Sarasota Real Estate Market News

Homeowner sues for being denied loan mod

DETROIT – Aug. 19, 2011 – Homeowner Kim Orsi is taking her battle against two lenders to court after being denied a loan modification – a possible sign of more such lawsuits to come.

Orsi, a hair stylist, told the Detroit-Free Press that after getting a divorce last year she was no longer able to afford her mortgage, so she contacted lenders to apply for the Home Affordable Modification Program (HAMP), a government program that provides foreclosure-prevention initiatives. Orsi says her lender, Bank of America, told her to stop making mortgage payments before she could qualify for the program. She stopped making mortgage payments and also started a pet-sitting business on the side to pay off her debts and make more money.

She says Bank of America later approved her for finally qualifying for HAMP, but a letter she received in the mail shortly after said she was denied a loan modification because she made too much money.

Orsi has sued Bank of America and Fannie Mae; the former says the latter denied the loan modification. Her foreclosure has been delayed as her case remains in court, and she says the incorrect information she received to stop paying her mortgage has now hurt her credit.

“I don’t want people to feel sorry for me,” Orsi told the Detroit-Free Press. “I want them to be angry because the banks can deny you a modification, even if you qualify.”

Earlier this year, a group of homeowners across California were denied permanent loan modifications and are also fighting back against banks, suing lenders after they were denied for taking part in HAMP.

Source: “Home Owner Sues: Income was Too Much–and Too Little,” Detroit-Free Press (Aug. 16, 2011)

August 20, 2011 Posted by | News related to Short Sales and Foreclosures | Leave a comment

Shadow inventory falls, expected to continue

NEW YORK – Aug. 19, 2011 – Standard & Poor’s estimates that it would take nearly four years – or 47 months – for the housing market to work through its shadow inventory at the current rate. While that number is still high, it marks an improvement over S&P’s first quarter report that had estimated 52 months.

Shadow inventory represents homes that are in the foreclosure system but haven’t hit the market yet. S&P defines shadow inventory as foreclosure and REO properties in 90-day delinquency or worse.

“In conjunction with stable liquidation rates, we believe these are positive signs that the amount of time it will take to clear this ‘shadow inventory’ should continue to decline over the next year,” S&P analysts said.

Delays from mortgage servicers in processing foreclosures likely will cause more than 1 million foreclosures to be postponed until next year, RealtyTrac recently reported.

As such, “the shadow inventory will continue to jeopardize the housing market’s recovery until servicers are able to improve liquidation times,” S&P said. “However, if and when that happens, an influx of homes will likely enter the market, increasing supply and driving prices down further.”

Shadow inventories are largest in New York, where S&P estimates it will take 144 months – or 12 years – to work through foreclosure properties at the current rate. That is down slightly from 146 months in the first quarter.

Source: “Standard & Poor’s: Shadow Inventory Levels Begin to Improve,” HousingWire (Aug. 17, 2011)

August 20, 2011 Posted by | News related to Short Sales and Foreclosures, News related to the Market | Leave a comment

Rate on 30-year mortgage falls to lowest on record

WASHINGTON – Aug. 19, 2011 – The average rate on a 30-year fixed mortgage has fallen to its lowest level on records dating to 1971.

The rate on the most popular mortgage dipped to 4.15 percent from 4.32 percent a week ago, Freddie Mac said Thursday. Its previous low of 4.17 percent was reached in November.

The last time long-term rates were lower was in the 1950s, when 30-year loans weren’t widely available. Most long-term home loans lasted 20 or 25 years.

Few expect record-low rates to energize the depressed home market. Over the past year, the average rate on the 30-year fixed mortgage has been below 5 percent for all but two weeks. Yet prices and sales remain unhealthy and are holding back the overall economy.

Five years ago, the average 30-year fixed rate was near 6.5 percent. In 2000, it exceeded 8 percent.

Most homeowners are paying rates more than a full percentage point higher than the current average. The average rate on all outstanding mortgages is 5.3 percent, Freddie Mac said, citing data from the Bureau of Economic Analysis.

After previous recessions, housing accounted for 15 percent to 20 percent of overall economic growth. This time, in 2009 and 2010, housing contributed just 4 percent to the economy.

“The housing market is not going to turn around because of this, because it isn’t the mortgage rate that matters,” said Joel Naroff, head of Naroff Economic Advisors. Naroff blamed the “horrendous” process of qualifying for a mortgage despite tougher lending standards. He said trying to sell a home in many markets is just as difficult.

Many would-be buyers can’t take advantage of the low rates. The unemployment rate is 9.1 percent, few Americans are getting raises and many are struggling to shrink their debt loads.

Banks are also insisting on higher credit scores and larger downpayments for first-time buyers. Many repeat buyers have too little equity invested in their homes to qualify for loans. Others are too nervous about the economy or their job security to invest in a home.

The average rate on a 15-year fixed mortgage, which is popular for refinancing, fell to 3.36 percent, also a record low. It’s the third straight week of record lows for the popular refinancing option. Freddie Mac’s records date to 1991, but analysts believe the new low on the 15-year mortgage is the lowest ever.

Borrowers who qualify have rushed to refinance and take advantage of the low rates. Refinancing accounted for 70 percent of mortgage applications in the first half of the year, Freddie Mac said. Refinancings tend to provide less benefit to the economy than home purchases do.

Mortgage rates typically track the yield on the 10-year Treasury note. Economic fears have drawn investors to the safety of Treasurys, driving down the yield on the 10-year note to barely above 2 percent. That helped lower mortgage rates.

The Federal Reserve offered a dim outlook of the economy last week, saying it expects growth will stay weak for two more years. As a result, the Fed said it expects to keep short-term rates near zero through mid-2013.

Roughly 14 million Americans remain unemployed. And the economy isn’t creating enough jobs to rapidly trim that figure. The economy grew at an annual rate of just 0.8 percent in the first six months of this year, the slowest such pace since the recession officially ended more than two years ago. In June, consumers cut spending for the first time in 20 months.

Fewer Americans bought previously occupied homes in July for the third time in four months, the National Association of Realtors said Thursday in a separate report. It said sales fell 3.5 percent last month to a seasonally adjusted annual rate of 4.67 million homes. That’s far below the 6 million that economists say must be sold to sustain a healthy housing market.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rate on a five-year adjustable-rate mortgage fell to 3.08 percent, its lowest level on records dating to January 2005. Last week’s reading of 3.13 percent also was a record low. The week before was, too.

The average for one-year adjustable-rate loans fell to 2.86 percent, the lowest on records going back to 1984. Last week’s average of 2.89 also set a record.

The rates do not include extra fees known as points. One point is equal to 1 percent of the total loan amount.
AP Logo Copyright © 2011 The Associated Press.

August 20, 2011 Posted by | News related to Financing | Leave a comment

Report: Government probe of Standard and Poor’s

WASHINGTON (AP) – Aug. 18, 2011 – The Justice Department is investigating whether the Standard & Poor’s credit ratings agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis, The New York Times reported Wednesday.

The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it’s likely to add to the political firestorm created by the downgrade, the newspaper said. Some government officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.

The Times cites two people interviewed by the government and another briefed on such interviews as its sources. According to people with knowledge of the interviews, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S&P business managers.

If the government finds enough evidence to support a case, it could undercut S&P’s longstanding claim that its analysts act independently from business concerns. The newspaper said it was unclear whether the Justice Department investigation involves the other two major ratings agencies, Moody’s and Fitch, or only S&P.

S&P and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.

Companies and some countries – but not the United States – pay the credit ratings agencies to receive a rating, the financial market’s version of a seal of approval. Before the financial crisis, banks shopped around to make sure rating agencies would award favorable ratings before agreeing to work with them. These banks paid as much as $100,000 for ratings on mortgage bond deals, according to the Financial Crisis Inquiry Commission, the Times said.

Critics say this business model is riddled with conflicts of interest since ratings agencies might make their grades more positive to please their customers.

The Times said the Securities and Exchange Commission also has been investigating possible wrongdoing at S&P, citing a person interviewed on that matter.

Ed Sweeney, a spokesman for S&P, said in an email to the Times: “S&P has received several requests from different government agencies over the last few years. We continue to cooperate with these requests. We do not prevent such agencies from speaking with current or former employees.”

Representatives of the Justice Department and the SEC declined to comment on whether they are investigating the ratings agencies, the newspaper said.
AP LogoCopyright © 2011 The Associated Press.

August 20, 2011 Posted by | News related to the Market | Leave a comment

Average Floridian getting younger

WASHINGTON – Aug. 18, 2011 – The U.S. Census Bureau released new information from the 2010 Census, and it shows that the majority of Florida growth came from working-age adults, 18 to 64 years old, who settled in counties on the edge of major cities.

Two decades ago, Florida had the highest median age in the U.S.; 10 years ago, the state ranked No. 2. Based on the just-released numbers, it’s now No. 5.

The recent Census information has valuable data for real estate agents considering a farm area or choosing a message for advertising. It includes statistics about Florida’s residents sorted by area, age, sex, household type, family type, housing units, and race and origin groups.

The Census Bureau has already released some of the information. The latest data, however, adds more information and allows much of it to be manipulated to create a more robust analysis.

New topics include:

• single year of age by sex
• more detail on children, including adopted, stepchildren and grandchildren
• race and Hispanic origin of householder
• more detail on household relationships
• group quarters population by sex, age and group quarters type
• housing tenure (rented or owned) by age, household type, race and Hispanic origin of householder
• mortgage status of owned housing units

Accessing the information

Summary tables can be found on the Census Bureau’s American FactFinder website. A good place to start is the quick tables, noted as “QT” in the search results list, which show a summary of a topic for one geographic area at a time. The geographic comparison tables (noted as “GCT”) are a good place to start for a first look at a topic across geographies, such as all places within Florida.

A summary file version of the information is also available for users who want to download the set of detailed tables for all of the geographies within a state and run their own analysis and rankings.

© 2011 Florida Realtors®

August 20, 2011 Posted by | News related to the Market | Leave a comment

USDA still offers no-downpayment mortgages

USDA still offers no-downpayment mortgages

WASHINGTON – Aug. 18, 2011 – Thanks to funding from federal programs to boost the housing market, the U.S. Department of Agriculture (USDA) still has $11.2 billion in its coffers earmarked for mortgage loans. The USDA’s Rural Development Service’s Section 502 loan is one of the few mortgage programs that requires no downpayment.

In earlier years, the program ran out of money by late summer, leaving homebuyers in limbo as they waited for the new budget year to begin. In Florida, most low-income and middle-income buyers qualify if they live in rural areas, smaller towns or some outlying suburbs to larger cities.

The program will change slightly after Oct. 1, when buyers will be required to pay a 0.3 percent premium for mortgage insurance monthly; however, the cost of upfront mortgage insurance will be reduced to 2 percent from its current 3.5 percent.

For more information, visit the USDA’s website.

© 2011 Florida Realtors®

Many single family properties  east of Interstate 75 (Lake Sarasota for example) qualify for this type of financing

August 20, 2011 Posted by | Uncategorized | Leave a comment

Florida’s existing home, condo sales up in July

ORLANDO, Fla. – Aug. 18, 2011 – Florida’s existing home and existing condo sales rose in July, according to the latest housing data released by Florida Realtors®. Existing home sales increased 12 percent last month with a total of 15,517 homes sold statewide compared to 13,874 homes sold in July 2010, according to Florida Realtors. Statewide sales of existing condos last month also rose 12 percent compared to the year-ago sales figure.

“Realtors in markets across the state are reporting increased activity from potential homebuyers who are ready to advantage of historically low mortgage rates and current availability of affordable housing options,” said 2011 Florida Realtors President Patricia Fitzgerald, manager/broker-associate with Illustrated Properties in Hobe Sound and Mariner Sands Country Club in Stuart.

Fifteen of Florida’s metropolitan statistical areas (MSAs) reported higher existing home sales in July; 13 MSAs had higher existing condo sales.

The statewide median sales price for existing homes last month was $136,500; a year ago, it was $137,700 for only a 1 percent decrease. Analysts with the National Association of Realtors® (NAR) note that sales of foreclosures and other distressed properties continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in June 2011 was $184,600, up 0.6 percent from a year ago, according to NAR. In Massachusetts, the statewide median resales price was $325,850 in June; in California, it was $295,300; in Maryland, it was $247,100; and in New York, it was $221,595.

In Florida’s year-to-year comparison for condos, 6,619 units sold statewide last month compared to 5,904 units in July 2010 for an increase of 12 percent. The statewide existing condo median sales price last month was $90,900; in July 2010 it was $87,800 for a 4 percent increase. NAR notes the national median existing condo sales price was $182,300 in June 2011.

Economic uncertainty continued to impact the recovery of the housing sector, according to NAR’s latest industry outlook. NAR Chief Economist Lawrence Yun pointed to overly restrictive lending requirements, low appraisals and federal budget issues as factors affecting the pace of sales activity.

Economic and political worries also dampened the outlook for Florida’s real estate markets, according to the University of Florida’s Bergstrom Center for Real Estate Studies’ latest quarterly survey of real estate trends. The report surveys economists, industry executives, real estate scholars, researchers and other experts.

“Even though unemployment in Florida improved in many markets, the pace of change and the still-high levels are affecting the pace of improvements in the real estate markets,” said Center Director Tim Becker. “Consumers continue to be cautious and pessimistic about their own spending, which is also affecting the rate of fundamental improvement.”

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 4.55 percent in July, about the same level as the 4.56 percent average during the same month a year earlier. Florida Realtors’ sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

© 2011 Florida Realtors®

August 20, 2011 Posted by | News related to Sellers, News related to the Market | Leave a comment

Down real estate market looking pretty good

MCLEAN, Va. – Aug. 17, 2011 – Despite the recent ups and downs in the capital markets, Freddie Mac’s U.S. Economic and Housing Market Outlook for August finds room for optimism. First, an extended period of both low short- and long-term interest rates should help as the market continues to struggle.

Outlook highlights

• The employment number was up 117,000, the best showing since April, and the unemployment rate edged down a tenth to 9.1 percent.

• Over the first half of 2011, growth was figured to be about 0.8 percent at an annual rate – positive but too weak to generate enough jobs to keep pace with labor force growth.

• Compared with the first quarter of 2008, borrowers are paying about $130 billion less in mortgage interest today, at an annual rate.

• The likelihood of an extended period of both relatively low short- and long-term interest rates is helpful news for the housing market’s recovery.

• Interest rates on 15-year fixed-rate loans – a popular choice for refinancing borrowers – reached about 3.5 percent in early August, assuring the refinance boom continues.

• The Freddie Mac House Price Index for the U.S. shows that prices are down 25 percent, on average, as of June 2011 compared with their peak obtained five years ago.

The complete August 2011 U.S. Economic and Housing Market Outlook is available on Freddie Mac’s website.

© 2011 Florida Realtors®

August 20, 2011 Posted by | News related to the Market | Leave a comment

Good things can come in small packages with shorter mortgages

NEW YORK – Aug. 16, 2011 – Normally, when you see smoke wafting from a neighbor’s backyard, you assume he’s burning some leaves, or has poured too much lighter fluid on his barbecue. But there could be another reason for the conflagration: Your neighbor is torching his mortgage.

Spurred by low interest rates and a desire to pay off their debts, homeowners are shortening the terms of their loans. In the first quarter, 34 percent of refinancers switched to a 20- or 15-year loan, the highest level in seven years, according to mortgage giant Freddie Mac. At LendingTree, an online mortgage broker, requests for 15-year mortgages are up 30 percent from a year ago, says Mona Marimow, vice president of marketing.

Quicken Loans recently launched Yourgage, a customized product that allows borrowers to select the term of their mortgage. The most popular term for Quicken borrowers? Eight years. The second most popular is 13 years.

“Mortgage-burning parties are back,” says Bob Walters, chief economist for Quicken Loans.

In one sense, this trend bucks conventional wisdom. The average rate for a 30-year, fixed-rate mortgage was 4.32 percent last week, close to a record low, according to Freddie Mac. That’s cheap money, especially when you factor in the tax deduction for mortgage interest. Some financial planners might argue that you’re better off keeping your payments as low as possible – which usually means sticking with a 30-year mortgage – and investing the balance.

The counter argument is that these days, the alternatives to paying down your mortgage aren’t very appealing, says Keith Gumbinger, vice president of HSH Associates, a mortgage research firm. You need a strong stomach and a long-term horizon to invest in the stock market. Interest rates from certificates of deposit, savings accounts and Treasury securities are microscopic and will likely stay that way for months.

By contrast, reducing the term of your mortgage could save you “tens or even hundreds of thousands of dollars in interest costs,” Gumbinger says. Because rates on 15-year mortgages are so low, some borrowers may be able to refinance to a shorter term without increasing monthly payments, he says. The average rate for a 15-year mortgage was 3.5 percent last week, according to Freddie Mac. If you’ve got a 30-year mortgage with a rate of 6 percent or more, refinancing to a 15-year mortgage could lower your monthly payment.

Sadly, there are thousands of homeowners who would dearly love to refinance but can’t. In general, borrowers need a credit score of 720 or higher and at least 20 percent in home equity to qualify for the lowest rates, says Erin Lantz, director of Zillow Mortgage Marketplace, a mortgage comparison site. Market researcher CoreLogic estimates that 46 percent of homeowners with a mortgage have equity of 20 percent or less in their homes.

There are a couple of ways to get around this. One is to make extra payments on your existing mortgage. Even a small increase could save thousands of dollars in interest. Another option is to pay down principal when you refinance. More than a quarter of borrowers who refinanced in the second quarter paid cash as part of the deal, according to Freddie Mac.

Before you decide to shorten the term of your mortgage, consider:

• Other debts. If you’re carrying a credit card balance, pay that off before you start accelerating your mortgage term. The interest rate on your credit card is undoubtedly higher than the interest on your mortgage, and unlike mortgage interest, it’s not deductible.

• Your retirement savings. Retiring with a paid-off mortgage is a worthy goal, but you’ll need money to eat, too. Contribute at least enough to your 401(k) plan to earn the company match before you increase mortgage payments.

• Future income. Even at today’s low rates, most borrowers will end up with higher payments on a 15-year mortgage than they’ll pay on a 30-year loan. If you’re concerned that your income could decline before you pay off your mortgage, a 30-year may be the safer choice, Lantz says. You can shorten the term by making extra payments, but you’ll have the flexibility to pay only the minimum required if money is tight. The downside, of course, is that you’ll pay a higher interest rate on the 30-year loan, she says.

• Costs. The upfront costs of refinancing typically range from 3 percent to 6 percent of your principal. In most cases, you can pay these costs out of pocket, add them to the loan amount or accept a higher interest rate. Your best option depends on several factors, such as how long you plan to stay in your home. You can find a calculator that shows how long it will take you to recoup the cost of refinancing at

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

August 20, 2011 Posted by | News related to Financing | Leave a comment

Experts: Foreclosures create conditions for mold

HARTFORD, Conn. – Aug. 16, 2011 – Boarded up foreclosures – particularly during the hot summer months – can create ripe conditions for mold to surface. And some experts even estimate that half the foreclosed homes in the country likely have mold or mildew problems.

With its costly cleanup, mold can often be a deal breaker in a real estate deal.

Banks often shut off electricity and heat during the warm weather months when it forecloses on a home. But by doing so, “you’ve created a greenhouse” and all that is needed for mold to flourish is a little moisture from a pipe, rainwater or humid air seeping between the cracks, says David Goldstein, vice president of Mystic Air Quality, a company that tests buildings for mold.

“When buildings get closed up tight, those buildings rot,” Goldstein says.

Mold spores can survive for 20 years and lie dormant until the right conditions are met.

“This is really a buyer-beware situation,” Richard E. Maloney, director of trade practices with the Connecticut Department of Consumer Protection, says. “So if you’re going to buy a foreclosed home, you’d better know what you’re doing.”

Source: “More Foreclosures=More Closed Up Houses = Lots More Mold: What Banks and Realtors Don’t Want to Talk About,” Hartford Advocate (Aug. 12, 2011)

August 20, 2011 Posted by | News related to Buyers, News related to Short Sales and Foreclosures | Leave a comment