Gay Real Estate News

Treasury Investigates a Bet Against Home Owners

The Treasury Department is investigating allegations against Freddie Mac that accuse the government-sponsored enterprise of “betting against home owners’ ability to refinance their loans” while also putting in roadblocks to make it more difficult refinance at today’s lower rates, White House spokesman Jay Carney said Monday.

Some argue the GSE imposed several barriers to home owners who wanted to refinance their mortgages, like adding risk-based fees. 

The White House says it has tried to get the GSEs to ease such refinancing restrictions, as well as participate in debt-forgiveness programs, so more home owners can take advantage of current low mortgage rates.

The Treasury Department announced last week that it would extend for the first time to Freddie Mac and Fannie Mae-backed loans incentives for lenders to forgive portions of homeowner debt in a refinancing program. 

But both GSEs have traditionally refused to permit debt reduction on its loans because it says it will create more losses to taxpayers. (The GSEs are backed by taxpayer money.) The GSEs did agree to review the current incentives, however. 

Several media outlets are reporting that Freddie Mac had a multibillion-dollar investment that hinged on borrowers continuing to pay higher interest rates, and they’re alleging that’s why the GSE wasn’t so eager to help more home owners refinance. 

“Beginning in 2010, Freddie bought several billion dollars' worth of ‘inverse floater’ securities — essentially the interest-paying portion of a bundle of mortgages — for its investment portfolio while selling the far less risky principal portion,” an article in The New York Times reports. “There is no evidence that Freddie tailored its refinancing standards to its investing strategy, but ‘inverse floaters’ make less money if the loans they cover refinance to a lower interest rate.”

Freddie denies any wrongdoing and, in a company statement said that it has stopped doing such transactions and only $5 billion of its $650 billion portfolio contained inverse floaters. In a statement issued Monday, the company said ''Freddie Mac is actively supporting efforts for borrowers to realize the benefits of refinancing their mortgages to lower rates.” What’s more, the company says that refinancings made up 78 percent of its loan purchases last year.

 

The author of this article is: realtormag.realtor.org

 See the original post at: http://realtormag.realtor.org/daily-news/2012/01/31/treasury-investigates-bet-against-home-owners

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Homeownership rate falls to 14-year low

The nation's home ownership rate fell for the seventh year in a row, nearly touching levels unseen in 14 years.

U.S. home ownership in the fourth quarter of 2011 dropped 0.5% from the year-ago period to 66%, according to a U.S. Census Bureau report released Tuesday. The rate hasn't dropped that low since 1997 when it was 65.7%. Since then, it steadily rose until 2005, reaching 69%.

Vacant units that were held off market comprised 5.4% of the total housing stock. Of these units, 1.7% were for occasional use, 1% were temporarily occupied by persons with a usual residence elsewhere, and 2.7% were vacant for a variety of other reasons.

The homeowner vacancy rate fell 0.4% points to 2.3% in the fourth quarter from the year-ago period and 0.1% lower than the previous quarter. In that same period, the vacancy rate in rental housing held steady at 9.4% and fell 0.4% from the previous quarter.

The vacancy drop was paralleled by a 2.3% decrease in vacant units held off the market. The fell from 7.3 million units in fourth quarter 2010 to 7.2 million in fourth quarter 2011.

Markets across the country are bulging with a shadow inventory of millions of underlying delinquent or already foreclosed mortgages, according to Lender Processing Services ($17.80 0.47%) data.

About 86.1% of housing units in the fourth quarter were occupied and 13.9% were vacant. Owner-occupied housing units made up 56.9% of total housing units, while renter-occupied units made up 29.3% of the inventory in the quarter.

"The share of Americans who are willing and able to own their own home is still falling," analysts at Capital Economics said. "The flipside is more households in the rented sector and fewer properties lacking tenants. This is helping to drive rents, and therefore landlords’ returns, higher."

Click on the image below to see U.S. home ownership rates since 1995.

 

The author of this article is: Justin T. Hilley 

 See the original post at: http://www.housingwire.com/article/homeownership-rate-falls-14-year-low

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Top 6 States With Highest Mortgage Debt

A high mortgage debt doesn’t mean you’re at a greater likelihood of defaulting on your mortgage, at least according to a new analysis. 

The states with the highest mortgage debt are surprisingly in states with some of the lowest foreclosure rates in the country, according to an analysis by 24/7 Wall St., using a report by Credit Karma. Residents of the states with some of the highest mortgage debt seem to be wealthy enough to be able to afford to lose or owe more money than other states, finds 24/7 Wall St. 

The states with the highest mortgage debt tend to be in states that have some of the highest median home values.

The following are the top states with highest mortgage debt, according to 24/7 Wall St. and Credit Karma: 

1. California
Average mortgage debt: $313,749
Median household income: $57,708

2. Hawaii
Average mortgage debt: $307,508
Median household income: $63,030

3. Maryland
Average mortgage debt: $242,445
Median household income: $68,854

4. New Jersey
Average mortgage debt: $236,017
Median household income: $67,681

5. Washington
Average mortgage debt: $225,581
Median household income: $55,681

6. Massachusetts
Average mortgage debt: $224,661
Median household income: $62,072

 

The author of this article is: realtormag.realtor.org

 See the original post at: http://realtormag.realtor.org/daily-news/2012/01/30/top-6-states-highest-mortgage-debt

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S&P/Case-Shiller Nov. home prices down 3.7% from year earlier

The average price of a single-family home fell again in November, with decreases in 19 of the 20 largest metropolitan areas during the month, according to the Standard & Poor's/Case-Shiller index.

The ratings agency's 20-city composite index and 10-city index both declined 1.3% from a month earlier. The larger, benchmark index drop 3.7% from November 2010 and the 10-city index for November was 3.6% lower than the year earlier.

S&P said both indices are one-third lower than the peak in the summer of 2006 and home prices are now at levels last seen in the middle of 2003.

Atlanta home prices for November were nearly 12% lower than the prior year, while Detroit at 3.8% and Washington with a 0.5% gain are the only metropolitan areas to post annual increases. Home prices in Atlanta, Las Vegas, Seattle and Tampa, Fla., all reached new lows in November, according to S&P/Case-Shiller.

"Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall," said David Blitzer, chairman of the S&P index committee.

He said Phoenix, one of the hardest-hit areas in recent years, was the only MSA to post an increase in prices from October with a 0.6% gain.

"Annual rates were little better as 18 cities and both composites were negative," Blitzer said. "The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand."

Analysts with Toronto-based Capital Economics agreed and said "there are still no signs that house prices are on the verge of turning around," as the Case-Shiller indices fell for the seventh month in a row.

"But things should be different in six months' time, when the recent rises in home sales will have helped to put a floor under prices," the analysts said.

 

The author of this article is: Jason Philyaw 

 See the original post at: http://www.housingwire.com/node/32393

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Analysts see housing impact on economic recovery as minimal

Don't expect housing improvements to play a major part in any overall national economic recovery.

Because housing now makes up only a small share of the economy, the sector is unlikely to add much more than 0.2% to annual gross domestic product growth in 2012 and 2013, according to analysts at Capital Economics. So although housing may soon support growth, it won’t help much.

Normally in the first two years after a recession, residential investment adds an average of 0.7% to annual GDP growth. This time, it has added nothing, they say. If residential investment had performed as well as during past recoveries, then GDP growth in 2011 would have been close to 2.5% instead of 1.7%.

"The added problem is that housing now has to work harder to boost GDP growth," analysts at the Toronto-based research firm said. "In the fourth quarter of last year, residential investment accounted for just 2.5% of overall GDP. That's down from the 2005 peak of 6.3% and the 1946 to 2008 average of 4.8%. Back in 2005, every 10% increase in residential investment would have boosted GDP by 0.6%. The same increase would now boost GDP by just 0.2%"

The Federal Reserve Board of Governors, however, points out the importance of housing on the economy in its recent white paper suggesting potential fixes.

"Looking forward, continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery," the Federal Reserve Board said.

The Capital Economics analysts expect housing will add about 0.5% to GDP in both 2014 and 2015.

"It is quite clear, then, that the housing recovery we expect will not be strong enough to trigger a significantly stronger recovery in the wider economy," they said.

However, there is room for residential investment to rise as a share of GDP from, for example, homebuilding activity, which appears to have embarked on a modest upward trend.

Housing can also boost the economy through indirect effects on consumption, such as the so-called wealth effect, refinancing and extra spending on furniture and furnishings triggered by a home move.

Contrary to popular opinion, the U.S. economy can perform well without a strong housing market, according to Capital Economics analysts. For example, subdued residential investment growth did not prevent the economy from growing at healthy rates during the late 1980s and late 1990s, they said.

Programs such as the expanded Home Affordable Refinance Program will boost consumption, analysts say, but the ultimate impact will be "very small." Data provided by Freddie Mac and the Mortgage Bankers Association suggest mortgage rates falling to 4.1% from 5.1% led about 4.5 million borrowers to refinance to a lower rate. That saved those Americans around $4.5 billion per year in monthly payments — less than 0.1% of GDP.

"This year, mortgage rates are likely to fall by less from 4.1% to around 3.7% and many borrowers who can refinance may have already done so," analysts say. "We estimate that refinancing may save households around $1.4 billion in mortgage payments this year, which wouldn't noticeably boost GDP."

 

The author of this article is: Justin T. Hilley 

 See the original post at: http://www.housingwire.com/2012/01/30/housing-impact-on-economic-recovery-minimal-analysts

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2011 Marks Worst Year on Record for New-Home Sales

Sales of new-home declined in December, dropping 2.2 percent, and marking the end to the worst year on record for new-home sales, the Commerce Department reported Thursday. 

New-home sales reached a seasonally adjusted annual pace of 307,000 in December — less than half the 700,000 pace that economists consider healthy for the sector. 

In 2011, 302,000 new homes were sold nationwide, overtaking 2010’s 323,000 sales that had previously marked the worst year for sales on record. 

The new-home sector continues to struggle to compete against discounted distressed properties that are plaguing many markets and have put downward pressure on home prices. Builders also say tighter lending standards are preventing some home buyers for qualifying for financing, and appraisals of new-homes are coming in lower on the agreed upon purchase price, causing more deals to fall through. 

In December, the median sales price of a new-home was $210,300, according to the Commerce Department. 

Turnaround Coming?

Despite the latest numbers from December, new-home sales rose in the overall final quarter of 2011. Home construction for single-family homes increased in the final three months of 2011, and an index measuring homebuilder sentiment showed builders are more positive about where the market is heading too. 

"Although this [December] decline was unexpected, it does not change the story that housing has likely bottomed," Jennifer H. Lee, senior economist at BMO Capital Markets, told the Associated Press.

 

The author of this article is: realtormag.realtor.org

 See the original post at: http://realtormag.realtor.org/daily-news/2012/01/27/2011-marks-worst-year-record-for-new-home-sales

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Fed Vows to Keep Rates Low Until 2014

The Federal Reserve announced that short-term interest rates will likely stay near zero for nearly three more years, a move that is expected to spillover to long-term mortgage rates for home buyers and home owners.

In August, the Fed had made a rare move to say it would keep rates near zero until at least mid-2013. The Fed said Wednesday that the economy still needs more help and it will now extend that period to 2014. 

Fed Chairman Ben Bernanke said in a news conference that the Fed isn’t happy with the modest economic recovery and that the Fed may need to take additional steps to spur recovery. He did not comment further on what those steps might be, though. 

While the economy has improved somewhat in recent weeks, Fed officials say it’s worried about “strains in global financial markets” and the still high unemployment rate. 

Some critics say that the Fed’s vow to keep mortgage rates longer won’t do enough to help the economy and the housing market. They argue that too many Americans are already unable to take advantage of the record low mortgage rates because of the tightening of lending standards. 

Bernanke shared that concern, saying that millions of home owners were unable to refinance because of damaged credit or being from underwater in their homes.

 

The author of this article is: realtormag.realtor.org

 See the original post at: http://realtormag.realtor.org/daily-news/2012/01/26/fed-vows-keep-rates-low-until-2014

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