NAR backs move to extend tax credit
WASHINGTON – June 11, 2009 – The Housing Working Group of Business Roundtable, an association of leading U.S. corporation CEOs, yesterday announced bipartisan proposals to help return stability and growth to the U.S. housing market. “We recognize the earlier efforts made by the Administration and Congress, but strongly recommend taking additional steps to jumpstart the lagging housing market in order to stimulate a broader economic recovery,” says Richard A. Smith, president and CEO of Realogy Corporation and chair of Business Roundtable’s Housing Working Group. “If the housing market is not corrected or stabilized, the tide of the recession is not likely to reverse in the near term, and the slide in the economy overall will continue.” The recommendations include expanding homebuyer tax credit incentives. Among other recommendations, the CEOs also strongly encourage the Obama Administration to keep 30-year fixed mortgage interest rates at historically low levels for the next 12 months, and to undertake a comprehensive review of existing foreclosure mitigation and loan-modification programs. “NAR (The National Association of Realtors®) and our 1.2 million members applaud the Business Roundtable for its sound policy recommendations put forth to reinvigorate our nation’s housing market,” says NAR President Charles McMillan. “The proposal is consistent with the recommendations NAR has advocated and reflects the critical need to continue efforts to bring stability to the housing market.”The specific Business Roundtable recommendations include: 1. Keep mortgage interest rates at historically low levels for at least one year.2. Expand the current first-time homebuyer tax credit incentive from the lesser of 10 percent of the purchase price of the home or $8,000, to a higher limit of 10 percent or $15,000 for all homebuyers. Remove the current income restrictions and include all primary residence purchases for one full year.3. Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates.4. Make permanent the current temporary conforming loan limits.5. Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices. For more information about the Housing Working Group and Business Roundtable, visit its website at: http://www.businessroundtable.org© 2009 FLORIDA ASSOCIATION OF REALTORS®
Friday, June 12, 2009
Mortgage rates rise again
Mortgage rates rise again
WASHINGTON – June 12, 2009 – Rates for 30-year home loans jumped to the highest level in seven months this week, leading to a slowdown in refinancing activity, Freddie Mac said Thursday.The average rate for a 30-year fixed mortgage was 5.59 percent this week, up from 5.29 percent last week, Freddie Mac said. The last time the average 30-year fixed rate mortgage was higher was the week ended Nov. 26 of last year, when it averaged 5.97 percent.Frank Nothaft, Freddie Mac’s chief economist, said the higher rates followed an increase in bond yields, a barometer for interest rates on mortgages and other loans.On Wednesday, the government was forced to lift the yield on 10-year Treasury notes to 3.99 percent to lure in buyers at an auction. That was the highest yield it’s offered since last August, before it started bailing out the nation’s financial industry.Though there are signs that the troubled U.S. housing market is beginning to stabilize, higher rates could threaten or slow down any recovery, since borrowers would be able to borrow less money and might decide to hold off on their purchases.Nothaft said the higher rates “are slowing refinancing activity but not demand for home purchases.”During the three-weeks ended June 5, interest rates for 30-year fixed-rate mortgages rose nearly one-half of a percentage point, Nothaft said. Conventional mortgage applications for refinancing fell each week during that period, while applications for home purchases consecutively increased, according to the Mortgage Bankers Association.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.The average rate on a 15-year fixed-rate mortgage rose to 5.06 percent, up from 4.79 percent last week, according to Freddie Mac.Rates on five-year, adjustable-rate mortgages averaged 5.17 percent, up from 4.85 percent last week. Rates on one-year, adjustable-rate mortgages rose to 5.04 percent from 4.81 percent.The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages, and one-year adjustable rate loans. Fees averaged 0.6 point for five-year adjustable rate loans.
WASHINGTON – June 12, 2009 – Rates for 30-year home loans jumped to the highest level in seven months this week, leading to a slowdown in refinancing activity, Freddie Mac said Thursday.The average rate for a 30-year fixed mortgage was 5.59 percent this week, up from 5.29 percent last week, Freddie Mac said. The last time the average 30-year fixed rate mortgage was higher was the week ended Nov. 26 of last year, when it averaged 5.97 percent.Frank Nothaft, Freddie Mac’s chief economist, said the higher rates followed an increase in bond yields, a barometer for interest rates on mortgages and other loans.On Wednesday, the government was forced to lift the yield on 10-year Treasury notes to 3.99 percent to lure in buyers at an auction. That was the highest yield it’s offered since last August, before it started bailing out the nation’s financial industry.Though there are signs that the troubled U.S. housing market is beginning to stabilize, higher rates could threaten or slow down any recovery, since borrowers would be able to borrow less money and might decide to hold off on their purchases.Nothaft said the higher rates “are slowing refinancing activity but not demand for home purchases.”During the three-weeks ended June 5, interest rates for 30-year fixed-rate mortgages rose nearly one-half of a percentage point, Nothaft said. Conventional mortgage applications for refinancing fell each week during that period, while applications for home purchases consecutively increased, according to the Mortgage Bankers Association.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.The average rate on a 15-year fixed-rate mortgage rose to 5.06 percent, up from 4.79 percent last week, according to Freddie Mac.Rates on five-year, adjustable-rate mortgages averaged 5.17 percent, up from 4.85 percent last week. Rates on one-year, adjustable-rate mortgages rose to 5.04 percent from 4.81 percent.The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages, and one-year adjustable rate loans. Fees averaged 0.6 point for five-year adjustable rate loans.
Home short sale flips nixed
Home short sale flips nixed
TAMPA – June 12, 2009 – It may be a bit tougher now for investors to flip short sales for big profits.Attorneys’ Title Insurance Fund notified its 6,000 member lawyers this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales. A short sale occurs when a mortgage holder agrees to allow a home to sell for less than the mortgage balance so that foreclosure can be avoided.The Orlando-based fund is a major underwriter for lawyers who write title insurance in Florida. In a letter to lawyers, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work.The letter says they involve investors entering option deals with homeowners for “the exclusive right to purchase their property for a period of time.”The investor negotiates a short sale with the mortgage holder by convincing it that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.The problem is that “the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property,” the letter states.The fund’s decision could have a major effect on short sale flips because many investors use lawyers to close deals when traditional title companies won’t.The option contract method has been gaining steam as a way to work off inventory in a bad real estate market.Critics say mortgage holders are misled and don’t realize they could be selling for more. Some real estate agents and buyers complain that the option contracts lock some buyers out of the market. That’s because some types of loans forbid flips.Some lawyers have raised concerns that sellers may have to pay the difference later.But proponents say investors can make money and homeowners can avoid foreclosure. They say mortgage holders would lose even more money if they foreclosed on the home.Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services
TAMPA – June 12, 2009 – It may be a bit tougher now for investors to flip short sales for big profits.Attorneys’ Title Insurance Fund notified its 6,000 member lawyers this week that it will not insure deals made with a popular – but controversial – method for closing flips of short sales. A short sale occurs when a mortgage holder agrees to allow a home to sell for less than the mortgage balance so that foreclosure can be avoided.The Orlando-based fund is a major underwriter for lawyers who write title insurance in Florida. In a letter to lawyers, the fund said it has become aware of short sale programs advertised on the Internet that promise to make investors lots of money with little or no work.The letter says they involve investors entering option deals with homeowners for “the exclusive right to purchase their property for a period of time.”The investor negotiates a short sale with the mortgage holder by convincing it that the price it is offering is the market value of the property. The investor then finds a buyer for a much higher price. The sales happen simultaneously, and the investor pockets the difference.The problem is that “the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property,” the letter states.The fund’s decision could have a major effect on short sale flips because many investors use lawyers to close deals when traditional title companies won’t.The option contract method has been gaining steam as a way to work off inventory in a bad real estate market.Critics say mortgage holders are misled and don’t realize they could be selling for more. Some real estate agents and buyers complain that the option contracts lock some buyers out of the market. That’s because some types of loans forbid flips.Some lawyers have raised concerns that sellers may have to pay the difference later.But proponents say investors can make money and homeowners can avoid foreclosure. They say mortgage holders would lose even more money if they foreclosed on the home.Copyright © 2009 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services
Monday, June 01, 2009
Is the Stimulus Package Working For You
Is The Stimulus Package Working For You?
I would love to know how the stimulus package is affecting your business? I can attest here in West Central Florida that things seem very bleak. If this is a trickle down remedy, it hasn't made it this far South yet. Perhaps a good storm or two would bring some relief? Ouch that is harsh to say out loud but I bet it wouldn't hurt the regions bottom line ; ) I spoke with local hotel owners, restaurants and other businesses and the story seems to be a familiar one, "Things are just really slow." usually followed with a deep breath.
The real estate market as a whole continues to be challenging to say the least with most business being on the low end of the scale. Lots of buzz under 100K, mostly cash buyers with lots of time to wait out the seemingly never ending short sale game all in the hope to perhaps land the BIG one. It reminds me of earlier days fishing opening day for trout along the Paulinskill River in North Western NJ. Everyone got up early that morning hoping to catch the one of a lifetime. We get out to the swollen banks of the river only to be greeted by thousands of other fisherman with the same ideals. There are only SO many fish I thought to myself and SO many fisherman. Perhaps this will be viewed in time as our bottom?
I continue to hear stories from clients that have tried to get their mortgages modified without success only to be left with no action plan going forward, perhaps even a few months late now on payments and the lost look of hope in their eyes. Being a Realtor, we wear many other hats, one getting worn out lately is playing psychologist and financial advisor.
I have one question to ask, when will the rain end and the harvest coming for the American people?
To date, the stimulus package isn't helping me or my family.
I would love to know how the stimulus package is affecting your business? I can attest here in West Central Florida that things seem very bleak. If this is a trickle down remedy, it hasn't made it this far South yet. Perhaps a good storm or two would bring some relief? Ouch that is harsh to say out loud but I bet it wouldn't hurt the regions bottom line ; ) I spoke with local hotel owners, restaurants and other businesses and the story seems to be a familiar one, "Things are just really slow." usually followed with a deep breath.
The real estate market as a whole continues to be challenging to say the least with most business being on the low end of the scale. Lots of buzz under 100K, mostly cash buyers with lots of time to wait out the seemingly never ending short sale game all in the hope to perhaps land the BIG one. It reminds me of earlier days fishing opening day for trout along the Paulinskill River in North Western NJ. Everyone got up early that morning hoping to catch the one of a lifetime. We get out to the swollen banks of the river only to be greeted by thousands of other fisherman with the same ideals. There are only SO many fish I thought to myself and SO many fisherman. Perhaps this will be viewed in time as our bottom?
I continue to hear stories from clients that have tried to get their mortgages modified without success only to be left with no action plan going forward, perhaps even a few months late now on payments and the lost look of hope in their eyes. Being a Realtor, we wear many other hats, one getting worn out lately is playing psychologist and financial advisor.
I have one question to ask, when will the rain end and the harvest coming for the American people?
To date, the stimulus package isn't helping me or my family.
Tax Credit Can Be Used on Closing Costs
HUD: Tax Credit Can Be Used on Closing Costs FHA-approved lenders received the go-ahead to develop bridge-loan products that enable first-time buyers to use the benefits of the federal tax credit upfront, according to eagerly awaited guidance from the U.S. Department of Housing and Urban Development on so-called home buyer tax credit loans that was released today.Under the guidance, FHA-approved lenders can develop bridge loans that home buyers can use to help cover their closing costs, buy down their interest rate, or put down more than the minimum 3.5 percent.The loans can't be used to cover the minimum 3.5 percent, senior HUD officials told reporters on a conference call Friday morning. Thus, buyers applying for FHA-backed financing with an FHA-approved lender that offers a bridge-loan program can get a bridge loan to bring down the upfront costs of buying a home significantly but would still have to come up with the minimum 3.5 percent downpayment.There remain many sources of assistance for buyers needing help with the 3.5 percent downpayment, including many state and local government instrumentalities and nonprofit lenders.In addition, some state housing finance agencies have developed their own tax credit bridge loan programs, so buyers in states whose HFAs offer such programs can monetize the tax credit upfront to cover all or part of their downpayment. These programs are separate from what HUD announced today. The first-time homebuyer tax credit was enacted last year--and improved upon earlier this year--to help encourage households to enter the housing market while interest rates are low and affordability is high. The credit is worth up to $8,000 and is available to households that haven't owned a home in at least three years. The credit does not have to be repaid, and is fully reimbursable, so households can get their credit returned to them in the form of a payment.
Sunday, May 31, 2009
Making an Offer on a Short Sale? What You Need to Know
Making an Offer on a Short Sale? What You Need to Know
Are you looking to buy a new home? Are you thinking that now's a great time to find bargains? Before you make an offer, it pays to know a little about the seller's situation.
If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.
A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.
You're a good candidate for a short-sale purchase if:
You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.
Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.
You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.
If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:
Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.
A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)
Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.
Some of the other risks faced by buyers of short-sale properties include:
Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.
Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.
No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.
The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.
* Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.
Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.
Are you looking to buy a new home? Are you thinking that now's a great time to find bargains? Before you make an offer, it pays to know a little about the seller's situation.
If a home is being sold for below what the current seller owes on the property—and the seller does not have other funds to make up the difference at closing—the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.
A short sale is different from a foreclosure, which is when the seller's lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.
You're a good candidate for a short-sale purchase if:
You're very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller’s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.
Your financing is in order. Lenders like cash offers. But even if you can’t pay all cash for a short-sale property, it’s important to show you are well qualified and your financing is set. If you're preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.
You don’t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property—or you need to be in your new home by a certain time—a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.
If you're serious about purchasing a short-sale property, it's important for you to have expert assistance. Here are some people you want to work with:
Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who's knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.
A qualified real estate professional.* You may have a close friend or relative in real estate, but if that person doesn’t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they've represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as “lender approval required.”)
Title officer. It’s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic’s lien, homeowners association lien, etc.), it's much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you’ve waited for months for lender approval. If you don’t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.
Some of the other risks faced by buyers of short-sale properties include:
Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you’ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.
Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you’ve already negotiated, which may not be agreeable to you.
No repairs or repair credits. You will most likely be asked to take the property “as is.” Lenders are already taking a loss on the property and may not agree to requests for repair credits.
The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.
* Not all real estate practitioners are REALTORS®. A REALTOR® is a member of the NATIONAL ASSOCIATION OF REALTORS® and is bound by NAR’s strict code of ethics.
Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.
Friday, May 29, 2009
Panel says commercial lending losses on the rise
Panel says commercial lending losses on the riseNEW YORK – May 29, 2009 – Commercial lending markets remain stagnant and losses in the sector are likely to sharply increase in the coming years, though government action could help reduce the downturn, a group of politicians and industry executives said during a hearing in New York on Thursday.Speaking before a Congressional Oversight Panel reviewing the impact of government lending efforts’ effects on corporate and commercial real estate lending, Congresswoman Carolyn Maloney, D-N.Y., said anecdotal evidence shows “access to commercial credit is absolutely frozen.”That lack of access to capital could lead to huge losses for banks and lenders in the coming years as loans originated during the peak in commercial real estate come due.Unlike residential real estate loans like mortgages, commercial real estate loans often do not involve much repayment of the principal loan balance and the length of the loans is much shorter. So as the loans mature, borrowers are either forced to refinance the loan or pay off up to the entire principal amount. If borrowers are not able to refinance the loans, defaults are likely to soar, adding to already mounting loan losses, industry experts agree.Richard Parkus, head of CMBS and ABS synthetics research at Deutsche Bank Securities Inc., said nearly two-thirds of outstanding loans packaged into commercial mortgage-backed securities could face trouble refinancing in the coming years. Those loans are worth about $400 billion, he said.Commercial-mortgage backed securities are pools of commercial real estate loans that are packaged and sold to investors. Loans packaged into securities only account for about one-quarter of all commercial loans outstanding, so total losses are likely to be even higher as those held by banks and other institutions also default, Parkus said.However, some who testified at the hearing did say recent government actions have provided a little help to the market and additional actions could help reduce potential risk.Jeffrey DeBoer, president and chief executive of the Real Estate Roundtable, said the government’s Term Asset-Backed Securities Loan Facility, or TALF program, has provided a bit of additional liquidity to the market and helped improve pricing on some asset-backed securities.Adjusting rules used to structure commercial-backed mortgage securities could provide some help, DeBoer said. Currently those regulations often do not allow the refinancing of a loan that was packed in a security until just before it defaults. Easing those restrictions to allow for earlier refinancing would minimize potential losses for investors and fewer defaults, he said.Copyright © 2009 The Associated Press, Stephan Bernard, AP Business Writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
11% of Florida homes in some state of foreclosure
11% of Florida homes in some state of foreclosureORLANDO, Fla. – May 29, 2009 – The faltering economy and falling home prices plunged an additional 99,000 Florida borrowers into foreclosure in the first three months of the year, bringing the total number of home loans in some stage of the foreclosure process to 374,134.With 11 percent of its home loans in foreclosure, Florida ranked first in the country for defaults and was the only state in double digits. The rate was up roughly 2 percent from the previous quarter, according to figures released Thursday by the Mortgage Bankers Association.As job losses mounted and incomes dwindled, more and more homeowners fell behind on their loans, with payment problems socking greater numbers of previously credit-worthy borrowers who have traditional mortgages.The delinquency rates for loans 30 days or more past due stood at 10.67 percent in Florida, or about 378,000 of some 3.54 million loans.The rate dipped slightly from the previous quarter, but that is always the case at the start of the year, said Jay Brinkmann, chief economist for the MBA. The rate nationally was 9.12 percent. Florida’s crisis is particularly acute because of the staggering run-up in real estate values during the housing boom. People rushed to get loans to buy property that, in many cases, they could not afford. When prices collapsed, homeowners were stuck, unable to sell or refinance. Others were caught in adjustable-rate mortgages with payments that soared.With Florida home values continuing to fall, Brinkmann predicted foreclosures would continue to rise through the rest of the year. A large oversupply of new property makes stabilizing home prices in the state likely a distant prospect.“It’s going to take getting demand even with supply just to put a floor under prices. Even then, it may not get it up to a point where it gets buyers back above water,” Brinkmann said.At the end of March, roughly 71 percent of owners who bought in Miami-Dade and Broward counties in the past five years were underwater, or owed more than their homes were worth, according to Web-based real estate services firm Zillow.com.Analysts have said so-called negative equity is one of the biggest reasons why borrowers fall into foreclosure – if they need to sell, they can’t, at least not for enough to cover the debt, or they choose to throw in the towel, thinking it’s better to take their losses and rent.While most lenders have established loan modification programs and are helping borrowers reduce their monthly payments through things like interest rate reductions and extended terms, many homeowners are falling back into default. A recent study by Fitch Ratings projected that as many as 75 percent of subprime loan modifications would fall behind by 60 days or more within a year. Brinkmann said that so-called redefaults could show up in the new foreclosure statistics: “There may be repeat visitors coming back into the numbers.”Copyright © 2009 The Miami Herald, Monica Hatcher. Distributed by McClatchy-Tribune Information Services.
Mortgage rates rise, remain below 5%
Mortgage rates rise, remain below 5%WASHINGTON – May 29, 2009 – Rates on 30-year home loans rose this week and were poised to go higher as investors demanded higher rates for long-term government debt, which is closely tied to mortgage rates.Mortgage finance giant Freddie Mac said Thursday that average rates on 30-year fixed-rate mortgages rose to 4.91 percent this week, from an average of 4.82 percent a week earlier. Rates in Freddie Mac’s survey have been below 5 percent for more than two months. If they rise higher, that will diminish the appeal for refinancing for many borrowers.The yield on the Treasury’s 10-year note – a key benchmark for home mortgages and other kinds of loans – reached its highest level since November earlier this week.The worry is that rising bond yields could drive mortgage rates higher and also increase the cost of borrowing for businesses. That could short-circuit the nation’s efforts to emerge from a deep recession and the worst housing crisis in decades.The federal government is being forced to greatly expand Treasury debt sales to cover a deficit that is projected to soar this year to eye-popping levels. So far, all that new debt had been sold at low interest rates as investors have preferred the safety of Treasury securities in uncertain times.Mortgage rates “followed long-term bond yields higher this week as financial markets try to discern the state of the economy,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement.Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day.The average rate on a 15-year fixed-rate mortgage rose to 4.53 percent this week from 4.5 percent last week, according to Freddie Mac.Rates on five-year, adjustable-rate mortgages inched up to 4.82 percent from 4.79 percent last week. Rates on one-year, adjustable-rate mortgages fell to 4.69 percent from 4.82 percent.The rates do not include add-on fees known as points. The nationwide fee averaged 0.7 point last week for 30-year and 15-year mortgages, and averaged 0.6 point for five year and one-year adjustable rate loans.Qualifying for a loan, however, is still tough. Lenders have tightened their standards dramatically over the past year, so the best rates are available to those with solid credit.
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