Sarasota Real Estate Market News

Gov’t in talks to rent out foreclosures

WASHINGTON – July 25, 2011 – The Obama administration is considering a plan that would take foreclosed homes off the market and rent them out – in a move aimed at clearing the glut of unsold foreclosed homes and preventing home values from falling any more, The Wall Street Journal reports.

The talks come at a time when national rents are on the rise and home prices have been falling. By taking advantage of higher rents, lenders would be able to cover the costs of holding the properties until the homes can be resold after the market stabilizes – and maybe even make a profit on it later, experts note.

Nationally, sales of distressed homes, which are often sold at steep discounts, continue to pull down home values. Removing some of the high number of foreclosed homes for sale is “worth looking at,” Federal Reserve Chairman Ben Bernanke said last week in testimony to Congress.

Just reducing Fannie Mae and Freddie Mac’s foreclosed property sales from its current rate of 50,000 each month to 30,000 could lessen total distressed sales by one-third and help avoid a further 3 percent to 5 percent decline in home prices, analysts at Credit Suisse estimate.

However, turning foreclosed homes into rentals could place lenders and the government in an unknown role of playing landlord.

Another idea being tossed around, according to The Wall Street Journal: Federal officials selling thousands of foreclosed properties to private investors who would agree to rent them out, and who could then work with property management firms and handle the day-to-day tenant demands.

Source: “Uncle Sam Weighs Landlord Role to Ease Housing Slump,” The Wall Street Journal (July 22, 2011)

July 29, 2011 Posted by | News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Fixed mortgage rates inch up from yearly lows

WASHINGTON – July 22, 2011 – Fixed mortgage rates were mostly unchanged this week, inching up from their yearly lows.

The average rate on the 30-year fixed loan ticked up to 4.52 percent from 4.51 percent a week ago, Freddie Mac said Thursday. It reached its yearly low of 4.49 percent a month ago.

The average rate on the 15-year fixed loan, popular for refinancing, nudged up to 3.66 percent from 3.65 percent, its low point for the year.

Mortgage rates typically track the yield on the 10-year Treasury note. Yields fall when prices rise. In the past week, yields have been stable even though Congress and the Obama administration are less than two weeks away from a possible default on the government’s debt.

Negotiations to raise the government’s $14.3 trillion borrowing limit have yet to produce a deal that can pass both chambers of Congress, although a bipartisan Senate plan has drawn support from President Obama.

Low mortgage rates and depressed home prices have done little to revive the struggling housing market. Many people simply can’t take advantage of the historically low rates because of tighter lending standards and bigger required down payments.

Other potential homebuyers are holding off, concerned that housing prices will continue to fall.

Few economists expect the housing market to rebound before 2013.

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 edged down to 3.27 percent from 3.29 percent last week. Three weeks ago, it hit 3.25 percent, its lowest level on records dating back to 2005. The average rate on the one-year adjustable loan rose to 2.97 percent from 2.95 percent. It hit a record low last week.

The rates do not include extra fees known as points. One point is equal to 1 percent of the total loan amount.

The average fees for the 30-year loans were unchanged at 0.7, according to Freddie Mac’s survey. Average fees for the 15-year fixed loan rose to 0.7. Fees for the five-year and one-year ARMs were 0.5.
AP Logo Copyright © 2011 The Associated Press, Derek Kravitz, AP business writer. All rights reserved.

July 29, 2011 Posted by | News related to Financing | Leave a comment

NAR recommends qualified mortgage rules

WASHINGTON – July 22, 2011 – Today, the National Association of Realtors® submitted its recommendations for a Qualified Mortgage (QM) Rule being considered by the Federal Reserve.

The Fed is implementing a new law, the Truth in Lending Act (TILA), which is part of the massive Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. (While they share many goals, the QM rule is separate from the Qualified Residential Mortgage or QRM rule under consideration by other federal agencies.)

Under TILA, the Fed must create a rule that would prohibit any creditor from providing a mortgage loan without “a reasonable and good faith determination that the borrower has the ability to repay the loan.”

The proposed rule gives creditors four ways to comply with the “ability to repay” requirement and creates criteria for compliance. Once finished, the Board will transfer all comments to the Consumer Financial Protection Bureau (CFPB), which assumed rulemaking authority on July 21, 2011.

NAR focused on three points of concern to Realtors:

• Seller financing should continue to be exempt from the ability-to-repay requirements, providing it fits the legal definition of “seller.” Generally, anyone who extends credit to a consumer more than five times per year is considered a creditor rather than a seller.

• The QM definition should include stronger consumer protections than currently proposed, promote liquidity, add ability-to-repay standards and offer lenders a safe harbor that reduces litigation.

• The QM rule’s 3 percent cap on points and fees should be adjusted, NAR says. One option is to reinstate the affiliated business exemption from the Real Estate Settlement Procedures Act (RESPA). Failing that, the rule should remove the cost of title and escrow charges from the calculation for fees and points.

NAR has posted its comment letter about ability to pay under the propose QM rules.

The original rule proposed by the Federal Reserve was posted in the Federal Register and also available online.

© 2011 Florida Realtors®

July 29, 2011 Posted by | News related to Financing | Leave a comment

VA loans make many foreclosed homes off-limits

WASHINGTON – July 21, 2011 – The Department of Veterans Affairs provides home loans to veterans that helps them buy a house for very little money down, if any at all.

However, some of the VA requirements, which were created to protect buyers, actually hamstring them when it comes to purchasing a distressed property. Despite the high number of foreclosed houses, many sellers are reluctant to accept offers from those using VA loans because of their strict requirements – including that a dwelling be in shipshape condition.

The VA said it implemented the criteria to protect veterans from sinking money into a rundown house that they might not be able to afford later.

Bill White, assistant director of loan policy for the Veteran’s Benefits Administration, did acknowledge that it is possible the agency is “protecting somebody out of a home.” However, he also said the VA has no intention of changing its requirements.

Source: NPR Online (07/14/11) Noguchi, Yuki

July 29, 2011 Posted by | News related to Buyers, News related to Financing | Leave a comment

Turned down for a loan? Now you can find out why

WASHINGTON – July 21, 2011 – Your credit score determines the interest rate you pay for a credit card, car loan, private student loan or a home mortgage. A low score could prevent you from getting a loan at all. But for years, this important number has been a mystery to most consumers.

Starting today, that will change.

A provision of the Dodd-Frank financial reform law that takes effect today requires lenders to provide consumers with a free credit score whenever:

• They reject an application for a loan. In that case, lenders will be required to provide consumers with an “adverse action” notice that includes their credit score and explains why they were turned down.

• They approve a loan but at a higher rate than the rate provided to their best customers. As in the first instance, lenders will be required to provide borrowers with a credit score and explain why they’re charging a higher rate.

• Lenders must provide the score they used to make a decision about your loan. They’ll also be required to explain the factors that adversely affected your score and the range of possible scores so you’ll know where you stand.

Consumers submit about 1 billion credit applications every year and of those, about half will fall under one of those two categories, says Mark Greene, CEO of FICO, which developed the most widely used credit score.

Many borrowers who receive the notices will be surprised to learn that they didn’t qualify for a lender’s best rate, Greene says. That could encourage more consumers to shop around and take steps to improve their scores, he says.

The requirement won’t create a burden for lenders because they’ve already bought the scores from FICO or other credit score providers, Greene says. “All (lenders) are doing is sharing it with the consumer,” he says.

The requirement won’t help consumers who want to view their scores before they apply for a loan. A federal law enacted in 2003 requires the three main credit bureaus to provide consumers with a free annual copy of their credit reports, but they’re not required to include a score.

Consumers can purchase a credit score from the credit bureaus when they order their free credit reports. They can also obtain credit scores when they enroll in credit-monitoring services offered by the credit bureaus.

However, those scores aren’t necessarily the same ones lenders use, according to a report issued Tuesday by the Consumer Financial Protection Bureau. Some credit bureaus sell consumers “educational” scores that aren’t the ones used by lenders. In other cases, the score may be based on a different model than the one lenders use, the report said.

If these differences lead consumers to mistakenly believe they’re poor credit risks, they may settle for less-favorable terms than they’re eligible to receive, the report said. Conversely, a consumer who mistakenly believes he is a good credit risk could waste time and effort applying for loans he’s not qualified for, CFPB said.

More cash

A separate provision of the financial reform bill that takes effect today will double the amount of money financial institutions must make available to customers after they deposit a check.

The provision requires banks and credit unions to make a minimum of $200 available to depositors in one business day, up from the current minimum of $100. There are exceptions: Financial institutions can hold on to funds for a longer period if the check exceeds $5,000 or the customer has repeatedly overdrawn his or her account.

Nessa Feddis, senior counsel for the American Bankers Association, says most banks already exceed the new requirement. “I don’t think many consumers are going to notice” the change, she says.

But some financial institutions have expressed concern that the rule change will make it more difficult for them to identify fraudulent checks. “There’s going to be more of a risk exposure to financial institutions in general as a result of this” rule change, says Mary Dunn, general counsel for the Credit Union National Association, a trade group.

© Copyright 2011 USA TODAY, a division of Gannett Co. Inc., Sandra Block

July 29, 2011 Posted by | News related to Buyers, News related to Financing | Leave a comment

Listing website errors rile owners, brokers

PHILADELPHIA – July 21, 2011 – In the old days, if you were looking for a new place to live, you picked up the local newspaper, looked at the real estate classifieds, put on comfortable shoes or gassed up the car, and began a house-to-house search.

The Internet has made the job easier, at least on your feet. In short order, you can look at all kinds of sales and rental listings just about anywhere – around the block or across the country.

Given their promise of information from all over the place, how reliable are websites such as Zillow, Trulia, HomeGain, and a growing number of others?

A colleague posed the question after seeing that his Abington, Pa., house was listed online by its ZIP code, which is shared by portions of neighboring towns, and included the wrong school district.

Ken Shuman, head of communications at Trulia, said his website obtained information on 95 million houses from county assessors’ offices nationwide and Fidelity National Real Estate Solutions, a data provider.

Various sources provide details about Zillow’s 100-million-plus homes, both for rent and for sale, said chief economist Stan Humphries: “Information comes in from public-record data, real estate brokerages, users of our information (consumers), and real estate agents directly.”

School sources provide that information, Humphries said, adding that “we do take pains to say the closest school to the property will not necessarily be the one children will be attending.”

“It would be great if we knew, but very difficult to know exactly,” he said.

Real estate agents take issue with these website flaws, as well as with the values the sites place on houses, for sale or not. (They also offer price information about homes already sold, for example.)

When asked whether he recommended these sites to consumers, Kit Anstey of Prudential Fox & Roach in Chester County, Pa., said, “Absolutely not. Very misleading.”

But Mark Wade of Prudential Fox & Roach in Philadelphia said the real estate websites did have some value.

“I think they play a very helpful part in house and condo hunting,” he said. “A lot of information is available at a potential buyer’s fingertips. (Trulia and Zillow) consolidate the information and are both fairly easy to navigate.”

Yet Wade added that he thought estimates of value offered on some websites, such as Zillow’s “Zestimates,” were unreliable, saying that using the formula that determine them “is akin to throwing arrows at a dartboard. You rarely know where it is going to land.”

Trulia’s Shuman, acknowledging that there is sometimes a 90-day delay in obtaining data, said the three-month “rolling average” his site offers is based on properties within municipalities rather than within metropolitan statistical areas.

“When people buy houses, they are looking for specific places – a city, town, or neighborhood,” he said. “MSAs can skew numbers. There are often dramatic differences from neighborhood to neighborhood.”

Trulia lets consumers “leverage” information about houses, Shuman said: “People often save homes from the site if they are not interested in buying them. If they are following a property, we serve them up recent comps (comparable sales) so they can manually update that information.”

HomeGain has an “instant home-prices tool” that allows an owner to recalculate a price range that might be better if actual amenities and square footage of living space were addressed. It doesn’t affect the information from official sources.

Regarding the accuracy of location and school information, Trulia, Zillow, and HomeGain all said owners could update details posted about their homes.

“If you feel your house is misrepresented on Trulia, you can update the information as long as the house is off-market,” Shuman said. “We hope to get edited information for houses on the market, but right now we are trying not to tussle with listing agents.”

The site also is “resetting school boundaries, as a result of a new relationship (with a data provider) we have just formed,” Shuman said. “We have school rankings and are expanding it to do searches based on school boundaries, setting a polygon search for the consumer on the map.” Rollout is planned for late July to mid-August.

Zillow requires people trying to update descriptions to prove that they are the homeowners, Humphries said.

It’s tough to pinpoint all but obvious misrepresentations, he said, but “we do filter for owners giving erroneous information about home or area, and eliminate the data from the models.”

The issue, for some, seems to be not so much the information the websites offer but what consumers might take away from it.

Philadelphia mortgage broker Fred Glick said the websites “can be the downfall for everyone involved” because they offer no sense of the condition of properties.

“When you want to get an idea of what your home is worth for a refinance, those sites can tell you the wrong value,” Glick said. “If the appraisal comes in lower, it may mean a higher interest rate than you were expecting.”

Zillow’s Jill Simmons said, “Zestimates are an estimate – a starting point in determining a home’s value,” not the actual value of a property.

The data on Zillow “are tools to help consumers make better real estate decisions,” Simmons said, “but we always recommend that people who want to buy, sell, or refinance engage a local professional like an appraiser or a real estate agent.”

© 2011 The Philadelphia Inquirer. Distributed by McClatchy-Tribune Information Services.

July 29, 2011 Posted by | News related to Buyers, News related to Investors, News related to Sellers | Leave a comment

Feds: House prices rose for second month

WASHINGTON – July 21, 2011 – U.S. house prices rose 0.4 percent on a seasonally adjusted basis from April to May, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.8 percent increase in April was revised to a 0.2 percent increase.

For the 12 months ending in May, U.S. prices fell 6.3 percent. The U.S. index is 19.6 percent below its April 2007 peak and roughly the same as the January 2004 index level.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from April to May ranged from -1.0 percent in the West South Central Division to +2.0 percent in the Mountain Division.

© 2011 Florida Realtors®

July 29, 2011 Posted by | News related to the Market | Leave a comment

Lawmakers call for hearings on robo-signing

NEW YORK – July 20, 2011 – Lawmakers and enforcement agencies called for hearings and further investigation Tuesday after learning that the illegal practice known as robo-signing has continued in the mortgage industry.

The Associated Press reported on Monday that county officials in at least three states – Massachusetts, North Carolina and Michigan – say they have received thousands of mortgage documents with questionable signatures since last fall. That’s when forged signatures and false affidavits – also called robo-signing – led to a temporary halt to foreclosures. Banks and mortgage processers promised to stop the practice. But the findings of the county officials indicate that robo-signing is still a widespread problem.

Sen. Sherrod Brown, D-Ohio, chair of the Financial Institutions and Consumer Protection Subcommittee, said the subcommittee will hold a hearing on the robo-signing issue.

“Wall Street and some in Washington want us to believe that robo-signing is a thing of the past,” said Brown. “But the same risky practices that put our economy on the brink of collapse continue to infect the housing market.”

Rep. Maxine Waters, D-Calif., a senior member of the House Committee on Financial Services said the lenders who continue the practice “need to be investigated and prosecuted.” She told The Associated Press that she believed regulators should step in and that the absence of stronger regulation is “the reason why the system broke down in the first place.” She said the county officials’ findings show lenders will not stop practices like robo-signing on their own.

“(The lenders) have complete disregard for the damage they have already caused and have no intention of changing their ways,” said Waters, who also called for more hearings on the issue.

County officials, who are responsible for keeping land records, including property deeds, say that they have received thousands of robo-signed documents filed in their offices since October.

In Essex County, Mass., the office that handles property deeds has received almost 1,300 documents since October with the signature of “Linda Green,” but in 22 different handwriting styles and with many different titles.

In Guilford County, N.C., the office that records deeds says it received 456 documents with suspect signatures from Oct. 1, 2010, through June 30. And in Michigan, a fraud investigator who works on behalf of homeowners says he has uncovered documents filed this year bearing the purported signature of Marshall Isaacs, an attorney with foreclosure law firm Orlans Associates.

Early Tuesday, an official from the office of Minnesota attorney general, Lori Swanson, contacted the Essex County’s John O’Brien to get more information for its own investigation into robo-signing. The Massachusetts attorney general’s office also confirmed that it is meeting with several of the state’s 21 registers of deeds to assess the extent of robo-signing in the state.

Rep. Waters, meanwhile, says the Office of the Comptroller of the Currency, or the OCC, is the main federal regulator for banks. As such, it’s the OCC’s responsibility to investigate the banks.

The OCC has been criticized by lawmakers and consumer advocates for going easy on banks in the past. The same criticism has resurfaced since the robo-signing scandal broke in September. Last fall, The Associated Press found that robo-signed documents led to banks wrongfully foreclosing on people who had paid their mortgages in full. When asked about the issue, an OCC spokesman flatly denied that any such thing had ever occurred.

The OCC partnered with other federal regulators and conducted a review of bank procedures including robo-signing in December. In April, the 14 largest national banks entered into a consent decree with the OCC in which they vowed to submit action plans as to how they would address such systemic issues as robo-signing.

Last week, the banks delivered those action plans to the OCC, which is now reviewing them, a spokesman said.
AP Logo Copyright © 2011 The Associated Press, Pallavi Gogoi and Michelle Conlin, AP business writers. All rights reserved.

July 29, 2011 Posted by | News related to Short Sales and Foreclosures | Leave a comment

NAR: June existing-home sales slip, but prices stabilize

WASHINGTON – July 20, 2011 – Existing-home sales eased in June as contract cancellations spiked unexpectedly, although prices were up slightly, according to the National Association of Realtors®.

Sales gains in the Midwest and South offset declines in the Northeast and West. Single-family home sales were stable while the condo sector weakened.

Total existing home sales – which are completed transactions that include single-family, townhomes, condominiums and co-ops – declined 0.8 percent to a seasonally adjusted annual rate of 4.77 million in June from 4.81 million in May, and remain 8.8 percent below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the homebuyer tax credit.

NAR Chief Economist Lawrence Yun said this is an uneven recovery.

“Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market, including an unusual spike in contract cancellations in the past month,” he said. “The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was cancelled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year.”

Yun cited other factors in the sales performance. “Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”

The national median existing-home price for all housing types was $184,300 in June, up 0.8 percent from June 2010. Distressed homes – foreclosures and short sales generally sold at deep discounts – accounted for 30 percent of sales in June, compared with 31 percent in May and 32 percent in June 2010.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.51 percent in June, down from 4.64 percent in May; the rate was 4.74 percent in June 2010.

NAR President Ron said home sales should be higher. “With record high housing affordability conditions thus far in 2011, we’d normally expect to see stronger home sales,” he said. “Even with job creation below expectations, excessively tight loan standards are keeping many buyers from completing deals. Although proposals being considered in Washington could effectively put more restrictions on lending, some banking executives have hinted that credit may return to more normal, safe standards in the not-too-distant future, but the tardiness of this process is holding back the recovery.”

Phipps added that lower mortgage loan limits, due to go into effect on October 1, already are having an impact. “Some lenders are placing lower loan limits on current contracts in anticipation they may not close before the end of September. As a result, some contracts may be getting cancelled because certain buyers are unwilling or unable to obtain a more costly jumbo mortgage,” he said.

Total housing inventory at the end of June rose 3.3 percent to 3.77 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, up from a 9.1-month supply in May.

All-cash transactions accounted for 29 percent of sales in June; they were 30 percent in May and 24 percent in June 2010; investors account for the bulk of cash purchases.

First-time buyers purchased 31 percent of homes in June, down from 36 percent in May; they were 43 percent in June 2010 when the tax credit was in place. Investors accounted for 19 percent of purchase activity in June, unchanged from May; they were 13 percent in June 2010.

The balance of sales was to repeat buyers, which were a 50 percent market share in June, up from 45 percent in May, which appears to be a normal seasonal gain.

Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.24 million in June, but are 7.4 percent below a 4.58 million pace in June 2010. The median existing single-family home price was $184,600 in June, up 0.6 percent from a year ago.

Existing condominium and co-op sales fell 7.0 percent to a seasonally adjusted annual rate of 530,000 in June from 570,000 in May, and are 18.0 percent below the 646,000-unit level a year ago. The median existing condo price was $182,300 in June, up 1.8 percent from June 2010.

Regionally, existing-home sales in the Northeast fell 5.2 percent to an annual pace of 730,000 in June and are 17.0 percent below June 2010. The median price in the Northeast was $261,000, up 3.1 percent from a year ago.

Existing-home sales in the Midwest rose 1.0 percent in June to a pace of 1.04 million but are 14.0 percent below a year ago. The median price in the Midwest was $147,700, down 5.3 percent from June 2010.

In the South, existing-home sales increased 0.5 percent to an annual level of 1.86 million in June but are 5.6 percent below June 2010. The median price in the South was $159,100, down 0.1 percent from a year ago.

Existing-home sales in the West declined 1.7 percent to an annual pace of 1.14 million in June and are 2.6 percent below a year ago. The median price in the West was $240,400, up 9.5 percent from June 2010.

© 2011 Florida Realtors®

July 29, 2011 Posted by | News related to the Market | Leave a comment

Sarasota real estate market remains strong in June 2011

Members of the Sarasota Association of Realtors® continued to sell properties at a brisk pace in June 2011 with 728 total transactions recorded last month. This marks the fourth month in the last 12 with sales exceeding the 700 level – all occurring in 2011. In addition, the median sales price for single family homes hit the highest level since last June, and the total inventory of available properties dropped to the lowest level in more than a decade, which could spur stronger competition for homes and condos.

 

Read Full Report HERE

July 29, 2011 Posted by | News related to the Market | Leave a comment