American Trust Escrow

Archive for the 'Real Estate News' Category

Foreclosure Timelines are Growing Longer According to Recent Reports

Both RealtyTrac and Moody’s Investor Service are in agreement that foreclosure timelines are growing longer. In fact, they say that all loan servicers experienced an extension in foreclosure timelines during the fourth quarter of 2012. This was especially true in judicial states, which helped to drag down the overall average.

In states like New Jersey, Florida, Pennsylvania, and Ohio, loan servicers continue to work through a massive backlog of foreclosures. According to Moody’s, these states were some of the slowest states during the fourth quarter. GMAC recorded the longest foreclosure timeline in all loan categories because of their high concentration of foreclosures in judicial states.

For residential mortgage-backed securities, the report also discussed the importance of net present value (NPV) models in the loss mitigation process. Moody’s said, “The NPV model and related assumptions used by mortgage loan servicers play a critical role in a servicer’s decisions about defaulted loans.” NPVs can vary in accuracy though, so they have advised servicers to “update their model inputs according to the most recent reliable information available.”

During the fourth quarter, REO timelines remained relatively unchanged. Moody’s did point to shorter REO timelines in California and Florida though, two states that saw a large uptick during the real estate market crisis. Moody’s adds, “We expect REO liquidation timelines to improve at a slow and steady pace going forward as the broader housing market improves as well.”

Underwater Borrowers Have More Time to Refinance

Exciting news for underwater homeowners who have yet to refinance… The Obama Administration’s popular Home Affordable Refinance Program (HARP), which was scheduled to end at the end of this year, has been extended through 2015.

The Federal Housing Finance Agency (FHFA) announced earlier this month that their decision was made in hopes that more underwater borrowers who are current with their mortgage can benefit from lower interest rates. The FHFA plans to launch a nationwide campaign to promote HARP and motivate consumers to explore their options within the program’s parameters.

As of January 2013, more than 2.2 million borrowers have already refinanced through HARP since its inception in April 2009. What’s more, the Los Angeles Times reported on April 11, 2013, that “about 2.7 million underwater homeowners remain eligible for HARP loans, according to online lender Quicken Loans, which said the average savings from a HARP refinance is around $200 a month with an average rate reduction of 1.75 percentage points.”

The FHFA says the extension will allow more borrowers the opportunity to refinance, while reducing risk for Fannie Mae, Freddie Mac and taxpayers.

HARP is available to certain borrowers whose loans are owned or guaranteed by Fannie Mae and Freddie Mac, the government-controlled home finance companies that back about two-thirds of all residential mortgages.

To see the full official release on the HARP extension and review the program’s criteria, go to: http://www.fhfa.gov/webfiles/25112/HARPextensionPRFINAL41113.pdf.

Homeowners Cashing-In on Higher Home Values and Relocating

Many homeowners are taking advantage of their higher home values by cashing out and relocating to where jobs are more plentiful. According to Challenger, Gray & Christmas, Inc., a nationwide outplacement firm, home values have risen to a point where previously underwater homeowners are finally able to sell once again. The report states that 2013 may be the busiest year yet for job-specific relocations.

John A. Challenger, CEO of the firm, said, “One factor that has kept unemployment rates high has been the inability of underwater homeowners to relocate for employment opportunities. With home prices bouncing back, even those who may now simply break even on a home sale might consider moving to a region where jobs are more plentiful. This could spark a more rapid decline in the unemployment rate over the next year.”

Unsurprisingly, homeowners are happy to be out from underneath the negative equity that all but handcuffed them to their homes during much of the recession. But employers also stand to benefit from the dearth of skilled employees who can finally move about the country freely and apply for open positions.

For skilled workers around the country who found themselves jobless during the recession, the ability to move to where the jobs are is finally a step toward personal financial recovery. Challenger said, “It is likely that employers in low-unemployment regions are actually struggling to find available workers with the skills needed to fill job openings.”

The Challenger, Gray & Christmas, Inc. report found that 13.3% of people seeking employment each quarter in 2012 relocated for a job opportunity.

 

Pulling at the Heartstrings of Sellers is New Buyer Tactic

Inventory levels continue to be a challenge throughout the real estate market, and many buyers are employing a new tactic when it comes to getting the attention of sellers: pulling at their heartstrings. As competition heats up during the busy spring and summer periods, buyers are finding it increasingly difficult to stand out in a sea of interested people. Prices are on the rise, but that is the least of buyer’s concerns. The real issue is how to get a seller’s attention.

Incidentally, many buyers are writing heartfelt letters to sellers describing why their home is the perfect one. Their hope is that it will make the decision easier for sellers, and this particular method seems to work well for buyers with children who are purchasing from sellers in the same boat. From personal photos to tokens of appreciation that appeal to the seller, buyers don’t seem to have any shame when it comes to pitching their situation.

In fact, one seller commented on how he received a letter explaining how his home’s spacious layout would be perfect given the imminent arrival of the buyers’ first child. The father of a toddler adds, “I felt very comfortable with these people. I really wanted this place to go to somebody in a similar situation.”

But this is just the latest sign that the real estate market is finally on stable footing once again. Love letters, as they’re commonly referred to, were commonplace during the pre-recession real estate boom. The trouble is that money just doesn’t talk in all markets anymore since most buyers are on a level playing field with one another when it comes to financing. It’s a traditional supply and demand scenario, and as home prices continue to rise, sellers can expect to see even more of these boom era tactics showing up in their mailboxes and taped to their front doors.

 

Trophy Properties Fetching Top Dollar Across The Globe

The first quarter of 2013 proves that fabulous homes still garner equally spectacular prices. So says a report released by Christie’s International Real Estate this month, which confirms top-tier properties achieved record prices globally in 2012 and the trend isn’t slowing down.

Just like fine fragrances, custom sports cars and collectable art, the international luxury real estate market finds its niche well-insulated from the general market’s economic and political trends.

Christie’s March 2013 report confirms the prestige property market—from Los Angeles and San Francisco to London and Hong Kong—is experiencing record prices, amplified demand and often global—not simply local or regional—interest.

Supply of luxury residences may be limited, but high-net-worth individuals are continuing to invest in this scarce and sought-after real estate, often picking up second or multiple homes. International buyers in particular are ready to buy. In seven of the 10 cities studied, more than 30 percent of the luxury homebuyers were from other countries. In every city studied but Dallas and Toronto, the year’s  highest sales price exceeded $35 million.

Cash deals were predominant as well. The study that revealed that the higher the price tag, the less likely buyers were to arrange traditional mortgage financing.  Nearly 100 percent of Los Angeles transactions above $5 million were in cash, followed by 90 percent in New York and 70 percent each in San Francisco and Miami.

With more millionaires and billionaires than we’ve seen in the past decade, fashionable locations with high security and plenty of lifestyle benefits should continue to draw the interest, and the pocketbooks, of investors from far and wide.

Common Real Estate Negotiations That Catch People Off Guard

Whether you’re the buyer or the seller, real estate transactions are complicated. It’s quite common for a purchase agreement to be rejected the first time around, meaning both parties head back to the bargaining table to try and reach common ground. Whether you’re a seasoned real estate veteran or you’re navigating the process for the first time, here are some of the most common real estate negotiations that catch people off guard all too frequently.

Contingencies: These can be associated with things like loan approval, inspections, appraisals, and more. Worth noting is that some contingencies allow the seller to fix the issue, while others give buyers the ability to withdraw from the contract at the end of the contingency period. If you have questions about contingencies, your real estate agent can assist you, or you can discuss them with a real estate attorney.

Written Vs Verbal: Since real estate transactions are such robust transactions, you should get everything in writing when it comes to buying or selling a home, especially before the purchase contract is signed. Once signed, the document is considered “ratified,” meaning it is a legally binding contract between both parties. Usually, once the purchase contract has been signed, it cannot be changed unless both sides agree.

Renegotiation: Real estate transactions set off in one direction, but sometimes, they change course as they unfold. This prompts both parties back to the bargaining table, and renegotiation begins. Just because you have a ratified purchase agreement, be prepared to go back to the bargaining table.

Lender-Required Appraisal: It’s not uncommon for a lender to require an appraisal before they will release money. Sometimes, this appraisal will come back with a lower number than the purchase contract price, meaning the lender can change the loan amount. If this happens, a buyer might request another appraisal, withdraw from the contract, or renegotiate the price with the sellers to bring it within the updated loan amount.

 

Multifamily Real Estate Sector Expected to Have Banner 2013

According to Fannie Mae and the National Association of Home Builders, the multifamily real estate sector is expected to have a banner 2013. Vacancy rates and higher rents continue to permeate the landscape, which has given both groups cause to believe that the multifamily housing sector is poised for growth this year.

Fannie Mae says that asking rental rates are expected to climb 2.5% this year, while vacancy rates should increase to 6%. The improvement in this sector is expected to benefit the overall real estate recovery that still continues to take shape.

Both Fannie Mae and the NAHB say that a boom in multifamily housing is expected, and after years of stagnation, new construction will also come to fruition. In general, experts are calling for a balanced multifamily market without the peaks and valleys of previous years. Of course, as is the case with any recovery, there will still be some hurdles to overcome, including the lack of available capital that has given developers around the country pause.

In 2012, the multifamily sector vacancy rate was 5.5% in the fourth quarter, falling into the low end of historical data. Couple that with rent growth that exceeded Fannie Mae’s projection of 3%, and there’s reason to agree that the multifamily housing sector will continue to make strides in 2013.

 

A Look at Freddie Mac’s New Short Sale Process

Freddie Mac’s new Standard Short Sale program has been underway for three months, but the program is finally gaining in notoriety. The GSE has been working overtime to get the word out about the program in order to grow it and bring attention to the variety of options available to borrowers.

The onus has been transferred to loan servicers, giving borrowers a bit more freedom to pursue short sale properties. The new program aims to reduce short sale timelines by 50-75%, and lenders now must stay within a 30-day timeline when issuing a decision on a short sale application. In order to do this, lenders are now being given more autonomy to review potential client applications and make decisions.

The entire program is possible because of Freddie Mac’s involvement. They obtained approval from nine mortgage insurers who said they would allow servicers to skip the normal approval process in order to reach a quicker decision about short sales. As such, lenders can now approve short sales without consulting mortgage insurance companies. Of course, this doesn’t mean they can skip determining an applicant’s financial hardship; that is still very much a part of their responsibility.

If a lender should need more time to arrive at a decision, they will be given 30 more days at most. Mooney adds, “A final decision is required by day 60.” And if a mortgage servicer runs past the initial 30-day window, they are required to stay in consistent communication with the applicant, issuing weekly updates.

CFPB Releases Anticipated Qualified Mortgage Rule

The Consumer Financial Protection Bureau’s (CFPB) recently unveiled their new qualified mortgage (QM) rule, which was created to protect both consumers and lenders. The Ability-to-Repay rule goes into effect in January 2014 and specifies that all new mortgages must comply with basic requirements that protect borrowers from taking loans they can’t repay.

Under the revised rules, all borrowers provide supporting financial information and banks must verify it prior to approving a loan. Examples of supporting financial information include income and assets, current debt obligations, credit history, employment status, and more. This information will be reviewed by the lender in order for them to make a fair judgment on the borrower’s behalf.

Adds CFPB director Richard Cordray, “When consumers sit down at the closing table, they shouldn’t be set-up to fail with mortgages they can’t afford. Our Ability-to-Repay rule protects borrowers from the kinds of risky lending practices that resulted in so many families losing their homes. This common-sense rule ensures responsible borrowers get responsible loans.”

There are other possible amendments to the new Ability-to-Repay rule that could come down the line, and if passed, these proposed amendments would be finalized this spring. The CFPB says they’re looking into specific exemptions for non-profit creditors that work with low- and moderate-income consumers, along with those for consumers who are trying to refinance from a risky mortgage to a more stable one.

A Look at 2013’s Real Estate Trends

2012 is a thing of the past, but the end of the year brought good news with regard to the real estate industry. And the general mood is a good one. When asked about how home prices in their local market might rise as part of a survey by Trulia last summer, 61% of respondents said they believe prices will rise in 2013, while 58% believe prices will take 10 years or less to return to pre-recession peaks. Additionally, 80% of renters said they plan to buy a home someday.

As 2013 gets underway, here’s a look at the real estate trends that have people talking this year!

Rising home prices: With inventory levels suppressed around the country, prices are going up. This trend is expected to continue in 2013.

Rents Rising: So many young people have been waiting for the real estate market to return to a healthy state, which drives up rent prices. There’s a pent-up demand for rentals, so finding that perfect place is going to be a challenge this year.

Reduced Foreclosure Bargains: Has the foreclosure ship sailed? Perhaps. Sales of foreclosed upon homes were down 28% from March 2011 due in part to the Federal Housing Finance Agency (FHFA), the Federal Deposit Insurance Corporation, and banks who have been bulk-selling foreclosed homes to purchasers who agree to work with the original borrowers rather than simply foreclosing.

More Short Sales: More banks are agreeing to go this route instead of proceeding with the foreclosure process, which is expensive and time-consuming foreclosure.

Increase in First-Time Buyers: Growth in demand for single-family homes this year is expected to be a driver by first-time buyers. According to an NAR survey of buyers and sellers released in November 2012, 39% of borrowers were first-time homebuyers, an increase of 37% from their 2011 survey.