Real Estate Blog

When the number of home sellers grossly outpaces the number of buyers, no offer can be ignored, even if it’s 25 percent or more off the asking price. But in today’s rebounding market, those low-ball offers don’t often work. Many times, the potential buyer finds that they don’t get a counter-offer. And, in many cases, another more realistic buyer gets the home.

A low-ball offer – generally 25 or more off the asking price – allows buyers to see if they can land a great deal, even if they’re willing to pay more. In a survey last year conducted by the National Association of Realtors® (NAR), one in 10 respondents cited low-ball offers as a concern. According to real estate columnist Kenneth Harney, a NAR survey conducted in March and not yet released found that almost no one complained about low offers.

When the number of listings outpaced the number of buyers, many potential homeowners submitted a shockingly low offer on the theory that they had nothing to lose. If the seller balked, most would still counter with something below their asking price. Today, however, offers close to the asking price – or even beating it – will probably come in fairly quickly from someone else if a home is priced correctly in the first place.

Even buyers who still want to low-ball an offer on a home many times switch tactics after they lose a property or two to a more aggressive buyer.

Florida Realtor Marnie Matarese works with J Wood Realty in Sarasota. She told Harney that fewer buyers want to low-ball an offer in her area, but they still come in – mainly from out-of-state or out-of-the-country people who have read about the state’s foreclosures and short sales. That news, however, is old – it has not kept up with reality in many areas.

Matarese says some people still insist on making a low-ball offer, but that she doesn’t mind. “You can’t blame a buyer for trying to get a good deal,” she says.

In some cases, a seller isn’t offended by a low-ball offer, but their counter-offer shaves only a little bit off their original asking price. An Olympia, Wash., real estate agent had a $150,000 offer for a $250,000 listing, according to Harney. But after the dust settled and the seller shook off his irritation, he and the buyer agreed to $230,000.

Harney closed his column with this advice: “Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012’s environment – at least in rebounding markets – it could be counterproductive if you truly want to buy.”

Source: Ken Harney. Distributed by Washington Post Writers Group.

© 2012 Florida Realtors®

TALLAHASSEE, Fla. – Jan. 23, 2012 – An issue discussed at the recent Florida Realtors Mid-Winter Meetings appears resolved, at least for now. Citizen’s Property Insurance Corp. – the state-owned insurer of last resort – relied on a single vendor, 360Value, to estimate a building’s replacement costs that, in turn, impact the amount of property insurance an owner had to buy.

A number of Realtors and homeowners, however, felt that 360Value overestimated replacement costs, forcing owners to overpay for insurance. Consequently – and in response to criticism from Florida Realtors, homeowners, the media and others – Citizens says it will now consider other sources when calculating replacement cost, including other software firms, appraisers, contractors and more.

“Florida Realtors has followed Citizens’ actions closely, and we discussed replacement costs at the recent Mid-Winter Business Meetings,” says Florida Realtors Senior Vice President of Public Policy John Sebree. “This issue is important to Realtors, homeowners and buyers, and we’re pleased with Citizens’ decision to expand replacement cost appraisals.”

As a state-owned insurer, Citizens cannot raise rates beyond 10 percent per year; but critics of the replacement cost appraisals claimed Citizens found a way to raise rates by skirting the yearly cap – simply force policyholders to buy more coverage than needed.

In response, Citizens said that wasn’t true, and that replacement cost differs from market value. Buying a foreclosed home, for example, many times costs less than the money it would take to build that same home.

The problem started in late 2010 when Citizens started to use 360Value exclusively. Homeowners could not get alternative appraisals if they disagreed with the values released by the vendor. Effective now, however, Citizens will still use data from 360Value, but it will also accept the following to calculate replacement costs:

• Estimates from other vendors, such as MSB and e2Value

• An appraisal from someone licensed to estimate insurance reconstruction costs, which can be different than market value

• A general contractor, architect or engineer estimate, providing it includes a contract price for reconstruction and an itemized list of features in the home

• A property inspection report, providing it’s been conducted within the previous 12 months

Citizens officials have not said how they will deal with past problems, however. Some owners balked when their insurance premiums went up based on new and higher replacement cost estimates, but they continued to pay the higher premiums anyway. Under the updated rules, it’s not clear if Citizens will make a new estimate retroactive, and, if so, whether a property owner can expect reimbursement for premiums already paid.

After analyzing 1.2 million listings in 16 markets across the country for 21 months, Redfin found that sellers have a better chance of moving their homes off the market if they list them on a Friday.

The brokerage says the study indicates that Friday listings are 12 percent more likely to change hands within 90 days. Additionally, 94.4 percent of properties listed on a Thursday or Friday sold close to the list price; in contrast, only 93.3 percent of those listed on a Sunday or Monday sold close to the list price.

Friday listings were 18.8 percent more likely than Sunday or Monday listings to be toured, with Redfin noting that “homes listed on Fridays are the freshest in buyers’ minds when they’re making their weekend plans.” Buyers also prefer to visit the newest listings first to beat the competition.

The study’s conclusion: “More tours leads to more offers, and more offers leads to a better price and a better chance of selling.”

Source: Inman News (10/18/11)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

WASHINGTON – Sept. 14, 2011 – The Ad Council – in partnership with the U.S. Department of the Treasury and the U.S. Department of Housing and Urban Development (HUD) – will launch a new phase of their Foreclosure Prevention Assistance Public Service Advertising (PSA) Campaign.

The campaign, if successful, will increase awareness of the Making Home Affordable Program’s (HAMP) free resources for homeowners struggling with mortgage payments.

One in 11 homeowners nationwide has missed two or more mortgage payments, yet many enter foreclosure without reaching out for assistance. The new PSAs tell homeowners that help exists – and the sooner they act, the more options they have.

The foreclosure campaign encourages homeowners to call (888) 995-HOPE (4673) to speak with a HUD-approved housing expert and discuss the solutions available. The program website, MakingHomeAffordable.gov, serves as an online resource for struggling homeowners to learn about options other than foreclosure.

Created for free by Schafer Condon Carter, a Chicago-based advertising agency, the new television, radio, print, out of home, and online PSAs have been made in English and Spanish. The PSAs aim to inspire homeowners who are unsure of where to turn to reach out for help as soon as possible.

“The Making Home Affordable Program has already assisted over a million homeowners,” says HUD Secretary Shaun Donovan. “Struggling homeowners do not need to work through their concerns alone.”

The latest commercial and other media resources are available online.

© 2011 Florida Realtors®

WASHINGTON – Sept. 13, 2011 – The National Association of Realtors® (NAR) reports that 16 percent of real estate professionals surveyed in June reported a cancelation in a sale, mostly due to a large number of low appraisals.

Many real estate professionals are watching deals unravel, with some appraisals coming in 10 to 20 percent – or even more – below the accepted offer.

“Over the past decade, finding ‘comps’ that accurately reflect values has been a challenge as values rose quickly during the boom and fell just as fast during the bust,” according to a recent article by RISMedia. “Discounts paid for foreclosures and short sales have created a dual price structure between ‘normal’ and distress sales.”

Obviously one of the easiest solutions when a low appraisal comes in: Ask the seller to agree to a lower price. But when that doesn’t work, consider the following tips:

Research

If clients feel the appraisal was completed incorrectly, they have the right to a copy of the appraisal from their lender, including who performed it and what comparables were used. For example, a client can find out where the appraiser is based (maybe it was an out-of-town appraiser who was unfamiliar with the area). If an out-of-town appraiser unfamiliar with the local market does the appraisal, clients can demand a new one.

Also, a client should evaluate the comparables used in the appraisal. If a client feels that the earlier home sales do not fairly compare to the home they wish to buy, they can ask their real estate agent to pull together a fairer list of recent comparable sales – or possibly even pending sales – to justify the agreed-to-sales price. That information should then be submitted to the loan’s underwriter when asking for a review of the appraisal.

Request a new appraisal

If clients feel the appraisal wasn’t done fairly or accurately, they can ask their lender for a new appraisal. A lender has the ability to override an appraisal estimate, though that’s unlikely. The lender could, however, order a new appraisal, which is more likely.

Get an independent appraisal

Clients could opt to get their own appraisal. (If the loan is an FHA loan, they should ask the lender for a list of approved appraisers.) The bank will generally review the appraisal and ask the previous appraiser if they agree or disagree with the new one. Banks may request yet another appraisal, or they could reject a private appraisal altogether. However, the first appraiser could agree with facts in the independent appraisal and return with a better price.

Source: “5 Ways to Fight a Low Appraisal,” RISMedia (Sept. 7, 2011)

TAMPA, Fla. – Sept. 2, 2011 – Some foreclosed homeowners are taking out their anger on the homes they are forced to leave behind, smashing holes in the walls, scribbling graffiti everywhere, leaving piles of trash and ripping out appliances.

More banks – facing a growing problem from trashed foreclosures – are opting to offer homes at big discounts rather than fix the repairs, which can send surrounding home values in the neighborhood spiraling down, experts say.

Real estate pro Nick Davis with RE/MAX Premier Group told the Tampa Tribune that he has seen some home values greatly diminish from foreclosed homeowners who have trashed it. For example, he recalls one home that would have fetched $250,000 back in 2006 during the housing boom that would now sell for about $75,000 because the former owners trashed it.

“It looks like someone took revenge,” Davis says about the home, which had holes in the wall, appliances ripped out, and piles of trash. “Unfortunately, we’re seeing more of this. We’ve seen cement in the plumbing systems, the air conditioners ripped out from the outside, wiring being removed.”

Some real estate professionals and lenders are even blaming the high number of real estate deals falling apart due to more homes being left in poor condition by the original owners.

Buyers “look at these homes and say, ‘If this is the damage I can see, what else did the homeowner do to this place that I can’t see?’” Davis says.

Some homeowners facing foreclosure place the blame on banks for their woes so they leave behind a mess for the bank. But trashing a home can backfire. Some banks are saying they may even start taking steps to sue homeowners for the cost of repairs, and law enforcement officials say homeowners can be charged with vandalism as well as theft if they remove items that don’t belong to them from the home.

“Anything that came with the house needs to stay with the house,” says Larry McKinnon, spokesman for the Hillsborough County Sheriff’s Office in Florida. “You may think you’re getting back at the bank. But the bank may have the last laugh.”

Source: “Trashing Foreclosure Homes May be on the Rise,” Tampa Tribune (Aug. 30, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

WASHINGTON – Aug. 24, 2011 – In recent news, Fannie Mae has publicly assured homeowners going through foreclosure that they will be protected from losing their homes while applying for a federally funded loan modification. Homeowners can apply for a modification at any point before or during the foreclosure process.

The basic steps of foreclosure

If a modification is approved, homeowners can keep their homes if they make their adjusted payments. Absent that, here are the stages of a typical foreclosure:

1) In default: A loan is in default when a mortgage payment is 30 days late.

2) Warning: When a loan is 60 days past due, the bank, credit union or mortgage company warns that foreclosure is the next step.

3) Proceedings begin: After 90 days, the lender refers the loan to its foreclosure department, and hires a local lawyer to begin foreclosure proceedings.

4) Sale advertised: The lender's lawyer advertises the property for sale for four consecutive weeks in a local newspaper. The sheriff's sale date is listed in the advertisement.

5) Sale held: The sale is held on the published date. A sheriff's employee conducts a courthouse auction and the highest bidder wins, usually the bank that owned or serviced the mortgage.

6) Sheriff's deed: The winning bidder gets a sheriff's deed that lists the last date the homeowner can redeem, or take back, the property, usually six months from the date of the sheriff's sale. During this redemption period, the homeowner can live in the property or try to sell it.

7) Redemption period: To redeem a property, the homeowner must pay off the mortgage and all interest and late fees, court and attorney fees, title and appraisal fees, taxes and insurance. Otherwise, they will be evicted from the home.

Copyright © 2011, Detroit Free Press. Distributed by McClatchy-Tribune Information Services

Weak appraisals are “driving down the real estate market” and “borders on buffoonery,” says William Maxwell, an expert in finance and professor at Southern Methodist University’s business school, who has seen his own Dallas property fluctuate in appraised value by $60,000 in just a year.

While the sluggish economy has pushed home values down the last few years, some real estate professionals and economists say that low-ball appraisals are pushing values down even more and undermining a housing recovery, The Wall Street Journal reports.

The National Association of Realtors® says that 16 percent of real estate pros surveyed in June reported a cancelation in a sale, mostly due to a large number of low appraisals.

Erin Wanner, a sales executive with Stirling Sotheby’s International Realty in Orlando, Fla., says that one of her deals fell through when an appraisal came in 40 percent lower than expected for a 7,000-square-foot custom-built lakefront home; the home was under contract for $650,000, but the appraisal came in at $380,000.

Some real estate professionals are accusing lenders of pressuring appraisers to come in with lower estimates and for basing their valuations largely on nearby distressed sales that often sell at discounted prices. That has prompted at least four states – Illinois, Nevada, Missouri, and Maryland – to consider legislation that would prevent appraisers from using distressed sales when conducting their valuations.

But the Mortgage Bankers Association says more conservative appraisals are needed. The trade association says it’s a way to protect the banks from future problems with investors who buy mortgages.

Source: “Judgment Call: Appraisals Weigh Down Housing Sales,” The Wall Street Journal (Aug. 12, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD

I personally think that the banks are trying to do everything in their power to deny all home loans.

 In the aftermath of the nation’s housing-market collapse and recession, more than 500 midsize and large cities have seen a rise in the share of homes that are rented rather than owned, according to a USA TODAY analysis of Census data.

Almost 4 million homes have been lost to foreclosures the past five years, turning many former owner-occupied homes into rentals.

The shift to rental housing is potentially long lasting and portends changes for neighborhood stability and how people build wealth, economists say.

“The changes are big but glacial,” says Mark Zandi, economist at Moody’s Analytics.

The swing from owner- to tenant-occupied homes in the past decade has been dramatic in some places:

Of the 100 largest cities, some of those with the largest shifts were Irvine, Calif., which went from about 40 percent of occupied homes rented in 2000 to 49.8 percent in 2010; Philadelphia increased from 40.7 percent to 45.9 percent; and Birmingham, Ala., rose from 46.3 percent to 50.7 percent.

Twenty-five cities including Baltimore, Minneapolis, Sacramento and Salt Lake City swung from having more than half of homeowners in 2000 to majorities of renters in 2010. In Reading, Pa., 57.6 percent of occupied homes were rentals in 2010, up from 49 percent in 2000.

Florida, California and Arizona had the most cities where the share of renter-occupied housing grew by at least 5 percentage points. All three states have been hit hard by foreclosures.

Nationwide, 34.9 percent of occupied homes were rented in 2010, up from 33.8 percent in 2000.

The Census data that USA TODAY analyzed for cities covered only housing within the cities’ boundaries, not their much larger metropolitan areas.

Vacant properties, excluding seasonal or vacation homes, accounted for 7.9 percent of U.S. housing units in 2010.

It’s not clear how many of those have since become rentals or owner-occupied homes.

The renter household market had remained fairly stable from 1990 to 2006, says Daniel McCue, senior research analyst at Harvard University’s Joint Center for Housing Studies.

Since 2006, when housing prices peaked, the number of renter households in the U.S. has grown an average of 692,000 a year, while owner households have fallen an average of 201,000 a year, Census surveys show.

Several factors will boost the growth of rental homes for years to come, Zandi says, including continued foreclosures, continued drops in home prices that frighten buyers and potential cuts to government subsidies supporting homeownership.

On the other hand, 74 percent of renters think owning is superior to renting, said a recent survey by mortgage giant Fannie Mae.

There will be a steady and gradual increase in rent rates as rental supplies diminish.

“There’s still a pull toward homeownership although it’s been diminished,” McCue says.
Contributing: Paul Overberg

© Copyright 2011 USA TODAY, a division of Gannett Co. Inc., Julie Schmit and Barbara Hansen.

• All indications are showing that we have more or less hit the bottom - investors are feeling it and are out buying homes!
  
• For the past three months, more than 60% of all closed transactions have been cash transactions,
  
• When properties are priced correctly, the average number of days a property will stay 'active' is less than 45 days,
  
• Interest rates continue to hover around 5% - still the lowest in many, many years,
  
• Home prices have stabilized.  We may see some minor dips and increase in prices, but for the most part we seem to have stabilized
  
• Home affordability is at record levels - somewhere around 14%, compared to around 37% in 1980
  
• The average age of a home buyer today is between 30-45, making up over 50% of all buyers - these are the echo buyers, children of the baby boomers and 80 million strong,
  
• 82% of people purchasing today are buying single-family homes, 9% buying condos, 7% buying townhouses, and 1% buying duplexes,
  
• Buyers today are very well educated.  They look at many properties, determine value by comparison shopping, they watch TV and most all work with a real estate agent.
  
• Moving over to the seller's side - sellers need to put their trust in two time-tested principles of real estate: condition and price.  These are the only two factors sellers have control over, and they are the two that buyers care about the most.
  
• 94% of homes in better condition were offered a higher percent of the list price than 88% of homes in poor condition were offered a lower percent of the list price,
  
• Staging a home or having a professional stager come and evaluate a home is critical.  Interestingly enough staging a home in California is common and here in Florida its viewed as an expense.  Yet - staging a home will typically bring 1.7% more on the sale of the home.

WASHINGTON – Feb. 22, 2011 – Effective April 18, the average FHA-backed mortgage will cost new borrowers about $30 more per month. In a letter sent yesterday, Assistant Secretary for Housing/Federal Housing Commission David H. Stevens explained the change, which will increase the mortgage insurance premium (MIP) on all 30-year and 15-year loans by a quarter of a percentage point (.25).

The increase impacts FHA loans with a case number assigned on or after April 18, 2011.

According to Stevens, FHA must increase its Mutual Mortgage Insurance (MMI) fund reserves – a two percent capital reserve ratio – to comply with current law.

“The MMI fund has been below the two percent threshold in our last two annual actuarial reports to Congress,” Sevens says; and that at the current rate, MMI will not meet its mandated level until at least 2015. “Raising the annual premium will enable FHA to increase revenues … Based on current volume projections, the annual MIP increase would generate an additional $2.5 - $3 billion annually.”

Stevens defended the increase’s unveiling during a down real estate market by calling the quarter-point increase “a responsible step towards meeting the two percent threshold, while allowing FHA to remain the most cost-effective mortgage-insurance option for borrowers with lower incomes and lower downpayments.

“I understand the concerns of those in the industry about this increase,” he says. “While I do not expect all to agree, we have made these moves to protect FHA so that it can continue its vital mission.”

While the monthly payments on the average FHA loan will go up about $30, it shouldn’t impact closing costs. The upfront MIP remains unchanged at one percent.

To read the Department of Housing and Urban Development’s Mortgagee Letter explaining the change (PDF format), visit HUD’s website.

© 2011 Florida Realtors®

Jan. 24, 2011 – BizCosts.com did an analysis on pro-business cities and counties –based on the cost of doing business – and created the nation’s top 20. In the analysis, Orlando came out on top, and five Florida city areas made the list. No other state had more than one area in the top 20.

Florida city areas by rank and yearly cost to operate
1. Orlando
3. Jacksonville
7. Tampa Bay
16. Palm Beach County
20. Broward County

“Florida is one of the most pro-business states in the nation, and it has been for some time,” said John Boyd Jr. with BizCosts.com.

To create the top 20, BizCosts looked at typical business costs, such as the operation of a corporate headquarters building, labor, taxes and travel. To make the comparison between cities fair, it assumed a 75,000-square foot headquarters and staff of 300. Based on that model company, the yearly cost in Orlando is about $19.9 million per year; Jacksonville is about $20.1 million; and Broward County is about $21.6 million.

In New York City, the most expensive city for business operating expenses, the cost per year is about $28.5 million.

Source: The Orlando Sentinel, Jan. 19, 2011, Jim Stratton

© 2011 Florida Realtors®

TALLAHASSEE, Fla. – Jan. 10, 2011 – Worried that your bank might go after your other assets if you’re late on the mortgage or lose your home to foreclosure?

It can happen in Florida, especially if a bank sells your foreclosed house and doesn’t recoup the full loan amount and if you’re a big-dollar borrower.

With nearly half of all mortgages under water in South Florida, plenty of residents may wonder if their home lender can garnishee their wages or suddenly lock down their deposit accounts.

Rules on tapping assets vary by state and depend on the terms of specific loans and accounts.

Problems on typical home loans usually don’t crop up before foreclosure. They tend to come after the bank sells the home and ends up short.

In Florida, banks can go to court for a “deficiency judgment” to collect the rest of the money owed on a mortgage after foreclosure, said Anthony di Marco, vice president of the Florida Bankers Association.

Banks can pursue other assets with that judgment. They can file a lien on your boat or car. But “they can’t jump priority on a loan,” so the lender for that boat or car has first dibs to collect, di Marco said.

Florida banks usually don’t target other assets after foreclosure if they don’t see much to tap. “Collecting on judgments is time-consuming and costly,” said real estate attorney Shari Olefson, a partner at Fowler White Boggs in Fort Lauderdale and author of “Foreclosure Nation: Mortgaging the American Dream.”

But banks pay more attention to borrowers with multimillion-dollar homes or businesses that default on big commercial properties. The lender can check if the customer has other accounts with the same bank. Depending on the terms of those savings or checking accounts, they may move to freeze, sweep, garnishee or otherwise tap those accounts to collect money owed, Olefson said.

There’s another risk for smaller borrowers later. Banks may sell their deficiency judgments to a collection agency. The judgments are valid for up to 20 years. That leaves an agency focused on collections ample time to come after you for the balance still due, she said.

“That’s why it’s so important for people to deal with these mortgage problems upfront,” Olefson said. “So if you have the chance to do a short-sale through the bank, or if you have the chance to negotiate with the bank and clear up the loan – rather than have this financial time-bomb ticking over your head for years – you’ll be so much better off working with the bank.”

And be sure to get any settlement reached with the bank in writing, mortgage specialists add.

No matter what, some types of assets are off the table when banks look to collect money due on homes.

Some federal payments cannot be garnisheed at any time to cover a mortgage. Those include Social Security checks, veterans benefits and some railroad retirement payments, among others, according to the American Bankers Association in Washington, D.C.

Some states don’t let banks go after an individual’s assets after a home is seized and sold, said Mark Tenhundfeld, the association’s senior vice president of regulatory policy.

Even with a deficiency judgment, Florida law specifies 11 items that cannot be garnisheed to pay court orders in most cases, including unemployment benefits, disability checks and payments from Supplemental Security Income, a federal anti-poverty program.

Consumers in Florida have complained about what they see as improper garnishments by banks.

The Florida Office of Financial Regulation said concerns often center on Supplemental Security Income payments garnisheed to pay the mortgage loan.

But a consumer can reverse the practice by showing that the law exempts that income from garnishment or by going to court to resolve the issue, said Flora Beal, a spokeswoman for the regulators office.

Banks have sometimes garnisheed funds that are electronically deposited into a customer’s account, not knowing that the money came from exempt sources, according to the Florida Bankers Association.

The borrower’s recourse: Inform your bank that the money is exempt and seek to get it back, said the association’s di Marco.

That’s not always easy, according to South Florida building contractor James Clare III.

Clare said he fell off a roof during a job, was disabled and lost income. He ran late on mortgage payments and other bills. One day, he found that his bank would not allow him access to a disability award electronically deposited into his account at the same bank.

Clare engaged a lawyer, but he said it took weeks for the bank to give him access to the funds and then, only after he agreed to bring some payments up to date.

“I had no choice. It would have cost me more to go to court. My attorney said by the time I’d pay all the fees and all the bills over a year or two, the money’s gone,” said Clare. “It was the most frustrating time.”

Copyright © 2011, Sun Sentinel, Fort Lauderdale, Fla., Doreen Hemlock. Distributed by McClatchy-Tribune Information Services.

WASHINGTON – Dec. 10, 2010 – U.S. credit bureau TransUnion predicted Thursday the number of delinquent mortgage accounts would drop by nearly 20 percent next year.

The number of delinquent accounts – those with payments 60 days past due – is predicted to fall to 4.98 percent by the end of 2011 from 6.89 percent at the end of 2009.

“This is a welcome contrast to the year-over-year increases of 54 percent between 2006 and 2007, 53 percent between 2007 and 2008 and 50 percent between 2008 and 2009,” TransUnion said in a press release.

Steve Chaouki, group vice president in TransUnion’s financial services business unit, said the decrease in delinquencies could be attributed to “a slowly improving unemployment picture and continued stabilization in housing markets.”

“While there is continued price pressure in many markets, we expect a rise in property values along with some stabilization of values in those states and markets hardest hit by the recession,” he said.

TransUnion said Nevada would see a 24.77 percent drop in its delinquency rate next year while Arizona’s rate would drop 24.27 percent. In Florida, the rate would drop 23.9 percent.

“Interestingly, the states projected to experience the greatest decrease in mortgage delinquencies – Nevada, Arizona and Florida – are the same areas expected to have the highest 60-day mortgage delinquency rates at the end of next year,” TransUnion said.

The states most in need of improvement, in other words, are expected to experience the highest rates of improvement.

Copyright © United Press International 2010

WASHINGTON – Dec. 2, 2010 – Pending home sales jumped 10.4 percent in October, showing another positive uptrend since bottoming in June, according to the National Association of Realtors®.

The Pending Home Sales Index (PHSI), a forward-looking indicator, rose to 89.3 based on contracts signed in October from 80.9 in September. The index remains 20.5 percent below a surge to a cyclical peak of 112.4 in October 2009, which was the highest level since May 2006 when it hit 112.6.

The latest surge also reflects market strength, since buyers had an additional push to close quickly in October 2009 to qualify for one version of the first-time homebuyer tax credit that expired in November. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

The data also surprised economists who had expected a decline in pending home sales given current troubles within the housing market. However, Lawrence Yun, NAR chief economist, says excellent housing affordability conditions drew in more homebuyers.

“It is welcoming to see a solid double-digit percentage gain, but activity needs to improve further to reach healthy, sustainable levels,” Yun says. “The housing market clearly is in a recovery phase and will be uneven at times, but the improving job market and consequential boost to household formation will help the recovery process going into 2011. More importantly, a return to more normal loan underwriting standards and removal of unnecessary underwriting fees for very low risk borrowers is needed and could quickly help in the housing and economic recovery.”

Recent loan performance data from Fannie Mae and Freddie Mac clearly demonstrates very low default rates on recently originated mortgages – much lower that the vintages of 2002 and 2003 before the housing boom.

The PHSI in the Northeast jumped 19.6 percent to 71.3 in October but is 27.3 percent below the tax credit peak in October 2009. In the Midwest, the index surged 27.3 percent in October to 81.7 but is 24.8 percent below a year ago.

Pending home sales in the South rose 7.1 percent to an index of 93.8 but are 18.4 percent below October 2009. In the West, the index slipped 0.4 percent to 104.3 and is 15.6 percent below a year ago.

Near term, Yun expects home sales to continue climbing from their cyclical low this past summer.

“Even so, we now have some consumer concerns regarding the mortgage interest deduction, an important component in housing affordability,” Yun says.

© 2010 Florida Realtors®

TAMPA, Fla. – Oct. 5, 2010 – On Florida’s west coast, where the housing bust has flooded courts with foreclosure filings, the chief judge of the 6th Judicial Circuit has little sympathy for lenders who have routinely submitted flawed and possibly fraudulent foreclosure cases.

J. Thomas McGrady, whose jurisdiction includes two hard-hit counties with more than 1 million people in the Tampa area, said Monday that foreclosures based on improper paperwork should be tossed out.

Judges “are going to have to vacate that judgment and start over again,” he said.

Across the country, judges facing pressure from homeowners and their attorneys are beginning to reexamine old cases and dismiss pending ones. The trend could lead to overturned evictions, and it could stall foreclosure cases for years and scare away buyers of millions of seized properties clogging the real estate market.

“We’ve never been inundated to this extent with this number of cases alleging fraudulent paperwork,” said Peter D. Blanc, chief judge of the 15th Judicial Circuit Court, in West Palm Beach. “We’re in new territory, and we’re struggling to determine what the proper solution is.”

Judges nationwide have broad latitude in deciding whether to accept new paperwork and whether to charge the lenders with fraud for submitting problematic documents in the first place.

Even before three of the nation’s largest lenders – Bank of America, J.P. Morgan Chase and Ally Financial – announced moratoriums on foreclosures in the 23 states that require a court order to evict a borrower from a home, some judges were beginning to push back against banks with sloppy or fraudulent filings.

The lenders have acknowledged that a handful of employees signing off on hundreds of thousands of files may not have read them, but they have insisted that the problem amounts to a technical issue that can be fixed easily by replacing old documents with new ones. They say that the facts proving that borrowers missed their payments are sound and that the procedural errors might delay foreclosures but won’t change the outcome.

As the situation in Florida shows, it’s unlikely to wind up so simple.

Armies of consumer attorneys and homeowners are seizing on the paperwork issues to try to protect individual homes from foreclosure and bring into question the legitimacy of the millions of foreclosures undertaken since the housing crisis began in 2007.

The recent moratoriums have made life easier for people such as Michael Gaier, a Philadelphia lawyer who has taken on 130 clients hoping to fight their foreclosures.

Before, he said, judges churning through foreclosure cases tended “to roll their eyes, because they’ve heard every story in the book,” he said. But now, “I don’t have to convince them on my own. I don’t have to start from scratch,” he said, because the moratoriums show that the banks “know that something is wrong.”

Gaier and other lawyers say they have been flooded with calls from new clients who had lost hope of keeping their homes but now see an opportunity to stay. In addition, homeowners who had been complaining of flawed or forged paperwork for years feel they are finally getting traction.

“My reaction is, it’s about time. In the past, people thought we were crazy; the judges laughed at us. Now everyone knows there is a serious problem,” said Denise McMillan, 51, who was evicted from her four-bedroom home in Pikesville, Md., in July and has been coordinating online with others fighting foreclosure.

The collective decisions of judges across the country could turn a foreclosure slowdown into a far larger mess if they determine that homes were wrongly seized and resold by lenders. Foreclosed homes accounted for nearly one-fourth of all residential sales in the second quarter, according to a report by RealtyTrac released last week.

That possibility already is driving away potential buyers of bank-owned properties who don’t want to get caught in legal battles between banks and borrowers. At least one company that provides title insurance, Old Republic Title, has refused to work on homes foreclosed by Ally’s GMAC mortgage unit.

Travis John, a broker in central Florida who specializes in distressed sales, said buyers in recent weeks have seen the headlines about problems in the foreclosure process and have shied away.

“If buyers continue to have this fear – if we have even 30 percent less sales – that would be traumatic,” he said. “We’re already in a traumatic market.”

Across Florida, which has the most foreclosure filings of any state, mortgage companies are already submitting formal requests to judges for the withdrawal of documents that they say were “not properly verified.”

Such actions show that the flawed paperwork is “a serious problem,” said veteran circuit court judge Lynn Tepper, who has presided over foreclosure cases in Pasco County, north of Tampa.

“They’ve conceded that the affidavit is flawed,” Tepper said. That means the judgment based on the affidavit must have been problematic as well – and that the decisions should be reversed.

Tepper sent a chill through law firms working for lenders this spring when she threw out a request for a foreclosure and ruled that U.S. Bank perpetrated fraud by submitting backdated documents that purported to show the lender owning the loan at the time of the foreclosure.

The homeowner, Ernest E. Harpster, got his home back despite the fact that he owed $190,000 on the loan. Tepper also ruled that U.S. Bank could not refile the case.

These days, Tepper is plodding slowly through the pending cases, looking closely at signatures and notarizations, making sure the names and numbers look accurate and legitimate.

“You have to be careful,” she said. “It used to be such a pro forma thing; it was a no-brainer. That’s surely not the case now.”

Copyright © 2010 washingtonpost.com

NEW YORK – Sept. 28, 2010 – Have you been working to boost your credit score before trying to get a mortgage? It may not yield the payback you expect.

The mortgage loan interest rates offered to borrowers with stellar FICO scores aren’t much lower than the rates offered to those with a middle-of-the-road 720 score these days.

That means that efforts to drive up a credit score to lofty heights aren’t likely to produce substantial savings over the life of the loan.

The real savings comes from getting your score to that magic line of 720.

An analysis of interest rate quotes made through real estate website Zillow.com during the first half of September found that prospective borrowers with FICO scores of 620 or below aren’t likely to get any mortgage offers. “These lenders are really not looking at people under 620 at all,” said Stan Humphries, chief economist for Zillow.

That means well over a quarter of U.S. adults have little or no access to mortgage loans right now, based on the most recent distribution of scores provided by FICO. That’s because credit remains tight and banks, which have written off billions in bad loans in the past three years, are trying to keep their risks low, so they’re bypassing the diciest borrowers. “As the housing market continues to improve over the next five years, then this situation will also change,” Humphries predicted.

For potential borrowers with scores between 620 and 720 - roughly another quarter of U.S. adults - the lowest annual interest rate offered by lenders through Zillow.com shows the impact a few credit score points can have.

• For scores between 620 and 639, the best average annual percentage rate offered was 4.9 percent.
• For scores between 640 and 659, the rate was 4.73 percent.
• For scores between 660 and 679, the rate was 4.6 percent.
• For scores between 680 and 699, the rate was 4.56 percent.
• For scores between 700 and 719, the rate was 4.44 percent.
• For scores of 720 and above, the rate was 4.3 percent.

That means that for each 20-point score increase, the average rate dropped 0.12 percent. On a $300,000 home with a 20-percent down payment, a 0.12 percent decline equals about $6,400 saved over the course of a 30-year mortgage, according to Zillow. The company looked at 25,000 loan requests and the quotes they garnered from its pool of 1,000 lenders to come up with its data.

“If you’re between 620 and 720, you should be killing yourself to get every point you can,” Humphries said.

But if you’re already at 720, the benefits start to dwindle as you improve your score further. There are still incremental rate reductions for borrowers in the higher range, but they won’t see the same level of drop-off that improvements lower on the scale can produce.

Part of the reason for so little change for the top borrowers is that interest rates are so low overall. “There’s not that much room right now between the rates,” noted Diane Winland, a financial planner with Financial Finesse, based in Manhattan Beach, Calif.

Another potential factor is that consumers with “perfect” credit scores tend to be less profitable for banks than consumers with a few dings on their histories, who pay higher rates and often penalties like late fees.

Consumers with great scores by and large avoid credit, explained John Ulzheimer, president of consumer education for the website Credit.com. “They have credit, they have had credit for a very long time, but they’re definitely a small-time user of credit. Which means that they’re not very profitable.”

The current situation means that potential mortgage applicants need to carefully evaluate their current standing and their goals before taking any steps.

Someone with a low credit score should work to improve his or her credit report before applying. “There’s lots of things people can do in a short period of time to go up 10 points,” said Todd Marks, vice president of education at the Consumer Credit Counseling Service of Greater Dallas.

But someone who already has a relatively high score may not benefit enough from an improved score to make delaying a home purchase worthwhile. “I always tell people, don’t get greedy,” Ulzheimer said. A rate in the low 4-percent range is still very good by historic standards, he noted. “In the grand scheme of things, it does not pay to wait.”

Copyright © 2010 The Associated Press, Eileen AJ Connelly, AP personal finance writer.