Tight Credit Squeezing First Time Home Buyers

Posted in Real Estate by Jake on April 19, 2014 2 Comments

Writing about how tight credit is squeezing out first-time home buyers, Dr. Kenneth T. Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, penned an illuminating article for the Foreclosure News Report, on why some would-be home buyers are being forced to rent because lenders don’t want to make 30-year loans at such low interest rates.  “Prior to the economic downturn, a 620 FICO with 5% down was an insurable prime loan,” writes Rosen. “In today’s conventional market, 680 is the new 620.  That line of demarcation is simply too high and squeezes too many families into higher-cost loans or out of the housing market completely. We are concerned that many low and moderate-income families will be forced to remain renters not by their own choice, but as a result of the cumulative impact of regulatory rules seeking to create a limited risk environment.”

Peter Francese, founder of American Demographics magazine, interviewed for an article titled “The Tenant Trap: Rising Rents,  Falling Incomes, Tight Inventory,” declared that the American Dream of home ownership is still alive and well in the United States, even if home ownership rates took a hit during the Great Recession.  “We are not becoming a nation of renters,” said Francese. “The past six years have been the worst years for real estate since the Great Depression.  The recession is slowly coming to an end and homeownership is creeping up. The American Dream is to buy a house and send your kids to college. That cultural icon is still operative today.”

 

Investors Take A Pause As Home Price Price Gains Stall…

Posted in Real Estate by Jake on October 4, 2013 No Comments yet

A potential stall in home price gains and a large drop in the number of distressed properties have some big investors pulling out of the single-family rental market.  They are getting out at the same time that billions of investor dollars continue to pour in.  “I think the investor market is largely past us,” Doug Lebda, chief executive of Lending Tree told CNBC.  “People were buying investment properties three, four, five years ago.  What I hear is that’s slowing now.”

Recent reports that Oaktree Capital Group is selling about 500 of its homes added fuel to other reports that Och-Ziff Capital management is selling its homes as well.  Both declined to comment on the reports.

Carrington Mortgage Services stopped buying distressed homes late last year, claiming the market was “a bit too frothy.”  Home prices are up over 12% from a year ago, according to CoreLogic, but still down 18% from their peak in 2006. Investors certainly played a role in putting a floor on home prices and then pushing them higher than many predicted.  Now, faced with higher mortgage rates and weak wage and employment growth, even usually bullish brokers predict home prices will stay flat through 2014.  Critics say without rising prices, the rental trade is a low-to-mid single-digit return proposition.  Management of the homes can be as tricky as it is costly, and that alone lowers profit dramatically.  “Investors who were buying REO [bank-owned homes] four and five years ago have the added cushion of home price appreciation to augment returns.  But if you’ve been buying REO or even new homes for rent in the past year or so, the embedded home price appreciation is limited,” said a mortgage industry insider who did not want to be identified.  “It is going to be very hard for investors to make money on rental fees alone.  Looking at the dismal data for household formation,  jobs and consumer income, it seems pretty obvious that 2013 may be the peak.”

Institutional investors have poured a collective $20 billion into as many as 200,000 properties, or up to 12% of distressed home sales over the past 18 months, according to a report from KBW.  It is a tiny slice of the housing stock, to be sure, but investors who remain in the game say it will get larger and the potential for long-term profit is big.  “We don’t see it as a trade; we see it as a business,” said Justin Chang of California-based Colony Capital. Colony owns over 15,000 homes and is buying at a rate of about 1,000 homes per month.  “There is plenty to buy,” added Chang.

The number of homes in the foreclosure process was down 34% in August year-over-year, according to Lender Processing Services. That still represents more than 1 million homes, while more than 2 million homeowners are behind on their mortgages.  “We’re looking at the multiple listing services, we’re still looking at REO from the banks, we’re looking at short sales, we’re even buying some traditional houses now where people are just putting them on the market,” said Laurie Hawkes, president and COO of Arizona-based American Residential Properties, a publicly traded real estate investment trust.  “We think that if you get a reasonable cost of capital, both debt and equity, you can actually not only create a very attractive return on a current basis, but in today’s market, the house price appreciation that we think is still in the market is extraordinary.”  American Residential has already bought 80 portfolios of rental homes from smaller aggregators, according to Hawkes, who said that while Arizona is “fully invested,” the company is now setting its sights on Georgia, the Carolinas, Indianapolis and Chicago.  “I think soon there will be consolidation from potentially other players who might have had private equity, who can’t make it work, whether it’s the Carringtons or others in the universe who have decided this isn’t for them because they aren’t going to make the commitment to the operations or they couldn’t make it work,” said Hawkes.

 

CHDAP Suspension Will Affect California RE Agents Homebuyers

Posted in Real Estate by Jake on January 28, 2013 No Comments yet

CHDAP Down Payment Assistance is temporarily suspended by CalHFA due to discrepancy by HUD.

 

“This temporary measure is a result of the Department of Housing and Urban Development’s (HUD) recent interpretive rule governing a provision of the Housing and Economic Recovery Act of 2008, that affects how all Housing Finance Agencies (HFAs) provide down payment assistance on FHA-insured loans. HUD’s interpretive rule requires HFAs to provide such assistance directly at closing. Under this interpretive rule, it is not permissible for HFAs to purchase down payment assistance loans from lenders after the loan is closed, which is the way CalHFA currently conducts business with all its approved lenders under state law. First mortgage loans combined with subordinate loans not complying with HUD’s recent interpretive rule may be uninsurable by FHA. HUD’s interpretive rule is effective for loans closed on or after November 29, 2012. Again, this only applies to CHDAP loans combined with FHA-insured first mortgages.

 

CalHFA is aggressively pursuing several solutions to again offer CHDAP loans, which we expect to release in the near future. For questions about this bulletin, contact the CalHFA Single Family Division by phone 916-326-8000; fax 916.327.8452; or email sflending@calhfa.ca.gov. In addition you can always visit CalHFA’s web site at: www.calhfa.ca.gov or Single Family Lending at www.calhfa.ca.gov/homeownership.”

 

PAY CLOSE ATTENTION TO YOUR BUYER’S PRE-APPROVAL. IF THEY ARE USING CHDAP WITH AN FHA LOAN THEY WILL NOT BE ABLE TO MOVE FORWARD AT THIS TIME.

Housing Shortage Being Felt…Especially In The West

Posted in Foreclosures, Real Estate by Jake on October 22, 2012 No Comments yet

“It’s hard to imagine, given that the nation’s housing market is still digging itself out of an epic foreclosure crisis, that there just are not enough homes available to buy.  But that, apparently,  is the case, according to the National Association of Realtors, who blame a drop in home sales on an ‘acute lack of supply’ in certain formerly hot markets.  ‘Recent price increases are not deterring buyer interest,’ notes Lawrence Yun, NAR’s chief economist.  ‘Rather, inventory shortages are limiting sales,  notably in parts of the West.’  A little perspective is called for here.  The housing recovery has largely been driven by investors on the low end of the market.  Cities like Phoenix,  Las Vegas and Sacramento, CA, where the foreclosure crisis hit hardest and where home prices fell the most, were swarmed by these investors, who were looking to take advantage of the situation and convert this distress into long-term rental rewards and shorter term resale profits.  Witness, sales of homes priced under $100,000 in the West are down 47 percent from a year ago, according to the NAR,  after investors drove prices notably higher.  Distressed sales made up just 24 percent of total home sales in September, while they had been making up over one third of sales for the past two years.

Where’s The Beef?

So where is all this distressed supply, given that there are still 5.45 million homes with mortgages that are either delinquent or in the foreclosure process (per LPS Applied Analytics)?  Banks are doing more foreclosure alternatives, like short sales, but they are also making more aggressive loans.  Bank of America this week announced that in the past five months it has reduced principal on 30,000 troubled loans, with an average reduction of $145,000.  This as part of the mortgage servicing settlement signed early this year.  However, banks have also finally come around to the fact that loan modifications with reduced principal have a much lower re-default rate.  Yun suggests that builders need to really ramp up production in order for home sales to recover more.  Housing starts for single family homes in September were up 43 percent from a year ago and building permits were up 27%, but the real volumes are still about half the normal level.  New homes are popular with first-time home buyers, who are only making up 32 percent of the market, whereas they normally represent about 45 percent. That is due to still tight credit conditions. The biggest problem affecting inventories is that regular home sellers are not putting their homes on the market at a high enough rate to offset the drop in distressed volumes.  Why?  Part of it is still a lack of confidence in the market, but most of it is that, as of August, about 15 million homeowners still owed more on their mortgages than their homes were worth, according to Zillow.  That’s 31 percent of homes with a mortgage.  Negative equity and near negative equity is largely what is holding the market back now, even as distressed homes slowly move out of the system.  Given the huge drops in sales and inventory out West, which had been driving much of the gains in the overall market,  some analysts predict deeper sales drops in the coming months.  While sales of higher priced homes are up considerably from a year ago, they still make up a very small share of the total market.  About 65 percent of the market is made up of homes priced lower than $250,000.  These are a lot of numbers to digest, but they add up to a still bumpy recovery ahead for housing.”

Excerpts contributed by Diana Olick

Home Sales Will Hit A 5 Year High…Maybe!

Posted in Real Estate by Jake on September 22, 2012 No Comments yet

“Sales of existing single family homes and condominiums beat expectations for August, rising to the highest level since May of 2010, when the government’s home buyer tax credit juiced sales temporarily. This time it could be argued that the government stimulus behind sales is record low mortgage rates, but that may not be all of it. Close to one third of the homes that sold in August went to buyers using all cash, despite average rates on the 30-year fixed sitting around 3.6%. Rates appear to have less of an impact than hoped. Witness mortgage applications to purchase a home fell 4% last week, even as rates fell to record lows on the Mortgage Bankers Association’s weekly survey. ‘The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizable stored-up housing demand that accumulated in the past five years,’ said the National Association of Realtors’ chief e conomist Lawrence Yun. With the August jump of 7.8% from July, Realtors now say they are confident that home sales for all of 2012 will hit their highest level in five years. They do warn that there are still ‘frictions’ in the market, not the least of which are about 12 million borrowers who owe more on their mortgages than their homes are worth. These so-called ‘underwater’ borrowers are largely stuck in place, unable to cover their debt and unable to move up. ‘Bottom line, housing continues to recover, but the bounce still has to be put into the perspective of how much damage was done,’ notes Peter Boockvar at Miller Tabak. ‘Looking specifically at single family homes, at a sales level of 4.30mm, it’s back to where it was in 1998 and of course still well below the bubble high of 6.34mm in Sept ’05.’

Still More Distressed Property On The Horizon

As positive data begin to outnumber negative, analysts warn of a large pipeline of distressed properties that are still weighing down a potentially more robust recovery. Foreclosure activity increased in August, and states that had all but halted the process on thousands of properties, due to judicial challenges to paperwork, are now ramping up again. This will add lower-priced properties to an already low volume of homes for sale. The question is, will that distress be absorbed quickly by investors and cease to have the negative impact on surrounding properties and consumer sentiment that foreclosures have had in years past? Investors, big and small, continue to move into this market, unafraid that rent prices will fall any time soon. ‘The demand for rental housing is incredible,’ said former GE CEO and author Jack Welch on CNBC Wednesday. ‘The home rental idea is moving strongly.’ As for the latest news on housing starts? ‘We’re going nowhere in housing,’ Welch replied. Home sales usually get a slight boost in early fall before tapering off to the slowest season around the holidays. Regardless of seasonality, the numbers are improving, while the barriers to entry, like credit and nega tive equity, remain. The two will duke it out slowly in these next few months, until a stronger improvement in jobs and more certainty over regulatory changes in the mortgage market finally let the bulls run free.”

Short Sale, Loan Modification Or Just Walking Away?

Posted in Short Sales by Jake on August 31, 2012 No Comments yet

A long time client called me the other day and asked me the following question…  Should I do a short sale, a loan modification or just walk away?  Pretty sobering realization, to say the least….

I understood the gravity of his question as this is a man that has taken great pride in his financial stability.  He spends within his means and doesn’t take chances with his family’s stability.  I also know that in the last 4 years he has seen a cut in his wages with the State… his wife has lost her job… they have a child in college and he thinks their home has dropped in value by about 45%.  All in all,  not a pretty situation!

As I told him, walking away or deed in lieu is a horrible option.  Successful modifications are rare and time consuming to say the least, so a short sale is the most viable option.  He has since concluded that he wants to do the short sale.  After doing some research I learned that he is only about 15% underwater and I am going to be able to help him short sell the home and in the process free up a fairly large amount of money each month.  The change in him is palpable and he can see light at the end of the tunnel. 

So What About You?

Where is the value of your home and what are your options?  Sacramento County short sales can be easy or hard depending on who you work with.  I started working with underwater homeowners in 1989 when no one knew what a short sale was!  I have more experience with short sale lenders than the vast majority of agents who took a course or two,  completed a short sale or two and now refer to themselves as “experts”.  When you need help it is seldom worthwhile to go to the new kid on the block.  I have the kind of experience with short sales in the Sacramento County area that you can put to use and take advantage of.

Even if you are on the fence you need someone with a huge volume of experience in real estate in this beautiful American River Canyon and Parkway Area that we live in.   I have that level of experience and can produce results quickly.  Call my office at 916-967-1000 or visit my website at www.americanriverproperties.com and lets have a conversation so you can sleep peacefully again.

New Short Sale Guidelines Announced By FHFA

Posted in Short Sales by Jake on August 27, 2012 No Comments yet

Acting Director of the Federal Housing Finance Agency (FHFA) Edward J. DeMarco announced new, clear guidelines for short sales yesterday. Among the new guidelines is one that will allow homeowners with a Fannie Mae or Freddie Mac mortgage to do a short sale even if they are current on their mortgage if they have an eligible hardship.

Up until now, the FHFA would only allow short sales for homeowners at risk of “imminent default,” (what they consider death of a borrower, divorce, or sudden disability) or had to be delinquent in their payments. As long as a homeowner can document a legitimate hardship, as shown in the list of requirements below, they can be eligible for a short sale even if they have been paying their mortgage on time.

One eligibility requirement that’s been added allows underwater borrowers to do a short sale if they need to relocate more than 50 miles for a job. Another significant change is that they will now include increased home expenses as an eligibility requirement. This is important for homeowners who have to pay more each month because of day care costs, medical expenses, or unexpected home repairs.

Updated Short Sale Eligibility Requirements

  • Death of a borrower or death of the primary or secondary wage earner in the household
  • Unemployment
  • Divorce
  • Long-term disability
  • Distant employment transfer/relocation (more than 50 miles one way)
  • Increased housing expenses
  • Disaster (natural or man-made)
  • Business failure
  • Borrowers that need to relocate more than 50 miles one way for a job, including service members with Permanent Change of Station Orders, can be current or delinquent on their mortgage to apply for a short sale.

One new guideline may cause some confusion. It states that Fannie Mae and Freddie Mac “will waive the right to pursue deficiency judgments in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes.”

This does not mean you have to bring cash in order to do a short sale. Most distressed homeowners who need to do a short sale can usually have their deficiency balance waived without having to provide money up front. This guideline is only for borrowers who have the financial capacity to contribute something.

We applaud the FHFA decision to clarify and streamline short sale eligibility requirements. So many homeowners are struggling to pay their mortgage, and many can no longer afford to stay in their home. But up until now, borrowers had to be delinquent in order for them to be considered for a short sale if they didn’t fall under the imminent default rules. This meant these homeowners had to stop paying their mortgage just to be able to sell their home!

With these updated guidelines many more homeowners can now be proactive and do a short sale and avoid foreclosure, as long as they can prove that they cannot afford the home.

Since around March of this year, Fannie Mae and Freddie Mac had tightened their short sale qualification rules, and insisted that borrowers had to either stop paying their mortgages (and become delinquent) or had to be in imminent default in order to be considered for a short sale. But now that has changed.

Short Sale Process Showing Improvement

In June, the FHFA announced shorter timelines for short sales to help expedite the short sale process. Under the new guidelines loan servicers are required to review and respond to requests for short sales within 30 calendar days from receipt of a short sale. They must also communicate final decisions to the borrower within 60 days of the offer. In cases where they can’t offer a decision within 30 days following receipt of a complete borrower response package, they must notify the borrower within the 30 day time limit that it’s still under review.

In June, DeMarco announced a change to short sale policies for military homeowners whose mortgages are owned by either Fannie Mae or Freddie Mac. Under the new guidelines for military homeowners, an order to transfer bases, known as a Permanent Change of Station (PCS), would now be considered a hardship that qualifies for a short-sale approval.

Then in July, DeMarco announced his decision that he would not allow mortgage principal reduction on homes whose values are less than the amount owed. Principal reduction would not be considered, in part, because DeMarco said principal forgiveness is already available through doing short sales and greater efforts were being made to streamline the short sale process, making it an option that respects as he said, “the interests of borrowers, neighbors, and lenders alike.”

This latest announcement is a welcome update to the short sale guidelines and will allow more struggling homeowners avoid foreclosure.

If you are having trouble paying your mortgage, or have been paying your mortgage but find it increasingly difficult to make the payments, thanks to these new guidelines to streamline the short sale process, doing a short sale will be easier than it has ever been.

The guidelines will go into effect November 1, 2012.

article courtesy of:  Short Sale Specialist Network

Short Sale Timeframes… Help On The Horizon

Posted in Short Sales by Jake on August 12, 2012 No Comments yet

Stockton Representative, Jerry McNerney, has introduced a bill to speed up the short sale process by requiring junior lien holders (2nds, HELOCS, etc.) to make a decision on a short sale within 45 days.  The bill, titled Fast Help For Homeowners (FHFH) Act, received strong support from the National Association of Realtors(NAR).   “Second mortgage lien holders frequently hold up and cancel the short sale transaction while trying to collect the largest possible payout in exchange for releasing the homeowner’s lien, even though the secondary lien holder often gets nothing if the home ends up going into foreclosure,” said NAR President Moe Veissi, in a statement.  “While efforts have been made to improve primary lien holders’ response times, issues still abound with second and subsequent lien holders, and this legislation is a step in the right direction. “ If the lender does not make a decision within that 45 day time frame, the short sale will be deemed approved on the 46th day.  California Association of Realtors, which is urging fast passage, conducted a recent survey that found that nearly half of all properties sold as short sales in California had subordinate liens.

This would be welcome legislation if it makes it into law.  One of the biggest problems we are facing as Realtors in this market is keeping those buyers who are in contract from pulling out of their deals.  Excessive time only leads to impatience and “wandering eye syndrome”.  When there is a solid offer in place that has been agreed to by the principals, there is absolutely no good reason why lenders should be taking 3 to 6 months to approve or counter the offer and complete the short sale transaction.  The proposed legislation would force any junior lien holders to engage immediately and accept the fact that the lien they hold has a higher risk and they are not in a position to dictate terms.  They knew it when they made the loan, and the fact that the market made a mockery of the mortgage industry just goes with the territory.  I’m glad to see FHFH and look forward to it’s implementation.

Housing Market Picking Up Steam…

Posted in Real Estate, Short Sales by Jake on July 31, 2012 No Comments yet

 The housing market recovery is picking up speed with builders expressing more confidence about construction demand and falling gas prices, albeit still high, providing consumers with more disposable income.  The report from Goldman Sachs arrives at a time when forecasts for housing are somewhat improved, but worries remain over the potential global impact of the euro zone crisis and stagnant unemployment numbers.  In fact, the national debate over whether another round of quantitative easing is warranted remains in the news as the Federal Reserve grapples with an unemployment rate stuck well above 8%.  The latest Goldman Report comes from the firm’s global economics, commodities and strategy research team.  The team forecasts roughly 10% growth in residential investment but recognizes that risks remain in the sector.  Still, the report is generally positive with Goldman saying, “prices are now edging up, and the trough is probably behind us.”  Goldman had stated in March it was more pessimistic about housing because of stagnation in disposable personal income, but real disposable income growth has evidently picked up from zero in early 2012 to 2.7% in the three months leading up to May.

Short sales with seconds taking 19 + months

Roadblocks involving second liens are standing in the way of more short sales, which reached the highest number in three years in the first quarter — 133,192 total transactions — said Daren Blomquist, vice president at RealtyTrac Inc., a real estate information service in Irvine, California.  While about 39% of homes that have entered the foreclosure process have more than one lien,  just 4.2% of short sales — 5,658 transactions — completed in the first quarter were on homes with second mortgages, according to an analysis RealtyTrac performed for Bloomberg.  In June, short sales of homes with multiple loans were completed an average of 19.75 months after the borrower’s last payment, according to an analysis by J.P. Morgan Securities, a unit of JPMorgan Chase & Co. (JPM)  That’s about two months, or 12%, longer than short sales of homes with single mortgages. Homes with second mortgages were twice as likely to be underwater, according to a July 12 report by real estate information provider CoreLogic Inc. (CLGX).  That makes them candidates for short sales, even if they don’t have delinquent loans, because their mortgage debt is greater than their resale value. The average negative equity for homes with second liens was $82,000, compared with $47, 000 for single-mortgage homes, Santa Ana, California-based CoreLogic said.

Still More Legal Recourse For California Homeowners In Foreclosure?

Posted in Foreclosures, Real Estate by Jake on July 2, 2012 No Comments yet

The Foreclosure Reduction Act and the Due Process Rights Act were approved by the Joint Conference Committee in a 4-1 vote, sending them up to an expected vote in both the Assembly and Senate next week. The Foreclosure Reduction Act restricts the process of “dual-tracked foreclosures,” in which lenders work with homeowners on trial loan modifications while at the same time continuing the foreclosure process.  Over 900,000 foreclosures occurred in California between 2007 and 2011 and last year, 38 of the top 100 ZIP codes hit hardest by foreclosures were in California.  California’s foreclosure crisis has hurt property values throughout the state and resulted in less revenue for schools, public safety, and other vital public services.  The Due Process Rights Act guarantees a reliable contact for struggling homeowners to discuss their loans with and imposes civil penalties on robosigning.   The legislation also includes enforcement for borrowers whose rights are violated.  The committee responsible for the bill, the Joint Conference Committee, has passed historic legislation that codifies the protections eligible homeowners deserve while helping to stabilize the foreclosure crisis that has thwarted California’s economic recovery.  The Homeowner Bill of Rights was introduced in February and has been the subject of much debate from various state groups ever since.

Meanwhile in a galaxy not far away…

Economists continued to predict home prices will decline only slightly in 2012, falling 0.4 percent for the entire year, and will increase thereafter, according to the June 2012 Zillow Home Price Expectations Survey, compiled from 114 responses by a diverse group of economists, real estate experts, and investment and market strategists. 
For the first time, the individual economists surveyed were largely in agreement on the trajectory of home prices nationally, signaling that a true bottom may be imminent.

However, a majority (56 percent) of respondents also believe that, in five years, the U.S. homeownership rate will be below 65.4 percent, the rate recorded in the first quarter of 2012. One in five believe the homeownership rate will be at or below 63 percent, testing or breaking the 62.9 percent rate established in 1965, the lowest on record.
While the stronger signals of an imminent market bottom and turn are encouraging, the expected pace of housing recovery over the coming three years is significantly weaker now than it was two years ago.

States With Highest Foreclosure Rates Are Still Holding Out…

Posted in Real Estate by Jake on February 8, 2012 No Comments yet

California, New York, Nevada, and Massachusetts are among the states that haven’t signed off on a settlement with banks over foreclosure abuses, according to state officials and two people familiar with the talks.  The holdouts include some with the highest rates of foreclosures. More than 6% of Nevada housing units had at least one foreclosure filing in 2011, the nation’s highest rate, according to RealtyTrac. California was third-highest with more than 3%, said the firm, which tracks foreclosures.  California Attorney General Kamala Harris and New York Attorney General Eric Schneiderman, who have been among the most outspoken in pushing for changes to the accord, were among those who hadn’t joined as of a Feb. 6 deadline.

More than 40 states originally signed on, said Iowa Attorney General Tom Miller, who is helping to lead talks with the banks.

“Adding more numbers probably improves the political dimension of the settlement from the standpoint of the attorneys general,” said Ken Scott, a Stanford University law professor.

“If you can say there were only a handful of diehards that didn’t sign on, that gives you some political protection.”  All

50 states announced almost 16 months ago they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from states and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with five banks that is said to be worth as much as $25 billion.  At the time of this posting, Arizona, Michigan and Florida have also joined the other 40 states in the deal, for a total of 43.

Buying a Home is Your Better Option Today

Posted in Foreclosures, Real Estate by mrdublin on November 29, 2011 No Comments yet

There are two reasons to buy homes today – home values dropping and mortgage costs increasing.  As more distressed homes are being sold quickly, the perfect time to buy homes is now, when banks are rather willing to give you what you’re bargaining for.

Home Prices Fall

Twenty eight of the nation’s largest metropolitan areas have home values dropping down in almost all housing markets in the third quarter of the year. From August to September, prices declined by 0.6%, according to the Standard & Poor’s/ Case-Shiller index of 20 metro areas.

For the third quarter of the year, prices were down 3.9% nationwide compared with a year earlier; however, this is a slight improvement from the 5.8% annual decline recorded at the end of June, says Case Shiller National Index.

The reason for the price drop is still the distressed real estate market as banks are keeping themselves busy selling foreclosed and distressed properties at discounted, very low, prices. Analysts say that even if summer saw a lot of home buyers closing on sales, they had to buy homes at bargain prices, and most often, they weren’t too proud about their new purchases.

Prices fell in all twenty cities except for Washington, D.C., New York and Portland who earned gains.

Mortgage Loan Limit Increases

Why wouldn’t you want to buy a home if you can get a bigger loan today?  With the Congress recently increasing FHA loan limits, there are more reasons to finally grab a home you can call your own.

Rental and mortgage rates have risen across the country, with the latter at nearly 4%, the lowest since the 1950s.  This has caused massive slashing of the monthly mortgage payments on the median priced home including taxes and insurance.  Payments are lower than the average rent levels in 12 metro areas. The data was found by The Wall Street Journal, in cooperation with Marcus & Millichap, a real estate brokerage that tracks 27 metro areas.

However, the data also found that it is less expensive to rent that to buy in 15 cities. The average asking rent standing at $840.

Meanwhile, in metro cities Detroit, Minneapolis, Orlando, Las Vegas, Miami, St. Louis, Chicago and Phoenix, owning is cheaper than renting.

Another reason to consider buying homes today is that apartment rents are looking to rise by around 4% this year.

“Banks are often much quicker to cut prices to unload properties quickly, which means that the greater the share of “distressed” sales, the more prices tend to fall.”

 

Source: Smart Real Estate News

Up and Down: Seesawing Mortgages

It’s not hard to see the effects of a distressed economy. Jobless claims, mortgage loans, rates and delinquencies, foreclosures and short sales rise and fall. Just this November, headlines under mortgages in inman.com prove that the country’s real estate industry is ever changing and ever inconsistent. Obviously, thanks to the big help coming from the White House, many Americans are still unemployed, homeless, and in debt.

Let’s trace the headlines back to the first week of the month.

November 3, 2011 — Mortgage rates stay in the basement

“Mortgage rates sagged this week as ongoing concerns about the European debt crisis had investors fleeing to the relative safety of mortgage-backed securities that fund most U.S. home loans.”

November 9, 2011 – New settlement disclosure form to replace HUD-1

A prototype for a new unified settlement disclosure form may replace the separate HUD-1 Settlement Statement and Truth in Lending disclosure form which is currently used. Should the new forms’ designs are finalized, consumers will receive a unified loan disclosure form when they apply for a mortgage, and a unified settlement disclosure form if they want to purchase a home.

November 10, 2011 – Low rates sparking demand for mortgages

Low rates of mortgage loans increased demand to purchase mortgages and refinancings.

November 11, 2011 – 10 guilty pleas in scheme to take control of Las Vegas HOAs

“Federal prosecutors have negotiated guilty pleas with 10 defendants for their alleged involvement in a scheme to take control of as many as a dozen homeowners associations in Las Vegas in order to file construction defect lawsuits against builders and then win contracts to do remediation work.”

November 17, 2011 – Mortgage rates near historic lows for third straight week

Mortgage rates remain low for the third consecutive week averaging 4% and still nearing the all-time low of 3.94 percent in the week ending October6.

November 17, 2011 – Congress votes to restore FHA loan limits

The Congress and Senate vote  with 298-121 and 70-30, respectively, to restore FHA’s ability to insure loans of up to $729,750 in high cost markets through 2013.

November 23, 2011 – Economic worries keep lid on mortgages rates

Mortgage rates reach record lows for the fourth consecutive week in November for the week ending November 23, which is down by percent last week and 4.4 percent a year ago, according to Freddie Mac’s Primary Mortgage Market Survey.

 

Source: www.inman.com/news/category/Mortgages

What Happens if FHA Continues to Lose Money?

Posted in Real Estate, Wholesale And Rehabs by mrdublin on November 18, 2011 No Comments yet

Congress raises FHA loan limits amidst the latter continuously running out of cash.

The Federal Housing Administration is the governing body that insures mortgage loans thus as an insurance, it needs to maintain a certain amount of money called cash reserves, that will keep it operating. The cash reserve also guarantees that if ever an unfortunate even happens to FHA (it got closed down or something) it can still pay off all insured. The government’s mandated FHA reserve must at least be 2% of its total insurance in force.

According to CNBC.Com’s Diana Olick, But the FHA is right inside the danger zone now. An actual independent actuarial report found that FHA’s loan loss reserves is already 0.24% of its $1.1 trillion dollars insured mortgages.

From 5% in the market share, FHA has gone up to 30% now – obviously an indication that there are much more mortgage loans now (spell: debts) that FHA is insuring. This will continue to grow big, according to the auditor, as home prices fall and mortgage delinquencies grow high.

FHA’s reserves is at $2.6 billion as of end of September which means it is down by a whopping 45% from last year’s $4.7 billion. This is hardly 2% of the required reserves (which the Congress has set) yet now that the loan mortgages are raised, there could be more loaners running after FHA.

Well in that case, the government must prepare itself for a bailout program, unless it wants FHA to continue going down the drain, which seem to be the case when the Congress approved for higher loan limits.

Bob Nielsen, chairman of the National Association of Home Builders (NAHB) was caught saying, “The FHA program is fully self-supporting, and a great example of a public-private partnership with lending institutions. Restoring the loan limits will provide millions of potential consumers in markets throughout the nation access to safe, affordable mortgage financing.”

Good intentions, wrong execution. It’s still a fail for the government.

Senate Restores Mortgage Loan Limits

Posted in Politics, Real Estate by mrdublin on November 1, 2011 No Comments yet

The Senate makes a move to restore mortgage loan limits just before Halloween. But…Will it save the real estate market? Will it increase home sales? Will it attract more homeowners to sell home? Will it push home buyers to buy home? Or will it be just another scheme to make the government look like it is doing something to save the home sales market?

Calling all real estate agents, home buyers and home sellers, an important amendment was passed by the senate last Thursday, October 30, which will restore the mortgage loan limits back to $729,750. This is still in connection with the request of National Association of Realtor (NAR) to restore the mortgage loan limits and give more chances for home buyers to purchase the house of their dreams.

The amendment to a spending bill would restore the $729,750 maximum loan limit on government backed mortgages for two more years. The increase in ceiling is joined by another Senate amendment that would bring back the formula for determining the upper loan limit in high-cost housing markets from now until 2013.

With a 60-38 vote, the new amendment was approved by the Senate, and now moves to the House, which is now responsible for approving or disapproving the said bill.

NAR lobbied real hard for the amendment despite continuously failing to have related bills reach the House or even the Senate and despite the Obama Administration not wanting to extend its role in mortgage lending by opposing the higher limits taking place.

To rationalize with those against the higher limits, the new amendment will impose a new loan fee of 15 basis points a year on unpaid principal balance for the entire time of the mortgage. A basis point is equal to a hundredth of a percent thus, 15 basis point fee means $750 on a loan with a $500,000 balance. This would raise the revenue to $300 million according to backers of the bill.

Meanwhile, according to Fannie Mae, Freddie Mac and FHA, lower loan limits would affect approximately 83,000 mortgages in areas with higher living costs.

Courtesy: Real Estate Insider News

HARP Revealed: Thoughts for the Home Buyers and Home Sellers

Posted in Real Estate by mrdublin on October 28, 2011 No Comments yet

Thousands of Americans will find mortgage relief in what the Obama Administration claims is an attempt to prevent economic and political fallout in housing crisis. This move is in direct correlation to Obama’s new rules on federally guaranteed loans, as part of his efforts to address economic troubles and various challenges faced by homeowners and investors.

The Obama’s Administration made the efforts despite the Republicans’  block on a majority of his proposals. But critics said it’s finally time that the President make a move to improve (or technically, save) housing in the country. In fact, his lack of action with respect to the home foreclosures and other housing crisis has resulted in demands from his own allies to do something!

These new bailout plans known as the Home Affordable Refinance Program (HARP 2.0), however, are questionable in terms of scope of benefits. Under this proposal, homeowners who are still current on their mortgages are still able to refinance even if the value of their home has dropped lower than what they still owe. But what percent of the population can benefit from it? Will it really be that beneficial to majority of people suffering from mortgage debt?

An explanation of the things one should consider before thinking they could benefit from the mortgage bailout plan was revealed in an interesting feature article:

Will you qualify for the revised HARP (HARP 2.0) program…will this program really work to ‘save housing’?

…few things to consider:

  1. There are 11,000,000 underwater owners in the US. (and growing). Estimates are that HARP 2.0 can only ‘help’ 10% of those underwater owners…big reason, the owner must be current on their mortgage. If you are late, don’t apply. Of the estimated 11 million underwater owners nearly half are already behind on their payments, in default.
  2. HARP 2.0 has nothing to do with homes already foreclosed. There are millions of homes readying to become REO listings over the next 12-24 months. Millions of homes that will be put for sale and discount prices. What effect will this have on property values?
  3. 3) Did HARP 1.0 work? The HARP program in its current form has fallen well short of its intended target of 4-5 million homeowners, helping just 894,000 of which only 70,000 were significantly underwater.
    4) THE BANKS have to agree to participate in HARP 2.0. Its estimated that the banks will ‘lose’ 15,000,000,000 (15 BILLION) if they participate with this new program. Do you think banks will be eager to participate in 2.0?
    5) AND THE BIG QUESTION….how many owners does the Obama Administration think HARP 2.0 will help? Their answer…’Time will tell’. In other words, they have no idea.

So, I ask you….does the new HARP 2.0 offering any real substance and hope or will this program follow the same path as HAMP and all the other failed efforts?”

Courtesy: Real Estate Insider News

Principal Reduction Modifications – To Reduce Or Not To Reduce..That Is The Question!

Posted in Real Estate by Jake on August 24, 2011 No Comments yet

Well, we’ve had about two and half years now of government intervention in the mortgage and banking industry and I’ve got to tell you, things are still terrible!  HAMP was/is a dismal failure with a 2 to 4% success rate in helping homeowners keep their homes, depending on which source you get your information from.  Conversions form trial to permanent are right at 50% +/-.   What is more disturbing is the default rate.  The number of people that are right back in arrears after a HAMP workout…is upwards of 21% and projected to go above 40% over the next few years.  Remember TARP?  Well the homeowner assistance portion was supposed to be 75 billion.  The government has spent less than 5 billion on the HAMP program so far!  Where is the money??  Typical government waste, fraud and abuse…!  Not that throwing more money at it would help, mind you…it’s just the principal of it. (no pun intended)

HAMP…More questions than answers..

HAMP was supposed to provide relief for people who had been impacted by the economy and/or the sup-prime meltdown that occurred in this country.  However, the only thing that banks would talk about were rate reductions or term extensions or both…with little or no consideration given to mark-to-market, (better known as principal reduction) of existing mortgages,  most of which were and are grossly under water.   This stalwart attitude on the part of banks has spurred a tremendous amount of controversy on all sides of the moral and political spectrum raising questions about recovery, capitalism, our free market system, fairness, responsibility, honor and so on!   I have my views on the issue and I can definitely understand both sides of the argument.

All for one or all for all…

But what is right to get this housing market off it’s ass and moving again?  What is more important than our nation getting back it’s footing and once again revving up our massive economic engine?  It’s not going to happen until housing stabilizes and begins to, once again, become the cornerstone for family wealth building in this country.  When people begin to sense that their single biggest investment is again, in fact, an investment…they will buy stuff!!  Like cars and durable goods and clothes and, well you get the picture!  So…should the banks reduce principal as part of  HAMP or their own private workout programs?  Should it be across the board to include strategic defaulters who just don’t like the fact that they are underwater, but are not financially distressed?  Should it be tied to a certain percentage of the underwater difference or should it be marked-to-market as determined by full appraisal?  Please comment…

The HAFA Alternative

Now we have HAFA, another government backed program designed to complicate the short sale process!  Well, not really…but it sure seems to get in the way of doing a quick and easy short sale.  Homeowners have to write a letter opting out of the HAFA alternative so that they don’t have to go through the same ridiculous paperwork fiasco as a HAMP workout to be given “permission” to short sell their home and receive move out assistance (a bribe).   The move out assistance is really so that pissed of homeowners don’t trash their home out of anger when they leave.  The irony in all of this is simply this:  The banks have to agree to reduce (short) the loan balances in a short sell to make the property go away.  In other words, they have to reduce the principal balance in order to sell the home!  Go figure!!

10,000 HAFA Short Sales And Banks Still Don’t Get It!!

Posted in Short Sales by Jake on August 9, 2011 No Comments yet

Servicers completed 10,438 short sales through the government’s Home Affordable Foreclosure Alternatives program since it launched in April 2010, according to the Treasury Department.
HAFA was designed to provide an incentive to servicers for completing short sales and deeds-in-lieu of foreclosure for loans that fail out of the larger Home Affordable Modification Program.
Through June, servicers started 21,412 short sales and DILs, up 20% from the month before. A total of 10,754 were completed, up 25%.  JPMorgan Chase is the programs leading performer, completing nearly 3,600 through the program, including nearly 1,000 in June alone.  Wells Fargo was second, completing more than 3,100 since the program launched and roughly 700 in June.
Bank of America completed 1,873 HAFA transactions, an increase of roughly 200 in the month.

 

Pam Marron, a senior loan officer with Gold Start Mortgage Financial Group in Tampa Bay, Fla., said more and more homeowners in negative equity view a short sale as their only way out. Many, she said, are defaulting because banks require them to do so in order to qualify for a short sale.  “The growing problem in Florida is the alarming increase in the number of short sale listings that are coming onto the market. These people are still employed but severely underwater and are having to short sale because they are not able to pay the vast difference owed between the mortgage amount and the value of these homes,” Marron said.
“Banks are requiring homeowners to default in order to qualify for the short sale.”  In 22% of the HAFA agreements started — equal to roughly 4,700 mortgages — the homeowner began a HAMP trial but later requested a HAFA agreement or was disqualified from HAMP.

Pay People To Pay Mortgages?

Posted in Real Estate by Jake on July 14, 2011 No Comments yet

“At what point is moral hazard trumped by corporate survival and the cold hard need to get people to pay their mortgages? The answer is: Now.  As home values continue to fall and more borrowers fall into a negative equity position on their home loans, those who stand to lose, banks and investors, are working to keep borrowers current.  To date, they have focused on delinquent borrowers, offering loan modifications and foreclosure alternatives, like short sales and deeds in lieu of foreclosure.

Last fall, New Jersey-based Loan Value Group launched a new business model, offering lenders and mortgage investors a way to keep their current, but underwater, borrowers current through cash incentives.  It’s called Responsible Homeowner Reward, and today, one of the nation’s largest mortgage insurers, PMI Mortgage Insurance, joined in.  Here’s how it works. Borrowers pay nothing. They sign up with the program, promising to keep current on their mortgages for a certain period, generally 36 to 60 months (LVG has worked out the contract with the participating lender/investor).  After that period, the borrower will be paid anywhere from 10 to 30% of the loan principal, depending on the contract, in cash. The lenders/investors pay LVG, which receives a servicing fee, and LVG pays the borrowers. Again, the borrowers pay nothing for this bonus.

Even PMI is getting into the act

The PMI deal works the same, with PMI paying a scaled reward for select borrowers over a five-year period. If the borrowers stay current, they earn the payoff over the five years and receive the cash at the end. PMI created its own subsidiary, Homeowner Reward, but that subsidiary will work with LVG, and PMI will pay LVG an administration fee. To date, 38 states have borrowers enrolled in the LVG program, totaling approximately 10,000, according to LVG. The largest number of borrowers are from the hardest hit states, California, Florida, Arizona, Nevada and Michigan.  So far, RH Rewards has offered, but not paid out, $107,393,922, according to the company’s website.  ‘All of those states have achieved greater than 50% reduction in default rates than respective control group,’ said an LVG spokesperson.

Okay, so now that we get it, we have to ask what exactly are we getting here? From a purely business perspective, it makes sense.
By targeting borrowers with the most negative equity and therefore at the greatest risk of strategic default, lenders and investors are cutting their losses by keeping the borrowers current. They stand to lose more in a foreclosure.  But does it sound slightly ironic to anyone else that a mortgage insurance company, whose business is to insure loans by charging borrowers premium fees, is now paying those very same borrowers back to stay current on the loans they’re insuring?  ‘For borrowers in our pilot program, Responsible Homeowner Reward (SM) provides an incentive to stay current on their mortgage by helping them earn an offset to the decline in home values. Such programs, if successful, could reduce the incidence of foreclosure, which could help stabilize house prices and stabilize communities,’ said Chris Hovey, PMI’s SVP of Servicing Operations and Loss Management.

Strategic default is the only card left

Like I said, it’s business, a numbers game where companies have now figured out how much they need to pay to avert a larger loss.
Apparently we have hit that tipping point where strategic default is now so pervasive and so acceptable that companies are forced to pay borrowers to stop.  So what exactly is the difference between that and principal write-down, which the big lenders seem to abhor as a bigger moral hazard even for borrowers facing foreclosure?  In an interview with HousingWire back in April of this year, the managing partner of LVG, Frank Palotta, said, ‘There is little focus on loss-mitigation efforts for current loans, as these homeowners typically pay. As a result, the vast majority of these homeowners are left with no other option than to become ‘the squeaky wheel’ by becoming delinquent in order to receive a call from their servicer.’

courtesy:  Diana Olick

Surge In Short Sales…No Thanks To The Government

Posted in Short Sales by Jake on June 20, 2011 No Comments yet

This from Diana Olick:

“Any time I see a 74% jump in anything, I hear alarm bells, so when the Treasury Department reported just that big a jump in its Home Affordable Foreclosure Alternatives (HAFA) program, I figured there had to be something really big behind it.  And I was wrong.  There’s nothing big behind it, in fact there’s something very small behind it: Small numbers.

HAFA provides financial incentives for servicers and borrowers to do short sales (selling the property for less than the value of the mortgage) and deeds in lieu of foreclosure (basically just giving the property back to the bank). The program launched in April of 2010 and was later streamlined in December, 2010, based on feedback from mortgage servicers, real estate agents and homeowners.  So far, HAFA has completed 7,113 short sales or DIL’s. In April, however, HAFA saw 1,666 completed, up 74% from the 959 done in March.  Why the jump?’  It’s too early to draw broad conclusions,’ says Treasury spokesman Andrea Risotto, noting that Treasury just began reporting the numbers two months ago. She also points to a long reporting lag because the short sale process still takes so long. But none of this is the story.
The 74% jump exists because the numbers are just so small, and that’s the story. HAFA is doing a relatively miniscule number of short sales, when you compare the program to what the big banks are doing on their own.

JP Morgan Chase has done over 110,000 short sales since 2009, now processing about 5000 a month, according to recent reports to Congress, and they are the number three servicer behind Bank of America and Wells Fargo. If you extrapolate that out, the top three banks are probably doing more than 20,000 a month, and they’re ramping up the sales as we speak.  ‘Short sales shot up in the Spring as banks wrestled with foreclosure problems and delays,’ says Guy Cecala of Inside Mortgage Finance. In fact, the Campbell/Inside Mortgage Finance Housing Pulse Tracking Survey reported short sales hit a record high of 19.6% of all home purchase transactions in March. ‘Banks have discovered that short sales are often the fastest and most cost effective way to resolve a severely delinquent mortgage, and they have greatly improved their processing systems (any turnaround times) for handling these transactions.’

Compared to a foreclosure, other sources say, short sales result in smaller losses. There is more financial certainty than from an REO (bank owned) sale many months down the road when the property has likely deteriorated. The banks are currently looking at so many potential REO’s from so many delinquent loans in the pipeline, they’d be ridiculous not to try to short sell as many as they possibly could.  Some servicers are aggressively seeking out borrowers for short sales.  ‘Chase reaches out to borrowers who have already listed their homes or were recently denied a modification to initiate the short sale evaluation process. The goal is to have as much paperwork completed as possible prior to receiving the offer, thereby reducing the time from offer receipt to approval,’ a Chase spokesman explains.

But why, if HAFA actually pays borrowers and servicers to do short sales and DIL’s, would banks be doing so many outside of the program?  ‘HAFA is a taxpayer funded program, so it has eligibility requirements targeted at a certain segment of the population,’ says Risotto, noting that the program is for owner occupants who can demonstrate financial hardship and whose first mortgage is less than $729,750. ‘HAFA is not meant to be for every person looking to do a short sale,’ she adds.  That knocks out investors, jumbo loans and borrowers who don’t meet the ‘hardship’ requirements of the Treasury. The big banks are likely more lenient on that last one, again knowing that a short sales will be cheaper in the end than a foreclosure.”

Is Housing As Bad As It Seems?

Posted in Real Estate by Jake on June 20, 2011 No Comments yet

As the housing market started to weaken earlier this year, analysts feared that the seasonal bump would not materialize at all – a sure sign of deepening problems that could tip the economy back into recession.  From January through to March, home prices fell so far that they are now back to levels not seen since the middle of 2002, according to the widely watched S&P/Case-Shiller Index.  Slowing job growth and declining consumer confidence added to the perception that the market was worsening.

What do the Realtors Say?

And yet interviews with realtors in half a dozen cities around the country paint a different picture. They say that the volume of sales and prices started to strengthen in April and have continued to gain momentum through the first weeks of June.  The housing market in many US cities is performing better than recently released national data would suggest.  List prices rose in 24 of 26 cities tracked by Altos Research in May, with San Francisco, Washington and San Jose, California, showing the biggest gains.  New York and Las Vegas were the only two cities in the index where prices declined.  A separate index compiled by CoreLogic that tracks prices in 6,507 postal codes rose slightly in April compared with March – the first such increase since a homebuyer tax credit that helped prop up the market expired in April 2010.  It may well be the beginning of a reversal,” said Mark Flemming, CoreLogic’s chief economist.

No one is suggesting there is a boom under way, only that the market may not be as bad as some recent analysis has suggested.
Most predictions call for at least a 5% price decline this year and no bottom until 2012. Despite the hand-wringing, there are encouraging signs.  California, hard hit by the housing crisis, has seen a notable pick-up. “People are still unsure, because there are a lot of mixed signals,” said Jim Hamilton, the former head of the California Realtors Association. “But, overall, more buyers are coming into the market.”

Luxury housing leading the recovery

The housing market is showing “signs of improvement” with help from luxury home sales, Toll Brothers Chief Executive Douglas Yearley said yesterday.  “There are some signs luxury is leading us out of this a little bit,” he said. “We’re clearly off the bottom.”  But while Toll is a builder of those luxury homes, the CEO expects sales the rest of the year to be relatively flat.
That’s despite 60% of Toll sales coming from the northeast corridor of Boston to Washington, D.C., which was not hit with the same housing problems as Las Vegas and Florida, among others.
“I think in pockets we’ll see some success,” Yearley said.
“The good news is pricing has definitely stabilized. We’re not seeing price reductions. In some isolated cases, we have some pricing power, we’re able to raise prices.”  He added that after five or six years of waiting, buyers want “to move on with their lives and I think they’re done trying to time the perfect point to get in the market. They’re taking advantage of great interest rates. Affordability’s at an all-time high…It’s helping us but we have a long ways to go.”

West Is Now In Double Dip..Prices Sliding

Posted in Real Estate by Jake on April 10, 2011 No Comments yet

According to DSNews.com,  new data released by Clear Capital shows that home prices in the western part of the country are sliding again, down 4.3% over the first three months of this year.  Granted housing is inherently local, but the company says, taken on the whole, the West region has now officially entered double-dip territory, with home values hitting lows not seen since 2001.  Across the rest of the United States, though, the valuation firm argues that negative forecasts have been “overstated,” as prices in the South and Midwest have remained flat since the beginning of the year and prices in the Northeast have slipped just 0.5%.

According to Clear Capital, data through March 2011 in the Midwest, South, and Northeast regions is “encouraging” as home prices have managed to find a bottom in the midst of ongoing foreclosure pressures and the traditionally slow winter season.  “The latest data through March supports our view that many markets are continuing to see relief from the significant price declines we observed through January,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital.  “Looking deeper at the disparity between the West and the other regions, we find that the rate of change in REO (bank foreclosures) saturation continues to serve as a leading indicator of home prices.

For example, out of all the regions, only the West showed acceleration in its REO saturation from the previous quarter,” Villacorta explained.  Clear Capital says the region’s underperformance in home prices reflects the extent distressed activity plays in western markets.  Recently, distressed activity as a proportion of total sales has climbed nearly 10% since the second quarter of 2010, and now stands at 40.8% of sales, according to the company’s study.  The poor showing in the West pulled home prices at the national level down 1.3% during the first quarter of this year, Clear Capital reports.  But looking ahead, the company says should the traditional spring and summer buying seasons prove substantial, national home prices could reach positive quarterly gains before the end of 2011. However, Clear Capital was quick to add that distressed activity remains high and will likely void any gains in the West.

Short Sales And The Effects On Home Prices

Posted in Real Estate, Short Sales by Jake on April 9, 2011 No Comments yet

This from Diana Olick:

“Home prices fell 6.7% in February year over year, according to a new report from CoreLogic. That numbers includes distressed sales, that is, sales of foreclosed properties or short sales, where the bank agrees to let the homeowner sell for less than the value of the mortgage. If you take those sales out, however, home prices were basically flat.  ‘When you remove distressed properties from the equation, we’re seeing a significantly reduced pace of depreciation and greater stability in many markets,’ notes CoreLogic’s chief economist Mark Flemming. ‘Price declines are increasingly isolated to the distressed segment of the market, mostly in the form of REO sales, as the stock of foreclosures is slowly cleared.’  Distressed sales, though, still make up more than a third of all home sales, according to the National Association of  Realtors, and that number is likely to rise at least in the near future. The banks have slowed the process of foreclosure, and that has reduced the num  ber of bank owned properties hitting the market lately, but it’s a whole different story with short sales.

‘Absolutely we can see on the ground, it’s just happening,’ says Robert Cruz, a real estate broker just south of San Francisco who deals primarily in short sales. ‘The banks are asking us to go out and engage the borrower, find the borrowers who have defaulted or re-defaulted and list the properties before they have to foreclose.’  Short sales used to be a long, tedious process with a very low success rate. ‘Short sales used to be a waste of time,’ Cruz remembers. ‘Now it’s totally changed.’  Much of that is due to banks streamlining the process and a new government incentive program, but much of it is coming from the banks themselves.

Cruz says in the first quarter of this year his firm’s short sale closings were up at least 60%, thanks to the banks and servicers being far more aggressive in pursuing them; not only are they pursuing them, but they are paying for them. While the government’s Home Affordable Foreclosure Alternative Program offers borrowers $3000 in ‘relocation assistance’ after successful short sales, Cruz says some of the banks are paying borrowers up to $25,000. He says the banks know the sellers are more savvy today and know they can live rent free for at least a year before a bank takes possession of the home in foreclosure. $3000 isn’t much incentive to move quickly; $25,000 is.  ‘It’s a sea change,’ adds Cruz.  So why am I telling you all this? Because if short sales continue to increase at this rate, even just this year, that’s going to push the home price numbers down even further. Sure, if you take out the short sales, the numbers will look better, but those big headline numbers generally include short sales, and that will further erode confidence. More short sales will also force organic sellers and home builders to try to compete with lower prices. Short sales may be better for the banks and better for borrowers’ credit scores, but they will take their toll on the greater market.”

DOJ Meeting Over Modifications And Foreclosure Practices Gets Off Slowly

Posted in Real Estate, Short Sales by Jake on April 1, 2011 No Comments yet

This from CNBC’s Diana Olick:

“At the end of a day-long negotiation session over the foreclosure paperwork mess at the Department of Justice, Iowa Attorney General Tom Miller and Associate Attorney General Thomas Perrelli came out for a brief chat with reporters.  They essentially said nothing.  Miller: ‘We had a good first meeting with the banking and servicer industry- emphasis on good and first. It was a first meeting, it was a breaking of the ice, and that takes some time and is part of the process. The discussion was good—I think it was on a good level, given the exchange of ideas and rationale and principles. I think we have a long way to go—again emphasis on first meeting.’  Perrelli: ‘Tom Miller is a fantastic partner, we’re lucky to be working together. I’ll echo what Tom said, I think it was a very productive first meeting, with serious discussion of a wide range of challenges and problems in the mortgage servicing industry.’

The banks weren’t talking, at least the representatives in the meeting weren’t talking, nor were their spokespeople. But big bank executives have been commenting on the biggest sticking point in a potential settlement over foreclosure practices: Principal reduction.  Some of the State AGs, including the lead on the investigation, Miller, as well as federal regulators and administration officials appear to be looking toward principal forgiveness as the punishment the banks should pay. But as recently as last night, JP Morgan Chase’s Jamie Dimon told reporters, ‘Yeah, that’s off the table.’  This morning the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) put out their quarterly ‘Mortgage Metrics Report’ for Q4.

It showed just 2.7 percent of modifications made in the quarter by national banks and federal thrifts (that includes Fannie and Freddie) included any principal reduction. The banks did the vast majority of the reduction with Fannie and Freddie doing none. But principal reduction fell dramatically, over 60 percent from year ago as a modification tool, meaning banks are less and less inclined to do it.  I’m not exactly sure what will come out of these endless ‘negotiations’ over the so-called ‘robo-signing’ scandal, other than the banks trying to push foreclosures through and out of the system before any penalties come down the pike. The longer the negotiations drag on, the better for the banks and the worse for consumers. Federal regulators may come out with something sooner, given that they are less worried about the political ramifications of what they do than the state attorneys general.”

Obama Tries To Force Mortgage Deal…May Lose HAMP

Posted in Real Estate by Jake on February 24, 2011 No Comments yet

The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America’s largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration’s proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won’t be borne by investors who purchased mortgage-backed securities, these people said.  If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said.  But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation’s largest mortgage servicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.

So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan.  Several federal agencies have been scrutinizing the nation’s largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.

A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff.  “Nothing has been finalized among the states, and it’s our understanding that the federal agencies we are in discussions with have not finalized their positions,” said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.

House May Kill Obama’s Rescue Plan

The House of Financial Services Committee has scheduled a vote next week on legislation that would shut down the Obama administration’s key housing rescue programs.  The panel’s Republican leadership said it will consider a bill to terminate the Home Affordable Modification Program, which it said has failed to help a sufficient number of distressed homeowners to justify its cost.  It also will vote on bills to shut down a Federal Housing Administration refinancing program and a program to stabilize neighborhoods suffering from heavy foreclosures.  “In an era of record-breaking deficits, it’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners,”  Financial Services Committee Chairman Spencer Bachus said in a statement.

Where Is Housing Headed? Strategic Defaults Or Foreclosures

Posted in Real Estate by Jake on February 11, 2011 No Comments yet

I can’t help but be touched, shocked really,  by the sheer numbers of people I come into contact with on a daily basis who have lost their home recently…or who haven’t made a payment in many, many months (somtimes years) or who have been totally and completely frustrated in their attempts to cut through the bank BS and modify their home mortgage!  The numbers are staggering and I think, somewhat under-reported.  Just yesterday, in my normal day to day running my business life, I connected with four such people.

Waiting Or Ignoring The Problem Will Not Make It Go Away!

Two called me for help…unfortunately, a day late and a dollar short.  In both cases, their homes were foreclosed went back to FNMA in late January and they weren’t even aware the sale date had come and gone!  The other two were months behind in payments, in denial about the effects on their credit and life, but yet coming to the point of realization that they had to do something.  These folks are indicative of the thousands, probably millions, of people all over the country who have to get it together, come to grips with their situation and decide whether to let the bank foreclose with no fight or short sale attempt or… strategically default and move on!  Tough stuff to deal with and not getting any easier….and certainly, no fun in the long run!

Moving On…So Where Are We?

“First came the surge in negative home equity, now a surge in mortgage interest rates. Add it up, and it throws a big pail of underwater on the hope for a big spring housing surge. At face value on their own, two reports out today shouldn’t cause too much concern, but the effect they have on consumer confidence is bigger than both of them.  The average rate on the 30 year fixed rate mortgage is now over 5%, which when you think historically is really a great rate, but that was then, and this is now. Consumer confidence and jobs are the two biggest drivers in the housing market.  ‘Because we had rates as low as 4.25% last year, any increase — particularly to above 5% — is likely to reduce loan applications as borrowers adjust to a higher interest rate environment,’ says Guy Cecala of Inside Mortgage Finance.

The biggest effect of course is in refis, which dropped over 7% last week, according to the Mortgage Bankers Association’s weekly survey. Last year refis accounted for two thirds of all mortgage originations, so that will clearly change with the new rates. The question is how the rates affect home purchases. Purchase applications also dropped last week, but just by 1.4%.  ‘We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis,’ says the MBA’s Michael Fratantoni.  Higher rates will make loans a little bit more expensive, but not all that much. The bigger driver of mortgage cost will be the new regulatory rules on the horizon and potential changes to Fannie Mae and Freddie Mac loan limits and fee structures.  But rising rates also put a bigger burden on those trying to modify or refinance troubled loans, especially those underwater. The new report from Zillow notes that the foreclosure freeze from the ‘robo-signing’ scandal put an artificially high number of borrowers in the underwater pool because many were supposed to be foreclosed and weren’t.

No Equity = More Strategic Defaults

Still, as was tweeted yesterday from Laurie Goodman of Amherst Mortgage Securities, ‘Home equity is the single most important determinant of mortgage default, not unemployment.’  Zillow’s chief economist, Stan Humphries, agrees: ‘Once you get above 125-130% loan-to-value ratios, that means that you’re 25 to 30% underwater on your house, at that point really you start to see a higher rate of strategic default, that’s people actually feeling a sense of futility about making their mortgage payments and they walk away from the mortgage.’  And how high will rates go? ‘I think if the 10-year Treasury yield remains at around 3.70%, mortgage rates will head to 5.25% over the next two weeks,’ opines Peter Boockvar of Miller Tabak. Again, that’s still historically low.  ‘Realistically, long-term mortgage rates in the 5-6% range over the next few years would be affordable enough to support a ‘normal’ housing market all things being equal,’ claims Cecala.  Unfortunately nothing in today’s  housing market is normal or even approaching equal.”

A Flood Of Foreclosures Coming…

Posted in Real Estate by Jake on February 11, 2011 No Comments yet

“You can talk all you want of renewed interest in housing, slowly increasing sales and supposed stabilization in prices, but the elephant in the room is slowly growing, and banks, Fannie, Freddie and the government know it. I’m talking about foreclosures.  Economist Mark Zandi, often quoted by lawmakers on both sides of the aisle, told the Senate Budget Committee this morning that while he’s ‘optimistic’ with regard to the economy’s prospects, ‘At the top of my list of concerns, at least in the near term (6 to 12 months), is the ongoing problem in the housing market and the foreclosure crisis.’  REO inventory is rising, he proved through some slides. Four million seriously delinquent loans, out of 50 million first mortgage loans, ‘so that’s a lot.’ And while he noted that the problems appear to have peaked, there are still over 600,000 properties in REO, which will only put more pressure on prices when they come to market.

Loan Mods Not Doing The Job!!

Zandi called modification efforts ‘inadequate,’ despite the 1.5 to 2 million modifications a year.  ‘In the context of all the problems that we’ve got, it’s still quite small,’ he noted.  Zandi’s biggest concern is that 14 million homeowners, according to his calculations, are underwater (owe more on their mortgages than their homes are worth), and 4 million of those are underwater by more than 50%. ‘That’s deeply underwater,’ he elaborated.  Observe the following banking proposals:

  • Chase announced yesterday that it has plans to add 25 new Chase Homeownership Centers in 19 states this year. ‘The best way to help borrowers find ways to stay in their homes is to sit down face-to-face and discuss their individual circumstances,’ writes Chase Home Lending CEO David Lowman in the press release.
  • Wells Fargo  is holding 20 mediation events across the country this year, inviting more than 150,000 borrowers who are behind on payments. These will be held at hotels and convention centers, much like the non-profit Boston  -based NACA has been doing for years.”
  • Fannie Mae is expanding its loss mitigation efforts, trying to modify more borrowers, and if not, trying to find foreclosure alternatives, like short sales or deeds in lieu. They are also testing a program in Florida to negotiate modifications before going to court.  4. Earlier this week, the Hope Now coalition of servicers and investors reported it had done well more than twice the number of loan mods in 2010 than the government’s Home Affordable Modification Program.”

“This testimony just happened to coincide with a few blurbs of information I’ve noted over the past few days.  Bottom line: banks, Fannie, Freddie…they really get it now. Foreclosures are ramping up again and are endangering today’s fragile housing recovery. Rick Sharga at RealtyTrac claims we have yet to see the foreclosure peak. Regardless, even if 2011’s number is slightly lower than the peak, it is more critical now than ever before to stem the tide because housing is struggling to recover on it’s own without government intervention (other than incredibly low mortgage rates, which don’t appear to help much).  Last year various government incentives helped mitigate the foreclosure losses to the overall market; the market doesn’t have that benefit now.  Zandi says one answer is for Fannie and Freddie to stop charging higher refi rates for borrowers with low credit scores and higher LTV’s (loan to value ratios) in order to facilitate more refinancing, even when borrowers are underwater. These are loans the GSE’s likely already own or back. ‘It will cost Fannie and Freddie in interest income, but they will benefit in the form of fewer foreclosures,’ argues Zandi.”

Article courtesy Diana Olick – CNBC

Republicans Want End The HAMP Fiasco

Posted in Real Estate by Jake on February 2, 2011 No Comments yet

House Republicans introduced a bill this week that would repeal the Home Affordable Modification Program (HAMP). The bill was introduced by Reps. Jim Jordan (R-Ohio), Darrell Issa (R-Calif.) and Patrick McHenry (R-N.C.), who cited yet another report from government watchdogs about the program’s underwhelming performance. The Treasury Department introduced HAMP in March 2009 allocating nearly $50 billion in incentive payments to servicers, borrowers and investors for modifying mortgages on the verge of foreclosure. Through December, servicers have modified more than 579,000 loans, well short of the 3 million to 4 million the Obama administration targeted. In December, the Congressional Oversight Panel estimated the program ultimately will reach between 700,000 and 800,000 borrowers.

If the bill passes, the Treasury will be unable to provide assistance under HAMP, which was authorized under the Emergency Economic Stabilization Act of 2008. The bill also would terminate all contracts between the servicers and the Treasury. “HAMP is a colossal failure,” Jordan, co-sponsor of the bill and chair of the oversight subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending said. “In many cases, it has hurt the very people it promised to help. It’s one more example of why government interference in the private sector doesn’t work and that’s why it should be repealed.”

Mortgage Delinquencies Declining….Other Signs Of Life

Posted in Real Estate by Jake on December 9, 2010 1 Comment

TransUnion expects the national mortgage delinquency rate to fall by about one-fifth to 4.98% by the end of 2011. The company projects the rate at 6.21% at the end of 2010, representing a nearly 10% decrease from the prior year. The national delinquency rate fell 3.5% from the second quarter to third quarter, which was the largest quarterly drop in four years, TransUnion said in late November. The number of delinquent mortgages peaked in July 2009.  Slowly improving employment figures and continued stabilization in housing prices will fuel the declining delinquency rates, according to Steve Chaouki, group vice president in TransUnion’s financial services unit.

“While there is continued price pressure in many markets, we expect a growing number of areas of the country to experience a rise in property values along with some stabilization of values in those states and markets hardest hit by the recession,” he said.  TransUnion said the national delinquency rate rose more 50% between 2008 and 2009, which was on top of a 53% gain the previous year and a 54% increase in 2006.  The company expects Arizona, Florida and Nevada to see the largest declines in mortgage delinquencies next year, but those three states will also have the highest rate of loans 60-days past due, as well.

Tax cuts extended?

President Obama announced a tentative deal with Congressional Republicans on Monday to extend the Bush-era tax cuts at all income levels for two years as part of a package that will also keep benefits flowing to the long-term unemployed, cut payroll taxes for all workers for a year and take other steps to bolster the economy.  “It’s not perfect, but this compromise is an essential step on the road to recovery,” Mr. Obama said. “It will stop middle-class taxes from going up. It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs.”  The package will reduce the 6.2% Social Security payroll tax on all wage earners by two percentage points for one year, putting more money in the paychecks of workers.

For a family earning $50,000 a year, it will amount to a savings of $1,000. For a worker slated to pay the maximum tax, $6,621.60 on income of $106,800 or more in 2011, the cut will mean a savings of $2,136.  That will replace the central tax break for middle-and low-income Americans in last year’s economic stimulus measure, White House officials said.  The deal will also continue a college-tuition tax credit for some families, expand the earned-income tax credit and allow businesses to write off the cost of certain equipment purchases.  The top rate of 15% on capital gains and dividends will remain in place for two years, and the alternative minimum tax will be adjusted so that as many as 21 million households will not be hit by it.  In addition, the agreement provides for a 13-month extension of jobless aid for the long-term unemployed.

Everyone hit in the foreclosure crisis

The foreclosure crisis has hit lower-income communities the hardest, but it has touched every slice of the market, and resolving it may well be harder in places where homes are too expensive to attract investors with ready cash.  Naperville, a high-end Chicago suburb, has more than 230 homes valued at over $300,000 in danger of seizure, according to RealtyTrac, a foreclosure data provider. Monmouth County, a New Jersey Shore area that boomed in the early 2000s, has 462 over $400,000.  Ladera, an unincorporated community of about 25,000, is conspicuously affluent — it’s home to Tamra of The Real Housewives of Orange County. The schools are strong, the surrounding chaparral foothills pretty.  Now defaulters may live for a year or more with a giant mortgage they can’t fully pay. Not counting homes already in the foreclosure process, about one in 10 Ladera mortgages is at least 30 days late, according to LPS Applied Analytics. And houses in the foreclosure process have been deli  nquent an average of 16 months, up from seven in 2008.

The national figures are almost as ugly. And what they show is that our collective real estate hangover is far from over. And limbo will start to last even longer as the “robo-signing” scandal raises questions about the integrity of the foreclosure process.  To judge from recent stories about poorly (if not fraudulently) documented seizures, you would think servicers are snatching up houses quickly. In fact, rushed doc signings and long delinquencies are two sides of the same problem: During the boom, lenders tripped over themselves to create millions more ultimately unsustainable mortgages than they can now unwind.  Yet for the housing market to return to health, there needs to be resolution for these zombie loans that won’t ever be paid in full and won’t quite die either. Until they can be eliminated through short sales, foreclosures, and permanent modifications, the zombies will keep home values from recovering and suck momentum from the economy. They’re not departing soon  .  As Christopher Thornberg of Beacon Economics in Los Angeles puts it, “This is going to bleed on for years. People will wander in and out of trouble.”

Auto credit market thawing

The percentage of loans going to subprime buyers rose 8 percent in the third quarter, their first year-over-year increase since 2007, according to a report issued Tuesday by Experian, a credit reporting agency. For new cars, the percentage of loans going to subprime buyers rose 13 percent over the July-September period in 2009. The increase for used cars was 3 percent.  The majority of loans—63 percent—still going to buyers with prime credit scores, which is defined as a 680 or above. But even that is settling into a more normal pattern. Before the recession, when credit was very loose, just 51 percent of loans were going to prime buyers, according to Melinda Zabritski, director of automotive credit at Experian. Last fall, when credit was tight, 66 percent of loans went to prime buyers.  Another sign that the credit market is thawing: The loans people are getting are covering larger amounts and have longer terms. The average amount financed for new cars rose $2,530, to $2  5,273, over the third quarter of last year, while the average amount financed for used cars grew $977 to $16,706. The average terms rose by about a month, although the lowest tier buyers—those with scores of 550 or less—saw their terms rise by nearly four months.  Zabritski said the loosening in auto lending is likely to continue to grow in the near term.

Mortgage rates are in your head!

“It’s like home buyers today are suffering from post-traumatic stress disorder.  The housing crash, foreclosure crisis and banking scandals have all combined to make buyers more sensitive than ever before.  That’s why the slightest fluctuation in mortgage interest rates have huge emotional power today.  ‘I think some people get a little fearful of what the higher payment might mean to them but they don’t’ realize how minimal the difference might be,’ notes Eric Gates, President of Apex Home Loans in Rockville, MD.  In fact, Gates did a little math for me on the change in your monthly payment at different interest rates, if you buy a $200,000 home (just above the national median) with 20% down.

–  4.25%: $787.10
–  4.5%: $810.70
–  4.75%: $834.64
–  5.0%: $858.91

‘Keep in mind that difference is mainly interest which is tax deductible. So, someone paying an extra $24 a month in interest who is in a 25% tax bracket is really only paying an extra $18 a month after the tax write off of the extra interest,’ Gates adds. Yes, cutting the mortgage interest deduction is currently being debated as a deficit-reducer, but the proposal is to reduce the cap from $1 million to $500,000, so it’s not going to affect the buyers I’m using as an example here.  The fact is that we’re talking less than $100 a month, for a full percentage point increase.  Obviously big cities or in-demand housing markets, where home prices are far higher than the national average, will see bigger jumps in their monthly payments, but if they’re able to afford the higher priced home, the change in monthly payment would likely be comparable in its impact on their overall budget.

So why, then, do mortgage purchase applications fall every time rates go up slightly and the opposite when they go down?  The answer is that it is largely emotional. Home buyers seem to ignore what they can afford and focus instead on what they think they somehow deserve in today’s badly beaten market.  ‘Instead of focusing on what’s my payment going to be, they see that their friend got 4.25 and they want that same rate and 4.5 isn’t 4.25 and they think ‘that’s not good enough’,’ says Gates, who has seen that happen more than once. Fear of unemployment also looms large, so buyers are much more careful with monthly payment calculations, even trying to make sure that if they are out of work temporarily they can still make the payments and not go into default.”

7 Million Mortgages Past Due

Posted in Real Estate by Jake on October 18, 2010 No Comments yet

There are 7,018,000 mortgages in the United States that are 30 or more days delinquent or in the process of foreclosure, according to new data from Lender Processing Services (LPS).  The Florida-based analytics and technology firm offered the media a preview Friday of its September month-end mortgage performance figures, derived from the company’s loan-level database of nearly 40 million mortgage loans.

Of the more than 7 million home loans in the country currently going unpaid, 2,055,000 have already commenced foreclosure proceedings. LPS reports that 4,963,000 are in the pre-foreclosure default stages, with nearly half of these falling into the 90-plus-days delinquent bucket.

LPS’ measurement of the U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure) rose to 9.27 percent as of the end of September. That’s a 0.6 percent increase over the previous month, but down 7.8 percent compared to last September.  The nation’s pre-sale foreclosure inventory rate stands at 3.84 percent, according to LPS’ market data – up 1.1 percent from the August reading and 3.6 percent above a year earlier.

LPS says the states with the highest percentage of non-current loans (defined as the total number of foreclosures and delinquencies as a percent of all active loans in that state) include: Florida, Nevada, Mississippi, Georgia, and Louisiana.

The lowest percentage of non-current loans can be found in: Montana, Wyoming, Arkansas, South Dakota, and North Dakota.

LPS will provide a more in-depth review of this data in its September Mortgage Monitor report, is scheduled for release on October 29, 2010.