foreclosures

10% drop in prices coming?

As many as 1.25 million of America’s least cared for homes are headed for auction after a year-long probe into foreclosure practices kept them off the market.  Sales of repossessed properties probably will rise 25% this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10% because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc. That month, 43% of foreclosures were delinquent for two or more years, from a 21% share in 2010, according to Lender Processing Services Inc. in Jacksonville, Florida.  “The longer a foreclosed home is in the mill, the bigger the losses,” said Todd Sherer, who manages distressed mortgage investments for Dalton Investments LLC, a Los Angeles-based hedge fund that oversees $1.5 billion. “We have a bulge of these properties coming through the system.”  Homes stockpiled less than a year sell for about 35% below the value set by lenders, according to a March 15 report by the Federal Reserve Bank of Cleveland. At two years, the loss is close to 60%. A surge of cheap foreclosures may erode prices in the broader real estate market, even as the economy expands and residential building increases, said Karl Case, one of the creators of the S&P/Case-Shiller home-price index.

Small business lending down

Lending to small business in the United States barely grew in February, supporting the view that economic growth was lackluster at the start of the year.  The Thomson Reuters/PayNet Small Business Lending Index, which measures the overall volume of financing to US small businesses, edged up to 98.3 in February from 98.2 a month earlier, PayNet said today.  Borrowing rose 14% from a year earlier, the lowest 12-month growth rate since September.  “It’s pretty uninspired,” PayNet founder Bill Phelan said in an interview. “We see this faltering as a sign that there’s caution on the part of small business owners.”  Economists forecast US economic growth slowed in the first quarter to around 2 to 2.5%, down from a 3% annual rate in the previous quarter. Federal Reserve Chairman Ben Bernanke said last month growth needs to accelerate to bring down the country’s 8.3% jobless rate.  The December and January readings for PayNet’s lending index were both revised downward.  PayNet tracks borrowing by millions of small US businesses, and the index is correlated with changes in US gross domestic product a quarter or two in the future.

LPS – mortgage monitor

The latest Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS) shows that February foreclosure starts and sales reversed course, declining on a month-over-month basis after January’s sharp increase in activity. Foreclosure starts were down 15% from the month prior, with sales down 19% for the same period. Foreclosure sales decreased in both judicial and non-judicial foreclosure states, dropping 22 and 19% month-over-month respectively in February.  The LPS mortgage performance data showed that, while January’s increase in foreclosure sales was most pronounced in loans held on bank portfolios, the February drop was broad-based across all investor classes. Even accounting for the decrease in foreclosure sales, national pipeline ratios continue to decline off their peaks, but still differ sharply by region. As of the end of February, the average pipeline ratio in judicial states stood at 84 months, as compared to 33 months in non-judicial states. Pipeline ratios continue to be most pronounced in the Northeast, particularly in New York and New Jersey, where average pipelines remain at 846 and 772 months respectively.  The February mortgage performance data also showed that continued declines in new problem loan rates support improved delinquency rates nationwide. Seasonal patterns are also evident in cures from delinquency, with increased cure rates across almost all categories of delinquent loans. Additionally, first-time foreclosures remained stable as repeat foreclosures saw an 8% month-over-month decrease. At the same time however, new mortgage originations remain depressed, continuing a four-month decline.

As reported in LPS’ First Look release, other key results from LPS’ latest Mortgage Monitor report include: 

Total US loan delinquency rate:​  7.57 %​

Month-over-month change in delinquency rate:​  -5.0 %​

Total US foreclosure pre-sale inventory rate:​  4.13 %​

Month-over-month change in foreclosure pre-sale inventory rate:​  -0.5 %​

States with highest percentage of non-current* loans:​  FL, MS, NV, NJ, IL​

States with the lowest percentage of non-current* loans:​  MT, AK, WY, SD, ND​

 *Non-current totals combine foreclosures and delinquencies as a% of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets.
(2) All whole numbers are rounded to the nearest thousand.

Auto sales up

The auto industry looks set to ride the appeal of smaller cars to its best monthly performance in almost four years.  The consulting firm LMC Automotive predicts US sales of new cars and trucks reached 1.37 million last month, up 6% from March of 2011 and the highest number since May of 2008. Industry analysts say sales could run at an annual rate of 14.1 million to 14.5 million vehicles, continuing a strong performance in January and February.   Some companies could break sales records.  Chrysler Group was the first automakers to report sales Tuesday. Its US sales jumped 34% in March on strong sales of Fiat small cars and Chrysler sedans.  It was the best month for the company in four years as consumers grow confident enough in the economic recovery to buy new cars.  Chrysler says Fiat sales hit 3,712, compared to just 500 last March when the car was first on the market. The subcompact Fiat is growing in popularity as new dealerships open and fuel prices rise.  Sales of Chrysler’s 200 and 300 sedans each doubled over last March. Both cars have recently been revamped and have better fuel economy than previous models, which is attracting new buyers.  Jeep brand sales rose 36% on the strength of the Jeep Grand Cherokee.  Incentives on trucks also helped lure buyers in March. Chrysler said its Ram pickup sales were up 23% over last March. General Motors Co. and Ford Motor Co. also were expected to report big gains in truck sales.

Olick – housing “paralysis?”

“In an unexpected reversal, both newly started foreclosures and finalized foreclosures dropped precipitously in February.  So-called foreclosure starts fell 15.2% month-to-month. Foreclosure sales, the final stage of the process (not sales of already bank-owned properties) fell 19% month-to-month, according to a new report from Lender Processing Services.  Most had expected both starts and sales to ramp up, following the $25 billion dollar settlement between five of the nation’s largest banks and state attorneys general and federal agencies over the now infamous ‘robo-signing’ scandal. The drop in finalized foreclosures was nationwide, in states where a judge is involved in the process as well as in non-judicial states.  ‘For both foreclosure starts and sales, we’re finding that so far, the sustained increase isn’t there, though we do see sporadic ‘bursts’ of activity,’ says Herb Blecher of LPS Applied Analytics. ‘These are sometimes focused around particular investors (i.e., Fannie Mae and Freddie Mac foreclosure starts) and may reflect seasonal trends, loss-mitigation activities, legislative impacts, or other operational factors. We can’t say specifically what those bursts correlate to, because we just don’t see that in the data.’

This sudden stall, however, if prolonged, could lead to an overall drop in home sales, given that foreclosures are such a large share of the market. That has at least one well-known analyst warning of more problems ahead for housing.  ‘Through relentless meddling with delusions that ‘foreclosures are bad,’ they effectively destroyed the macro housing market,’ says California-based mortgage analyst Mark Hanson, referring to government intervention in the housing market. ‘Contrary to popular thinking, the eradication of foreclosures will lead this housing market into paralysis, not recovery.’  Hanson claims that the lack of ready and available distressed supply, ‘portends big trouble’ for the overall housing market, but more pointedly for California, Nevada and Arizona, where distressed supply and sales are the bulk of the market.  ‘It will soon become apparent that ‘foreclosure prevention’ was one of the biggest housing and finance policy blunders of all time. That’s because it circumvented interest rate policy in part aimed at household de-leveraging, kicked the problem forward and spread it out over many more years.’  The drop in foreclosure starts and sales is likely due to the big banks trying to modify more loans under the settlement agreement, and in some cases dropping loan principal. Some of the modifications, claims Hanson, are even more ‘exotic’ than the loans borrowers defaulted from in the first place, like 2% interest-only loans, 40 year amortizations, 33% forbearance, and five-year fixed rate loans. This as more than 11 million borrowers (22% of homeowners with a mortgage) owe more on that mortgage than their homes are currently worth, so-called ‘underwater.’  ‘Legacy borrowers are now more levered than ever,’ worries Hanson.

Distressed sales, which include foreclosures and short sales (when the home is sold for less than the value of the mortgage) now make up just over one third of all existing home sales nationally, according to the National Association of Realtors, but more than half of all sales in California and other states hardest hit by the housing crash. Investors are rushing in to buy up all these properties, hoping to cash in on what is fast becoming an historic rental market.  In an effort to entice large investors to buy more properties and rent them out, the Federal Housing Finance Agency, regulator of Fannie Mae and Freddie Mac, recently launched a pilot program, offering 2,500 foreclosed properties on the GSE’s books for sale in bulk discount deals. Bank of America also just announced a program to turn troubled borrowers into renters, offering deeds in lieu of foreclosure to borrowers who would like to stay in their homes.  Both bulk sales and an intensified drive to modify more troubled loans will drain the supply of distressed properties on the market, leaving little for individual investors and first time home buyers with cash. They had been helping to put a floor on home prices, by increasing competition in the space. With the non-distressed market still running far behind normal volumes, a dramatic surge in non-distressed sales would have to occur to make up for the drop in distressed sales.  Given how many homeowners are stuck in place due to negative equity, and with home prices still falling annually, not to mention still-weak consumer sentiment in housing, that surge is highly unlikely.”

Irony – Obama warns against “radical” GOP budget

In an election-year pitch to middle-class voters, President Barack Obama is denouncing a House Republican budget plan as a “Trojan horse,” warning that it represents “an attempt to impose a radical vision on our country” that would hurt the pocketbooks of working families.  Obama, in a speech to newspaper executives, is sharply criticizing a $3.5 trillion budget proposal pushed by Rep. Paul Ryan, R-Wis., which passed on a near-party-line vote last week and has been embraced by GOP presidential hopefuls. The plan has faced fierce resistance from Democrats, who say it would gut Medicare, slash taxes for the wealthy and lead to deep cuts to crucial programs such as aid to college students and highway and rail projects.  “It’s a Trojan horse. Disguised as deficit reduction plan, it’s really an attempt to impose a radical vision on our country,” Obama said in excerpts of his speech released Tuesday. “It’s nothing but thinly veiled social Darwinism.”  Ryan’s proposal aims to lower the deficit and the size of government while offering sharply lower tax rates in return for eliminating many popular tax breaks.

WSJ – write-downs get a new push

The Obama administration’s offer to subsidize write-downs of mortgage-loan balances for some heavily indebted homeowners is putting the federal regulator who oversees Fannie Mae and Freddie Mac in a bind by forcing the agency to rethink its long-held opposition.  For years, the federal regulator overseeing the taxpayer-backed mortgage-finance giants has resisted calls to have the firms cut loan balances, often referred to as principal write-downs. But in recent weeks he has come under intense pressure to change course, especially now that the US Treasury is offering to split the cost.  In an interview this past week, Edward DeMarco, acting director of the Federal Housing Finance Agency, said while he’s still skeptical about the benefit of principal reductions, “we said all along, if money came from another source, we’d have to reconsider our position.” He says his agency will make a decision by mid-April.  The offer by the Treasury Department to help pay for principal write-downs has put Mr. DeMarco in a tough spot: He’s consistently argued that his mandate to reduce losses at the firms means putting the narrow interests of the firms ahead of broader housing market policy. The Treasury’s subsidies could reduce those costs, but don’t change his underlying doubts about whether principal reductions are good policy.

Fannie and Freddie back roughly half of the 11 million mortgages where borrowers owe more than the homes are worth. But any principal forgiveness program would be targeted to a small percentage of underwater borrowers—those owing at least 125% of the value of their property and who are behind on their mortgage payments. Economists who have studied the issue say the proposal could reach about 300,000 homeowners.  The newly offered incentives come from unspent housing-aid funds, which in turn came from the $700 billion bank rescue that Congress passed in 2008. The upshot is that even if write-downs reduce the cost to Fannie and Freddie, they don’t necessarily change taxpayers’ costs.  “It’s like overdrawing one account and pulling out a fresh new checkbook,” said Tim Rood, a former Fannie Mae executive and managing director at the Collingwood Group, a housing-finance consultancy.

JP Morgan exec is fined $750,000

One of London’s most prominent bankers was fined 450,000 pounds ($720,000) on Tuesday for passing on inside information in a case that will embarrass his employer JP Morgan Cazenove and which marks a new resolve by authorities to target high-profile figures.  Top dealmaker Ian Hannam resigned to fight the fine imposed by the Financial Services Authority in relation to 2008 emails that contained information about a his client, oil company Heritage Oil.  The former special forces soldier and engineer is the fifth person to be fined this year by the British regulator, which had previously been accused of ineffectiveness.  JP Morgan informed staff in an internal memo of Hannam’s resignation from his position as JP Morgan’s Global Chairman of Equity Capital Markets, after two decades at the firm.  The case is a fresh blow for the reputation of investment banking, as Hannam joins the list of big names targeted by the regulator, which is seeking to clamp down on market abuse and insider dealing.  Hannam’s fine, detailed in a decision notice dated February 27, is among the largest levied against an individual for market abuse, though it is dwarfed by the 3.6 million pounds hedge fund investor David Einhorn incurred earlier this year over trading abuses.

Colorado kills foreclosure slowdown bill

Legislators who killed a bill requiring that lenders prove they have the right to foreclose on a home say they did so because they tired of laws reforming Colorado’s foreclosure process.  And some rolled their eyes at the ever-present grassroots group that brought it forth — the Colorado Progressive Coalition — suggesting it might have succeeded with different backing.  HB 1156 died in committee two weeks ago on a mostly partisan 8-5 vote, after five hours of testimony, mostly in its favor. One Democrat sided with a majority of Republicans.  Had it passed, it would have stopped a practice that allows foreclosures on just a lawyer’s say-so.  “They need someone other than those groups pushing this stuff,” said Rep. Spencer Swalm, R-Centennial, the vice chairman of the Economic and Business Development Committee, which killed the bill March 13. “But the bottom line, to me, is the big-government, overt intervention in this market.”  Others on the committee told The Denver Post that, in addition to “the same faces supporting and testifying in support,” they voted against the bill because the state already has passed too many laws addressing the foreclosure crisis.  Others decried adding regulation to what they called an overregulated industry.  “Since 2005, the legislature has run and enacted 15 different bills to affect and change the foreclosure process in Colorado,” said Rep. Chris Holbert, R-Parker, the former president of the Colorado Mortgage Lenders Association. “Now is a good time to leave it alone and stop changing things. The process we have in place works fine. Changing things for the 16th time isn’t the right solution.”

QE3 not needed?

A third round of Treasurys purchase is not necessary unless the US economy deteriorates further, according to James Bullard, president of St Louis Federal Reserve Bank.  Recent economic data have signaled that the US economy is doing better than economists think, Bullard told CNBC Tuesday, and a third round of bond buying by the Fed – in a program known as quantitative easing, or QE – is not needed.  “I think QE3 would require the economy to deteriorate somewhat from where it is right now,” Bullard said. “The basic story on the US economy is that we’ve had good news over the last six months or so, especially compared to the recession scenario that was being painted in the August-September time period of last year.”  Injecting too much liquidity into the system will also have the effect of driving commodity prices higher and reducing real spending power, Bullard said.

Olick – no housing recovery?

“Housing was charging back. Spring sprung early. Sentiment among home builders doubled in six months. Any talk that the fundamentals might not be supporting the sentiment was met with harsh criticism. And then suddenly it wasn’t.  A slew of new housing data last week disappointed the analysts and the stock market, and all of a sudden you started to hear concern that maybe housing wasn’t exactly in a robust recovery.  From home builder sentiment to housing starts, to home builder earnings right through to sales of newly built homes, there was not one hopeful headline in any of it (except perhaps if you invest in rentals, as multi-family housing starts made more gains, but that is a contrary indicator to housing recovery).  And then an email from a Realtor in New Jersey: ‘Just reviewed March buyer clicks, Google’s analytics on all the sites we monitor – March is turning out to be the weakest month since last October re: Buyer interest..’  Now we start another week with another disappointment. Pending home sales, a measure of signed contracts for existing homes, not closings, fell half a percentage point month-to-month.  That may not seem like a big deal, but the analysts were looking for a small gain. No doubt the Realtors will point to the solid 9% gain from a year ago, but so much of that gain is based on a change in the foreclosure pipeline.  Last year the foreclosure process stalled. The ‘robo-signing’ mess brought everything to a standstill, and that left investors with little to buy on the distressed side. Foreclosures began ramping up again in the late fall, and that led to a surge in investor buying. Was that the ‘recovery’ we were seeing?

 Investors are still rushing into the market, with distressed sales making up a near-record 48.7% of sales in February on a three month moving average, according to a new report today from Campbell/Inside Mortgage Finance.  Investors are now a full quarter of the market, and they are increasing their activity in short sales (when a lender allows the home to be sold for less than the value of the mortgage).  Don’t get me wrong, investors buying up the distress is necessary to cleanse the market, but it is not real recovery. Mortgage originations are at a 12-year low, despite record low rates. Normal, ‘organic’ home buyers, move-up owner occupants, are not flooding back into this market. Rents are still rising.  Mortgage analyst Mark Hanson runs some disturbing numbers to back up his contention that Q2 will disappoint: ‘Investor sales volume up 37%  year over year for a whopper 69% of all year over year existing home sales gains. First-timers are starting to look weak in Feb. The gains in first-timer and repeat sales can easily be explained by historic rates and weather and can easily reverse in a single month. 

That may be why the home builders, who had been on a streak of gains in confidence, suddenly stopped moving this month. KB Home, which builds lower-priced homes, also came in with wildly disappointing earnings and an 8% drop in new orders. Sales of new homes also disappointed, which one analyst called, ‘puzzling.’  ‘If new homes are not selling, then why are builder confidence and single-family housing permits moving up, and why is the S.& P. home builder index up 80% since last October?’ asks Patrick Newport at IHS Global Insight. ‘Time will tell if builders and investors have gone out on a limb.’  Several other analysts started to question the strength of the recovery as well, with some just hoping that perhaps a warm winter had pulled some demand forward from spring. Despite a miss on existing home sales in February, the headline pointed to, again, big gains from a year ago.  Yes, we are ahead of where we were, but as we’ve noted so many times here on this page, rising foreclosures will put added pressure on this market, and we may not be out of the woods yet.  ‘Despite an extraordinarily mild winter, home sales just plod along at a pace last seen during the mid-1990s,’ notes Mark Zandi in his monthly report from Moody’s Analytics. ‘Thus, the underlying pace of home sales may not yet be strong enough to support a long-lasting upturn by home prices.’  Tomorrow we get the monthly reading on the S&P/Case-Shiller home price index. This index hasn’t been improving nearly as much as home sales, but the ever-hopeful housing lobby keeps blaming that on the fact that prices always lag sales, which is historically true, but what in today’s market has followed history?  Home prices are still falling not because of some lag, but because this housing market is running on sales of distressed properties at the very low end. The rest of the market is still stalled.”

Should we ditch Obamacare?

As the US Supreme Court hears arguments over President Barack Obama’s health care law, the biggest issue is over whether the individual insurance requirement is constitutional.  The court is in the midst of three days of arguments on the Affordable Care Act after 26 states challenged the law. In addition to the question of whether Congress had the authority to enact the individual mandate, the justices must also determine if the rest of the law can stay in place if the insurance mandate is struck down.  Tom Daschle, a Democrat who represented South Dakota during his time in the Senate, wrote in an op-ed in Politico Monday, “Congress was well within its authority in passing the individual mandate to regulate the interstate effects of an industry that is almost 20% of our nation’s economy—more than $2.5 trillion each year.”  Sen. Tom Coburn, M.D. (R) Okla., disagrees with Daschle. He said that Medicare is a perfect example of why the government shouldn’t be in the health care business.  “The problem with health care in America it costs too much and this bill doesn’t do anything to help the costs,” he said. “What it does is it actually makes it much worse.”  He blamed government regulations and lack of “smart state government” for the high cost.  “What we have is a system that ignores market reality, will not use markets to allocate resources and put it back on the individual to make the best choice for their life,” Coburn said.

NAR – pending sales down

Pending home sales were down slightly in February but remain notably above the pattern in the first half of last year, according to the National Association of Realtors.  The Pending Home Sales Index (PHSI), a forward-looking indicator based on contract signings, eased 0.5% to 96.5 in February from 97.0 in January but is 9.2% above February 2011 when it was 88.4. The data reflects contracts but not closings.  The PHSI in the Northeast slipped 0.6% to 77.7 in February but is 18.4% above a year ago. In the Midwest the index jumped 6.5% to 93.8 and is 19.0% higher than February 2011. Pending home sales in the South fell 3.0% to an index of 105.8 in February but are 7.8% above a year ago. In the West the index declined 2.6% in February to 99.3 and is 1.8% below February 2011.  Existing-home sales for March will be reported April 19 and the next Pending Home Sales Index will be released April 26. The Investment and Vacation Home Buyers Survey, covering transactions in 2011, is scheduled for March 29.

Smart Real Estate News & Commentary by Chris McLaughlin March 21, 2012

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Fed to fine banks

The Federal Reserve says that it plans to fine eight additional US bank holding companies for improperly foreclosing on homeowners. The financial firms — EverBank, Goldman Sachs Group, HSBC Holdings PLC, PNC Financial Services Group, MetLife, OneWest Bank, SunTrust Banks and US Bancorp — were not part of last month’s settlement over alleged foreclosure abuses. Suzanne G. Killian, a senior associate director at the Federal Reserve, called the fines “appropriate” during a congressional hearing in Brooklyn, New York. Killian offered few details about the size of the fines or when they will be levied. The nation’s five biggest lenders — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally Financial — last month agreed to a $25 billion settlement with state and federal government agencies last month after a 16-month probe. As part of that settlement, the five banks agreed to reduce mortgages for about 1 million homeowners. They also will pay into a fund that will send $2,000 to 750,000 homeowners who were improperly foreclosed upon. Separately, government regulators last April ordered 14 mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon. Since then, letters have been sent to 4.3 million borrowers who were at risk of foreclosure during 2009 and 2010. The deadline for borrowers to seek money under the orders is July 31. So far, nearly 122,000 homeowners have asked for an auditor to review their foreclosures.

North America the next middle east for oil?

Increased production of energy from a number of sources including deepwater drilling, natural gas exploration and Canada’s oil sands could make North America the next Middle East, according to a new report from Citigroup. The bank estimates that total North American energy production will rise from 15.4 million barrels per day in 2011 to almost 26.6 million barrels per day by 2020, boosting gross domestic product (GDP) and creating ripple effects throughout the economy. Citigroup analysts say the US will see large gains in oil production from deepwater drilling, while Mexico will begin to reverse recent declines in output. Production of shale gas liquids will increase by 3.8 million barrels per day by 2020. The report says this new production would amount to about 7% of additional global production, “a higher growth rate than OPEC can sustain.” That increase in energy supply will also be accompanied with a decline in demand. US consumption of oil products has fallen by 2 million barrels per day since its peak in 2005, and the Citi report says demand will fall by another 2 million barrels per day over the next decade.

Citgroup expects the shift in energy supply and demand to increase real GDP by between 2 and 3.3%. It also estimates that some 550,000 new jobs will be created directly in the oil and gas extraction sector by 2020. An additional 2.2 to 2.3 million new jobs will be created from the resulting economic stimulus effects of new production by 2020. In its analysis, Citigroup acknowledges infrastructure bottlenecks and legislation that blocks exports of crude oil of US origin. It also points out that new environmental regulations could prevent the scenario from playing out. But the analysts point out the surge in energy production could be game-changing. “It would not only improve incomes and create jobs, but also improve national energy security and reverse perennial current account deficits.”

MBA – mortgage applications down

Mortgage applications decreased 7.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 16, 2012. The Market Composite Index, a measure of mortgage loan application volume, decreased 7.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 7.1% compared with the previous week. The Refinance Index decreased 9.3% from the previous week. The seasonally adjusted Purchase Index decreased 1.0% from one week earlier. The unadjusted Purchase Index decreased 0.6% compared with the previous week and was 1.9% lower than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is down 2.79%. The four week moving average is up 3.25% for the seasonally adjusted Purchase Index, while this average is down 4.31% for the Refinance Index.

The refinance share of mortgage activity decreased to 73.4% of total applications, the lowest since July 2011, from 75.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6% from 5.8% of total applications from the previous week. “With the rate increase last week, refinances are obviously slowing, and the refinance share at 73% is down to its lowest level since last July. With rate/term refinances falling as we go forward, HARP will be a bigger percentage of refinances but will be more concentrated in certain states,” said Jay Brinkmann, MBA’s Senior Vice President of Research and Education. Brinkmann continued, “Some of the largest institutions are reporting that the HARP share of their refinances remained at about 30% last week, but HARP volume is not equal across the country. The states that I started referring to years ago as the sand states that had the worst delinquencies we now should start calling the HARP states for mortgage refinances. We saw big state-level differences in refinance applications for February over January: Florida was up 49%, Arizona was up 61%, and Nevada was up 71%. Refinances in the rest of the country were generally flat or even down. For example, Texas had no change, Colorado was down 3%, Connecticut was up only 2%, and Virginia was up 1%. HARP clearly is a driving force in those states that saw the most defaults and the biggest drops in home equity.”

The average loan size of all loans for home purchase in the US was $225,463 in February 2012, up from $216,888 in January. The average loan size for a refinance was $222,048, down from $227,563 in January. The largest purchase loans were made in the Pacific region at $ 324,606. The largest refinance loans were also made in the Pacific region at $ 305,949.

US exempts EU from sanctions

The United States on Tuesday exempted Japan and 10 EU nations from financial sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran’s top customers China and India exposed to the possibility of such steps. The decision is a victory for the 11 countries, whose banks have been given a six-month reprieve from the threat of being cut off from the US financial system under new sanctions designed to pressure Iran over its nuclear program. The list did not, however, include China and India, Iran’s top two crude oil importers, nor US allies South Korea and Turkey, which are among the top-10 consumers of Iranian oil. A US official held up Japan’s estimated 15-22% cut in oil purchases from Iran in the second half of last year as an example for other nations, saying it did so after the “tragedy” of the earthquake that caused the Fukushima nuclear disaster. “Japan was a model,” State Department Special Envoy and Coordinator for International Energy Affairs Carlos Pascual told lawmakers. “If Japan was able to do what it did … that should be an example to others that they could potentially do more.”

Olick – rising rates may not hurt housing

“It was barely a few weeks ago that mortgage rates were sitting at record lows. The idea of rates over 4% on the 30-year fixed seemed a distant memory. And here they are now at 4.05% on the Bankrate.com overnight, thanks to the recent rise in Treasury yields. The housing market, it seems, just can’t catch a break. Or can it? As the economy improves, the job market improves, and that is a key driver for housing. But on the flip side, as the economy improves, investors finally crawl out of the Treasury bunkers, driving yields higher, and mortgage rates generally follow the 10-year Treasury. ‘We will definitely see a freeze up in refi’s immediately but the decision on a purchase still won’t be impacted until rates get at least to 4.5% I believe,’ says Peter Boockvar at Miller Tabak. ‘Assuming a $200k mortgage, going from 4 to 4.5% in mortgage rate adds about $60 per month to one’s payments, and while an extra $700 per year matters, I’m not sure if it’s a deal breaker.’

While rates have moved a good quarter of a% in the past few weeks, most analysts don’t think they’ll go much higher. ‘Mortgage rates were too high anyway, relative to the 10-year Treasury, so I don’t think you will see a parallel shift,’ says FBR’s Paul Miller, who spoke to several bankers today. They told him mortgage volume is good, which helps keep rates competitive. ‘But it does take time for this stuff to flow through the markets,’ he adds. And then there could be one other phenomenon, as described by Freddie Mac’s chief economist Frank Nothaft: ‘When rates tick up, you may see some potential home buyers who have been sitting on the sidelines, suddenly they may get up, as they are concerned that maybe this is the beginning of a trend, and they don’t want to miss out on these 60-year low mortgage rates. In the near term it can encourage buyers.’”

Oil up to $107 per barrel

Oil prices rose to near $107 a barrel Wednesday after a report showed US crude supplies fell unexpectedly, a sign demand may be improving in the world’s largest economy. By early afternoon in Europe, benchmark oil for May delivery was up 49 cents to $106.56 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.49 to settle at $106.07 per barrel in New York on Tuesday after Saudi Arabia said it could pump more oil to cover any shortages. In London, Brent crude for May delivery was up 27 cents at $124.39 a barrel on the ICE Futures exchange. The American Petroleum Institute said late Tuesday that crude inventories fell 1.4 million barrels last week, breaking a two-month trend of growing supplies. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted an increase of 2.1 million barrels. Inventories of gasoline fell 1.4 million barrels last week while distillates rose 600,000 barrels, the API said.

LPS – first look report
Lender Processing Services, Inc. (NYSE: LPS), a leading provider of integrated technology, data and analytics to the mortgage and real estate industries, reports the following “first look” at February 2012 month-end mortgage performance statistics derived from its loan-level database of nearly 40 million mortgage loans.

Total US loan delinquency rate:7.57%
Month-over-month change in delinquency rate: -5.0%
Year-over-year change in delinquency rate: -14.0%
Total U.S foreclosure pre-sale inventory rate: 4.13%
Month-over-month change in foreclosure presale inventory rate: -0.5%
Year-over-year change in foreclosure presale inventory rate: -0.3%
Number of properties that are 30 or more days past due, but not in foreclosure: (A) 3,781,000
Number of properties that are 90 or more days delinquent, but not in foreclosure:1,722,000
Number of properties in foreclosure pre-sale inventory: (B) 2,065,000
Number of properties that are 30 or more days delinquent or in foreclosure: (A+B) 5,846,000
States with highest percentage of non-current* loans: FL, MS, NV, NJ, IL
States with the lowest percentage of non-current* loans: MT, AK, WY, SD, ND

*Non-current totals combine foreclosures and delinquencies as a% of active loans in that state.
Notes:
(1) Totals are extrapolated based on LPS Applied Analytics’ loan-level database of mortgage assets
(2) All whole numbers are rounded to the nearest thousand
The company will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which includes an analysis of data supplemented by in-depth charts and graphs that reflect trend and point-in-time observations.

Money printing going out of style

The era of quantitative easing—a process by which central banks buy assets such as government bonds to inject funds in the markets—may be coming to an end, according to a survey of fund managers. According to a March survey by Bank of America Merrill Lynch, investors are more upbeat about the future and the prospects for growth and they no longer expect further quantitative easing measures to be taken by the Federal Reserve or the European Central Bank. In the survey, 28% of fund managers said they expected the global economy to strengthen in the next 12 months, up from 11% in February. This was the highest reading since March last year. But the report did find that fund managers still see sovereign debt as the biggest tail risk to the global recovery. Investors do foresee higher inflation, with a net 13% expecting it to rise in the coming year.

WSJ – housing mixed

US home building fell in February, but permits for new construction reached their highest levels in nearly 3½ years, reflecting housing’s uneven and protracted recovery. Home construction decreased 1.1% from January to a seasonally adjusted annual rate of 698,000, the Commerce Department said yesterday. Construction of single-family homes, which makes up more than 70% of housing starts, fell by 9.9% – the largest drop in a year. Meanwhile, multifamily homes with at least two units, a volatile part of the market, posted a 21.1% gain. Still, January’s figures were raised to 706,000 starts overall, a 3.7% improvement from December and the highest level since October 2008.

In a positive sign for future construction, the February data showed new building permits rose by 5.1% from a month earlier to an annual rate of 717,000 – also the highest level since October 2008. The housing sector has been healing slowly after prices collapsed more than five years ago. A National Association of Home Builders (NAHB) report on Monday showed that US home builders’ confidence in the market held steady in March at the highest level since 2007. “The level of activity still remains far short of the pace implied by the NAHB index so we look for further gains over the next few months in both sales and starts,” said Ian Shepherdson, chief US economist at High Frequency Economics. “Housing will add to growth all year, and beyond.”

But Joshua Shapiro, chief US economist at MFR Inc., said that so far, the home builders association’s level of confidence hasn’t been matched by actual construction. “Our view remains that single-family housing starts are in a long-term bottoming process but that an enormous overhang of existing single-family home supply will prevent sharp gains in single-family starts in the near to medium term,” Mr. Shapiro said. NAHB said Monday that its members continue to face obstacles, including tight credit for both builders and buyers and a large inventory of inexpensive, foreclosed homes in many markets. The Commerce Department data showed that housing starts were mixed across four US regions. The Northeast posted a 12.3% decline, while starts in the West dropped 5.9% last month. Starts rose 3% in the Midwest and 1.5% in the South. Actual housing starts, calculated without seasonal adjustments, grew to 48,100 in February from 46,500 in January. Lumber and commodities markets watch those numbers closely to gauge demand.
See you at the top!
Chris McLaughlin

**************

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

*************************************************

About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 150 high-value, high-profit
properties

* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
420 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!

* In 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

* Follow me on Twitter: http://twitter.com/mclaughlinchris

* Join my Facebook Fan Page: http://www.mclaughlinchris.com

Smart Real Estate News & Commentary by Chris McLaughlin March 20, 2012

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Christian Science Monitor – ten best cities to buy short sales

10. Seattle-Tacoma-Bellevue, Wash. (average short sale discount – 24.5%)

Short sales took off in the Seattle area in the fourth quarter of 2011: 925 pre-foreclosure homes were sold. That’s a whopping 46% increase from the same period a year earlier and represented 7.4% of all home sales in the area, at an average price of $245,403. Buyers of short sale homes reaped a nearly 25% discount off non-foreclosure homes. Seattle is also among the top metros to buy foreclosure properties generally, at an average discount of 43%.

9. Phoenix-Mesa-Scottsdale, Ariz. (24.7%)

Phoenix is the sixth-most populous city in the United States. Known as the Valley of the Sun, the Phoenix metropolitan area had the second-highest number of pre-foreclosure home sales on the list, with 7,112 (up 43% from the fourth quarter of 2010). Short sales made up 20.3% of all homes sold in the area, at an average price of $122,212. As a state, Arizona saw one of the largest year-over-year increases in pre-foreclosure sales, up 48%.

8. Portland-Vancouver-Beaverton, Ore./Wash. (26.1%)

The Pacific Northwest is a pricier housing market that Phoenix, with fewer homes available. The area sold only 679 pre-foreclosure homes in the fourth quarter, which is the third-lowest number on the list (the minimum for inclusion is 500 homes). Still, that’s up 37.2% from 2010, and a willing buyer can get a short sale home for an average price of $190,042, which represents an average discount of 26.1% below market value.

7. Los Angeles-Long Beach-Santa Ana, Calif. (28.0%)

The most populous state in the country, California saw short sales increase in the fourth quarter. Los Angeles led the charge, with the most short sale houses sold of any metro in the country, let alone the state, at an average sale price of $342,668. In terms of total home sales, Los Angeles also boasts the highest percentage of short sales on the list, at 22%.

6. Jacksonville, Fla.(28.8%)

Situated on the St. Johns river at the top of Florida’s Atlantic coast, Jacksonville is the largest metropolitan area in the country from a geographical standpoint. It’s cheap, too – 677 short sale homes were sold in the area in 2011′s fourth quarter, at an average sale price of $116,447. Jacksonville saw a 41.34% increase in short sales from 2010, with pre-foreclosures making up 12.4% of all home sales in the area.

5. St. Louis (29.6%)

The St. Louis area has by far the cheapest housing market of the short sale metros on the Top 10 list. Nearly 600 pre-foreclosure homes were sold there in the fourth quarter of 2011, at an average price tag of $96,131. Short sales made up only 5.7% of home sales in St. Louis (the lowest proportion on the list), but short sales increased 19.9% from 2010.

4. Atlanta-Sandy Springs-Marietta, Ga. (32.9%)

Georgia’s foreclosure problem has continued to worsen in recent years. Foreclosure sales made up 39% of total home sales for the state in the fourth quarter of 2011, the third-highest of any state. As a result, the Atlanta area ranks high in both short sales and foreclosure sales.  The area saw the biggest surge in short sales of all the cities on the Top 10 list, with 3,387 homes sold, up 63% since the same period in 2010. Short sales made up 14% of all home sales in the quarter, with an average price tag of $123,271.

3. Chicago-Naperville-Joliet Ill./Ind./Wis. (33.5%)

In addition to a deep average discount on short sales, the Chicago metro is one of the top places to buy foreclosed homes, with an average discount of 49.1%. Chicago sold 2,409 pre-foreclosure homes in the fourth quarter of 2011, at an average sale price of $156,349. That’s a 28.9% increase from the fourth quarter of 2010.

2. San Jose-Sunnyvale-Santa Clara, Calif. (37.3%)

Home to Silicon Valley, the San Jose metro area is located just south of San Francisco and is the third largest metro in the state. In the fourth quarter of 2011, 1,169 homes were sold in short sales at an average price of $398,413. That’s the highest price among the cities on the Top 10 list, even with one of the biggest discounts in the US. Short sales increased 34.1% from the end of 2010 and made up 18.6% of all home sales in the San Jose area.

1. San Francisco-Oakland-Freemont, Calif. (41.0%)

Discounts for short sale homes don’t come any bigger than this in major metropolitan areas: more than 40% in San Francisco. Such sales surged 50% in the San Francisco metropolitan area from the fourth quarter of 2010: Nearly 3,000 homes in pre-foreclosure were sold in 2011′s fourth quarter, at an average price of $330,733. Short sales made up 19.2% of all home sales. The city is not among the top markets  for deeply discounted foreclosure homes, indicating that lenders are taking measures to help homeowners avoid foreclosure.

Goldman Sachs cut jobs

Goldman Sachs has begun a new round of staff cuts in its trading and investment banking divisions, three sources familiar with the matter said, a sign of continued cutbacks on Wall Street.  The job cuts follow 2,400 positions Goldman eliminated last year, and further reductions are possible as the company continues to reduce costs to raise profitability, the sources said.  The latest round of cuts is part of Goldman’s annual employee review process.  The new job cuts are taking place in all of Goldman’s four main divisions, including sales and trading, investment banking, wealth management and investing and lending, according to one source familiar with the matter.  Many of the cuts are aimed at traders who can be replaced with new technology, or back-office, technology and operations staff who can be replaced with less expensive employees, the source said. The bank has been pushing aggressively to replace staff in high-cost areas like New York and New Jersey with less costly workers in Salt Lake City, where the company is building a sizable workforce.

Housing starts down

The Commerce Department said housing starts slipped 1.1% to a seasonally adjusted annual rate of 698,000 units. January’s starts were revised up to a 706,000-unit pace from a previously reported 699,000 unit rate.  Economists polled by Reuters had forecast housing starts little changed at a 700,000-unit rate. Compared to February last year, residential construction was up 34.7%, the biggest year-on-year rise since April 2010.  New building permits surged 5.1% to a 717,000-unit pace last month, far exceeding economists’ expectations for an advance to a 690,000-unit pace from January’s 682,000-unit rate.  Housing starts last month were pulled down by a 9.9% drop in the construction of single-family homes — which account for a large portion of the market.  Groundbreaking for multifamily housing projects soared 21.1%. This segment is benefiting from rising demand for rental apartments, as falling house prices discourage some Americans from owning a home.  Housing starts in the South rose to their highest level since October 2008.  Permits to build single-family homes jumped 4.9% to a 472,000-unit pace — the highest since April 2010. Permits for multifamily homes increased 5.6% to a 245,000-unit rate.

Small cars costing more

Across the board, prices for these cars are moving up along with gas prices.  KBB tracks used car prices week to week. For the week ending March 2nd, it found used car prices jumped 1.3% to $12,286. That should not come as a surprise given the way auction prices have shot up. Used car auction house Adesa says the average compact car sold for $6,942 (up 4.4%) on the wholesale market in February.  While automakers are moving as quickly as possible to ramp-up production of small cars or at least the small fuel-efficient engines to put in those cars, it won’t happen overnight. So expect the tight inventories for many small cars to continue for some time. Eventually, that could play out with small cars selling with a minimal discount to the sticker price. Perhaps even at a premium to the MSRP.  One thing is certain, we won’t see increased incentives or rebates for new cars anytime soon. Automakers don’t need to grease a market where buyers are coming into the showroom.

Olick – did a warm winter steal spring housing?

“As if we really needed a reminder that today’s housing market is still very fragile, the first installment in a slew of housing data to be released this week came in below expectations.  Home builder sentiment, as measured by the National Association of Home Builders’ monthly sentiment survey, was unchanged in March, and February’s reading was revised down.  This after five straight months of gains in builder confidence.  ‘Many of our members continue to cite obstacles on the road to recovery, including persistently tight builder and buyer credit and the ongoing inventory of distressed properties in some markets,’ said NAHB chief economist David Crowe in a release.

Most troubling was a big drop in sentiment out West, which is where the bulk of the nation’s foreclosures and distressed properties are. Banks are really ramping up the foreclosure process now that the so-called ‘Robo-signing’ settlement is behind them and new guidelines are in place. That means more foreclosed properties will be hitting the housing market, as the still-swelled pipeline finally begins to empty.  While the all-important South region, most meaningful for the builders, saw an increase in sentiment, it is still below the national average, and overall current sales were down and buyer traffic was flat. Only sales expectations over the next six months rose. That could have a lot to do with unseasonably warm weather.  With temperatures in most of the country hitting near record highs in January and February, it begs the question, did much of the Spring market start early, and did it steal from the historically strong months of March and April?  ‘We think it has pulled forward a useful amount,’ says analyst Stephen East of ISI Group. ‘It definitely helps breaking ground and has been a big help on the jobs front.’

In fact ISI studied weather in all four regions and reported that while favorable economic trends and specifically job growth are the primary driver of renewed housing activity, ‘We believe some demand was pulled forward from the later Spring months, implying the first quarter could be above investor expectations, while the second quarter could be below expectations.’  Weather cannot be discounted in home sales, especially sales of new construction, since builders can offer potentially faster turnarounds for new orders if they’re not hampered by frozen earth. February saw a big spike in the ‘current sales’ component of the home builder sentiment index. Buyer traffic in March was unchanged.”

House GOP wants to overhaul tax code

House Republicans will call for overhauling the US tax code by reducing rates as well as the number of income tax brackets as part of their 2013 budget proposal.  House Budget Committee Chairman Paul Ryan of Wisconsin is slated to unveil today a tax and spending plan that would shrink the number of brackets to two from six with rates set at 25% and 10%. The top rate now is 35%.  Ryan’s proposal would also eliminate the alternative minimum tax while reducing the corporate tax rate from 35% now to 25%, according to documents provided by his office.  The plan may revive Republicans’ call last year for overhauling Medicare, though with a compromise Ryan has since written with Oregon Democratic Senator Ron Wyden on the health program for the elderly and disabled. It may also spur a reprise of proposals to carve big savings from other safety net programs to drive down the government’s $1.2 trillion deficit.  Though the proposals probably won’t become law anytime soon, they are certain to inflame an election year debate over what to do about government red ink.  “We’re back with a budget that offers real solutions,” Ryan said in a video posted yesterday on his website. “Americans have a choice to make — a choice that’s going to determine our country’s future.”

Fast foreclosure bill may return

Florida’s quickie foreclosure bill died quietly in the Senate on the last day of the 2012 legislative session, and although homeowner advocates fear it will reappear next year, sponsor Kathleen Passidomo said it may not be her pushing it.  The Naples Republican is confident the controversial bill, dubbed the Florida Fair Foreclosure Act, would have passed if it had come up for a vote by the full membership. Instead, she said it got lost in the last minute hustle to hear dozens of proposals before the end of the session March 9.  The Florida Bankers Association agrees there were enough votes in the Senate to pass the nationally watched proposal, which flew through the House in a 94-17 vote on Feb. 29.  But Anthony DiMarco, executive vice president of government affairs for the association, said it’s too early to tell what kind of expedited foreclosure plan may materialize in 2013.

The association said in its end-of-session newsletter that it believes “internal Senate politics” led to the bill’s demise and that it will push for similar foreclosure legislation next year.  “I think there will be a foreclosure bill filed next year if the prediction of a huge glut of foreclosures in the courts holds true, but whether I file it or not, I don’t know,” said Passidomo, noting that she has other interests and that this was the second time she tried and failed to streamline the state’s foreclosure logjam with legislation. “This was a missed opportunity.”  Still, it was the furthest a bill aimed at reducing Florida’s mounting foreclosure backlog has made it since the real estate crash. An estimated 368,000 foreclosure cases are in the courts statewide, with more on the way.  February foreclosure statistics released last week by the research group RealtyTrac showed a nearly 53% increase in South Florida filings compared with the same time in 2011. The spike was 40% statewide.  “I would be very surprised if the bill does not come back,” Boca Raton attorney Margery Golant said. “The industry is pushing everywhere it can to be able to move faster on foreclosures.”

WSJ – Wall Street keys on rentals

Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae.  The idea is that the new owners would rent out the homes at first rather than reselling – potentially aiding a housing-market recovery by reducing the number of properties clogging the market. The fact that big-name investors are interested also suggests they anticipate sizable future profits in housing.  Currently, banks selling through regular real-estate listings are getting more than 90 cents on the dollar of their asking price, according to industry analysts. They could be reluctant to unload properties in bulk if it means selling for much less.  Firms considering bids include Austin, Texas-based broker-dealer Amherst Securities Group and a fund run by mortgage-bond pioneer Lewis Ranieri. Hedge-fund manager Paulson & Co. and private-equity investors Colony Capital LLC are also considering bids, according to people familiar with the process.  The sale consists of 2,500 homes divided into eight regional pools, ranging from 572 properties in Atlanta to 99 in Chicago. The total current market value is $320 million, according to an offering document prepared by Credit Suisse, which is advising Fannie.

Bulk sales, however, pose a trade-off. While the current approach of selling homes one-by-one has its own high costs and is sometimes inefficient, selling properties in bulk to large investors could require Fannie Mae to sell at a big discount, leading to larger initial costs. It is unclear which would be least costly ultimately to taxpayers, who are responsible for the big mortgage-finance company’s losses.  Purely in dollar terms, the sale would be small by Wall Street standards. But it could offer clues about whether investors are willing to pay prices high enough to entice Fannie Mae – along with its sibling Freddie Mac, federal agencies and banks-to do more bulk-sale deals in the future.

Bernanke justifies Fed

Federal Reserve Chairman Ben S. Bernanke returns to his roots as a university professor today, seeking to explain and justify the existence of the central bank ahead of the 100th anniversary of its founding next year.  Bernanke will deliver the first of four hour-long lectures on the history of the Fed as part of what public relations specialist Richard Dukas called a “P.R. offensive” to buff the central bank’s tarnished image. The Fed is being attacked from both the left and the right, with liberals criticizing it for not doing enough to bring down unemployment, and conservatives blaming it for doing too much and risking faster inflation.  Bernanke’s return to the milieu where he spent more than two decades will give the Fed’s top policy maker an opportunity to “set the narrative” on the central bank’s role during and after the financial meltdown, said Princeton University professor and former Fed Vice Chairman Alan Blinder. “The question of who gets to write the history is an important one.”  If Americans lose faith in the Fed’s ability to manage the economy and contain inflation, that will rob monetary policy of some of its potency, according to Dana Saporta, director of US economics research for Credit Suisse Securities in New York. Policy has “less effect the less confidence the public has in the Fed,” she said.

HARP still a massive failure

Fewer underwater homeowners worked through the Home Affordable Refinance Program (HARP) in December than in any other month in more than a year, despite changes that removed previous barriers.  About 2,700 mortgages with a loan-to-value ratio between 105% and 125% received a HARP refinancing in December, down 47% from November and the lowest since October 2010. All HARP refis fell 36% monthly to 23,000 in December, hitting a low not seen since November 2009.  Total refinancings at Fannie Mae and Freddie Mac rose 5% to 376,000.  The data released by the Federal Housing Finance Agency (FHFA) included no loans with LTV ratios above 125% — now considered eligible. Those changes, dubbed HARP 2.0, took effect at the beginning of December.  Corinne Russell, a spokeswoman for the FHFA, said the agency’s data likely won’t reflect the changes until it releases numbers for the first quarter of this year. She said it typically takes 60 days to originate and close a loan and another 90 days from closing to loan delivery to Fannie and Freddie.

But with the changes, Russell said the agency is hearing that more lenders are refinancing loans with LTV ratios above 105%.  “Anecdotally, we know that lenders are embracing HARP 2.0, originating loans under the new terms,” Russell said in an email.  Analysts reviously predicted effects if the changes might not surface until February’s data.  HARP refinancings totaled 93,000 in the fourth quarter, bumping up the cumulative total 10% to 1.02 million over the life of the program.  Mortgage servicers closed 19,500 trials through the Home Affordable Modification Program in the fourth quarter, bringing the cumulative total to roughly 400,000. Active HAMP trials ended the fourth quarter at 36,391, down from 42,279 as of Sept. 30.  Short sales and deed-in-lieu deals increased 13% to roughly 35,000 in the fourth quarter, the highest total since the government placed Fannie and Freddie into conservatorship.  Julia Gordon, FHFA manager of single-family policy, said the agency is working to streamline policies in those programs.  “It’s not as if there’s some enormous gulf between the policies,” Gordon said. “Even small differences in policy can create frictions that are not necessary.”  Foreclosure starts at the government-sponsored enterprises declined to 218,000 from 224,000 in the third quarter, and mortgages 90-plus days delinquent dipped slight to 3.78% from 3.81% of Fannie and Freddie’s portfolio. Florida led states in those delinquencies at 11.5%, followed by Nevada and New Jersey at 8.3% and 6.3%, respectively.

See you at the top!
Chris McLaughlin

**************

Copyright Loss Mitigation Institute LLC 2011.
All Rights Reserved.

http://www.shortsalesriches.com

http://www.shortsalescoach.com

http://www.sixfigurebpo.com

http://www.reomillionaireclub.com

http://www.youtube.com/shortsalesriches

http://www.smartrealestatenews.com

(subscribe to this newsletter)

*************************************************

About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month

* Long-time authority on real estate investing
and rapid reselling of distressed homes.  Owns
portfolio of nearly 150 high-value, high-profit
properties

* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
420 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!

* In 2011, Chris’ 4 Central Florida real estate offices
closed 3,336 sides for a closed sales volume of
$430,902,643!

* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building

* Follow me on Twitter: http://twitter.com/mclaughlinchris

* Join my Facebook Fan Page: http://www.mclaughlinchris.com