Pending Home Sales Rise
Original Post Date: February 27, 2012

By: Nick Timiraos

An index that tracks contracts to buy previously owned homes rose 2% in January from December to the highest level since April 2010, rekindling hopes that improving demand will help halt the slide in prices this year.

The index of pending home sales, which reflects deals that have signed contracts but haven’t yet closed, rose to 97 from 89.8 a year ago, according to the National Association of Realtors.

The reading was the highest for any January since 2007, but still remains at historically low levels.

Real-estate firms saw buyer traffic surge as the year began, “but we don’t yet know if they’re going to buy,” said Glenn Kelman, chief executive of brokerage Redfin Corp. “Part of the concern is that we saw a strong January and February last year,” only to see sales disappoint during the spring and summer, he said.

Other reasons for caution: Many real-estate agents say a significant share of contracts are falling apart at the closing table. Also, lending standards remain tight, so some buyers can’t qualify for loans.

A bigger problem is that appraised values often come in below the agreed-upon sales price, forcing the buyer to lower the price or the seller to make a larger down payment in order to hold the deal together, real-estate agents say.

Also, while mortgage rates are nearly one percentage point below their levels of a year ago, applications for home-purchase mortgages remain in the dumps. Applications were down by 10% from a year ago in mid-February, according to an index maintained by the Mortgage Bankers Association, recording their second-lowest weekly level since the housing downturn began.

Some housing analysts say a pickup in sales might not be detected by the mortgage index because investors and other all-cash buyers have played a growing role in many of the hardest-hit housing markets over the past year.

Policymakers have stepped up efforts in recent weeks to shore up battered housing markets. On Monday, for example, the regulator that oversees Fannie Mae said it would begin accepting bids from investors on around 2,500 properties located in eight different regions as part of an initiative announced last year to convert some foreclosed properties into rentals.

Those properties currently are occupied by renters, and under the program investors would be required to maintain them as rentals. If this first phase succeeds, Fannie could begin marketing other foreclosed properties this way. So far, it has largely resisted bulk sales, instead selling homes one at a time.

Around 23% of the units in the first phase of the program are in Southern California, and 21% are in Atlanta. Other markets where Fannie is soliciting investor interest include Chicago, Las Vegas, Phoenix, and three different regions in Florida.

It isn’t clear how the sales will be structured. It is possible Fannie will keep a stake in a joint venture so the housing-finance company would benefit if home values rise. Policymakers have encouraged federal entities to consider renting out foreclosures because many housing markets are seeing rents climb while prices remain under pressure from a glut of foreclosed properties.

The Federal Housing Finance Agency began “pre-qualifying” investors this month, and the regulator said in a statement on Monday that investors would have to go through a “rigorous” process to be eligible to bid on the properties. It didn’t specify a timeline for the auctions, but inital sales could take place over the course of several months, said people familiar with the matter.

Meanwhile, federal officials on Monday said they would increase mortgage fees charged by the Federal Housing Administration to borrowers who take out loans insured by the agency. Today, the FHA offers among the easiest lending terms available with down payments of just 3.5%, making it popular with first-time buyers. But the value of its reserves has plunged, raising the specter of a taxpayer bailout.

Beginning April 1, the agency will raise by 0.75 percentage points to 1.75% the upfront insurance premiums that borrowers must pay when they take out FHA-backed loans. On a $300,000 loan, the new upfront premium works out to $5,250, up from $3,000. Because homebuyers are allowed to roll those fees into their loan, officials said they expected the higher premiums wouldn’t deter many buyers.

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Prototype of standardized monthly mortgage statement is released

Original Post Date: February 14, 2011

By: Jim Puzzanghera

Reporting from Washington—

Your monthly mortgage bill soon could get easier to understand, and it wouldn’t change each time your loan is sold to a new servicer.

The Consumer Financial Protection Bureau has developed a proposed standardized mortgage servicer statement designed to provide clear information about the loan on a single page.

The prototype released Monday included a breakdown of how much of the monthly payment went to principal, interest and escrow. The form also detailed the outstanding principal, maturity date, prepayment penalty and, for adjustable-rate mortgages, the time when the interest rate could change.

“This information will help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up,” said Richard Cordray, the agency’s director. “Given the widespread mortgage servicing problems we’ve seen over the past few years, consumers need clear disclosures they can count on.”

Although many servicers already provide such information on their monthly statements, there are no industrywide standards, the agency said.

Such standards are a good idea, and initial reaction from servicers to the agency’s proposal was positive, said Rod J. Alba, senior counsel in the mortgage markets division at the American Bankers Assn.

The agency posted a working draft of the standardized statement on its website, to solicit input from the public and industry before a version of the form formally is proposed this summer.

Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, said simplified mortgage statements would help resolve the broad mortgage servicing problems that were at the heart of last week’s federal and state settlement with five of the nation’s largest banks over botched foreclosure paperwork.

The consumer agency is required under the 2010 financial reform law to put new mortgage servicing rules in place to help consumers, Cordray said. The law has specific requirements for mortgage statements, including a phone number and email address for the customer to get information about the loan, as well as information about housing counselors.

The new mortgage statement is the latest consumer financial paperwork the agency is trying to simplify.

In May, it released two prototypes for shorter, easier-to-understand disclosure forms that lenders would have to give home buyers before they close on a mortgage. The agency has been receiving comments on the forms and tested them last month in Philadelphia.

And in December, the agency proposed a simplified credit card agreement form to make it easier to understand interest rate terms and comparison shop.

The agency also is developing a new disclosure rule for hybrid adjustable-rate mortgages that would require consumers to be notified months before their first interest rate increase, as well as to be provided with a good-faith estimate of the new monthly payment.

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Fannie Mae: Outlook for Home Prices Rises Again
Original Post Date: February 7, 2012

By: Mia Lamar

The consumer outlook for U.S. home prices improved again in January, extending a recent upward trend in housing market sentiment, according to mortgage market firm Fannie Mae.

For its monthly reading, Fannie Mae said respondents in its January survey predicted home prices will rise by 1% over the next year, up from the 0.8% gain forecast in December.

Views on the direction of the U.S. economy also continued to improve. According to the respondents, 30% said they believe the U.S. economy is on the right track, up from 22% with that view in December. The percentage who said the economy is headed in the wrong direction fell to 63% of respondents, marking a 6 percentage point decline from the previous month.

Fannie Mae Chief Economist Doug Duncan pointed to a slowly improving U.S. job market as one cause for rising confidence in the long-battered housing market. ”The strengthening employment picture last Friday provides encouragement that the improving trend in consumer confidence will continue and will at some point be reflected in a firming up of consumer spending,” Duncan said.

A report last week from the U.S. Labor Department showed nonfarm payrolls grew 243,000 last month, the largest gain since April. The jobless rate fell from 8.5% to 8.3%, the lowest it has been since February 2009.

Fannie Mae’s January survey also found 44% of respondents expect their personal financial situation to improve over the next year, up from 40% with that view in December.

The survey is based upon a monthly poll of roughly 1,000 adults and has a margin of error of plus or minus 3.1%.

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