home-buyers fell to 29 percent of the market - the lowest percentage of the market in nearly two years. A more healthy level of first-time home-buyers is about 40 percent, according to the trade group.
Foreclosures represented 37 percent of sales in January. All-cash transactions accounted for 32 percent of home sales - twice the rate from two years ago, when the trade group began tracking these deals on a monthly basis. In places like Las Vegas and Miami, cash deals represent about half of sales.
In the three states where foreclosures are highest, at-risk homes make up at least two-thirds of all sales. In Florida, 63 percent of sales in January involved homes that were at risk of foreclosure, according to a Campbell/Inside Mortgage Finance survey. And in Arizona and Nevada, a combined 72 percent of sales involved those homes at risk of foreclosure.
A major barrier for first-time home-buyers is tighter lending standards adopted since the housing bubble burst. These have made mortgage loans tougher to acquire. Banks are also requiring buyers put down a larger down payment. During the housing boom, buyers could purchase a home with little or no money down.
The median down payment rose to 22 percent last year in at least nine major U.S. cities, according to a survey by Zillow.com, a real estate data firm. That's up from 4 percent in late 2006 - as the housing bubble began to burst. The cities included some of the nation's hardest hit markets - Las Vegas, Phoenix and Tampa, Fla. - as well as areas that are rebounding, including San Diego and San Francisco.
That has prevented many from buying, even when the median price of a home fell in January to $158,800. That's a decline of 3.7 percent from a year ago and the lowest point since April 2002.
"If you can get the financing, it's a great time to buy a home with prices this low," said Patrick Newport, U.S. economist with IHS Global Insight.
Many potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further. High unemployment is also deterring buyers. Job growth, while expected to pick up this year, will not likely raise home sales to healthier levels.
With mortgage rates rising, mortgage applications have been volatile. They're now near their lowest levels in 15 years. Economists say it could take years for home sales to return to healthy levels.
"Home prices continue to languish," said Steven Wood, chief economist for Insight Economics. "Any recovery will be difficult to sustain given the still-large supplies of homes for sale and distressed properties."
Last year, home sales fell to 4.9 million, the lowest level in 13 years. And even that number, some say, was overstated.
CoreLogic, a real-estate data firm in Santa Ana, Calif., said it's found that 3.3 million homes were sold last year, far fewer than the National Association of Realtors' 4.9 million figure. CoreLogic has suggested that the Realtors figure is too high.
Since 1968, the Realtors group has produced the monthly report on the number of previously occupied homes sold. The group serves as chief advocate and lobbying arm for real estate agents. It says it's reviewing its 2010 yearly estimate.
One obstacle to a housing recovery is the glut of unsold homes on the market. Those numbers fell to 3.38 million units in January. It would take 7.6 months to clear them off the market at the January sales pace. Most analysts say a six-month supply represents a healthy supply of homes.
Analysts said the situation is much worse when the "shadow inventory" of homes is taken into account. These are homes that are in the early stages of the foreclosure process but have not been put on the market yet for resale.
For January, sales were up in three of the four regions of the country led by an 7.9 percent rise in the West. Sales rose 3.6 percent in the South, 1.8 percent in the Midwest and down 4.6 percent in the Northeast.
The January increase was driven by a 2.4 percent rise in sales of single-family homes. It pushed activity in this area to an annual rate of 4.69 million units. Sales of condominiums rose 4.7 percent to a rate of 670,000 units.
Saturday, February 19, 2011
Home prices in Dec. hit post-bust lows in most big cities, including Seattle
The Associated Press
The Standard & Poor's/Case-Shiller 20-city home price index fell 1 percent in December from November. Prices fell in all but one of the metropolitan markets tracked.
The only city to see a gain was Washington, D.C., where hiring by the federal government has helped boost the region's job market.
Eleven of the markets, including the Seattle metropolitan area, hit their lowest point since the housing bust, in 2006 and 2007. The others were Atlanta, Charlotte, N.C., Chicago, Detroit, Las Vegas, Miami, New York, Phoenix, Portland and Tampa, Fla. In the Case-Shiller report for November, nine cities — again including Seattle — had hit their lowest levels since the housing bust.
The housing sector is struggling even while the rest of the economy is showing signs of a slow but steady recovery. The latest evidence of this divide came Tuesday when The Conference Board said its Consumer Confidence Index rose in February to its highest point in three years.
The index surveys how people feel about hiring and income, and how they see that changing over the next six months.
By contrast, the outlook for housing in 2011 is not promising. Construction of new homes has fallen to a rate of about 600,000 homes built per year. In a healthy economy, builders expect to construct about 1 million homes each year. Homeowner vacancy rates are near record highs and the creation of new households in the United States is at its lowest point in four decades.
"Despite improvements in the overall economy, housing continues to drift lower and weaker," said David M. Blitzer, chairman of the index committee at Standard & Poor's.
The damage from the real-estate bubble has spread well beyond the Sun Belt, where new homes cropped up at a frantic pace during the mid-2000s. In many places, prices are expected to keep falling for at least the next six months, and several analysts said they expect prices to fall at least an additional 5 percent.
Some of the worst declines are in cities hit hardest by foreclosures and high unemployment, including Detroit, Phoenix and Tampa. A home that sold for $250,000 in the Motor City in 2000 now sells for roughly $163,150, according to the housing report. Homes in Las Vegas and Cleveland now sell, on average, for less than they did a decade ago.
In the Seattle metropolitan area — King, Snohomish and Pierce counties — home prices still are about 39 percent higher than in January 2000, according to Case-Shiller. But prices have fallen 28 percent from their July 2007 peak and are at their lowest level since December 2004.
Nationally, a large number of homes that aren't selling are contributing to a second wave of price declines since the boom years. Many of them have been vacant for months.
In December, prices fell for the sixth straight month and for the eighth time in the past 11 months. Foreclosures are also expected to increase as the year goes forward.
"There's just way too many homes out there relative to demand, and we're not going to see that change anytime soon," said Joshua Shapiro, chief U.S. economist for MFR.
The housing recovery is uneven across the United States. Coastal cities in California and the Northeast are faring much better than the Midwest and Southeast. That's mainly because they benefit from expensive and somewhat recession-proof housing markets buoyed by low unemployment and limited new construction.
The Case-Shiller report measures home-price increases and decreases relative to prices in January 2000 and gives an updated three-month average for the metropolitan areas it looks at.
Wednesday, February 16, 2011
Risk of foreclosure dips, but remains elevated
AP Real Estate Writer
NEW YORK —
The Mortgage Bankers Association said Thursday 8.2 percent of homeowners missed at least one mortgage payment in the October-December quarter. The figure, which is adjusted for seasonal factors, improved from 9.1 percent in the previous quarter and from a high of more than 10 percent in the January-March quarter.
The worst delinquency rates were in Mississippi at 13.3 percent, Nevada at 12 percent and Georgia at 11.9 percent. The percentage of homes in the foreclosure process rose to 4.6 percent from 4.4 percent, tying an all-time high for the survey. Foreclosures are expected to peak this year as 5 million troubled loans move through the process. Florida and Nevada had the highest percentage of homes in the foreclosure process at 14.2 percent and 10.1 percent.
California and Florida make up more than a third of all loans in foreclosure, which is down from nearly 40 percent a year earlier. Still, Florida's foreclosure crisis is one of the most pronounced in the country. Almost a quarter of Florida homeowners with a loan are behind on their payments or in the foreclosure process, the worst rate in the nation.
Typically, the percentage of seriously delinquent borrowers - those more than 90 days behind on their mortgages or in foreclosure - is just above 1 percent. In the fourth quarter, that figure was 8.57 percent.
An improving job market is behind the decline in the delinquency rate, said MBA Chief Economist Jay Brinkmann. He noted that the private sector added 1.2 million jobs last year and the number of people applying for unemployment benefits started to fall in the fourth quarter. "It's a sign we've turned a corner, that's the good news," Brinkmann said. "The bad news is loans in foreclosure are still very high."
Foreclosures dipped in the July-September quarter as lenders addressed allegations of improper paperwork during the foreclosure process. But by the final three months of last year, many had resumed taking back homes. Banks are on track to repossess more than 1 million homes this year, the most since the housing meltdown began, according to foreclosure tracker RealtyTrac Inc. That will drive home prices down because foreclosures are sold at deep discounts.
The foreclosure crisis started years ago when borrowers took out risky loans with adjustable interest rates that they couldn't afford. Many also qualified for loans without providing proof of income. The pain spread to homeowners with good credit who took out safe, fixed-rate mortgages, but are struggling in a weak economy.
Monday, February 14, 2011
Slow death proposed for Fannie, Freddie
The Obama administration Friday released its long-awaited proposal for overhauling the mortgage market, calling for gradually shutting down...
Los Angeles Times
The 32-page plan calls for phasing in an increase in the down-payment requirement for loans guaranteed by Fannie and Freddie to 10 percent, while reducing the maximum size of mortgages they can back — a move that would affect areas with high property values.
During the financial crisis, Congress boosted the limit on such loans to as much as $729,750. The administration said it supports letting the limit drop back to $625,500 as scheduled on Oct. 1.
The plan also calls for increasing mortgage fees to encourage more private investment while winding down the huge investment portfolios of Fannie and Freddie — whose bailouts have cost $150 billion so far — by at least 10 percent a year as the entities are slowly put out of business.
But demonstrating the complexity of pulling back government support from a still-fragile housing market, the plan offers Congress three options for long-term restructuring.
"This is a plan for fundamental reform of the housing market, but I want to emphasize we're going to proceed on this path of reform very carefully," said Treasury Secretary Timothy Geithner. He said the plan would take five to seven years to enact.
Fannie and Freddie own or guarantee more than half of all U.S. mortgages and are vital players in the $11 trillion mortgage market.
Sunday, February 13, 2011
Saturday, February 12, 2011
Try to Resist the Temptation to Over Improve
You have received some extra money! You want to remodel! If you are planning a major renovation, take a few sensible precautions before having plans drawn up and signing on the contractor's dotted line.
Any time you do any significant remodeling, you run the risk of over-improving your home. Please call or send an email if you are interested in a market analysis of what your home is currently worth. We can talk about neighborhood trends and discuss the recent sales of homes in your area.
If your neighborhood is experiencing healthy appreciation, making major changes to your home might make sense. However, if there is not much difference between the prices of remodeled homes and those which have not been renovated, expensive changes may be hard to recover if you sell your home soon. Please call or send an email to get help deciding if remodeling and renovations are in your best interest. grover@grovernet.com
Monday, February 7, 2011
Debt could be a deal-breaker
By Kenneth R. Harney
Syndicated columnist
WASHINGTON — One loan officer describes it as a "financial colonoscopy" on your credit, and he suggests anybody applying for a mortgage be prepared for it. What he's talking about is the combined effect of new credit-transparency standards imposed on lenders by mortgage giants Freddie Mac and Fannie Mae.
As of Feb. 1, Freddie Mac began requiring lenders to dig back 120 days into your credit-bureau files to detect any "inquiries" — signs of your applying for credit anywhere else — then to check out whether any applications were approved. If they resulted in significant new debts, your mortgage deal could be affected and your lender might have to revise the terms or the rate you're being offered.
Meanwhile, Fannie Mae is requiring lenders to track or review your credit behavior after you've been approved for a mortgage but haven't yet gone to closing. That period often extends for 60 days or more. If inquiries pop up on your files during this time, lenders must determine whether any new debt might require a re-underwriting of the originally quoted terms.
For example, if the mortgage quote is tied to specific debt-to-income ratio maximums — say 31 percent of monthly income for housing, 43 percent for total household debt — a new credit-card account with a $5,000 balance might require a new underwriting or even a higher rate.
If the new card account shows up late in the game — a day or two before closing, with moving vans on the way — you could face some serious problems.
"We now tell our customers that they need to be ready" for much more rigorous screening of their credit, said Matt Jolivette of Associated Mortgage Group in Portland, who made the reference to a "financial colonoscopy."
"They (Fannie and Freddie) want to know everything." This means full disclosure on any credit accounts, big or small, that consumers have shopped for in the months immediately preceding and following their application.
"Our advice is this: Don't buy cars, don't buy furniture or appliances on credit until we close," said Jolivette. "You don't own the house yet, so don't buy anything for it" unless you pay in cash.
The stricter credit-scrutiny rules from Freddie and Fannie have stimulated an explosion of new services and products to help lenders keep track of their mortgage clients' behavior.
For example, Experian, one of the three national credit bureaus, sells a "risk and retention triggers" system that functions much like the anti-identity theft services it markets directly to consumers. Lenders can choose from a detailed menu of trigger-event occurrences from the application date to the closing date. These include all new inquiries for credit cards, retail credit accounts, auto loans and even "over-limit" features they apply for on existing accounts. The monitoring is 24/7.
Equifax, another of the big three credit bureaus, offers a similar service called "Undisclosed Debt Monitoring." Steve Meirink, an Equifax vice president, said that because of Fannie and Freddie rule changes, there has been "a tremendous response" from banks and mortgage companies to sign up for its program.
Other players in the credit industry offer mortgage lenders customized "refresh" pulls of files and scores that compare a borrower's data at the application and just before the scheduled closing.
Marty Flynn, president of Credit Communications of San Ramon, Calif., urges clients to pull "triple merged" files from all three bureaus — TransUnion along with Experian and Equifax — because information on file can differ from bureau to bureau.
Freddie Mac's new 120-day look-back rule is designed to turn up situations where homebuyers apply for credit a couple of months before seeking a mortgage but the inquiry and new account haven't hit the national bureau files because of differing reporting schedules followed by creditors.
By scanning back 120 days — the previous standard was 90 days — virtually all inquiries made during the four months preceding the application should show up. If they're not caught then, they are certain to be identified during the scans or refresher reports obtained before closing.
The bottom line on all this: Be aware that more than ever, your credit files, not just your FICO scores, are likely being checked, rechecked and evaluated for the third of a year preceding a mortgage application and two to three months before closing.
The cleaner and simpler you keep the files, the easier your path to an on-time, uncomplicated closing should be.
Syndicated columnist
As of Feb. 1, Freddie Mac began requiring lenders to dig back 120 days into your credit-bureau files to detect any "inquiries" — signs of your applying for credit anywhere else — then to check out whether any applications were approved. If they resulted in significant new debts, your mortgage deal could be affected and your lender might have to revise the terms or the rate you're being offered.
Meanwhile, Fannie Mae is requiring lenders to track or review your credit behavior after you've been approved for a mortgage but haven't yet gone to closing. That period often extends for 60 days or more. If inquiries pop up on your files during this time, lenders must determine whether any new debt might require a re-underwriting of the originally quoted terms.
For example, if the mortgage quote is tied to specific debt-to-income ratio maximums — say 31 percent of monthly income for housing, 43 percent for total household debt — a new credit-card account with a $5,000 balance might require a new underwriting or even a higher rate.
If the new card account shows up late in the game — a day or two before closing, with moving vans on the way — you could face some serious problems.
"We now tell our customers that they need to be ready" for much more rigorous screening of their credit, said Matt Jolivette of Associated Mortgage Group in Portland, who made the reference to a "financial colonoscopy."
"They (Fannie and Freddie) want to know everything." This means full disclosure on any credit accounts, big or small, that consumers have shopped for in the months immediately preceding and following their application.
"Our advice is this: Don't buy cars, don't buy furniture or appliances on credit until we close," said Jolivette. "You don't own the house yet, so don't buy anything for it" unless you pay in cash.
The stricter credit-scrutiny rules from Freddie and Fannie have stimulated an explosion of new services and products to help lenders keep track of their mortgage clients' behavior.
For example, Experian, one of the three national credit bureaus, sells a "risk and retention triggers" system that functions much like the anti-identity theft services it markets directly to consumers. Lenders can choose from a detailed menu of trigger-event occurrences from the application date to the closing date. These include all new inquiries for credit cards, retail credit accounts, auto loans and even "over-limit" features they apply for on existing accounts. The monitoring is 24/7.
Equifax, another of the big three credit bureaus, offers a similar service called "Undisclosed Debt Monitoring." Steve Meirink, an Equifax vice president, said that because of Fannie and Freddie rule changes, there has been "a tremendous response" from banks and mortgage companies to sign up for its program.
Other players in the credit industry offer mortgage lenders customized "refresh" pulls of files and scores that compare a borrower's data at the application and just before the scheduled closing.
Marty Flynn, president of Credit Communications of San Ramon, Calif., urges clients to pull "triple merged" files from all three bureaus — TransUnion along with Experian and Equifax — because information on file can differ from bureau to bureau.
Freddie Mac's new 120-day look-back rule is designed to turn up situations where homebuyers apply for credit a couple of months before seeking a mortgage but the inquiry and new account haven't hit the national bureau files because of differing reporting schedules followed by creditors.
By scanning back 120 days — the previous standard was 90 days — virtually all inquiries made during the four months preceding the application should show up. If they're not caught then, they are certain to be identified during the scans or refresher reports obtained before closing.
The bottom line on all this: Be aware that more than ever, your credit files, not just your FICO scores, are likely being checked, rechecked and evaluated for the third of a year preceding a mortgage application and two to three months before closing.
The cleaner and simpler you keep the files, the easier your path to an on-time, uncomplicated closing should be.
Friday, February 4, 2011
Rate on 30-year fixed mortgage rises to 4.81 pct.
The average rate on the 30-year fixed mortgage edged up this week as bond yields increased.
AP Business Writer
NEW YORK —
Freddie Mac said Thursday the average rate rose to 4.81 percent this week from 4.80 percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year loan slipped to 4.08 percent from 4.09 percent. It reached 3.57 percent in November, the lowest level on records starting in 1991.
Rates have been little changed this year after spiking more than half a percentage point in the last two months of 2010. Investors sold off Treasury bonds during that time, driving yields lower. Mortgage rates tend to track the yield on the 10-year Treasury note.
High foreclosures, job worries and expectations that home prices will fall further have kept many potential homebuyers on the sidelines. Historically low mortgage rates haven't been enough to jumpstart the housing market.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage fell to 3.69 percent from 3.70 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans was unchanged at 3.26 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year and 15-year loan in Freddie Mac's survey was 0.8 point. The average fee for the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Saturday, January 29, 2011
The Seattle-area housing market's big plunge
Here's a snapshot of the market on its way up in 2005, near its peak in 2007, and three years after the fall in 2010.
Back in 2005, houses were selling like smartphones. Prices were climbing.In some months you could count the number of homes repossessed in King County on your fingers and toes — with a pinkie or two to spare. Prices peaked in 2007, but sales already had begun to tail off as the bow wave of the Great Recession slammed into Seattle. In 2010 the real-estate market still was struggling in its backwash, a new report from the Northwest Multiple Listing Service indicates.
Sales? Down 50 percent in King County from five years ago.
Prices? Still falling, although not as rapidly as in 2008 and 2009.
Here's a snapshot of the market on its way up in 2005, near its peak in 2007, and three years after the fall in 2010.
Repossessed homes by month
Experts say peak still to come. Last September, lenders repossessed 819 homes in King County, more than in all of 2006 — in King, Snohomish, Pierce and Kitsap counties combined.
Source: RealtyTrac
Total value of all houses sold in 2010 was 47 percent less than 2005's total.
Median sale price down 26 percent from 2007 peak, region's steepest drop.
Has experienced region's most dramatic drop in sales since 2005: 52 percent
Median price lower than 2005, but not down as much as Snohomish, Pierce counties
Accounted for 14 percent of 2010 King County home-sales dollar volume; largest in region.
2010 FACTOIDSThe median price of houses sold in King County was highest on the Eastside — $520,000 — and lowest in Southwest King County, $237,147.
Nearly 14 percent of houses sold in King County had two or fewer bedrooms. Eight percent had five or more bedrooms.
May and June — when federal tax credits for homebuyers were expiring — were the busiest months for home sales. January and February were the slowest months.
A total of 371 King County condos sold for more than $500,000. Almost all were in Seattle (250) or on the Eastside (118).
The median price of the 218 houses that sold on Mercer Island was $834,500, highest in the region.
Twelve houses on the San Juan Islands sold for more than $1 million. On Whidbey and Camano islands a total of eight fetched that price, while three houses sold for $1 million-plus on Vashon Island.
Thursday, January 27, 2011
December signed contracts for homes up 2 percent
The number of people who signed contracts to buy homes rose in December, marking the fifth increase in the past six months.
AP Economics Writer
WASHINGTON —
The number of people who signed contracts to buy homes rose in December, marking the fifth increase in the past six months.
The National Association of Realtors said Thursday that its index of sales agreements for previously occupied homes rose 2 percent last month. The index had posted a 3.1 percent increase in November.
Economists have cautioned that a big reason for the jump is that people are buying foreclosed homes. Still, the increase is likely to give the weak housing market a boost in the first few months of the year. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.
The number of Americans who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.
High unemployment and a record number of foreclosures are deterring potential buyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels.
Contract signings in December were up in every region of the country except the West. The gains were led by an 11.5 percent increase in the South. Signings were up 8 percent in the Midwest and 1.8 percent in the Northeast. However, they fell 13.2 percent in the West.
With the recent increases, contract signings are 24.1 percent above their low point in June. In that month, signings fell to the lowest level since the Realtors began tracking signed contracts in 2001.
Even with the gain in December, signings are 4.2 percent below where they were in December 2009. At the end of 2009, the housing market got a boost as buyers rushed to close deals to take advantage of a federal home-buying tax credit that initially was set to expire in November. The tax credit was later extended to April 30. After it expired, housing activity slumped.
Tuesday, January 25, 2011
Home prices fall in major U.S. cities, including Seattle, in November
Home prices are falling across most of America's largest cities, and average prices in nine major markets, including Seattle, have hit their lowest point since the housing bust.
The Standard & Poor's/Case-Shiller 20-city home price index released Tuesday fell 1 percent in November from October. All but one city, San Diego, recorded monthly price declines.
Nine others sank to their lowest levels since prices peaked in 2006 and 2007: In addition to Seattle, they were Atlanta; Charlotte, N.C.; Chicago, Las Vegas; Miami; Portland; Tampa, Fla.; and Detroit, which saw the largest drop at 2.7 percent from the previous month.
In the Seattle metropolitan area, which includes King, Snohomish and Pierce counties, average prices fell 1.1 percent between October and November, according to Case-Shiller.
Millions of foreclosures are forcing prices down, and many people are holding off making purchases because they fear the market hasn't hit bottom yet. Many analysts expect home prices to keep falling through the first six months of this year. "With these numbers, more analysts will be calling for a double-dip in home prices," said David Blitzer, chairman of S&P's Index Committee.
Over the past year, prices have risen in four major metro areas. Prices rose 3.5 percent in Washington, the largest gain. Los Angeles, San Diego and San Francisco also posted gains.
Seattle prices were down 4.7 percent year-over-year.
Some of the worst declines have come in cities hard hit by foreclosures.
As of November, average home prices in Las Vegas have fallen 57.2 percent from their peak in August 2006 and are back to where they were in late 1999. Another foreclosure hotbed, Phoenix, is down 53.9 percent from its June 2006 peak. Average home prices there are back to where they were in 2000. Miami has fallen 48.8 percent from its peak in December 2006, and is selling at late 2002 levels. Seattle average home prices peaked later, in July 2007, and have since fallen 26.4 percent. The last time they were lower was in February 2005, according to Case-Shiller. The 20-city index has risen 3.3 percent from its April 2009 bottom. But it remains well below its July 2006 peak.
Saturday, January 22, 2011
Neighborhood of the week: Sammamish Plateau
Sammamish Plateau can feel like two worlds in one -- a modern suburb in a rural setting that has garnered national attention, and a place where home values have held up over the past year.
Population: 46,246 (city of Sammamish 2010 estimate)
Distance to downtown Seattle: About 18 miles.
Schools: Residents of the Sammamish Plateau are served by either the Issaquah or Lake Washington school districts.Recreation: Pine Lake Park, 228th Avenue Southeast and Southeast 24th Street. Offers swimming, boat launch, fishing pier and two new play areas. The park is host to community events, including the annual Summer Nights At The Park series of music concerts, plays and outdoor movies.
Fun fact: Sammamish High School is actually in Bellevue and served by the Bellevue School District. The school opened in 1959, 40 years before the city of Sammamish was created.
Perched above Lake Sammamish on the edge of the Cascade foothills, the Sammamish Plateau appears to be a peaceful, forested retreat just minutes from Bellevue, Redmond and Seattle.
But the last 30 years have seen sweeping changes to the Plateau. When Janell Focht moved there in 1981, Sadlier's Country Store was a favorite local gathering place. There was still a hitching post and Focht saw horses tied up outside along with the cars. But Sadlier's closed in 1984 and today the site is home to a restaurant near a new, busy four-lane roadway in the fast-growing city of Sammamish, which was incorporated in 1999. While Focht has fond memories of the country store and rural feeling of the area, she says most of the change is good. She used to have to drive all the way down to Redmond for groceries or gas. And the widening and improvements to the roads have eased traffic considerably, too, she says. "It is a beautiful place to live," says Focht. "We are still pretty small town, even though we have grown."
Home values have remained relatively stable over the past year, according to figures compiled by Seattle-based Zillow.com. The median value of all single-family houses in Sammamish, not just those that recently sold, was $512,600 in November, down 1.1 percent year-over-year, the Zillow Home Value Index shows. That compares to a drop of 11.3 percent for single-family houses in the Seattle metro area, according to Zillow. Meanwhile, the median value of all condos in Sammamish was $223,500 in November, down 8.5 percent year-over-year, according to Zillow.
At times, the Plateau feels like two worlds melded together by its geography. Some parts of the Plateau look like a scenic country drive dotted with large estates and farm-style homes on acreage with horses, and many residents report seeing deer, raccoons, bobcats, and even the occasional bear. Other areas have been developed into denser suburban neighborhoods with plenty of amenities, such as stores, businesses and parks. In fact, residents say it is the amenities that set the area apart and make it a unique place to live.
Saturday, January 15, 2011
Relaxed FHA 'flip' rules prove no flop
Syndicated columnist
Definitely not. A classic flip involves the quick resale of a house or condominium at a significantly higher price than the purchaser paid, with only cosmetic improvements to the property if any at all. Sometimes only the contract itself is being signed over to a new buyer at a higher price.
A transaction in Florida last year illustrates the concept: An investor bought 19 condo units in a financially distressed Miami development for $1.25 million. She closed on the deal then resold the units barely 20 minutes later to another investor for $1.45 million for a $200,000 instant profit.
"That was a pretty impressive flip, even for this market," says Peter Zalewski, founder of Condo Vultures, a firm that tracks condo activity in the Miami area and advises investors. The Obama administration plan has no connection with deals like these, though the word "flipping" is in its title.
A little history: For years, the federal government had prohibited the use of FHA mortgage financing by buyers purchasing homes from sellers who had owned the property for less than 90 days. The idea was to prevent speculators from defrauding the government through quick flips of houses — usually involving straw buyers and corrupt appraisers — at wildly inflated prices.
One side effect of that policy had been to stifle purchase-and-renovate projects by legitimate, small-scale investors who buy houses after foreclosure or loan defaults then resell them in substantially improved condition.
In many parts of the country, first-time and moderate-income buyers often sought to buy these fixed-up houses using FHA-insured mortgages with 3.5 percent down payments, but were prevented from doing so by the long-standing "anti-flipping" rules.
This, in turn, left large numbers of foreclosed, vacant houses sitting unsold and deteriorating, with negative effects on the values of neighboring properties.
Last January, FHA Commissioner David H. Stevens announced a one-year suspension of that rule, permitting qualified buyers to obtain FHA mortgages on properties acquired by rehabbers less than 90 days before.
The plan, to expire at the end of this month, came with key safeguards for purchasers, including inspections and multiple appraisals in some cases to document the amounts spent by investors on the improvements.
Vicki Bott, the deputy assistant secretary for single-family housing at FHA, confirmed the agency expects to continue the policy for another year, and hopes to make a formal announcement soon.
Not only have first-time buyers responded overwhelmingly to the opportunity to buy "turnkey" renovated homes with low down payments, she said, but they have performed well on their mortgage obligations.
"Obviously we have concerns about flipping in general," Bott said, but FHA has seen none of the fraud problems, defaults and re-foreclosures that cost the agency millions in insurance payouts in earlier years.
The challenge for first-time buyers, she added, "is that they often don't have the money to do repairs — even replacing the carpet can be a hardship. So when you can bring in investors" who will do the renovations before resale, "it makes a huge difference."
What do investors themselves think about the relaxation of FHA's anti-flip rules? Not surprisingly, they tend to be enthusiastic.
Paul Wylie, who with a group of partners and contractors specializes in acquiring, renovating and reselling foreclosed and distressed houses in the Los Angeles area, says the government's policy "has been a very positive approach" because "it recognizes the role that (private investors) can play in helping the housing market get back on its feet."
In the L.A. market, according to Wylie, FHA financing now accounts for 40 percent of all home purchases and 60 percent of purchases in predominantly Latino and African-American communities.
Buying foreclosed houses "comes with a lot of risk factors," said Wylie. "There's no title insurance; we don't have a good idea of the extent of the defects" inside properties that have been sitting vacant or vandalized for months. Some houses come with delinquent property taxes to boot, which Wylie's group typically must pay.
This is not a game for the faint of heart.
Then again, the profit opportunities can be significant. Most of the Wylie group's houses sell for more than 20 percent higher prices than Wylie paid at acquisition — a quick turnaround gain that potentially works for buyers, sellers, neighborhoods, and yes, the FHA itself.
Thursday, January 13, 2011
Rate on 30-year fixed mortgage dips to 4.71 %
Rates on fixed mortgages dipped for the second straight week as Treasury yields fell.
AP Real Estate Writer
NEW YORK —
Freddie Mac said Thursday the average rate on the 30-year mortgage dropped to 4.71 percent this week from 4.77 percent the previous week. It hit a 40-year low of 4.17 percent in November.
The average rate on the 15-year loan slipped to 4.08 percent from 4.13 percent. It reached 3.57 percent in November, the lowest level on records starting in 1991.
Treasury yields dropped after the December employment report came in weaker than expected. That drove investors to buy safer Treasury bonds, driving up prices and lowering the yields. Mortgage rates tend to track the yield on the 10-year Treasury note.
Rates had been rising since November. Investors shifted money out of Treasurys and into stocks on expectations of faster economic growth and higher inflation. Yields tend to rise on inflation fears.
The recent dip in rates has persuaded some borrowers to refinance, but would-be buyers remain hesitant. The number of homeowners looking to refinance rose last week, the Mortgage Bankers Association said Wednesday. But the ranks of people applying for a purchase mortgage slipped from the week before.
Mortgage rates aren't expected to revisit last year's historically low rates, unless the economy takes a sharp turn for the worst. And even if they do, low mortgage rates did little last year to spark flagging home sales.
Higher rates are just another obstacle facing the beleaguered housing market. High unemployment, elevated foreclosures and falling home prices are other drags on the market's recovery.
RealtyTrac Inc. said Thursday that banks took back more than 1 million homes last year, the highest tally on records dating back to 2005. One in 45 U.S. households received a foreclosure filing in 2010, up 1.67 percent from the year before. The foreclosure listing firm expects bank repossessions to peak this year at 1.2 million.
Foreclosures typically sell at a steep discount of up to 50 percent in some of the hardest-hit regions. That lowers prices of similar homes in the area. Experts predict prices will drop nationally another 5 to 10 percent before bottoming out midyear.
To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.
The average rate on a five-year adjustable-rate mortgage slipped to 3.72 percent from 3.75 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.
The average rate on one-year adjustable-rate home loans fell to 3.23 percent from 3.24 percent.
The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year loan in Freddie Mac's survey was 0.8 point. The average fee for the 15-year fixed loan and the five-year ARM was 0.7 point, and the fee for the 1-year ARM was 0.6 point.
Wednesday, January 12, 2011
Mortgage applications rose last week
The number of people applying for a mortgage rose last week as lower rates lured more borrowers to refinance.
The Associated Press
NEW YORK —
The Mortgage Bankers Association said Wednesday its overall mortgage application index increased 2.2 percent from the previous week. The refinance index rose 4.9 percent, while the purchase index slipped 3.7 percent last week.
The refinance share of activity rose to 72.1 percent of all applications from 71 percent the previous week.
Rates on fixed mortgages edged down last week, but are still more than a half-point higher than they were in late October. They have risen as Treasury yields increased on rosier economic data and expectations that tax cuts will spur growth and spark higher inflation. Mortgage rates tend to track those yields.
The rate on the 30-year fixed mortgage fell last week to 4.78 from 4.82 percent a week earlier. The rate on the 15-year fixed loan, a popular refinancing option, dropped to 4.15 percent from 4.23 percent.
The Mortgage Bankers Association's survey covers more than 50 percent of all applications nationwide.
Misconceptions about Reverse Mortgages
You sell your house to the bank:You always keep title to your house and have complete control over it. You will never lose your home due to non-payment of the loan. Once the loan is settled, you are no longer liable for the debt.
You can be forced to leave your home:
Reverse Mortgages backed by the Federal Housing Authority and the Department of Urban Development specifically indicate you cannot be forced to leave your home.
Your home must be debt-free to qualify:
Even if you have a first mortgage or other debt, you may qualify. But Reverse Mortgage proceeds must first be used to pay off debts that effect title.
There are income qualifications that may disqualify you:
There are no income qualifications at all. The loan is based only on your age, the value of your home, the amount of equity you have and current interest rates.
You will lose your Medicare and Social Security benefits:
Money you receive is a loan, not income. Therefore, your Medicare and Social Security benefits are not effected.
Your heirs won't inherit anything:
When you are deceased, your heirs can repay the loan and keep the home or sell the home and use the proceeds to pay off the Reverse Mortgage.
You will have to make a monthly payment:
There is never any monthly payment to make. The flow of payments is reversed. The lender pays you.
My condominium does not qualify for a Reverse Mortgage:Reverse Mortgages are not limited to single family dwellings. You can also receive a Reverse Mortgage on condominiums, multi-family dwellings and manufactured housing as well.
For more information call me at (206)930-5606
Ed ModaReverse Mortgage Specialist
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