It Is Taking Longer to Sell a Home in November: Redfin

The median number of days a property for sale has remained on the market increased to 34 in November from 31 in October, according to a Redfin study of 23 markets.

The percentage of homes which entered contract within two weeks of being placed on the market remained in the area of 27% during the same time frame.
Nearly half the homes listed in San Jose during November entered into contract within two weeks and the median time a property is listed for is just 12 days.
Philadelphia is at the other end of the spectrum, with only 7% of homes going into contract within two weeks of listing, up from 6% in October. Homes here are on the market for a median of 71 days, up from 69 days in October.
Homes listed for sale in Boston are spending 25% fewer days on the market. The median time on market for a Boston for sale property is 42 days, down from 55% for October.
Redfin previously found that there were 7% fewer potential buyers seeking house tours in November versus October.

Pending Sales of U.S. Existing Homes Rise Less Than Forecast

Contracts to purchase previously owned U.S. homes rose less than forecast in November, indicating higher borrowing costs are holding back the recovery in residential real estate.
A gauge of pending home sales increased 0.2 percent, the first gain in six months, after a 1.2 percent drop in October that was larger than initially reported, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent advance.
Higher mortgage rates, tight lending standards and price increases driven by a limited supply of homes for sale are discouraging some prospective buyers. Further gains in hiring, household wealth and consumer confidence would help boost the housing recovery and give greater momentum to the economy.
“Next year we think housing is going to continue to grow at a fairly solid pace,” said Daniel Silver, an economist at JPMorgan Chase & Co. in New York. “You have a story of things getting better in the economy, better job growth, driving the numbers.”
Estimates in the Bloomberg survey of 30 economists ranged from a decline of 1 percent to an advance of 5 percent.
Stocks were little changed as the Standard & Poor’s 500 Index headed toward its biggest annual gain since 1997. The S&P 500 fell less than 0.1 percent to 1,840.69 at 11:13 a.m. in New York.

Year Ago

Purchases dropped 4 percent from the year prior on an unadjusted basis after a 2.7 percent decrease in the 12 months ended in October, the NAR reported.
The pending sales index was 101.7 on a seasonally-adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the Realtors group.
Two of four regions showed a decrease from October, with pending home sales in the Northeast dropping 2.7 percent and the Midwest falling 3.1 percent. Pending sales rose 2.3 percent in the South and 1.8 percent in the West.
Economists consider pending home sales a leading indicator because they track contract signings. Existing-home sales are tabulated when a contract closes, usually a month or two later.
Purchases of previously owned homes dropped 4.3 percent to a 4.9 million annual rate in November, the lowest level of the year, the National Association of Realtors reported earlier this month. Nonetheless, the NAR projects 2013 will be the best year for the industry since 2006, with an estimated 5.1 million transactions.

‘Cyclical Low’

“We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014,” NAR chief economist Lawrence Yun said in a statement.
New-home sales were close to a five-year high in November as builders responded to pent-up demand unleashed by employment gains and record stock prices.
The S&P/Case-Shiller national home-price gauge rose 11.2 percent in the third quarter from the same period in 2012, the biggest year-over-year advance since the first three months of 2006. Its index of property prices in 20 U.S. cities, set for release tomorrow, probably increased 13.5 percent in October from a year earlier, according to a Bloomberg survey.
Higher mortgage rates are also reducing affordability. The average rate for a 30-year, fixed mortgage was 4.48 percent in the week ended Dec. 26, up from 3.35 percent a year earlier. In August, the rate reached a two-year high of 4.58 percent.

Slower Growth

After two years of rapid-fire growth, the housing market shows signs of returning to normal, said Budge Huskey, president and chief executive officer of Coldwell Banker LLC, a real estate services firm in Madison, New Jersey.
“We’ve been picking up slack, that’s why the pace has been so torrid,” Huskey said in an interview. “Going forward, when we start to take a look at year-over-year gains and activity, it’s going to appear far more boring, which is not a bad thing.”
Investors and speculators who contributed to the run-up in property values in recent years are becoming a less-important factor in the market, Huskey said.
“We’re getting on the right track,” he said. “We’re now getting to a real estate environment that’s more about the fundamentals and less about these external factors that are artificially shaping the recovery.”

Ending extension for federal unemployment triggers housing concerns

News that the federal government has decided to forego an extension of long-term benefits for the unemployed prompted the California Employment Development Department (EDD) to fire off a warning notice to impacted workers.
The news affects housing mildly since many of these workers also carry mortgage debt that is now at risk without the continuation of the unemployment lifeline. In just California, the EDD says more than 220,000 long-term unemployed citizens have been notified that they will lose the federally funded extended benefits in two weeks unless lawmakers renew the extensions.
"Though the decision to renew the unemployment benefit extensions is in the hand of Congress and the President, the EDD is warning our customers that, if no further action is taken in Washington D.C., their federal extension benefits will end on Dec. 28," said Sharon Hilliard, EDD’s chief deputy director.
The development prompted the organization, Keep Your Home California, to remind homeowners that it offers 12 months of mortgage assistance under the Unemployment Mortgage Assistance Program.
"To qualify for our unemployment program, you have to receive benefits within the last 30 days," said Diane Richardson, program director for Keep Your Home California. "We have made a concerted effort to make sure homeowners receiving benefits make that call before the end of January."
Richardson says the group can pay as much as $3,000 a month to help an unemployed California borrower who applies for the program. Keep Your Home California has a partnership with the California EDD office, which sent out a special mailer advising impacted unemployment beneficiaries of some of the mortgage assistance available to them.

$500 Billion Drop in Fannie/Freddy/Ginnie MBS Insurance- AKA- less lending

The headwinds of rising interesting rates and the end of the refinancing wave could reduce agency MBS issuance by more than 30% next year.

 

Gross Fannie Mae, Freddie Mac and Ginnie Mae MBS issuance will total more than $1 trillion in 2014, down over $500 billion from 2013, MBS strategists at Bank of America Merrill Lynch are forecasting.
“That forecast is aligned with our forecast for total originations of about $1.2 trillion," Mortgage Bankers Association chief economist Mike Fratantoni told NMN.
The interest rate on the 10-year Treasury note rose above 3% on Thursday. The yield on the 10-year Treasury could reach 3.75% by yearend 2014 as the Federal Reserve proceeds with tapering and purchases fewer and fewer U.S. Treasury and agency mortgage-backed securities, accord to the MBS strategists.
“Assuming a linear taper for the Fed, its net MBS purchases in 2014 could total $240 billion,” down from $480 billion in 2013, according to a Dec. 20 BAML “Securitization Weekly” report.
Homebuilders are optimistic about the outlook for 2014, but they remained concerned about tight credit and recent declines in mortgage purchase applications, the MBS strategists noted. “As a result, we continue to think that, due to persistence of a tight mortgage credit regime, mortgage purchase volume is more likely to surprise on the downside in 2014.”
December is generally a slow time of year for buying a home. Yet purchase mortgage applications are “continuing to run more than 10% below last year’s pace,” Fratantoni said.

Happy Holidays

2013 has been an enchanted year.  On this Holiday Season, The HomeLiberty Team extends to you and your family a joyous and wonderful holiday season.  We look forward to working with you in 2014.

New Home Sales Fall

New home sales slipped 2% in November after an 18% jump in the month prior as higher prices may be sidelining some potential buyers.

The Census Bureau reported Tuesday that sales of newly constructed homes fell to a 464,000 seasonally adjusted annual rate in November from a 474,000 rate in October.
Tuesday’s report shows that new single-family home sales are up 17% from a year ago.
“The slight drop of new home sales in November from the month prior is no cause for alarm as the market remains near a five-year high in sales,” says Quicken Loans vice president Bill Banfield.
However, the inventory of new homes for sale remains tight.
The government report shows there were just 169,000 new homes on the market as of Nov. 30, which represents a 3.1-month supply at that the current sales pace. At the end of October, there were 179,000 new homes for sale and builders completed construction on 11,000 homes in November.
Yet demand for new homes is strong and it’s pushing up prices, according to economists at IHS Global Insight. The average price hit $340,000 in November, up 17% from a year ago.
“Increased buyer traffic and low inventories combined to lift the average sales price to its highest recorded value,” the Global Insight economists said.
The Census Bureau recently reported that single-family starts in November jumped to the highest level since March 2008.

AllRegs Provides Financial Education for Consumers

AllRegs is offering mortgage lenders and consumers financial education courses to help them meet requirements set forth by the Consumer Financial Protection Bureau.

As part of best practices, a mortgage lender should be supporting consumers with understanding the path to homeownership, as well as providing knowledge with regard to maintaining a home throughout the length of the mortgage.
To support this ideology, AllRegs is now providing online training that any lender can make available to their consumers, members, borrowers and potential borrowers. This homeownership training curriculum can seamlessly be accessed by users through a lender’s website.
All courses are approximately one hour, with over 22 titles to choose from including how to make and stick to a budget, the impact of credit scores, defining the industry players that homeowners will meet, and the mortgage process itself.
In addition, consumers can be made aware of how to avoid predatory scams and learn about their consumer rights.
“Financial education is a key component of any lender program to support the consumer’s protection in financial decisions,” says Dan Thoms, executive vice president of AllRegs, based in Eagan, Minn. “Lenders can now seize the opportunity to provide this turnkey financial education to their consumers and meet CFPB requirements.”

MGIC’s November Cures Outpace New Delinquencies

Normally, delinquencies increase this time of year because of holiday spending, S.A. Ibrahim, the CEO of competitor Radian Group noted in an interview a couple of months ago.
The mortgage insurer started the month with 109,629 loans in its inventory of delinquent loans. It received 8,012 new notices of delinquency in November.
However, 8,429 delinquent loans cured during the month. In addition, MGIC paid claims on 2,553 and rescinded or denied coverage on an additional 146 loans.
Furthermore, because of the settlement with Bank of America, another 1,846 loans originated by Countrywide were removed from the inventory. This brought the inventory down to 104,637 on Nov. 30. On the same day one year earlier, there were 143,153 loans in the delinquent inventory.
MGIC’s primary new insurance written during November was $2.2 billion, excluding Home Affordable Refinance Program loans. This is down from $2.4 billion in October, but similar to the NIW volume for November 2012.
Radian Guaranty had $3 billion of NIW in November, down from $3.5 billion in October and $3.84 billion in November 2012.
Its delinquent inventory started the month with 63,874 loans and the company received 4,501 new notices.
But cures took 3,793 loans out of the inventory along with paid claims on 1,747 loans. Radian denied or rescinded coverage on 279 loans, bringing the inventory to 62,556. One year prior it was at 92,770 loans.
Last week both MGIC and Radian got buy recommendations from Goldman Sachs.
The most recent data for the Mortgage Insurance Cos. of America, the trade group MGIC and Radian make up two-thirds of the membership, is for October. During the month, the group’s members did NIW of $8.7 billion, including HARP loans, down from September’s $9.6 billion and October 2012’s $11.5 billion.
However, the cure/default ratio was 93.9%, an improvement over 82.7% in September.

Citigroup, Wells Fargo Sued by Los Angeles for Discriminatory Lending

The city filed complaints against both banks yesterday in federal court in Los Angeles. Citigroup and Wells Fargo have been engaged in discriminatory lending to minority borrowers since at least 2004, which placed the borrowers in loans they couldn’t afford and caused a high number of foreclosures in minority neighborhoods, Los Angeles said.
The fact that the two banks’ foreclosures are so “disproportionately concentrated in minority neighborhoods is not the product of random events,” according to the complaints. It reflects and is fully consistent with the banks’ “practice of targeting minority neighborhoods and customers for discriminatory practices and predatory pricing and products.”
Homeowners in the second-largest U.S. city lost about $78.8 billion in home values as the result of 200,000 foreclosures from 2008 through 2012, the city said, citing a report by Alliance of Californians for Community Empowerment and the California Reinvestment Coalition. The lost property tax revenue to the city has been $481 million, according to the complaints.
Liz Fogarty, a spokeswoman for New York-based Citigroup, said the lawsuit is without merit.
“Citi is proud of our efforts to make sure our lending standards are fair to all of our customers,” Fogarty said in an emailed statement. “Citi considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis.”
Tom Goyda, a spokesman for San Francisco-based Wells Fargo, said the accusations are baseless.
“Wells Fargo is deeply disappointed by the city attorney’s decision to file a meritless lawsuit rather than collaborate together to help borrowers and homeowners in Los Angeles,” Goyda said in an emailed statement. “Wells Fargo has been a part of Southern California for over a century and we are proud of our record as a fair and responsible lender.”

Citigroup, Wells Fargo Sued by Los Angeles for Discriminatory Lending

The city filed complaints against both banks yesterday in federal court in Los Angeles. Citigroup and Wells Fargo have been engaged in discriminatory lending to minority borrowers since at least 2004, which placed the borrowers in loans they couldn’t afford and caused a high number of foreclosures in minority neighborhoods, Los Angeles said.
The fact that the two banks’ foreclosures are so “disproportionately concentrated in minority neighborhoods is not the product of random events,” according to the complaints. It reflects and is fully consistent with the banks’ “practice of targeting minority neighborhoods and customers for discriminatory practices and predatory pricing and products.”
Homeowners in the second-largest U.S. city lost about $78.8 billion in home values as the result of 200,000 foreclosures from 2008 through 2012, the city said, citing a report by Alliance of Californians for Community Empowerment and the California Reinvestment Coalition. The lost property tax revenue to the city has been $481 million, according to the complaints.
Liz Fogarty, a spokeswoman for New York-based Citigroup, said the lawsuit is without merit.
“Citi is proud of our efforts to make sure our lending standards are fair to all of our customers,” Fogarty said in an emailed statement. “Citi considers each applicant by the same objective criteria, which are blind to race, ethnicity, gender and any other prohibited basis.”
Tom Goyda, a spokesman for San Francisco-based Wells Fargo, said the accusations are baseless.
“Wells Fargo is deeply disappointed by the city attorney’s decision to file a meritless lawsuit rather than collaborate together to help borrowers and homeowners in Los Angeles,” Goyda said in an emailed statement. “Wells Fargo has been a part of Southern California for over a century and we are proud of our record as a fair and responsible lender.”

ACLU Sues FHFA over Limiting Eminent Domain

The subprime mortgage meltdown resulted in more than four million homeowners already foreclosed upon and nearly 11 million borrowers are currently underwater. Communities with large African-American and Latino populations, such as Richmond, Calif., and Irvington, N.J., have been particularly hard hit.
That is why Richmond has adopted a plan to use eminent domain to purchase securitized underwater mortgages so it can re-issue new mortgages for the homeowners on terms that reflect the current value of their properties. If the owners of the securities refuse to sell at fair market prices, the city proposes to use eminent domain to buy them in order to lower a borrower’s monthly mortgage payments.
“If eminent domain can be used in blighted neighborhoods to seize property that will be turned over to private developers, then eminent domain should also be available to help homeowners stay in their homes and to stabilize neighborhoods,” said Rachel Goodman, staff attorney with the ACLU’s Racial Justice Program.
But the FHFA has threatened legal action against Richmond and any other city that uses eminent domain to reduce mortgage principals and denying credit to people seeking mortgages in hard hit communities. The American Civil Liberties Union and the Center for Popular Democracy want the FHFA to provide details about its relationship with the financial industry on this issue, according to the lawsuit.
Community groups in October filed a FOIA seeking information about the FHFA’s exchanges with banks and financial institutions regarding eminent domain, but the agency never responded which led to this lawsuit.
“Struggling families need options, not threats,” says Ady Barkan, staff attorney with the Center for Popular Democracy. “As cities explore solutions that can work for them, the FHFA should be encouraging programs to end the foreclosure crisis, reduce debt, and rebuild our economy, not clamping down on them.”
An FHFA spokeswoman declined comment on the pending litigation.
The Secretary of the Treasury has called for FHFA to permit the entities it oversees to use targeted principal reduction in their loan modification programs. The Congressional Budget Office estimated that this program could save taxpayers $2.8 billion.
While both homeowners and taxpayers would benefit from a program of principal reduction, the FHFA has declined to implement a principal reduction program on loans owned by Fannie Mae or Freddie Mac.
“The FHFA has taken an aggressive stance on this issue in a way that has harmed minority communities. The public deserves to know why,” says Linda Lye, staff attorney with the ACLU of Northern California.

How Can We Have a REAL Real Estate Recovery, when mortgage applications are falling and values are rising? Who is buying these homes, and what are their intentions?

Mortgage applications tumbled during the week ending Nov. 29, sinking 12.8% from the last report, the Mortgage Bankers Association said Wednesday.
Similarly, the refinance index also dropped 18%, hitting its lowest level since the beginning of September 2013.
The purchase index dipped 4% from the previous week after recording a slight fall in the last update.
Overall, the refinance share of mortgage activity fell again and now represents 63% of all applications filed, down from 66% a week ago.
The 30-year, fixed-rate mortgage with a conforming loan limit increased to 4.51% from 4.48%, while the 30-year, FRM with a jumbo loan balance edged up to 4.49% from 4.48%.
Furthermore, the 30-year, FHA rate escalated to 4.17% from 4.14%, and the 15-year FRM rose from 3.52% last week to 3.56%.
Meanwhile, the average contract interest rate for a 5/1 ARM fell to 3.09% from 3.18%.

Senators warn HUD, Treasury about lingering eminent domain proposals

The eminent domain controversy in Richmond, Calif., continues with several senators publicly asking housing regulators to push back at any proposal that would allow municipalities to offer principal write-downs to underwater borrowers by acquiring their mortgages through eminent domain.  
So what prompted the strongly worded letter four senators mailed to Department of Housing and Urban Development Secretary Shaun Donovan and Treasury Secretary Jack Lew?
The answer apparently is an eminent domain rescue plan that reached a little too far for the senators' liking.
The city of Richmond, Calif., has gone as far as mailing letters to mortgage holders, asking them if the city can buy out their interests in underwater mortgages at a discount.
In the same letter, the city reportedly threatens to take over the mortgages using eminent domain if a deal is not reached.

This particular action prompted the letter from the senators advising Donovan and Lew that the Obama administration has been relatively silent on the issue and should give the mortgage market back-up.

While the senators noted the Federal Housing Finance Agency (FHFA) has publicly voiced its opposition to eminent domain, saying it could “negatively affect the extension of credit to borrowers seeking to become homeowners," the senators believe the Obama administration "has been largely silent on the subject."
The four senators, Pat Toomey (R-Pa.), John Boozman (R-Ark.), Mark Begich (D-AK) and Heidi Heitkamp (D-ND), told Lew and Donovan they want more answers from the Obama administration after a HUD representative told them the housing agency is monitoring the situation, but failed to specify what actions need to be taken.
Fearing eminent domain in Richmond will send shock waves through the housing market, the senators warned regulators of a dire impact on the entire mortgage lending space if eminent domain fully takes root.
To address the issue, the senators want HUD to use its existing authority to prevent the FHA from insuring mortgages on any properties affected by an eminent domain proposal.

Home Values to Rise Only 2.7% by October 2014

Home values have fallen in two consecutive months for the first time since October 2011, according to Zillow data.
The Zillow Home Value Index through October is $162,800, a slight 0.1% drop from the previous month. And even though home price appreciation was up 5.2% on a yearly basis, this represents a much slower pace than the 7% figure that was seen over the summer.
“The months-long period of annual home value appreciation rates in the 6 and 7% range was great while it lasted but we knew it would not continue indefinitely,” said Stan Humphries, chief economist at Zillow. “The slowdown we’ve seen these past few months was expected, and is largely welcome news for a market still struggling to find its natural balance.”
Out of the 388 metropolitan statistical areas covered by Zillow, half experienced monthly home value depreciation in October from September. Among the 30 largest markets Zillow tracks, 10 exhibited a month-over-month drop in home prices, while two more were flat.
Over the next year, national home values are forecasted to increase just 2.7%, which is approximately half the current pace, Zillow says. The biggest declines are projected to occur in St. Louis (down 1.5%), Philadelphia (drop of 0.9%), and New York (decline of 0.7%).
Meanwhile, renting a housing unit continues to be costly in October as it went up from the month before and a year ago by 0.2% and 2.3%, respectively.
“The conditions that led to the robust appreciation experienced earlier this year, including historically low mortgage interest rates, high affordability, low inventory and high demand, are waning,” Humphries says. “In their place, we’re beginning to see more inventory and rising mortgage rates, which will lead to further normalization in the market going forward.”