Archive for category Help for mortgage pros
Appraisals: Home Valuation Code of Conduct (HVCC)
Posted by Chas W. Leeper, SRA in Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on June 24th, 2009
The HVCC has allowed government regulation to completely decimate the business that I have spent 23 years developing. The clients that I have worked hard to capture and retain can no longer order appraisals from Leeper Appraisal Services. Andre’s article explains things pretty well. Please considered signing the two petitions below…
and
http://www.petitiononline.com/hvcc/petition.html
Thanks,
chas
By Andre Hemmersbach
Mortgage Planner at American California Fiancial Inc.
June 2009
Last year the “Home Valuation Code of Conduct” (HVCC) was introduced as the answer to the lending industries problems with fraud associated with appraisals. This new law took effect in May of 2009 and has now been in place for several weeks. Basically the law removes the ability of the loan officer, real estate agent, lending institution or anyone associated with the real estate transaction to choose the appraiser or to be in direct contact with the appraiser. Theoretically this should reduce the risk of fraudulent valuation scams and block the quid pro quo “more appraisal business for valuations that make deals work.”
To meet the requirements of complete disassociation between the appraiser and all other participants of the real estate transaction, lenders have hired Appraisal Management Companies (AMC’s) to be that artificial barrier. The AMC controls which appraiser does the property inspection and also controls all communication that is necessary with the appraiser.
At first glance, the HVCC looks like a great idea and most likely will accomplish its intended goal. Unfortunately this disassociation, in my opinion, will ultimately hurt the vast majority of consumers to protect a few. In essence it has created an additional level of “hoops” to jump through instead of taking a tough stance on enforcing the rules that are already in place.
The new process mistakenly replaces what merely should be common sense and good risk making decisions by lenders with a barrier to communication between parties that have to communicate to do a good job. For a fair and correct valuation of a property the consumer is best served when the appraiser is: experienced, ready, willing and able to meet the time line of the transaction, and is familiar with the geographic area of the subject property. The new process disburses appraisal assignments based on who is next on a list to receive an appraisal order not on the real qualifications of the appraiser.
Within the 5 weeks that this new appraisal procedure has been instituted, waves of nightmare stories have appeared on industry websites and blogs. Reports of inexperienced or out-of-town appraisers unfamiliar with the area making horrendous valuation decisions, extremely poor communication causing unexpected delays in closing and missed lock commitments are common. The new law also limits the ability of the borrower to shop for the best interest rate.
Borrowers who are declined at one institution or feel they can get a better rate at another lender used to be able to transfer their appraisal by requesting an assignment and then reapply at the new lender. This is no longer the case. An appraisal ordered through one lender’s AMC is not transferable or valid at any other institution. This, in effect limits the ability of the borrower to find new financing without starting the appraisal process all over again with new fees and time frames.
To be fair one of the benefit that I have noticed with the implementation of HVCC is the price. Previously an average appraisal would have cost a borrower approximately $450.00. Current cost has been reduced by about $60.00 to $390.00.
At the heart of capitalism is the freedom of consumer choice and this is the greatest market force guaranteeing a fair and competitive price in addition to a quality product. The government should use the current laws that are already in place and prosecute the fraud that has been committed by dishonest borrowers, loan officers, Realtors, and lenders and allow the vast majority of honest, hard working real estate professionals to continue to do the job of representing their client’s best interest.
Current Home Mortgage Rates Likely To Follow Yields
Posted by Chas W. Leeper, SRA in Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on June 17th, 2009
Treasury yields continued their drop last week. Yields on benchmark 10-year Treasuries fell from 3.86% midweek to 3.80% to close out the week. Treasury yields at one point on Thursday, prior to the Fed’s sale of the bonds, climbed as high as 4.01%. Mortgage rates should stabilize and drop slightly by the end of the week.
Lower yields on mortgage securities is another factor helping to stabilize and lower mortgage rates. Monday saw a third straight day of dropping yields. Fannie Mae saw rates in their 30-year fixed-rate bonds fall from 4.91% to 4.72% near the end of business on Monday.
Differences between the company’s bonds and 10-year Treasury yields fell to 1%. This difference, a key forecast indicator of future changes in mortgage rates, was as low as 0.7% in May. The difference had climbed to nearly 2.4% last year.
Predictions for falling home prices are another factor to be considered. A number of economists and real estate experts estimate the market will experience a fall in home prices of 40% from their peak. With higher mortgage rates lower home prices will be necessary to offset those finance costs to buyers. Builders nationwide are continuing to scale back construction as worries of surplus continue to plague the industry.
The U.S. Treasury will hold another policy meeting next Tuesday. Current mortgage rates will likely be what holds for the remainder of this week. The Federal Reserve has been committed to the continued purchase of Treasuries to keep borrowing rates low for consumers. However, some economists are worried the Fed’s efforts to keep mortgage rates low and boost the housing market will lead to inflation. World markets will be watching to see what the Treasury announces next week.
By Kyle Godfrey
Home Mortgage Loan Applications Fall as Interest Rates Soar
Posted by Chas W. Leeper, SRA in Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on June 9th, 2009
Mortgage loan applications decreased by 16.2% in the final week of May, as average mortgage rates moved up almost 50 basis points, according to the weekly survey from the Mortgage Bankers Association. Compared to the same four-day week from last year, however, loan volume was up 14.4%.
Analysts often look to the 4-week moving average to get a fuller picture of the market. With this week’s data that average is now down 9.0%.
The Refinance Index fell 24.1% in the week, but the Purchase Index gained 4.3%.
Refinance-related loans accounted for 62.4% of all loans in the week, compared to 69.3% of loans in the prior week. Adjustable-rate mortgages made up 3.0% of all loans, more than the 2.6% reported in the previous week.
The average interest rate for a 30-year fixed-rate mortgage increased rapidly to 5.25% in the week from 4.81%. The trend upwards is continuing this week, according to BankRate.com, which puts the current average 30-year rate at 5.36%.
Thanks to mortgagenewsdaily.com
Pending Home Sales Up for Three Months in a Row
Posted by Chas W. Leeper, SRA in California Home Values and Market Trends, Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on June 3rd, 2009
RISMEDIA, June 2, 2009-Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7% to 90.3 from a reading of 84.6 in March, and is 3.2% above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6% to 78.9 in April and is 0.8% above a year ago. In the Midwest the index rose 9.8% to 90.4 and is 11.1% above April 2008. The index in the South slipped 0.2% to 93.0 in April but is 3.5% higher than a year ago. In the West the index rose 1.8% to 94.8 but is 2.9% below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80% of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
For more information, visit http://www.realtor.org.
Home Sellers become More Realistic on Home Prices while Realtors Express Greater Optimism about Housing Market
Posted by Chas W. Leeper, SRA in Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on May 18th, 2009
RISMEDIA, May 18, 2009-HomeGain, one of the first websites to provide free instant home values, announced the results of an extensive nationwide survey on home prices based on the responses of over 1,150 Realtors.
The survey shows that 36% of homeowners think their homes should be listed 10 to 20% higher than what their Realtors’ recommend, down from 45% in the first quarter.
Conversely, 64% of homebuyers think that homes are overpriced versus 59% who believed the same in the first quarter.
“Realtors are in a unique position as they get to hear both sides of the home price story - the buyers’ and the sellers’. They then apply their own home valuation analysis based on their understanding of the market which often meets resistance from buyers and sellers,” said Louis Cammarosano, General Manager of HomeGain. “The results of our second quarter Realtor home prices survey indicates that home sellers seem to be getting the message that perhaps their homes are not worth as much as they thought they were, while buyers are expecting to find a bargain on every corner.”
The Realtors surveyed expressed more optimism in the second quarter survey on the direction of home prices than in the first quarter, with 22% of them believing that home values will increase in the next six months versus 11% who believed the same in the first quarter. Twenty-nine percent of survey respondents believe that home prices will fall in the next six months versus 53% who believed the same in the first quarter survey.
“There is major improvement in the number of homes selling,” stated Heather Lawson, Broker Century 21 Watson Real Estate in Genoa, IL. Gillian Goldrich of Coldwell Banker Residential Brokerage in Woodbridge, CT, agreed with Lawson, stating, “Markets are definitely picking up. It seems that buyers are getting off the fence and taking advantage of tremendous buys.”
Fifty-seven percent of Realtors surveyed indicated their approval of Obama’s performance as President. These results mirrored the nationwide results of the Rasmussen Daily Presidential Approval Index. Fifty-five percent of survey respondents believe that the Obama stimulus plan will have or has had no impact on home values versus 45% who believed the same in the first quarter survey.
For more information, visit www.homegain.com.
Selling off California real estate to help the budget?
Posted by Chas W. Leeper, SRA in California Home Values and Market Trends, Help for Buyers, Sellers & Homeowners, Help for mortgage pros on May 15th, 2009
Calling buyers with deep pockets. Remember our earlier L.A. Land item on the proposal to sell San Quentin? Well it’s apparently just the tip of the iceberg in terms of sites that California wouldn’t mind selling off. From latimes.com:
Gov. Arnold Schwarzenegger wants to sell the Los Angeles Memorial Coliseum, San Quentin State Prison, the Orange County Fairgrounds and other state property to raise cash amid the state’s growing fiscal crisis, according to a copy of a proposal reviewed by The Times.
Sale of the properties, to be included in the governor’s revised budget plan today, would raise between $600 million and $1 billion, although it would not provide financial relief for two to five years, according to the proposal.
“There are thousands of buildings and land parcels throughout California that represent billions of dollars of equity,” the plan says. “California’s current fiscal crisis has prompted new ways of thinking about how the state can unlock some of this value.”
Other items on the list for potential disposal include Cal Expo, site of the state fair in Sacramento; the Del Mar Fairgrounds in San Diego County; the Cow Palace, a nearly 70-year-old exhibition hall in Daly City, bordering San Francisco; and the Ventura County Fairgrounds.
It is not clear whether lawmakers would be willing to part with the real estate the governor has identified. Proposals to sell San Quentin and the Coliseum have not advanced in the Legislature in recent weeks.
Be interesting to see how much interest these generate.
Gain in Pending Home Sales Suggests Stabilization
Posted by Chas W. Leeper, SRA in Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on May 14th, 2009
The Pending Home Sales Index rose more than expected with a 3.2% advance in March, against forecasts that it would be unchanged after a revised 2.0% gain in February. The index now stands at 84.6.
Annually, pending sales have risen 1.1% since March 2008.
The index, released by the National Association of Realtors, gives some hope that the housing market may be stabilizing, and NAR chief economist Lawrence Yun said momentum could build up in the coming months.
“We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around,” he said.
Yun added that first-time buyers are responding favorably to an $8,000 tax credit, adding that affordability conditions remain near record highs.
The affordability index ? which measures the relationship between home prices, mortgage interest rates, and family income ? moved down slightly to 166.7 in March, but it remains nearly 31% higher than one year ago.
Economics strategist Ian Pollick from TD Securities attributed the gain to “the dramatic retreat in mortgage rates.” He called the report “encouraging,” but expressed caution going forward.
“As long as the U.S. labor market continues to wane, and as long as overall economic activity remains sparse, the necessary conditions for a housing market revitalization will not occur,” Pollick said.
Results were not positive across the board, however. Pending sales in the South rose 8.5% to 93.2 in March, and in the West the index advanced 3.9% to 93.1. By contrast, sales in the Northeast fell 5.7% to 59.5, while in the Midwest the index dropped 1.0% to 82.3.
Pending sales are a forward-looking indicator based on contracts that have been signed but not finalized. The indicator forecasts existing home sales, which represent the majority of the housing market, for the following month.
Also released at 10 am was the construction spending report from the Commerce Department, which unexpectedly rose for the first time in six months.
Construction spending in March was estimated at an annual rate of $969.7 billion, a figure 0.3% above the revised estimate from February. Compared to last year though, construction spending has plummeted 11.1% from the March 2008 estimate of $1,090.5 billion.
Public spending on construction improved from the February estimate, but spending fell in the private sector. The estimate for annual public construction spending was $308.7 billion, a 1.1% higher estimate than in February, while private spending was estimated at $661.0 billion, a 0.1% lower estimate than one month before.
Thanks to Mortgagenewsdaily.com
Home Foreclosures plateau at new high
Posted by Chas W. Leeper, SRA in Help for Realtors / Brokers, Help for mortgage pros on May 13th, 2009
By Inman News
The number of foreclosure-related filings on U.S. homes increased slightly from March to April, hitting a new high for the downturn, according to data aggregator RealtyTrac.
The 342,038 foreclosure-related filings recorded by RealtyTrac in April represented an increase of less than 1 percent from March, but a 32 percent increase from the year before. The rate of filings — one for every 374 homes — represented a high dating back to January 2005, when RealtyTrac began reporting.
Not every home subjected to a filing will ultimately be repossessed by lenders. RealtyTrac tracks public records generated as properties move through three phases of foreclosure — default, notices of foreclosure sale, and repossession by lenders.
RealtyTrac Chief Executive Officer James Saccacio said many properties subjected to filings in April were in the initial stages of foreclosure — default and auction — while bank repossessions were down on a monthly and annual basis to their lowest level since March 2008.
That suggests many lenders and servicers are beginning foreclosure proceedings on delinquent loans that had been delayed by legislative and industry moratoriums, Saccacio said, which is likely to produce a corresponding spike in real estate-owned, or REO properties, over the next few months.
More than three out of four properties subjected to foreclosure-related filings were located in 10 states: California (96,560 filings), Florida (64,588), Nevada (16,266) Arizona (16,245), Ohio (12,324), Georgia (11,521), Texas (11,314), Michigan (10,830) and Virginia (6,254).
With one foreclosure-related filing for every 68 homes, Nevada had the highest foreclosure rate in the nation, followed by Florida (1 in 135), California (1 in 138), Arizona (1 in 164), Utah (1 in 312), Georgia (1 in 344), Illinois (1 in 384), Colorado (1 in 387) and Ohio (1 in 411). The foreclosure rate for the U.S. as a whole, by comparison, was 1 in 374 homes.
At the metro level, foreclosure-related filings fell 20 percent from March to April in Las Vegas, to 14,073, but the city continued to post the highest foreclosure rate among metro areas with a population of at least 200,000. One in every 56 Las Vegas housing units received a foreclosure filing during the month.
The Cape Coral-Fort Myers, Fla., metro area saw one in 57 housing units receiving a foreclosure filing in April, up 31 percent from the previous month. Two other Florida metro areas also documented foreclosure rates in the top 10: Miami at No. 9 and Orlando at No. 10.
With one in every 65 housing units receiving a foreclosure filing, Merced, Calif., posted the nation’s third-highest metro foreclosure rate. Five other California metro areas also documented foreclosure rates in the top 10: Modesto at No. 4, Riverside-San Bernardino at No. 5, Bakersfield at No. 6, Vallejo-Fairfield at No. 7, and Stockton at No. 8.
Data aggregator ForeclosureRadar, which tracks properties through the foreclosure process in California, said sales at auction rose by 35 percent in April, with a record number of properties purchased by third parties at an average 28 percent discount from estimated market value. Notices of default dropped by 18.2 percent from March’s record level, while notices of trustee sale fell by 8.5 percent.
Home Mortgage Rates Stay in Record Territory
Posted by Chas W. Leeper, SRA in Help for Buyers, Sellers & Homeowners, Help for Realtors / Brokers, Help for mortgage pros on May 8th, 2009
Long-term mortgages reclaimed record low status this week as the 30-year fixed rate mortgage (FRM) dropped to 4.78 percent.
This ties the record that was set on April 7 as the lowest interest rate recorded by Freddie Mac’s Primary Mortgage Market Survey since it was started in 1970.
One week ago the survey reported the 30-year average at 4.80. Fees and points both weeks averaged 0.7 point.
The 15-year FRM remained at the record breaking level of 4.48 percent for the third successive week, the lowest rate for this product since Freddie Mac began tracking it in August 1991. Fees and points were also unchanged at 0.7.
The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) reached another new low, averaging 4.80 percent with .06 point. Last week the hybrid averaged 4.85 percent also with 0.6 point. Freddie Mac began keeping track of this mortgage product in January 2005.The one-year Treasury-index ARM decreased five basis points to 4.77 percent. Last week when the average was 4.82 percent was the first time the short-term ARM had ever been lower than the 30-year FRM. Fees and points for the one-year ARM, however, shot up this week from 0.4 point to 0.7 point.
“The housing market may be edging towards a bottom. Existing home sales stayed near its four-month average in March while new home sales were stronger than the market consensus. More importantly, the inventory of unsold new homes fell to the lowest number since January 2002. And, the S&P/Case-Shiller® 20-city composite index did not show a record year-over-year decline in February for the first time since December 2006. Finally, housing affordability hit record highs in the first quarter of this year, according to figures from the National Association of Realtors, which date back to January 1971.”
Weekly yields as announced by Fannie Mae for the week ended April 24 are as follows.
30-year conventional FRM increased from 4.40 percent during the previous week to 4.42 percent.
The 15-year conventional FRM was up 3 basis points to 4.10 percent.
Government-guaranteed FHA/VA 30-year loan yields which were 5.53 percent during the week ended April 17 increased to 5.58 percent for the most recent period.
The one-year ARM was also up from 3.35 percent to 3.38 percent.
All Fannie Mae yields are quoted net of servicing fees.
Thanks to mortgagenewsdaily.com
Real Estate Mortgage Application Activity Falls 18.1%
Posted by Chas W. Leeper, SRA in Help for Realtors / Brokers, Help for mortgage pros on May 4th, 2009
The Mortgage Bankers Association today released it’s survey on mortgage application activity for the week ending April 24th. The index, which measures both purchase and refinance volume as reported by mortgage bankers, commercial banks, and thrifts, fell from 1170.2 to 960.6 which is a decrease of 18.1%. The year over year decrease stands at 62.7%
Refinance transactions, down 21.9% to 5108.2 versus 6540.7 a week earlier, accounted for a majority of the drop. The purchase indeces were down as well with the conventional index decreasing 1.4% while the seasonally adjusted index decreased 0.6%. The government purchase index, however, saw a small gain of .8%. The total share of refinance volume fell to 75.3% from 79.7& a week earlier. This puts the refi index at its lowest level since the week ending March 13th.
The MBA also reports that the average contract interest for the same week fell to 4.62% from 4.73% from a week earlier on 30 yr fixed loans. 15 yr fixed loans also reported a slight decrease from 4.46% to 4.45% for the same time period.
Many originators have also reported to Mortgage News Daily that a significant amount of their prospective clients do not have a pressing need to refinance, but rather, are waiting for the most opportune time to lock an interest rate and move forward. In addition, some note that continuing home price deterioration and a dismal employment situation is also sapping application demand.
Despite those limiting factors, the speed with which current mortgages are expected to be paid-off, a key metric for analyzing and forecasting future mortgage rates, is seen to be up 40% in May, which is reported in June. When these prepayment speeds increase, it generally leads to the creation of mortgage supply in a lower rate range. Bear in mind though that markets have already accounted for this in their pricing. The potentially significant variable is the degree to which the actual reading varies from this expectation of 40%. Faster, and rates may fall. Slower, and rates may rise.