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Revamped Foreclosure Procedures Coming Soon
The country’s top mortgage servicers have reportedly reached an agreement on changes to their foreclosure procedures.

The consent agreement has not yet been made public, but The New York Times was able to get a preview of what the agreement contains from individuals who spoke on the condition of anonymity.

Among the proposed changes include:

• Greater oversight of foreclosures. The oversight will happen from third party groups that include law firms, who mostly will be charged with doing the actual work of eviction, The New York Times reports.
• Improved training of foreclosure staff.
• A single point of contact for every defaulting home owner with the servicers. Mortgage servicers will no longer be able to foreclose while borrowers are pursuing loan modifications.
• Servicers will hire independent consultants to review foreclosures that have been completed in the past two years. Mortgage servicers have agreed to compensate any owner who is found to have been improperly foreclosed on or made to pay excessive fees.

Analysts say that in order for mortgage servicers to meet these revamped rules they’ll need to hire more employees so they can be thoroughly review the cases of home owners in default or servicers will need to slow the pace of foreclosures even more (The average household in foreclosure has been delinquent for more than 500 days/)

Source: “Servicers Said to Agree to Revamped Foreclosures,” The New York Times (April 5, 2011)

Home Owners See Big Value in Remodeling
The do-it-yourself home improvement market has faced a 21 percent drop from 2005-2010, according to the latest research from market researcher Mintel. Yet, that’s not due to lack of will on home owner's part, but more about lack of money, according to the survey.

More than a quarter of DIYers surveyed said they would undertake a major home renovation or addition to their home if they had the funds.

Nearly 40 percent of DIYers say that making a major home improvement is the best long-term investment they can make.

However, with the sagging housing market, many home owners have opted to put off major renovation projects, but forecasters are already seeing signs that is changing.

“We forecast growth to accelerate in 2011 and, presuming a stabilization of the housing market, to remain positive through 2015,” says Bill Patterson, senior analyst at Mintel. “Pent-up demand, ongoing need for repair and maintenance, retro-fitting, and renovations from boomers approaching retirement and demand from millennials should all propel DIY spending.”

Source: “Consumers Have the Motivation--But Lack the Money for Home Improvement,” RISMedia (March 29, 2011)

You Can't Bribe Your Way to Lower Property Taxes
An Orlando man faces two counts of bribery from charges that he tried to bribe a property appraiser to lower the residential tax assessment on his $1.4 million lakefront home.

Gamel Said Badreg, 51 was arrested Wednesday.

Authorities were notified after an employee with the Orange County Property Appraiser said that Badreg handed him an envelope containing $500 in cash to lower the tax value on his 10,000-square-foot home. The employee was told that there would be a second envelope of cash once the house value was reduced, according to police reports.

The State Attorney's Office set up a second meeting with Badreg, presenting him with a fake tax evaluation. In exchange, he handed the employee another envelope with $500 in cash. Investigators then proceeded to arrest Badreg.

Source: “Owner of $1.4M home accused of trying to bribe public employee to reduce tax assessment,” Orlando Sentinel (March 31, 2011)

GOP Senators Join Efforts to End Fannie, Freddie
Sens. John McCain, R-Ariz., and Orrin Hatch, R-Utah, proposed a bill Thursday that would phase out government-sponsored enterprises Fannie Mae and Freddie Mac in five years or privatize them.

The bill comes on the heels of several similar Republican bills that have been proposed in the House.

While the proposed bill calls for Fannie and Freddie to be dismantled, the senate bill also calls for the GSEs to take steps such as charging higher fees and decreasing the size of their mortgage portfolios so that private banks can step up to take on a bigger piece of the mortgage market.

Fannie and Freddie, as well as other federal agencies, backed about nine in 10 mortgages in the past year.

"Never again can we allow the taxpayer to be responsible for poorly managed financial entities who gambled away billions of dollars," McCain says.

McCain's bill is similar to the one proposed in the House by Rep. Jeb Hensarling, R-Texas. Earlier this week, House Republicans also introduced eight smaller bills that take a “bite-sized approach” to winding down the GSEs.

The National Association of REALTORS® urged Congress this week to not move too fast in reforming Fannie Mae and Freddie Mac.

“NAR strongly agrees that the existing system failed and that reforms are needed. However, redesigning a viable secondary mortgage model that will protect taxpayer dollars and serve the country’s home owners today, and in the future, can only be achieved through a methodical, measured effort,” 2011 NAR President Ron Phipps said in testimony before the House Subcommittee on Capital Markets this week.

“REALTORS® agree that increasing private capital in the mortgage finance market is necessary for a healthy market and for reducing the government’s involvement. However, proposed legislation that relies only on private capital to operate the secondary mortgage market will slow, if not stop, the housing and economic recovery.”

Read more about NAR’s position.

Source: “Republicans Advance Effort to Kill Government-Run Housing Giants Fannie Mae, Freddie Mac,” Associated Press (March 31, 2011)

Mortgage Rates Continue to Inch Up
For the second straight week, mortgage rates were on the rise, but still remain overall low, reports Freddie Mac in its weekly mortgage market survey.

While interest rates for the 30-year fixed-rate still stand below 5 percent, rates inched up slightly this week averaging 4.86 percent. Last week, rates averaged 4.81 percent. Last year at this time, 30-year rates averaged 5.08 percent.

The 15-year fixed-rate mortgage averaged 4.09 percent this week, up from last week’s 4.04 percent.

The 5-year adjustable-rate mortgage averaged 3.70 percent, also up from last week’s 3.62 percent average.

"Low rates have benefited from relatively benign inflation reports,” says Frank Nothaft, chief economist for Freddie Mac. “Inflation as measured by the 12-month growth in the core price index for consumer spending ... is hovering near the lowest pace since 1960 when this data series began.”

Source: “30-Year Fixed-Rate Mortgage Up Slightly for Second Week,” Freddie Mac (March 31, 2011)

Bargain-Seeking Home Buyers on the Hunt
Housing prices across the country are at multi-year lows and mixed with low interest rates bargain hunters are targeting real estate.

More investors are heading to the market looking to make cash buys for real estate, investing in second or even a third home, Reuters News reports.

"We're starting to get a lot more inquiries and assisting in transactions," says Rocco Papandrea, a senior vice president and wealth management adviser at Merill Lynch in New York. Papandrea says he’s seeing more interest in properties along the West Coast and in Colorado, as well as Florida.

Canadian buyers in particular are expected to be looking to purchase U.S. homes. The Bank of Montreal estimates that one-in-five Canadians is considering buying U.S. property.

With dropping home prices, more cities are looking to be attractive buys, such as the increasing affordability in popular vacation-home designations along the U.S. Sunbelt. For example, home prices have fallen 44 percent in Tampa, 54 percent in Phoenix, 57 percent in Las Vegas, and 49 percent in Miami, the Bank of Montreal reports.

"If the economy keeps clicking along and jobs keep growing, housing will be fine," says Dean Frankel, a portfolio manager at Urdang Capital Markets in Plymouth Meeting, Pennsylvania, who oversees around $1.7 billion in real estate equity investments.

The economy--and ultimately housing--may then get a boost from the latest unemployment report released Friday. The unemployment rate reached a two-year low of 8.8 percent in March as companies began a brisk wave of hiring, adding employees at the fastest two-month pace since before the recession even started, the Labor Department reports.

The unemployment rate has fallen a full percentage point in the last four months, which marks the sharpest drop since 1983.

Source: “U.S. Housing Market Attracting Bargain-Hunters,” Reuters News (March 31, 2011) and “Unemployment Rate Falls to 2-Year Low of 8.8 Pct.; Employers Add 216k Jobs in March,” The Associated Press (April 1, 2011)

Mortgage Applications Drop 7.5%
Fewer refinancings and rising interest rates caused mortgage applications to drop over the past week, the Mortgage Bankers Association says.

Loan volume dropped 7.5 percent this week, following a 2.7 percent increase on a seasonally adjusted basis last week.

The unadjusted purchase index dropped 1.5 percent this past week. The purchase index is down 21.9 percent compared to the same week a year ago, MBA reports.

Meanwhile, refinancing activity this past week decreased to 64.3 percent of total applications, which marks the second lowest refinance share since May of last year, according to the MBA.

Interest rates have been on the rise. For example, 30-year fixed-rate mortgages, a popular choice among borrowers, increased to 4.92 percent from 4.8 percent a week prior.

Source: “Mortgage Applications Decline 7.5% As Refinancing Activity Subsides,” HousingWire (March 30, 2011)

7 Great Places to Retire
Sunbelt cities--traditional hotspots for retirees--don’t always offer good cost-of-living or the best place to settle down during retirement, according to Forbes’ annual list of best places to retire. While Forbes’ list takes into account numerous factors in choosing its “best retirement places,” this year it focused more on tax burden and cost-of-living.

Among the more affordable retiree cities that made the “best retirement places” list for 2011 are (listed in no particular order):

- Indianapolis: Very affordable housing.
- Fargo, N.D.: Lowest crime rate on the list and inexpensive living costs.
- Charlotte, N.C.: Affordable housing as well as cost of living.
- Charleston, S.C.: Lowest taxes of all the cities Forbes evaluated.
- Colorado Springs, Colo.: Affordable housing and low cost of living.
- Jacksonville, Fla.: No state income or estate tax.
- Pittsburgh: Tax breaks for retirees.

See Forbes’ complete list of 16 best retirement places.

Source: “The Best Retirement Places,” Forbes (March 23, 2011)

Vacation-, Investment-Home Shares Hold Even
The market share of vacation- and investment-home sales held steady in 2010, although the sales volume declined with the overall market, according to the National Association of REALTORS®.

NAR’s 2011 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2010, shows vacation-home sales accounted for 10 percent of transactions last year while the portion of investment sales was 17 percent, both unchanged from 2009.

NAR Chief Economist Lawrence Yun said, “Despite extraordinarily tight credit conditions for purchasing a second home, the market share for vacation and investment homes held steady,” he said. “A sizeable number of buyers made deals with all-cash offerings.”

All-cash purchases have become prevalent in the second-home market in recent years: 59 percent of investment buyers paid cash in 2010, as did 36 percent of vacation-home buyers.

With an overall decline in home sales during 2010, the volume of 543,000 vacation-home sales was down 1.8 percent from 553,000 in 2009. Investment purchases fell 7.8 percent to 867,000 in 2010 from 940,000 the previous year. Primary residence sales declined 5.6 percent to 3.81 million from 4.04 million in 2009.

Foreclosure or trustee sales accounted for 17 percent of investment purchases and 11 percent of vacation-home sales in 2010, compared with 5 percent of primary purchases. “Second home buyers purchased more distressed homes at discount than did buyers of primary residences,” Yun said.

The median vacation-home price was $150,000 in 2010, down 11.2 percent from $169,000 in 2009, while the median investment-home price was $94,000, which is 10.5 percent below the $105,000 median in 2009. By contrast, the median primary residence price declined a relatively modest 4.5 percent to $176,700 last year from $185,000 in 2009. ²

The typical vacation-home buyer in 2010 was 49 years old, had a median household income of $99,500 and purchased a property that was a median distance of 375 miles from his or her primary residence; 31 percent of vacation homes were within 100 miles and 41 percent were more than 500 miles.

Investment-home buyers had a median age of 45, earned $87,600 and bought a home that was fairly close to their primary residence – a median distance of 19 miles.

“The fall in home prices has opened opportunities for more families to enter the second-home market – the median income of investment buyers today is lower than it’s been in recent years,” Yun said. While the median income of vacation-home buyers in 2010 is slightly above 2007 when it was $99,100, the median income of an investment-home buyer is 5.7 percent below $92,900 in 2007.

“Even if purchases are delayed due to economic circumstances, the underlying long-term demand – the desire for purchasing second homes – remains because people in their 30s and 40s will reach the prime age for buying and will drive the second-home market in coming decades as conditions permit,” Yun added.

Currently, 40.7 million people in the U.S. are ages 50-59 – a group that dominated sales in the first part of the past decade and established records for second-home sales. An additional 43.8 million people are now in the primary buying demographic of 40-49 years old, while another 40.4 million are 30-39.

Lifestyle factors continue to be the primary motivation for vacation-home buyers, with the desire for rental income driving investment purchases. Vacation homes were more likely to be located in a rural area, while investment homes were more likely to be in a suburban location.

“Vacation-home buyers want the property for their own personal use, with 84 percent saying the primary reason for buying was to use for vacations or as a family retreat,” Yun said. “Rental income generation was the primary motive for investment buyers. At the same time, nearly half indicated they sought to diversify their investments or saw a good investment opportunity.”

More from the survey:

- 34% of vacation-home buyers said they plan to use the property as a primary residence in the future, as did 10 percent of investment buyers.

- 21% of investment buyers and 14 percent of vacation buyers purchased the property for a family member, friend or relative to use. “Some of these buyers purchase a home for their son or daughter to use while attending school,” Yun explained.

- Vacation-home buyers plan to keep their property for a median of 13 years while investment buyers plan to hold their property for a median of 10 years.

Distribution of vacation homes:

- 36% of vacation homes purchased in 2010 were in the South
- 27% in the West
- 19% in the Northeast
- 15% in the Midwest
- 3% were located outside of the U.S.

Distribution of investment properties:

- 32% of investment properties purchased in 2010 were in the South
- 24% in the West
- 21% in the Northeast
- 20% in the Midwest
- 3% were purchased outside the U.S.

NAR’s analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes and 41.6 million investment units in the U.S., compared with 74.8 million owner-occupied homes.

NAR’s 2011 Investment and Vacation Home Buyers Survey, conducted in March 2011, includes answers from 1,895 usable responses about home purchases during 2010. The survey controlled for age and income, based on information from the larger 2010 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.

The 2011 Investment and Vacation Home Buyers Survey can be ordered by calling 800-874-6500, or online at www.realtor.org/prodser.nsf/Research. The report costs $19.95 for NAR members and $149.95 for non-members.

Source: NAR

House Votes to End HAMP
The House voted Tuesday to end the Home Affordable Modification Program (HAMP), the Obama administration’s flagship program for foreclosure aid.

HAMP provides federal money to help banks modify mortgages for borrowers who are behind on their payments.

"To many struggling Americans seeking permanent mortgage relief, HAMP offered little more than false hope,” Rep. Darrell Issa (R-Calif.), who chairs the House Oversight Committee, said in a statement. “More home owners have been kicked out of the program than have received permanent relief."

The program has faced criticism that it hasn’t done enough to help struggling borrowers and is costly to taxpayers.

The House voted 252 to 170 to end any new funding for HAMP. The bill will now go before the Senate.

In recent weeks, President Obama has threatened to veto any bill that tries to end the administration’s foreclosure aid programs. House Republicans already have passed three other bills to stop funding of smaller programs, which are aimed at helping families, those who have lost their jobs, and neighborhoods dealing with foreclosure.

Despite being a mostly Republican led fight to end HAMP, Democrats have also urged government officials that HAMP needs to help more home owners.

"Yes, the HAMP program has a lot of problems," says Rep. Barney Frank (D-Mass.) on the House floor. "But, the absence of any program leaves home owners worse off."

Source: “House Votes to Kill Obama Mortgage Plan,” CNNMoney.com (March 29, 2011)