US Homebuilder Confidence Sinks In February

By ALEX VEIGA, AP Real Estate Writer

Updated 11:08 am, Tuesday, February 18, 2014

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  In this Jan. 10, 2014, photo, Trevor Davis puts concrete on stone for the foundation of a new home, in Pepper Pike, Ohio. The National Association of Home Builders reports on sentiment among U.S. builders on Tuesday, Feb. 18. Photo: Tony Dejak, AP

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U.S. homebuilders' confidence in the housing market declined sharply this month as the severe weather battering much of the nation keeps many would-be buyers at home.

Storms and cold weather dampened builders' outlook for sales ahead of the spring home-selling season and could further slow the pace of home construction.

The National Association of Home Builders/Wells Fargo builder sentiment index released Tuesday slid to 46. That's down from January's reading of 56 and is the lowest level since May.

Readings below 50 indicate that more builders view sales conditions as poor rather than good.

Builders' view of current sales conditions for single-family homes, their outlook for sales over the next six months and traffic by prospective buyers have all declined since January.

The overall index had been above 50 since June, reflecting a strengthening housing market. The latest reading complicates the outlook for sales just as the annual spring buying season ramps up. Typically, the spring season sets the pattern for residential hiring and construction in the ensuing months.

Sales of new homes jumped 16.4 percent last year to 428,000, the highest level in five years. Sales typically slow in November and December. But this winter's onslaught of snowfall and freezing temperatures has exacerbated the seasonal slowdown. Economists predict that sales of new homes fell for the third month in a row in January.

The builder survey adds to reports showing that severe weather this winter has taken a toll on the economy. Auto sales fell 2.1 percent in January and posted their first year-over-year drop in sales since August 2010. Retail sales also tumbled last month after a smaller decline in December.

"The weather also hurt retail and auto sales, and this had a contributing effect on demand for new homes," said David Crowe, the NAHB's chief economist.

Builders also continue to grapple with a shortage of skilled workers and ready-to-build land and delays in obtaining building materials, Crowe noted.

Those factors and the weather dimmed the outlook for some of the respondents polled in the latest NAHB survey, which included responses from 321 builders.

A measure of current sales conditions for single-family homes dropped 11 points to 51. Builders' outlook for single-family home sales over the next six months fell 6 points to 54. And a gauge of traffic by prospective buyers slid nine points from last month to 40.

Even so, most economists expect U.S. home sales and prices to keep rising this year.

The housing market has been recovering steadily over the past two years, helping boost economic growth and hiring. Home construction slowed in December but ended 2013 with the best showing since the housing bubble burst.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the homebuilders association.

New Analysis Seeks to Reduce Foreclosure Timelines

Source: 

Author: Colin Robins February 17, 2014 0

Oversite Data Services, a national provider of docket-based legal compliance and management solutions, released a white paper Tuesday that demonstrates how court data-based management of foreclosure cases can reduce foreclosure timelines and improve portfolio management.

The analysis is based on a dataset of over 50,000 foreclosure loan files.

"Our analysis shows that it is possible to quantify a number of factors impacting foreclosure timelines that can then be used to benchmark foreclosure management and more accurately estimate foreclosure timelines," said Oversite CEO, James Albertelli. "Oversite’s docket-data based technology platform provides the transparency needed to better manage third parties through a data-based systematic process, minimize timelines and reduce avoidable risks."

The release noted that average servicer timelines varied up to 192 percent from 2007 to 2013.

The data noted a few broad trends, including:

• Variations in foreclosure timelines by servicer, controlling for geography and year of foreclosure start.
• Proactive foreclosure management can reduce the number and timelines of outlier cases.
• Cases with foreclosures and bankruptcies present significant opportunity for proactive case timeline management.

Other findings in the white paper include that cases with a Lack of Prosecution (LOP) finding had an average foreclosure timeline of 308 days, and the number of LOP filings among servicers varied by over 500 percent

Buyers From China Target These 10 U.S. Cities

DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 14, 2014

International buyers have been increasingly eyeing U.S. states in search of housing bargains in recent years, particularly buyers from China.

“Chinese are widely interested in the U.S. markets,” says Andrew Taylor, co-CEO of Juwai.com, an international property website for Chinese buyers. “The data shows they are investing in many places and in greater amounts than most people realize.”

Chinese buyers spent $8.2 billion on U.S. property in 2012, which generated about $492 million in commission for real estate agents that year, according to data from the National Association of REALTORS®.

Chinese investors looking for U.S. property are motivated by profit potential of underpriced housing markets; educational opportunities for their children; and an international diversification of their investments, Taylor says.

In a new report, Juwai.com reveals the following 10 U.S. cities are receiving the most interest from Chinese property hunters:

1.   New York

2.   Los Angeles

3.   Philadelphia

4.   Detroit

5.   Houston

6.   Chicago

7.   Las Vegas

8.   Atlanta

9.   San Diego

10. Memphis

Source: “Top 10 U.S. Destinations for Buyers From China,” RISMedia (Feb. 3, 2014)

Retiring on the House

Reverse Mortgages for Baby Boomers

FEB. 13, 2014

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The New York Times

Mortgages

By LISA PREVOST

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As baby boomers age, reverse mortgages are expected to gain popularity as a means of covering living expenses. Hence, in the future, more homes passed on to children will come with a bill attached — the balance due on these equity loans.

Federally insured reverse mortgages, officially issued as part of the Home Equity Conversion Mortgage program, are a way for homeowners 62 and older to borrow money using their home equity as collateral. The proceeds must first be used to pay off any remaining balance on the mortgage, which frees homeowners from monthly payments. Interest and monthly insurance premiums are charged throughout the life of the loan, and the total becomes due when the borrower dies (or permanently moves out of the home).

RELATED COVERAGE

• Mortgages: More Articles in the Series

A common misconception about reverse mortgages is that the lender takes an equity share in the house, said Vivian Dye, a reverse-mortgage consultant at Atlantic Residential Mortgage in Westport, Conn. “It’s a relationship between the bank and the borrower,” she said, “and it’s the same kind of relationship as a regular loan.”

As the first lien holder on the property title, however, the lender must be repaid when the property changes hands. How the heirs handle repayment depends on how much equity is left in the home and whether they want to keep it.

Under federal regulations, after the last borrower named on the loan has died, the lender must provide up to 30 days for the heirs to decide on a repayment method. Heirs then have up to six months to sell or arrange financing, said Colin Cushman, the chief executive of Generation Mortgage, a reverse-mortgage originator and servicer based in Atlanta. But, he noted, as many as two 90-day extensions are allowed if the heirs can show they are actively trying to sell the property.

Should they wish to retain ownership, the heirs might choose to get a separate mortgage to refinance the home and pay off the reverse mortgage. Or, if there is enough equity in the home, they might choose to sell it and use the proceeds to pay off the loan.

The heirs will not be on the hook for any shortfall should the home fail to sell for enough to pay the loan in full. If the loan balance exceeds the value of the home, the amount owed is limited to 95 percent of the appraised value.

Mr. Cushman offered an example: On a home with an appraised value of $100,000, and a reverse mortgage balance of $120,000, the amount owed the lender would be $95,000. (No short sale would be approved for less than that amount.) Government-backed insurance on the loan would cover the $25,000 gap.

In such “underwater” situations, the heirs may instead choose a deed in lieu of foreclosure, in which they simply deed the property over to the lender.

Heirs should be aware that the ability to draw on the reverse mortgage ceases once the borrower dies. For that reason, Ms. Dye recommends that the family consider whether enough money has been set aside for things like funeral expenses while funds are still accessible — that is, if the family discusses finances at all.

“Some people don’t even know their parents had a reverse mortgage,” said Vincent Liberti, an estate planning and elder law lawyer in Hartford.

He frequently sees financially precarious people who haven’t planned for retirement take on a reverse mortgage as a last resort, as well as those who go through the funds too quickly. It’s one of the last “tools” he recommends using.

But Mr. Cushman says his firm is trying to change such negative perceptions, most recently with an app planning tool, “nu62,” that shows how to use home equity strategically to meet long-term financial goals.

Fannie Mae Increases Incentives to Purchase REO Properties

Author: Colin Robins February 14, 2014 0

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Fannie Mae announced Thursday that homebuyers can now receive up to 3.5 percent in closing cost assistance. The help is available within the FirstLook period of Fannie Mae’s HomePath properties in 27 states.

The incentive will offer qualified buyers up to 3.5 percent of the final sales price to pay closing costs.

The FirstLook period has been extended from 15 to 20 days, and gives private homeowners the ability to buy a home without competition from investors.

HomePath is the branding used by Fannie Mae-owned properties, and offers low down payment mortgages on properties that are real estate owned (REO).

"This incentive will provide more opportunities for families to find a property to call home," said Jay Ryan, Vice President of REO Sales. "Our goal is to sell as many HomePath properties as possible to owner-occupants who will stabilize neighborhoods and help the housing recovery."

To be eligible for the recently increased incentive, initial offers must be submitted between February 14, 2014 and March 31, 2014, and close on or before May 31, 2014.

HomePath properties include a wide variety of homes, including single-family houses, condominiums, and town houses.

Freddie Mac: Mortgage rates edge higher; 30-year average is 4.28%

Source: Los Angeles Times

A Los Angeles home for sale. (Kevork Djansezian / Getty Images / December 19, 2013)

• By E. Scott Reckard

February 13, 2014, 8:07 a.m.

A five-week decline in fixed mortgage rates has ended, with Freddie Mac’s survey showing the 30-year home loan averaged 4.28% early this week, up from 4.23% a week ago.

The 15-year fixed-rate mortgage was unchanged at an average of 3.33%, Freddie Mac said Thursday in its weekly report on the terms that lenders are offering to highly creditworthy borrowers.

Aside from a weak jobs report, which the market seemed to shrug off, there was little economic news early this week to influence rates, Freddie Mac chief economist Frank Nothaft noted in the finance company’s report.

The yield on the 10-year Treasury note, an indicator for long-term mortgage rates, had risen Tuesday and Wednesday before falling back as the markets opened Thursday.

New Federal Reserve Chair Janet L. Yellen sent a reassuring message in her first appearance before Congress this week, indicating that she would continue the Fed’s policy, adopted under former Chair Ben S. Bernanke, of slowly withdrawing a stimulus program intended to keep long-term rates low.

The 30-year-fixed mortgage rate dropped to record lows at the end of 2012, falling below 3.5%. It rose to the 4.5% range last year in anticipation of the Fed cutting back the stimulus, which involves buying tens of billions of dollars worth of Treasury and mortgage securities each month.

This year’s decline in mortgage rates came as a welcome surprise to home buyers, who have seen housing prices in many areas rise sharply over the last year. Most observers believe that the long-term trend is upward.

"With Ms. Yellen expressing confidence that the recovery will continue and even accelerate over the coming year, it remains a fair bet that mortgage rates will move higher," said Keith Gumbinger, vice president of HSH.com, a Riverdale, N.J., mortgage market researcher.

Freddie Mac’s survey, conducted weekly for more than 40 years, asks lenders about the terms they are offering to borrowers with strong credit scores and income and 20% down payments, or at least 20% home equity if they are refinancing.  

The survey assumes that the borrowers would pay less than 1% in lender fees and discount points to obtain the loans; costs of appraisals and title insurance, usually borne by borrowers, are not included.

US 30 Year Mortgage Rate data by YCharts

http://www.latimes.com/business/money/la-fi-mo-freddie-mac-mortgage-rates-20140213,0,555301.story#ixzz2tK7AcORE

Have Young Buyers Been Priced Out?

Author: Krista Franks-Brock February 12, 2014 0

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While last year’s rising home prices brought relief to many underwater homeowners, allowing many older homeowners with increased net worth to purchase new homes, they also precluded many young first-time buyers from purchasing, according to a report from Houston, Texas-based BBVA Group, a global financial services firm.

“Older homeowners are increasingly able to purchase a new residence with cash only after they sell their current home,” said Jason Frederick, an economist for BBVA Compass.

In December 2013, 42 percent of residential home sales were made in cash, a significant increase from just 18 percent a year earlier.

With many older Americans feeling confident as their net worth rises with their home values, homebuilders are now targeting potential buyers 55 years old or older, according to BBVA.

Younger Americans who do not yet own a home find themselves in a very different situation from seasoned homeowners. Home price growth has outpaced income growth, and according to Frederick, “[Y]oung families will need to see faster income growth and save additional money to make a larger down payment.”

Prices will continue to rise this year, but appreciation will slow from the 11.5 percent annual gain last year to a pace of 8.5 percent for 2014, according to BBVA’s projections.

Gross domestic product (GDP) and employment will also improve this year, according to BBVA. GDP will grow by 2.5 percent this year, and the economy will add 2.4 million jobs. These improvements will carry over to the residential market, translating to 2.1 million new households over the next two years.

“[H]ousehold formation will increase with economic growth because both immigration rises and young people move out of their parents’ houses,” BBVA said in its report.

However, many of these new households will enter the rental market rather than the purchase market. BBVA predicts rental households will grow by 1.2 million over the next two years, while owner-occupied households will grow by 900,000.

Home sales will rise in 2014, according to BBVA. Existing single-family home sales will rise 4.2 percent over the year to about 4.7 million, while new single-family home sales will jump up 13.4 percent over the year to about 490,000.

With inventory low, BBVA predicts a 17 percent increase in housing starts this year. Single-family housing starts will total about 810,000, and multifamily starts will total about 274,000 for an overall addition of about 1.1 million housing starts.

The healing market will also encounter fewer foreclosures this year than last. BBVA predicts between 700,000 and 800,000 foreclosures this year, down from 1 million last year.

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5 Ways to Make a Home Extra Cozy This Winter without Paying a Fortune

By Melissa Dittmann Tracey, REALTOR(R) Magazine

With cooler temperatures, home owners will want to keep a home inviting and cozy, especially if they’re trying to sell it.

But just cranking up the heat can prove costly — particularly this year. Heating costs are on the rise, and more than 90 percent of homes will likely face higher heating expenses during this year’s cold season, according to the Energy Department. For example, households using natural gas will likely see bills 13 percent higher this year than last, paying on average $679 for heat this season.

So what are some quick, affordable ways to keep a home warm? A free, new ebook, “The Cure for the Common Cold Room: A Safe & Smart Home Heating Guide,” by ElectricFireplacesDirect.com offers up numerous tips and tricks to home owners and sellers for keeping a home warm this winter. Here are a few ideas from the book:

1. Add area rugs: Hardwood and tile floors can make your home feel cold in the winter. Add some area rugs to provide a warmer barrier between your feet and the floor. Non-skid utility rugs or rubber mats can make kitchen floors more comfortable and safe, according to the ebook.

2. Set ceiling fans to run clockwise: Yes, a ceiling fan can be used in the winter months too and can even help heat your home. The majority of ceiling fans have two settings: Counterclockwise cools rooms in the summer and clockwise can force warm air downward in the winter. Look for a small switch on the ceiling fan to change its direction clockwise for the cooler months.

3. Rearrange furniture: Check the arrangement of the furniture in the home to make sure it’s cozy. Often times, home owners spread out furniture to fill an entire room. Instead, group pieces together to get a warmer feel. Move furniture away from the windows and doors and closer to the fireplace, if there is one in the home.

4. Add moisture to the air: Humid air feels warmer than dry air. Therefore, a humidifier may make a difference. Cool mist and warm mist humidifiers can both be effective in making rooms feel warmer. “A cool mist humidifier is safer — and usually less expensive — because it doesn’t expel hot water or steam vapor that could hurt children or pets,” according to the book.

5. Let the sun shine inside: Use the sun to heat your home by adjusting the home’s curtains to let the sun in. Open south-facing curtains on sunny days. Also, be sure to close curtains at night to provide an extra barrier against wintery winds that are trying to squeeze inside the home.