Mortgage Rates Fall To Record Lows

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via Les Christy @CNN Money

                        

 

CLICK ON MIKE, BELOW, TO SEE TODAY'S RECORD LOW RATES!

 

 

 

HARP's Rep and Warranty Waiver: Will It Spark a Refinancing Frenzy?

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

 

via DSNews.com Carrie Bay

With the Federal Housing Finance Agency’s (FHFA) retooling of the Home Affordable Refinance Program (HARP), one change in particular may hold the answer to just how much of an impact the initiative will have – FHFA’s decision to waive certain representations and warranties on loans refinanced through the program.

The debate has already begun about whether such a move will indeed persuade lenders to utilize the program more freely.

Generally when a mortgage is refinanced, any representations and warranties that are attached to the original loan – such as assurance of a clean title – are carried over to the originator of the new refinanced loan. The new lender can be held responsible by the investor – in this case, Fannie Mae and Freddie Mac – and be forced to buy back the loan as a result of an earlier defect overlooked by the original lender.

Essentially, defects can be transferred from lender to lender. Market players and government officials alike say this aspect of the refinance process has hindered the reach of HARP.

FHFA’s waiver eliminates the repurchase exposure associated with the intent of reps and warranties for loans refinanced through the federal program.

While reps and warranties protect Fannie and Freddie from losses on defective loans, FHFA’s decision to forego such protection is grounded in the idea that loans that qualify for HARP pose less of a risk.

To be considered for a HARP refinancing, the mortgage must have been originally sold to the GSEs on or before May 31, 2009. According to FHFA, defects that trigger reps and warranties typically show up in the first few years of a mortgage.

HARP also requires the borrower to be current at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

FHFA explains that nearly all HARP-eligible borrowers have been paying their mortgages for more than three years, and most for four or more years. The federal agency says these are “seasoned loans made to borrowers who have demonstrated a capacity and commitment to make good on their mortgage obligation through a period of

severe economic stress and house price declines,” which makes them a safe bet.

“Therefore, FHFA has concluded that eliminating the reps and warrants that may have discouraged industry participants from taking greater advantage of HARP to-date will be good for borrowers, housing markets, and the enterprises and taxpayers,” the agency said in a statement.

Gene Sperling, director of the White House’s National Economic Council, told reporters during a phone briefing that FHFA’s elimination of rep and warranty stipulations will “unleash competition for housing refinance.”

Without the added risk of pre-existing underwriting deficiencies, officials believe lenders will be more aggressive in putting borrowers into new loans under the HARP initiative.

Homeowners who are current on their payments but have been unable to refinance because of a severe negative equity position may soon find themselves being pursued by a host of lenders with a HARP application in hand. Some mortgage lenders do see it as an opportunity.

American Banker cites comments made to investors by Matthew Jozoff, a managing director for JPMorgan Chase, in which he explained, “So if a [Bank of America] borrower has been current for six months, basically a Chase originator could go after that borrower, refinance them, and not be held to the original loan file that BofA had. Consequently, we think that does increase the willingness of cross-servicing refinancing to take place.”

The analysts at Barclays Capital, however, say the “rep and warranty waiver may be less effective than initially estimated.”

In a research note released Tuesday, they concede that rep and warranty issues are widely thought to be one of the main points of friction in refinancing HARP-eligible borrowers.

“The new HARP announcement held some promise of relief on this issue, and initial reports seemed to suggest a significant waiver in claims,” Barclays said, but the investment bank points out that Fannie Mae already provides rep and warranty relief on the old loan for same-servicer underwriting through its Refi Plus program.

Essentially, the new HARP announcement simply extends this feature to Freddie Mac and potentially to refis by a different servicer, according to Barclays. But the company’s analysts note that “the presence of this waiver has not caused Fannie Mae speeds to be dramatically higher than Freddie Mac’s historically.”

While the program revisions could increase loan refi prepayments on the margin, the company’s analysts say “it is difficult to envision the proposals – as they stand – triggering a significant rep and warranty waiver related refinancing wave.”

Barclays also notes that the waiver may potentially only be provided in exchange for a fee.

Mortgage Rates Fall To New Record Lows

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via: MissionHillsPrudential - Shane Pliskin

Industry data released Thursday show borrowing costs for home loans falling to new lows, slipping further from what was already reported as the lowest level for mortgage interest rates in more than a half-century. Economists attribute the continuing declines to ongoing employment concerns and economic uncertainty.

 

Freddie Mac reports that all fixed- and adjustable-rate mortgage products covered in its regular market study hit all-time record lows for the week ending September 8th.

The GSE now puts the average rate for a 30-year fixed mortgage at 4.12 percent (0.7 point), a drop of 10 basis points from 4.22 percent last week. As a point of reference,

Freddie says last year at this time the 30-year rate was averaging 4.35 percent.

The 15-year fixed rate came in at 3.33 percent (0.6 point) this week in Freddie’s survey. That’s down from 3.39 percent last week. A year ago at this time, the 15-year rate averaged 3.83 percent.

The 5-year adjustable-rate mortgage (ARM) was unchanged this week, matching its all-time low set last week at 2.96 percent (0.6 point). This time last year, the 5-year ARM carried an average rate of 3.56 percent.

Freddie Mac’s study shows the 1-year ARM is now averaging 2.84 percent (0.6 point), down from last week’s average of 2.89 percent. It was 3.46 percent 12 months ago.

“Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields and allowed fixed mortgage rates to hit new lows this week,” explained Frank Nothaft, Freddie Mac’s chief economist.

He notes that last month’s jobs data showed no net gains, the poorest showing since September 2010, with the national unemployment rate holding above 8 percent for the 31st consecutive month. That’s the longest stretch of such elevated joblessness in 70 years, according to Nothaft.

Why Use a REALTOR®

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

Many consumers consider selling their home directly but eventually turn to REALTORS®. Smart home sellers realize they need the expertise in pricing their home, making connections with REALTORS® working with buyers, arranging and staffing open houses, and coordinating with other professionals in the sales process.

Only about half of all real estate agents are REALTORS® - the top half, in our not-so-humble opinion. REALTORS® work independently, for small agencies, or for large brokerages. They help people buy and sell residential or commercial properties, vacation homes, and land; they conduct appraisals; they operate in the United States and in other countries; some specialize in auctions; and others are buyer's representatives.

Move or Remodel
Are you considering a move? Check out HouseLogic, NAR's new consumer site, to analyze the pros and cons of moving or staying put, plus lots more information about owning a home.

REALTORS® Are Experts

Eighty-five percent of sellers were assisted by a real estate agent when selling their home, according to NAR Research, and 79 percent of buyers purchased their home through a real estate agent or broker.

Why Use a REALTOR®?
Real estate transactions involve one of the biggest financial investments most people experience in their lifetime. Here are 12 ways a REALTOR® will make your home buying or selling experience better.

REALTORS® Are Part of the Community

REALTORS® Work to End Housing Discrimination - during April, which is Fair Housing Month, and all year long. REALTORS® are active members of their communities.

REALTORS® Protect You

 

Only REALTORS® Follow a Code of Ethics
To be a member of NAR and a REALTOR®, a real estate agent must abide by a set of professional principles and serve clients fairly.

Learn how the Code of Ethics affects everyday real estate practices

Specialty Mortgages: What Are the Risks and Advantages?
A growing number of home buyers are deciding to use one of several new types of specialty mortgages that let them "stretch" their income so they can qualify for a larger loan. Before you decide whether a specialty mortgage is for you, read this brochure

via: National Association of Realtors - Realtor.org

HUD Extends Application Period for EHLP

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

 

via: DSNews.com by Krista Franks

The U.S. Department of Housing and Urban Development (HUD) is once again accepting applications for its Emergency Homeowners’ Loan Program (EHLP). The new deadline for applications is September 15.

The original deadline of July 22 was extended to July 27, but HUD announced Monday that it is extending the application process again because the agency believes it has enough resources to help more homeowners than have currently applied.

EHLP was designed to help homeowners who have encountered financial hardship due to involuntary unemployment or underemployment and are at risk of losing their homes.

The program is available to homeowners 90 or more days delinquent on their mortgage payments.

Eligible homeowners will receive an interest-free loan to pay a portion of their monthly mortgage payments for up to two years or up to $50,000, whichever occurs first.

EHLP also helps homeowners with past due charges, taxes, insurance, and attorneys’ fees accumulated due to their delinquency.

Homeowners can apply for EHLP through participating counseling agencies, such as NeighborWorks America.

HUD aims to help 80,000 homeowners through the program, which is available in the following 27 states and Puerto Rico: Alaska, Arkansas, Colorado, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Dakota, Oklahoma, South Dakota, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the Commonwealth of Puerto Rico.

Assistance is granted on a first-come, first-serve basis.

HUD received $1 billion for the program through the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Home Sales In West Increase 20.6% From Last July

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via: DSNews.com Krista Franks

Pending home sales decreased overall and in three of the four national regions in July, according to the National Association of Realtors (NAR) Pending Home Sales Index. However, nationally and in all four regions, pending home sales remain higher than one year ago.

The West was the only region to post a month-over-month increase. Pending sales in the region increased 3.6 percent for the month and 20.6 percent from last July.

At 110.8, the West was also the only region to surpass a ranking of 100 for the month.

NAR’s pending home sales are measured on a point scale with 100 being a historically healthy average.

The South came close to the historic average last month but slipped 4.8 percent to 94.4 for the month of July. This rate is 9.5 percent above last year’s rate.

The Midwest was third on the scale at 79.1 for the month of July. Pending home sales in the Midwest fell 0.8 percent from the previous month but have risen 18.8 percent from the previous year.

The Northeast’s pending home sales ranked lowest at 67.5 on NAR’s scale. The rate is 2 percent below last month’s rate but 9.7 percent above last year’s rate.

“Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April,” said NAR’s chief economist, Lawrence Yun.

“The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge,” Yun said.

He added: “It is now a question of lending standards and consumers having the necessary confidence to enter the market.”

NAR’s Pending Home Sales Index measures contracts but not closings. Yun notes that not all contracts become closings, so there is some discrepancy between pending sales for a month and later-reported existing sales.

Pre-Foreclosure Short Sales Jump 19% in Second Quarter

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via: dsnews.com by Carrie Bay

Short sales shot up 19 percent between the first and second quarters, with 102,407 transactions completed during the April-to-June period, according to RealtyTrac.

Over the same timeframe, a total of 162,680 bank-owned REO homes sold to third parties, virtually unchanged from the first quarter.

RealtyTrac’s study also found that the average time to complete a short sale is down, while the time it takes to sell an REO has increased.

Pre-foreclosure short sales took an average of 245 days to sell after receiving the initial foreclosure notice during the second quarter, RealtyTrac says. That’s down from an average of 256 days in the first quarter and follows three straight quarters in which the sales cycle has increased.

REOs that sold in the second quarter took an average of 178 days to sell after the foreclosure process was completed, which itself has been lengthening across the country. The REO sales cycle in Q2 increased slightly from 176 days in the first quarter, and is up from 164 days in the second quarter of 2010.

Discounts on both short sales and REOs increased last quarter, according to RealtyTrac’s study, but homes sold pre-foreclosure carried less of a markdown when compared to non-distressed homes.

Sales of homes in default or scheduled for auction prior to the completion of foreclosure had an average sales price nationwide of $192,129, a discount of 21 percent below the average sales price of non-foreclosure homes. The short sale price-cut is up from a 17 percent discount in the previous quarter and a 14 percent discount in the second quarter of 2010.

Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-distressed homes. The REO discount was 36 percent in the previous quarter and 34 percent in the second quarter of 2010.

Commenting on the latest short sale stats in particular, James Saccacio, RealtyTrac’s CEO, said, “The jump in pre-foreclosure sales volume coupled with bigger discounts…and a shorter average time to sell…all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales.”

Saccacio says short sales “give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO.”

Together, REOs and short sales accounted for 31 percent of all U.S. residential sales in the second quarter, RealtyTrac reports. That’s down from nearly 36 percent of all sales in the first quarter but up from 24 percent of all sales in the second quarter of 2010.

States with the highest percentage of foreclosure-related sales – REOs and short sales – in the second quarter include Nevada (65%), Arizona (57%), California (51%), Michigan (41%), and Georgia (38%).

States where foreclosure-related sales increased more than 30 percent between the first and second quarters include Delaware (33%), Wyoming (32%), and Iowa (30%).

Mortgage Rates Plunge to Lowest Level in Over Five Decades

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via: dsnews.com by Carrie Bay

Investors’ growing appetite for the safety of U.S. Treasury bonds in the wake of European debt troubles and domestic policy decisions aimed at jump-starting a stagnant economic recovery have driven mortgage interest rates to their lowest level in over 50 years.

Freddie Mac says both fixed- and adjustable-rate mortgages have reached all-time record lows, providing further incentive for homeowners looking to refinance.

Data released by Freddie Mac Thursday puts the average 30-year fixed-mortgage rate at 4.15 percent (0.7 point) for the week ending August 18th, a 17 basis-point drop from 4.32 percent in one week’s time.

The 15-year fixed-rate fell 14 basis points, from 3.50 percent last week to 3.36 percent (0.6 point) this week.

“Not surprising, many homeowners took advantage of this low mortgage rate environment and have already refinanced their loans,” said Frank Nothaft, Freddie Mac’s chief economist.

“The refinance share of applications averaged nearly 70 percent of all mortgage activity in the first half of this year,” Nothaft contined. “In addition, an increasing share of refinancing borrowers chose to shorten their loan terms during the second quarter.”

Adjustable-rate mortgages (ARMs) also headed lower in Freddie’s study, with the 5-year ARM falling from 3.13 percent to 3.08 percent (0.5 point), and the 1-year ARM slipping from 2.89 percent to 2.86 percent (0.6 point).

Freddie Mac’s weekly mortgage rate survey averages quotes gathered from about 125 lenders across the country.

A separate study released Thursday by Bankrate also put rates at or near record lows. The tracking firm’s results are based on data provided by the top 10 banks and thrifts in the top 10 U.S. markets.

In Bankrate’s survey, the benchmark conforming 30-year fixed-mortgage rate slipped to 4.45 percent (0.45 point), down from 4.46 percent last week.

The average 15-year fixed mortgage reset a record at 3.58 percent (0.42 point). That’s down from the 3.61 percent average reported last week.

Bankrate says the larger jumbo 30-year fixed rate fell below the 5 percent mark for the first time ever, landing at 4.89 percent. It was 5.02 percent last week.

Adjustable rate mortgages saw the biggest decreases in Bankrate’s survey, with the average 5-year ARM dropping from 3.24 percent to 3.15 percent and the 10-year ARM falling from 3.93 percent to 3.83 percent.

Renting Versus Buying in 2011

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via: California Association of Realtors www.car.org

This year California housing market conditions make a strong and compelling case for homeownership. With prices still well below the historic highs of just a few years ago and attractive mortgage rates, qualified buyers have a unique opportunity to own their own home. As seen below, a rigorous analysis of renting versus buying hears this conclusion out. As shown in the following chart, the monthly housing costs (principle, interest, taxes, and insurance or PITI) associated with buying a median-priced home of $301,430 is $1,590 (Fourth Quarter 2010 median priced home in California).  This assumes the buyer is making a 20 percent downpayment and financing with a 30-year fixed rate mortgage at 4.62 percent. In comparison, the median rent on a three-bedroom two-bath apartment with renter’s insurance in California is $1,810. That means buying a home would save the homeowner $220 per month when compared to renting and the homeowner would save over $2,600 a year.

                        click on graph for larger view  

In addition, existing tax laws allow homeowners to itemize and deduct the mortgage interest and property taxes from their taxable income. For example, compare the tax implications for two households both earning $63,430 a year, the minimum income required to purchase the statewide median-priced home of $301,430.* The household that purchases the home with a 20 percent downpayment and finances the mortgage at the current rate of 4.62 percent will receive a tax deduction of over $14,000 in the first year of ownership. The renter household will most likely utilize the IRS Standard deduction of $11,400, $2,600 less than their homeowner counterparts. The homebuyer reduces their total tax liability by $400 compared to the renter in the first year of ownership. Accounting for the out-of-pocket savings as well as the tax savings, the homebuyer saves over $3,000 in their first year of ownership.

                         click on graph for larger view

The mortgage rate is a significant factor in determining just how much a homebuyer can afford. Today’s low mortgage rate environment tips the scale—for some—in favor of buying versus renting. For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.

                       click on graph for larger view

Of course, there are many other socioeconomic benefits that homeownership brings to communities. And there are other costs associated with homeownership above and beyond the downpayment and monthly PITI. So as long as one has considered all of the costs and benefits of owning a home and is in the financial position to do so, there are some pretty compelling reasons to strive for the “American Dream.”

 

*Assumptions:

1. Underlying assumptions for the Mortgage Interest Deduction and Property Tax (1 percent of the purchase price) deduction are based on the Traditional HAI Q4-2010 assumptions of: The prevailing median price in the 4th quarter 2010 (Median Price $301,430), effective FRM interest rate of 4.62%, a 20% downpayment, and a $241,144 loan amount.

2. Incomes are based on the underlying assumptions for the Traditional HAI. The same income is used for both Renters and Buyers and is assumed to be the Minimum Qualifying Income needed to purchase a median priced home in the 4th quarter 2010.

3. Tax rate based on 2010 IRS Schedule Y-1 Married Filing Jointly in 15% tax bracket (latest available from the IRS) assuming no changes over the 5 year horizon

4. Interest deduction based on the Traditional HAI Q4-2010 underlying effective FRM interest rate
of 4.62%, a 20% downpayment, and a $241,144 loan amount.

5. Property taxes are assumed to be constant over this 5 year analysis, thereby assuming the underlying market value remains unchanged. If the home value were to increase, under Proposition 13, the property tax assessment would increase at a rate of 2 percent per year. Along these same lines, income is also assumed to be constant over this 5 year analysis in order to keep the analysis simple and determine the basic 5 -year tax benefit of buying a home in 2010.

Mortgages rates keep falling: 30-year nears record low

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

  

NEW YORK (CNNMoney) -- Just when it seemed mortgage rates weren't going to get any lower, they started testing new lows.

In the tumultuous days following Standard & Poor's debt downgrades, rates on 30-year fixed mortgages fell to 4.32%, down from 4.39% last week and closed in on a record low of 4.17% set last November, according to Freddie Mac's Primary Mortgage Market Survey.

Rates on 15-year fixed mortgages set a new record for the second week in a row, falling to 3.5%, down from 3.54% last week.

"It's a crazy time," said Doug Lebda, the CEO of online lending exchange LendingTree. "I'd say rates can't get much lower, but I was saying that last week, too."

The savings for borrowers who lock in rock-bottom rates over the length of a mortgage loan can be sizable. Take, for example, a borrower with a $200,000, 30-year loan. If their mortgage carries a 4.32% rate their monthly payment is just $992 and they make total interest payments of $157,153. However, if the rate on their 30-year fixed mortgage is 5% (ordinarily considered a low rate), they'd pay $1,074 a month and $29,357 more in interest over the 30-year period.

The low rates are sparking a rash of refinancing activity, according to the Mortgage Bankers Association. Last week, total mortgage borrowing, most of it refinancings, jumped nearly 22%. This week's activity could be even higher, according to Greg McBride, chief economist for Bankrate.com.

"Rates have been below 5.5% for two years," he said. "For most people who have refinanced or purchased since then, there's little benefit to refinancing. But when rates drop below 4.5%, then it's worth looking into."

Rates could go even lower

Treasury yields near all-time lows

Rates could drop even lower, according to Keith Gumbinger of HSH Associates, a provider of loan information.

"Low Treasury interest rates are still not being fully passed through to mortgage borrowers," he said.

While mortgage rates do not move in lockstep with Treasury yields, they are closely correlated. The yield on the 10-year bond plunged to 2.24% Thursday from 2.56% at the end of last week.

The difference between the 30-year fixed mortgage rate and the 10-year Treasury yield is usually about 1.6 to 1.7 percentage points, so a bond rate of 2.24% should mean that mortgage rates should be at 3.84% to 3.94%.

"That argues that mortgage rates could go lower," said Gumbinger. "Will the spread shrink again, though? That's hard to say."

One reason to question a further drop: S&P's downgrade of the credit ratings of Fannie Mae and Freddie Mac. The downgrade could make borrowing more expensive for the two mortgage giants, which represent, along with FHA loans, close to 90% of mortgage lending these days. And those costs may get passed along to borrowers.

Another factor is that investors in mortgage securities backed by Fannie/Freddie may stop buying mortgages if the yields fall much further. The low rates would provide too puny a return.

Investors may also balk, according to Gumbinger, because the attractive rates give borrowers less incentive to prepay their mortgages. That means investors would get stuck with a low rate of return on their investment for a long time.

To compensate for that risk, according to Gumbinger, investors may demand greater yields and keep mortgage rates a little higher, even though they are already very low indeed.

via: http://money.cnn.com  - Les Christie

Delinquencies Register Greatest Drop Since Recession End: TransUnion

TransUnion recorded the largest percentage drop in delinquencies since the end of the recession two years ago.

According to TransUnion, mortgage delinquencies improved 5.98 percent during the quarter.

Information and risk management company, TransUnion, compiles data from 27 million consumers randomly sampled each quarter.

The rate of homeowners 60 or more days delinquent declined to 5.82 percent in the second quarter of 2011.

TransUnion predicts delinquencies will continue to decline throughout the year.

“While relatively low home prices and high unemployment continue to exert upward pressure on delinquency rates, they are more than offset by the impact of more conservative lending policies reflecting consumers with higher credit scores,” said Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit.

“Not only are these consumers less likely to default if house prices continue to edge downward throughout the year, but their willingness to repay their debt obligations in the face of high unemployment rates is greater,” Martin said.

“It is because of these dynamics that lenders today take a much closer look at the borrower’s income history and overall debt situation than before the recession began in 2007,” he added.

Excluding Vermont, all states and the District of Columbia registered declines in delinquencies during the second quarter of 2011. Vermont posted an increase.

States with the highest delinquency rate in the second quarter of 2011 were Florida, Nevada, California, and Arizona.

States with the lowst delinquency rate for the quarter were North Dakota, South Dakota, Nebraska, and Alaska.

At the same time, delinquencies decreased in 79 percent of metropolitan statistical areas (MSA), an increase from the previous quarter when 69 percent of MSAs showed decreases in delinquencies.

The rate is a significant increase from one year ago when delinquencies decreased in 44 percent of MSAs.

“Mortgage delinquencies have shown six straight quarters of improvement and the pace of the improvement seems to be picking up speed. This is encouraging news,” Martin said.

“However, at their current level, nearly three times the pre-recession ‘norm,’ and the current pace of improvement, we may not see ‘normal’ delinquency rates until the end of 2015,” Martin concluded.

via: www.dsnews.com - Krista Franks

Fed Reports Slight Decline in Mortgage and Other Debt

The Federal Reserve found a small increase in consumers’ willingness to borrow and banks’ willingness to lend, according to the Household Debt and Credit Report for the second quarter of 2011 released Monday.

According to the report, most types of loans showed small decreases in balances.

Both mortgage loans and home equity lines of credit decreased by about $20 billion during the second quarter of 2011. This was a 0.2 percent drop for mortgage balances and a 3 percent drop for home equity lines of credit (HELOC).

At the end of the second quarter, the Fed calculated mortgage indebtedness at 8.3 percent below its peak.

Mortgage debt now makes up 71 percent of total household debt.

At the same time, HELOC indebtedness was 12.7 percent below its peak.

During the second quarter of 2011, about 2.2 percent of mortgages moved from performing status to delinquent. This rate has been improving for three consecutive quarters.

At the end of the quarter, 9.9 percent of outstanding debt was reportedly delinquent. This is down from 10.5 percent the previous quarter and 11.4 percent one year ago.

This was the sixth consecutive quarterly decline in delinquency, according to the Federal Reserve report.

New foreclosure filings decreased 22.8 percent from the previous quarter. In total, about 284,000 new foreclosure notes were filed in the second quarter of 2011.

“Outstanding consumer debt remained essentially flat, down just $50 billion, in what was basically a repeat of the previous quarter, said Andrew Haughwout, vice president in the Research and Statistics Group at the New York Fed.

“This is more evidence that the pace of consumer deleveraging that began in late 2008 has slowed,” Haughwout said. “During the next few quarters we will gain a better understanding of whether this is a permanent or temporary break in the decline of total outstanding consumer debt.”

via: www.dsnews.com  - Krista Franks

Market Concerns Produce New Record Low Mortgage Rates

Freddie Mac (OTC: FMCC) recently released the results of its Primary Mortgage Market Survey® (PMMS®), showing mortgage rates continuing to decline with the 30-year fixed averaging 4.32 percent marking a new low for 2011, and the 15-year fixed, 5-year ARM, and 1-year ARM averaging new all-time record lows this week.

News Facts

• 30-year fixed-rate mortgage (FRM) averaged 4.32 percent with an average 0.7 point for the week ending August 11, 2011, down from last week when it averaged 4.39 percent. Last year at this time, the 30-year FRM averaged 4.44 percent.

• 15-year FRM averaged 3.50 percent with an average 0.7 point, down from last week when it also averaged 3.54 percent. A year ago at this time, the 15-year FRM averaged 3.92 percent.

• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.13 percent this week, with an average 0.5 point, down from last week when it averaged 3.18 percent. A year ago, the 5-year ARM averaged 3.56 percent.

• 1-year Treasury-indexed ARM averaged 2.89 percent this week with an average 0.5 point, down from last week when it averaged 3.02 percent. At this time last year, the 1-year ARM averaged 3.53 percent.

For more information, visit www.freddiemac.com.

via: rismedia.com

Where To Find The Biggest Foreclosure/Short Sale Discounts

Foreclosure filings fell to a 44-month low last month nationwide.

Are Foreclosure Problems Past Their Peak?

According to RealtyTrac, foreclosure filings nationwide fell 35 percent as compared to July 2010, a statistic that hints at the ongoing housing recovery. "Foreclosure filing" is a catch-all term encompassing default notices, scheduled auctions, and bank repossessions.

Despite the improvement, though, foreclosure activity remains concentrated in just a handful of states.

Of all of July's bank repossessions, more than half came from just 6 states in the union. Those states were California (19%); Georgia (8%); Florida (7%); and 6% each from Texas, Michigan, and Arizona.

On a per-household basis, the numbers were similarly skewed. Nevada's foreclosure rate was twice the next closest state.

1. Nevada : 1 filing for every 115 households
2. California : 1 filing for every 239 households
3. Arizona : : 1 filing for every 273 households

These same three states have dominated foreclosure markets since the housing downturn began in 2007.

The national average is 1 foreclosure for every 611 households.

Selling Homes At Discounts

Distressed homes, which includes foreclosures and short sales, remain in high demand with today's buyers, account for 30% of all home resales, according to the National Association of REALTORS®.

That's no surprise, either. Distressed homes typically sell at 20 percent discounts as compared to non-distressed ones.

You can even buy them with cash, then refinance them immediately afterward because of Fannie Mae's new guidelines. Under the Delayed Financing Rule, the long-standing 6-month "waiting period"  for a cash-out refinances has been waived in full.

Click here for a mortgage rate quote.

Foreclosure Mortgage Rates

If you're buying a foreclosure or short sale, you'll need a mortgage rate quote, too. The purchase process is a little bit different (and a little bit longer) so make sure you tell your loan officer.

Also, if you own more than 4 properties, you're still mortgage-eligible, too. Again, be sure to tell your loan officer.

 

Via TheMortgageReports.com - Dan Green

Mortgage Rates Sink After Strong Jobs Report

Via: TheMortgageReports.com Dan Green

Is the job market better than they say?

"Strong" Rebound For Payrolls

 

The latest Non-Farm Payrolls survey  shows 117,000 net new jobs created in July. The figure handily beat analyst estimates and surprised Wall Street investors.

In addition, the Bureau of Labor Statistics looked back at May and June's originally-reported figures and revised them both higher:

• May 2011 was revised higher by 28,000 jobs
• June 2011 was revised higher by 28,000 jobs

In other words, news of a sagging jobs market may have been grossly overstated; the jobs market may have been healthier than for what it's been given credit.

Unemployment slipped to 9.1 percent to July.

Mortgage Rates Rally

The jobs report's strong readings would typically be a boon to stock market and a threat to mortgage rates.

This is because more employed Americans means more disposable income spent on products and services; and more taxes paid to governments at the federal, state and local level, a combination that fuels consumer spending and supports new job growth.

It's a self-reinforcing cycle that spurs economic growth and draw investors to equities.

This month, however, the market reaction has been different.

Since the Friday release of the July Non-Farm Payrolls report, the Dow Jones Industrial Average has lost close to 6 percent of its value. Furthermore, mortgage bonds -- which typically sink on a strong jobs figure -- have thrived.

High demand for bonds has pushed rates down.

Lowest Rates In History

If you've been shopping for a mortgage, or recently bought a home, use this week's action to your advantage. Mortgage rates have dropped to an all-time low. Finally.

Gorgeous Craftsman Remodel Open House in San Diego

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

OPEN HOUSE

Saturday & Sunday

August 6 - 7 Noon - 3 p.m.

4494 40th Street, San Diego, CA 92116

No detail has been overlooked on this incredible 2bdrm (optional 3rd), 2 full bathroom with garage remodel in Normal Heights - New roof, new hardwood flooring throughout including travertine flooring in kitchen and baths, granite counter tops, new cabinetry, paint inside and out, new windows, new garage door, new landscaping, the list goes on!  Everything new while still maintaining its original charm and character! Located on a corner lot across the pedestrian bridge to Kensington, this home is a must see! 

MLS#110043640

Brought to you by The Property Shop Team - Prudential CA

Open house contact:

Allan Figi, Realtor
The Property Shop Team
Prudential Ca Realty
890 Washington St
San Diego, CA 92103
858-761-1385cell
619-299-8020 office
619-298-0925 fax
Allan.Figi@prusd.com
www.ThePropertyShopTeam.com
DRE LIC#01794865

How Low Are Current Mortgage Rates? 3 Convincing Answers

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

via: www.Money-Rates.com - Richard Barrington | Money-Rates Columnist

There can be a fair amount of hype associated with products like mortgages, so when you hear a phrase like "current mortgage rates are historically low," how seriously should you take it?

 

It turns out that there are at least three reasons you should take it very seriously indeed. Current mortgage rates are historically low in three distinct ways:

1. Current mortgage rates are barely half of their historical average. Since the early 1970s, 30-year mortgage rates have averaged 8.86 percent. Current mortgage rates, at 4.50 percent for 30 years, are just over half that average, and barely above the all-time low of 4.23 percent.
2. Current mortgage rates are low compared to inflation. Like any interest rate, mortgage rates have to be considered in the context of inflation. There are, after all, two components to an interest rate: an inflation assumption, which is merely an attempt by the lender to get the same purchasing power back when the loan is repaid, and a premium over the inflation assumption, which is the real (i.e., after inflation) profit the lender hopes to earn. Historically, that premium over inflation has averaged 4.42 percent. Given the 3.6 percent inflation rate over the past year, at 4.50 percent current mortgage rates represent a premium over inflation of under 1 percent, or less than one-fourth the historical average.
3. Current mortgage rates are even low relative to themselves. You have a choice between a 30-year and a 15-year mortgage. As low as current 30-year rates are, 15-year rates represent an even better bargain. Since the early 1990s, 15-year mortgages have typically been 0.46 percent lower than 30-year mortgages. Now, they are 0.83 percent lower. In no year has the discount for a 15-year mortgage exceeded an average of 0.66 percent, so 15-year mortgages are in especially rare territory right now.

If you are thinking of buying a house or refinancing a mortgage, there are many factors to consider. One thing you can be sure of, though, is that current mortgage rates really do offer an exceptional opportunity.

DataQuick: Prices up in 38 of 92 zip codes

via DataQuick - SignOnSanDiego by Lily Leung

Thirty-eight of 92 San Diego County ZIP codes in DataQuick's monthly real estate report show increases in median price for June.

That finding covers sales of all home types, including single-family resales, condo resales and new homes.

Was your neighborhood among the areas that saw price increases for June?

All sales for June, San Diego County

Rank	Neighborhood	ZIP code	Sold '10	Sold '11	Median '10	Median '11	Pct. Change
1	San Ysidro	92173	21	8	$130,000	$245,000	88.5%
2	Descanso	91916	1	2	$190,000	$299,000	57.4%
3	Jamul	91935	5	7	$385,000	$594,000	54.3%
4	Bonsall	92003	3	9	$265,000	$360,000	35.8%
5	Rancho Santa Fe	92067	13	3	$1,950,000	$2,587,591	32.7%
6	Escondido South	92025	36	30	$249,250	$330,000	32.4%
7	Del Mar	92014	15	23	$915,000	$1,162,500	27.0%
8	Lakeside	92040	39	48	$222,000	$276,750	24.7%
9	North Park	92104	49	48	$216,000	$263,500	22.0%
10	Warner Springs	92086	1	1	$120,000	$145,000	20.8%
11	Hillcrest/Mission Hills	92103	38	35	$435,000	$525,000	20.7%
12	Rancho Bernardo West	92127	108	99	$563,500	$651,000	15.5%
13	Chula Vista Northeast	91914	35	30	$445,000	$510,000	14.6%
14	Mira Mesa	92126	75	59	$318,500	$360,000	13.0%
15	Fallbrook	92028	75	58	$330,000	$372,500	12.9%
16	Logan Heights	92113	31	29	$137,500	$153,000	11.3%
17	Campo	91906	7	4	$137,500	$152,000	10.5%
18	San Marcos South	92078	61	94	$380,000	$418,500	10.1%
19	Pauma Valley	92061	1	2	$357,000	$392,500	9.9%
20	La Jolla	92037	67	55	$855,000	$925,000	8.2%
21	Carlsbad Northeast	92010	18	36	$500,000	$537,500	7.5%
22	Paradise Hills	92139	47	37	$210,000	$225,000	7.1%
23	Carlsbad Southeast	92009	100	77	$618,500	$660,000	6.7%
24	Escondido North	92026	62	62	$300,000	$320,000	6.7%
25	Tierrasanta	92124	29	22	$420,000	$442,000	5.2%
26	San Carlos	92119	24	37	$377,500	$396,000	4.9%
27	Oceanside East	92056	61	78	$278,000	$290,000	4.3%
28	Morena	92110	20	31	$295,000	$307,500	4.2%
29	Alpine	91901	31	20	$402,500	$416,500	3.5%
30	Vista East	92084	37	31	$300,000	$310,000	3.3%
31	Chula Vista/Eastlake/Otay Ranch	91913	113	92	$310,000	$320,000	3.2%
32	City Heights	92105	54	41	$182,500	$188,000	3.0%
33	La Mesa Grossmont	91942	39	42	$270,000	$277,000	2.6%
34	Spring Valley	91977	71	58	$265,000	$271,500	2.5%
35	Encinitas	92024	45	59	$577,500	$591,500	2.4%
36	San Marcos North	92069	59	49	$332,250	$340,000	2.3%
37	Chula Vista Northeast	91910	67	57	$302,000	$305,000	1.0%
38	Nestor	92154	81	65	$247,500	$249,000	0.6%

And here are the neighborhoods that saw the biggest drops in price for June.

All sales for June, San Diego County, bottom

Rank	Neighborhood	ZIP code	Sold '10	Sold '11	Median '10	Median '11	Pct. Change
83	Rancho Bernardo East	92128	109	80	$423,000	$322,500	-23.8%
84	Mission Beach/Pacific Beach	92109	40	52	$662,250	$485,000	-26.8%
85	University City	92122	37	48	$400,000	$285,000	-28.8%
86	Oceanside (Central)	92058	34	20	$280,000	$197,000	-29.6%
87	Solana Beach	92075	37	34	$1,222,000	$814,000	-33.4%
88	Borrego Springs	92004	13	9	$177,000	$107,500	-39.3%
89	Jacumba	91934	2	3	$148,545	$89,500	-39.7%
90	Rancho Santa Fe post office	92091	2	11	$2,562,500	$1,350,000	-47.3%
91	Julian	92036	5	5	$350,000	$136,500	-61.0%
92	Boulevard	91905	2	1	$172,500	$47,500	-72.5%

Source: DataQuick

Return to SignonSanDiego.com for more coverage of DataQuick's June numbers. Reach reporter Lily Leung at lily.leung@uniontrib.com or 619-293-1719. Follow her on Twitter @LilyShumLeung and on Facebook.

 

How To Become A Master Marketer - Power Of The Product

The first step in becoming a master marketer is to choose the right company. No matter how committed you are and how hard you are willing to work, your ultimate success hinges on choosing a company with a great track record, a clear, long-term vision, strong management, an equitable compensation plan and perhaps most importantly, a cutting-edge, consumable product that is second to none.

I'm going to focus on the importance of choosing a company that is product driven. I can't overstate the fact that unless you are with a company offering high quality, consumable products, there is no residual income! You want lifetime customers - people who order your products every single month. Ideally, your company has an auto-ship program so your customers get their products automatically. And even if those lifetime customers never introduce a single person to your relationship marketing opportunity, you will still earn a commission each and every month that he or she orders more of your products. It is a simple concept. Once you understand the power behind the concept, you are on your way to making a fortune in this industry.

Let me share with you why USANA Health Sciences is first and foremost a product-driven company. USANA has been able to sustain steady growth due to the fact that USANA has built its foundation on quality products and dedicated scientific research. The USANA nutritional product line is based on the scientific reality that healthy cells equal healthy bodies. USANA was founded and is directed by a scientist, Dr. Myron Wentz, whose background is in immunology and microbiology.

USANA's scientific team of researchers has developed the USANA products using scientifically derived formulas and the finest raw materials available. USANA’s in-house facility has gained Drug Establishment Registration with the U.S. Food and Drug Administration (FDA). Operating an FDA-registered facility brings with it an increased amount of scrutiny. While other companies are required to follow the FDA’s less stringent nutritional supplement standards, USANA’s facilities can and will be inspected by the FDA under pharmaceutical guidelines—the FDA’s highest possible standard for manufacturers. Every step of the manufacturing process—from the handling of raw materials to tableting—will now be required to comply with these strict guidelines.

USANA has been voluntarily adhering to these exacting standards for years. Our compliance with pharmaceutical-grade Good Manufacturing Practices (GMPs) means no changes will need to be made to the manufacturing processes in order to comply with the increased FDA scrutiny.

The FDA registration is another statement of USANA’s unwavering confidence in the quality of its products — a statement you can happily share with your family, friends and neighbors.

Here are just a few more of the reasons USANA's products are superior:

#1 - USANA PRODUCTS WORK! You don't need to understand how electricity works to turn on the lights. Take these powerful products every single day and notice how they work for you.

#2 - USANA IS PRECISELY BALANCED. There is no guesswork involved. The USANA nutritional line has been developed by a pioneer in cellular research to be a simple, complete system.

#3 - THE AMOUNTS OF INGREDIENTS USED IN THE USANA PRODUCTS ARE AT OPTIMUM LEVELS. Compare the ingredients in the USANA products with what you are currently taking. My guess is - you won't believe your eyes!

#4 - USANA HEALTH SCIENCES CONTROLS THE MANUFACTURING PROCESS TO GUARANTEE POTENCY AND PURITY. If you want it done right, do it yourself!

#5 - USANA PROVIDES EXCELLENT VALUE. USANA has thousands of Preferred Customers who don't participate in the business opportunity but who simply want to be on the USANA products. USANA products are a great dollar for dollar value.

I have seen USANA products impact the health of people all over the world. The same is going to be true for you as you begin taking the USANA products yourself and begin introducing them to the people you know and love. Before you know it, building your USANA business will become much more than a money-making proposition. You will be sharing a vision of true health with thousands of other associates around the world. You will begin to feel the personal rewards that come from making a difference. It's powerful.

So how do you build your own belief so that you can, with confidence, share that belief with others?

First, educate yourself about the USANA products. If you are not currently a USANA distributor and would like a free USANA Product Catalog, please call me at 800-813-0399.

Next, visit the following links:

USANA's website

Take a look at our opportunity "The Solution"

Most importantly, begin taking the USANA products as soon as possible! Take a proactive approach to your own health and become your own product testimonial.

I hope you have found this information useful. If you would like more information, please leave a message at (800) 813-0399 or email me at Allan@TeamFigi.com.

Life is Good! Make it Successful!

Allan Figi
USANA Independent Associate
Lifetime Platinum Pacesetter

Why it's time to buy real estate....

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

By Ruth Simon and Jessica Silver-Greenberg , The Wall Street Journal

Back in June 2006, when the housing market peaked, the prospect of a five-year national housing bust seemed unimaginable to most people. And yet here we are, with the latest Standard & Poor's Case-Shiller index showing that prices hit new bear-market lows, falling back to 2002 levels nationally and to 1990s levels in some battered regions.

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years: According to Moody's Analytics, the ratio of home prices to income is now 20.9% lower than the 15-year average through 2010, and 12.5% lower than the 1989-2004 average. A historic glut of homes, meanwhile, has created a buyer's market: There were about 15 million vacant homes in the U.S. last year, according to John Burns Real Estate ConsultingInc.—some 3.1 million more than normal.

Such conditions might not last long. Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse. Meanwhile, demographic indicators such as "household formation"—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

The upshot: "While we might not see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound," says Anthony Sanders , a real-estate finance professor at George Mason University.

The short-term outlook isn't encouraging. Job growth remains weak, foreclosure sales are making up more of the market, and economists are predicting that home prices will fall more in the coming months.

But the long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.

So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.

Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn't battered by foreclosures, you may be close to a bottom already.

"The regular marketplace is hanging tough," says CoreLogic chief economist Mark Fleming .

Here is a look at five key factors that will govern local markets over the next several years:

Demographics The rate of "household formation" is expected to climb in coming years.

Affordability In several markets, it's becoming cheaper to own than to rent.

Employment The strength of the housing recovery depends on job growth.

Lending As rates hover near historic lows, experts expect banks to ease borrowing standards over time.

Psychology If prices stabilize, it could tip the balance away from fear and pull more buyers back into the market.

Demographics

But household formation increased to nearly 950,000 last year, says Moody's, and should average 1.2 million over the next decade.

That, combined with increased obsolescence and higher demand for second homes, should begin sopping up excess inventory in much of the country over the next two years, Moody's says.

"Whatever the excess supply of housing is, it is shrinking pretty fast," says Thomas Lawler , an independent housing economist.

Some of the uptick in household formation is likely to come from the leading edge of the echo baby boomers, who have been waiting for the economy to recover before striking out on their own, says William Frey , a demographer with the Brookings Institution. That is likely to fuel an increase in demand for both rental apartments and starter homes.

The portion of people moving across the country has fallen to the lowest level since World War II, he adds. That is a sign that many people have put their lives on hold because of the weak economy.

"When things do pick up, there will be this pent-up demand for everything involved with starting a household," Mr. Frey says.

Of course, when prices in healthier regions begin to rise, many would-be sellers who have sat on the sidelines could begin putting homes on the market, muting the price gains at first, says Susan Wachter , a professor of real estate and finance at the University of Pennsylvania's Wharton School. Even so, she expects home prices to stabilize and begin to strengthen over the next two or three years.

 

There also are some powerful demographic cross-currents worth considering. The first baby boomers turned 65 in January, an age when demand for new homes falls and many begin to think about downsizing. "The baby-boom generation pushed prices up as they got older," says Dowell Myers , a professor of urban planning and demography at the University of Southern California. But in the coming years, "boomers will start flooding the market on the supply side" with larger homes, while fueling new demand for smaller properties with more services and amenities.

Affordability

Rising home prices made renting cheaper than buying in many parts of the country. But that dynamic has begun to change: Housing affordability, as measured by the ratio of median home prices to median household incomes, has fallen below pre-housing bubble levels in just over two-thirds of the country, according to an analysis of more than 380 metro areas by Moody's Analytics.

Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won't be the case for long. Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., according to Moody's Analytics. In other markets, including Dallas, Las Vegas and Sacramento, Cailf., the equation is likely to soon turn in favor of homeownership if current trends persist, the firm says.

In Ann Arbor, Mich., where home prices fell 11.2% between 2007 and 2010, according to Fiserv Case-Shiller, housing affordability has risen well above historical levels, according to Moody's Analytics.

That is good news for home buyers such as Steven Upton , a 42-year-old photographer, who in June will close on four-bedroom brick house on 10 acres in an upscale community in Ann Arbor. Mr. Upton paid $400,000 for the home, which previously listed for $600,000. "It's a tremendous deal," he says.

Before buying a house, it is wise to compare rental prices for similar properties. To be ultraconservative, wait until the monthly outlays, including taxes and insurance, are equal. You also could factor in the tax savings of owning, which would make buying more attractive even if the gross monthly outlay is slightly higher.

Employment

The strength of the housing market depends largely on the economy. Rising incomes and increased employment tend to give more would-be buyers confidence and buying power. For now, job growth remains sluggish: On Friday the Labor Department reported that just 54,000 jobs were created in May, far below expectations.

But signs of how a stronger job market could fuel housing demand are evident in the Dallas metro area, which added 83,100 new jobs in the 12 months ending in April—the largest gain in the nation, according to the Bureau of Labor Statistics. Dallas never had a big housing boom or bust and has benefited from trade with Mexico, a strong telecommunications sector and a central location.

 

The opportunities for a job with more responsibility drew Duane and Linda Elmer to Dallas from Des Moines, Iowa, where Mr. Elmer was a banker for nine years. The couple has agreed to pay $415,000 for a four-bedroom, four-bath house with a Jacuzzi and pool. Their Des Moines home, purchased nine years ago for $410,000, is on the market for $390,000. "We are willing to take the loss for the opportunity to live in a more diverse community and to take a job with greater breadth of responsibilities," Mr. Elmer says.

Borrowers like the Elmers who are relocating for job opportunities are a big driver of home sales in nearby Plano, Texas, says Harry Ridge , a real-estate agent. He says such sales accounted for 20% of his business last year.

A similar influx of job seekers is fueling housing demand in the Washington area, where 25,700 new jobs were added in the 12 months since April 2010. Washington was the only one of the 20 cities tracked by Standard & Poor's and Case-Shiller that saw home prices rise both on a month-to-month and year-over-year basis.

Credit

Mortgage financing remains plentiful for borrowers with good credit scores and solid employment histories. But for borrowers who don't fit traditional lending standards, getting a loan can still be nearly impossible. In the first quarter, about 10% of banks tightened standards for nontraditional loans, according to the Federal Reserve. Meanwhile, higher down-payment standards are locking some would-be buyers out of the market. Just 35% of renters have the minimum 3.5% down payment needed for an FHA loan on the median-priced home in their market, according to a recent survey by Zelman Associates.

Credit is likely to remain tight for at least the next six months, says Clifford Rossi , a former Citigroup C +0.99% Inc. consumer-lending executive who teaches at the University of Maryland.

But conditions should improve over time, he says: "There's no question that it will gradually get easier."

That will be welcome news to borrowers like Greg Silver. The 50-year-old real-estate developer would like to buy a second home, but hasn't been able to secure a jumbo mortgage because his income consists of capital gains from sales of the properties he develops. Mr. Silver closed three sales in the past 12 months, netting him a total of more than $25 million, but didn't record any capital gains in 2008 and 2009. Sure, he could use some of that cash to buy a home outright, but he would prefer to mortgage it, get the tax deduction and keep his cash free for business purposes.

"It's a little devastating," says Mr. Silver, who is living in Greenwich, Conn.

Psychology

The long-term case for buying over renting remains in force. Yet nowadays, "People are simply scared," says Aaron Galvin , chief executive of Luxury Living Chicago, which finds rental apartments for wealthy clients.

Mr. Galvin says he has seen a 30% increase in business in the last year, driven by would-be home buyers who can afford to purchase a property but are choosing not to do so.

The portion of Americans who believe homeownership is a safe investment dropped to 66% in the first quarter from 83% in 2006, according to Fannie Mae, the government-controlled mortgage company.

But it isn't clear whether the fear will result in a prolonged change in attitudes, as during the Great Depression, or have little long-term impact, as was the case for the housing bust that shook California and the Northeast in the late 1980s and early 1990s. Eighty-seven percent of people surveyed by Fannie Mae said they preferred owning to renting, though access to schools, control over one's environment and other quality-of-life issues now are seen as the key benefits of homeownership, with building wealth and other financial factors viewed as less important. In addition, 67% of renters surveyed by Zelman Associates said they planned to buy a home in the next five years.

Jeffrey Connor may be a bellwether for the future of the housing market. The 40-year-old finance director at a corporate law firm says he thought briefly about buying a house when he moved to Chicago from Washington in October. But he opted instead to rent a luxury two-story apartment in downtown Chicago for $3,559 a month. Mr. Connor says it will take substantial job growth and a sharp drop in foreclosures to convince him to buy.

"The market is clearly soft," he says, "especially when we consider it good news that the unemployment rate is hovering around 9% instead of 10%." Mr. Connor says he isn't worried about missing out on today's low interest rates and will consider buying once unemployment falls to 6%.

Other buyers are showing less willingness to wait for the absolute perfect time to buy. Doug Yearly , chief executive of luxury builder Toll Brothers TOL +0.08% Inc., told investors in May that "some of our clients, after waiting so long, are starting to move off the fence and into the market, motivated by attractive pricing, low interest rates and, most important, the desire to take the next step in their lives. The family with elementary-school kids and a puppy when the housing debacle began five years ago now has middle-school kids and the dog weighs 80 pounds."

Write to Ruth Simon at ruth.simon@wsj.com and Jessica Silver-Greenberg at jessica.silver-greenberg@wsj.com  

Investing in rentals could be a good move

CHICAGO (MarketWatch) — As home prices fall and rents rise, some investors are plunking their money into real estate, chasing the cash flow that comes along with becoming a landlord.

“For the first time in a long time, you can buy that home and can get a cash-on-cash return immediately,” said William King, director of valuation services for Veros Real Estate Solutions, a supplier of housing data to the country’s largest banks, as well as government organizations. “There are a lot of places in the country where an investor can buy a single-family home, rent it, and get a positive cash flow.”

In fact, investors bought 20% of all the homes sold in April, according to the National Association of Realtors. Some of them are buying with cash.

But even if they do finance part of the purchase, they’re able to turn around a profit much quicker than they would have been able to in the past, King said. And the return on rentals can be much better than returns on other investments these days, he added.

In the past, investors would subsidize their monthly payments on a property with the rent they were able to collect, and the big payoff was the price appreciation he or she would accumulate, he said. Now, investors can come in with a 25% or 30% down payment, finance the rest, and the rent they collect often can cover the mortgage payment, taxes and insurance — with additional cash left over, he said.

“Investors are looking at these properties on a monthly income generating basis,” said Alex Villacorta, director of research & analytics at Clear Capital, a firm that provides data for real-estate asset valuation and risk assessment to financial services companies. “They can start to realize instant profit margins, even as the market goes down more.”

“There’s a turning point where the cost of owning a home is less than the cost of renting,” he said. “When that disparity grows … we will see a push from investors to pick up investment properties.”

In general, that investors are beginning to snap up rental properties is a good thing for the stabilization of housing markets, King said. It’s also one of the ways that a floor on real-estate prices can be established; as more investors spot opportunities in residential markets, prices could bottom.

“Once investors come into a community, you’re seeing the beginning of the end of the decline,” King said.

What to look for

Before investing in a rental, make sure you’ve considered the harsh realities of becoming a landlord, said Mike Litzner, broker and owner of Century 21 American Homes, which has locations in Long Island, Queens, Nassau and Suffolk Counties. He’s also a landlord.

“There are some people who think it’s glamorous, but when you get the wrong tenants, it can be a nightmare,” he said. That said, when you get the right tenants and the properties perform as expected, it can be a “tremendous” way to make a buck — and he believes the “smart money” is now working its way into the marketplace.

Before considering any purchase, decide if you have it in you to be a landlord. You have to be willing to set expectations and consequences to ensure rents are paid on time, and you have to ready for the possibility of evicting non-paying tenants, he said. Plus, you’re responsible for the upkeep of the property, no matter how your tenants treat it.

From there, it’s a numbers game. Get a sense of what rents are in the area you’re considering, the vacancy rate, and consider your costs of financing, Villacorta said. Don’t forget the other costs of owning a property, including taxes and upkeep. Some investors may want to enlist the help of a real-estate agent to assist with analyzing the market.

Remember, often the best investment is a home you wouldn’t necessarily buy to live in yourself, Litzner said. These days, foreclosures can be snapped up at bargain prices, and as long as you have the means to make required repairs, they can represent good opportunities.

“Don’t buy the most expensive house in the neighborhood,” King said, “and look at the broader community. Where are the renters going to come from, and what do they do?” Areas near colleges and military installations can be good places to invest; and think about what renters typically look for, including access to public transportation, he said.

Some of the houses bought in the worst conditions ended up being the best investments for Litzner, who was able to put some sweat equity into the homes before renting them out. It’s also important that investors have multiyear plans for the properties they buy, planning the financials at least 5 years into the future, he said.

Best markets

Many investors sink their money into properties not far from where they live. Those are likely the communities they’re most familiar with, and from a management perspective, you’re never far from the tenants you’re dealing with.

But some markets are better than others to invest in right now.

A recent report from Inman News, an online real-estate industry publication, named the 10 best markets for home investors. These are markets with traits including high affordability, low prices, high share of foreclosure sales, high population growth, improving unemployment rate, and high return on investment in the next 10 years.

The following are their top 10 markets:

1. Indianapolis-Carmel, Ind.

2. Winchester, Va.-W.Va.

3. Gainesville, Fla.

4. Tucson, Ariz.

5. Tallahassee, Fla.

6. Hagerstown-Martinsburg, Md.-W.Va.

7. Salt Lake City

8. Richmond, Va.

9. Gainesville, Ga.

10. Winston-Salem, N.C.

By Amy Hoak, MarketWatch

Amy Hoak is a MarketWatch reporter based in Chicago.

 

 

Copyright © 2011 MarketWatch, Inc. All rights reserved.

Precursor to Existing-Home Sales Heads Higher

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

 

 By Carrie Bay via DSNews.com

Pending sales of existing homes rose again in March, according to data released Thursday by the National Association of Realtors (NAR).

The trade group’s monthly reading of contract signings – which is a forward-looking indicator of where sales of previously owned homes will likely be within one to two months – rose 5.1 percent in March.

With distressed properties now accounting for nearly half of the market’s sales activity, the pending sales reading points to an increase in REO and short sales in the coming months.

NAR described its latest assessment as another sign that the market’s recovery is proving to be “uneven, but a notable improvement.”

The trade group’s measurement of contract activity has risen in six of the past nine months. Reports of actual sales of previously owned homes have exhibited the same ups and downs.

“Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own,” said Lawrence Yun, NAR’s chief economist.

“The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards,” Yun added.

Contracts signings rose last month in every region of the country except the Northeast, where the pending sales index dropped 3.2 percent from the previous month, NAR said.

In the Midwest the index rose 3.0 percent in March. In the West pending home sales increased 3.1 percent, and in the South they jumped 10.3 percent.

“Based on the current uptrend with very favorable affordability conditions, rising apartment rents, and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes,” Yun said.

He explained that with more homes sold in the lower price range, it will ultimately translate to further declines in price trends.

“The good news,” Yun added, “is that recent homebuyers are staying well within budget, leading to exceptionally low loan default rates among homebuyers over the past two years.”

Distressed Properties Claim 40% of Existing-Home Sales

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

Via: DSNews.com

Distressed homes – typically REOs and short sales – accounted for 40 percent of the existing homes sold in March, the National Association of Realtors (NAR) reported Wednesday.

The trade group notes that these properties generally sell at discounts in the vicinity of 20 percent. Their large market share served to dampen the median existing-home price. For all housing types, it came in at $159,600 last month, down 5.9 percent from March 2010.

Overall, sales of previously owned homes rose 3.7 percent last month as the spring buying season began to take hold. NAR described March’s reading as “continuing an uneven recovery,” following the 9.6 drop recorded in February.

Lawrence Yun, NAR’s chief economist, expects the improving sales pattern to continue.

“Existing-home sales have risen in six of the past eight months, so we’re clearly on a recovery path,” he said. “With rising jobs and excellent affordability conditions, we project moderate improvements into 2012, but not every month will show a gain – primarily because some buyers are finding it too difficult to obtain a mortgage.”

“For those fortunate enough to qualify for financing, monthly mortgage payments as a percent of income have been at record lows,” Yun added.

The March numbers put the annual sales rate at 5.10 million in March, up from a revised 4.92 million in February, but below the 5.44 million pace in March 2010.

NAR notes that sales were at elevated levels from March through June of 2010 in response to the federal homebuyer tax credit. Immediately following its expiration, existing-home sales bottomed last July, and been on a slow but fairly steady path ever since.

“Although home sales are coming back without a federal stimulus, sales would be notably stronger if mortgage lending would return to the normal, safe standards that were in place a decade ago – before the loose lending practices that created the unprecedented boom and bust cycle,” Yun said.

He says given that the Federal Housing Administration (FHA) and Veterans Affairs (VA) government-backed loan programs turned a modest profit over to Treasury last year, and have never required a taxpayer bailout, low down payment loans should continue to be made available for consumers who have demonstrated financial responsibility.

A parallel NAR practitioner survey shows first-time buyers purchased 33 percent of homes in March, compared with 34 percent in February. They were 44 percent in March 2010.

All-cash sales were at a record market share of 35 percent last month, up from 33 percent in February and 27 percent in March 2010.

Investors accounted for 22 percent of sales activity in March, up from 19 percent both the month before and a year earlier.

Today's Real Estate Market a 'Once-in-a-Generation Opportunity'

Click Here And Let Allan Figi Be YOUR Personal Shopper Today

 

Via DSNews.com

Greg Rand, a 20-year real estate veteran and CEO of OwnAmerica, says now is the time to invest in real estate.

Rand compares the current market to the years following the Great Depression when market conditions sparked a boom that sustained 65 years of appreciation in real estate.

“This economic crisis, while similar to the Great Depression, is also unique in the way that the housing market played a central role,” Rand said. “It is true that this is a once-in-a-generation crisis. It is also true that this is a once-in-a-generation opportunity. It’s time to focus on the other side of the coin.”

According to Rand, a little optimism can go a long way toward spurring real estate back to life.

“There is a very real economic force called irrational pessimism that is the cause of much economic hardship, not the effect,” he said.

“More people are unemployed because successful businesses are afraid to expand. More people are losing homes they can afford because they are underwater and believe their home will never appreciate again. People with job security are convinced they don’t have it and live in fear,” Rand explained.

He insists, “Irrational pessimism is one reason why today’s situation runs so parallel to the Great Depression.”

Rand contends there is no housing meltdown. Rather, there was a media and Wall Street meltdown centered on a predictable housing correction.

The real estate market changes hourly, he says, and investing in real estate is a matter of watching the trends.

“It comes down to the idea that no matter how the markets change, no matter which way the winds shift, people will always need a place to live,” Rand said. “That’s been true of America since the first log cabin.

“If you plug into that concept and leave fear in a box on the shelf, you can be ahead of the curve and ride the wave of the trends that matter,” according to Rand.

OwnAmerica is a Web-based resource for real estate investors and investment advisors headquartered in New York.

Rand is also on WABC Radio, a regular commentator on the Fox Business network, a columnist for Real Estate magazine, and author of the book “Crash-Boom” from Career Press.