Archive for September, 2013

A full-blown housing recovery could push the nation closer to full employment, but a confluence of factors have made this an illusory goal, researchers claim in a new report from Moody’s Analytics and the Urban Institute.

As home prices rise, rates increase and investors step away from the market, the recovery becomes even more dependent on the return of move-up and first-time homebuyers, says analysts Jim Parrott and Mark Zandi, both of whom published a research paper on mortgage credit, titled “Opening the Credit Box.”

The only problem is many of these buyers are not ready to sign onto a mortgage, or they are not allowed to get a mortgage due to stringent underwriting guidelines.

Parrott and Zandi’s statistics show first-time homebuyers struggling as affordability disappears and tighter lending standards block them from the mortgage market altogether.

The good news is housing starts doubled from the Great Recession to current levels, rising from 500,000 units per year during the crux of it, to 900,000 units. Prices are also up 15% from two years ago, Parrott and Zandi said.

But credit remains tight, with the average credit score on purchase loans hovering at 750 – 50 points above the average credit score a decade ago.

Lenders and borrowers are caught on a type of dangerous carousel, where they are unable to break free of current market trends due to pending litigation and regulatory risk, changing market dynamics and fears built into the system on both sides.

“First, lenders have reassessed how much risk they are willing to take on, in part because they were burned badly in the crisis and in part because they have come to recognize a range of costs associated with riskier lending not fully appreciated before: the increased cost of servicing distressed borrowers; the reputational and legal risks associated with servicing significant numbers of delinquent or defaulting loans; and a similar range of risks associated with originating loans that subsequently default, to name but a few,” the two researchers noted in their report.

Lenders also were able to stay active and financially viable for years by focusing on refinancing – a market that is starting to cool, making the pivot to purchase loans essential, but difficult.

Lenders are also worried about loan putbacks – or requests from the GSEs asking lenders to repurchase loans with underwriting mistakes or issues.

“Lenders are only willing to make loans intended for purchase by Fannie or Freddie or insurance by the FHA if there is little prospect of default, so that they do not expose themselves unwittingly to the risk that they will bear the cost,” the report concluded.

Parrott and Zandi say the goal is to strike a balance between access to credit and safe lending, without resorting to excessive risk-taking.

The average household receiving a Fannie/Freddie purchase mortgage had a FICO score of 766 in June. A decade ago, that score would have been 50 points lower. Current FHA borrowers have an average credit score of 700 and above, which is also 50 points higher when compared to normal market cycles.

By: Kerri Ann Panchuk



Flexible spaces, tech-savvy features and outdoor-oriented living are popular with well-to-do U.S. homeowners, a pair of recent surveys show.

Among the 300 wealthy consumers polled, open floor plans, full automation/wiring and swimming pools topped the list of important amenities, a study by Coldwell Banker Previews International and the Luxury Institute found. Lower priorities for households earning at least $250,000 annually were staff quarters, tennis/sports courts and catering kitchens.

Architects also are seeing high interest in wireless and energy-efficient systems, results of an American Institute of Architects second-quarter survey show. And homeowners are still seeking outdoor living rooms and home offices.

HUD Delays Dual Agency Restrictions

Posted: September 30, 2013 in Short Sales

HUD has delayed its prohibition of dual agency listings on short sale properties according to a statement made this week by the National Association of Realtors (NAR).

The HUD prohibition had first been outlined in a July letter to mortgage servicers describing new anti-fraud requirements for short sales and deed-in-lieu of foreclosure transactions. The original policy was slated to go into effect October 1, 2013.

In response, NAR President Gary Thomas wrote a letter toHUD outlining NAR’s concern with both the reasoning behind the prohibition and the possible consequences of it.

“NAR has been told that the policy was implemented because the HUD Inspector General detected fraud and abuse in the pre-foreclosure sales process; however, no

statistics or reports were provided to NAR detailing short sale fraud by real estate agents,” the letter said. “NARtakes fraud very seriously…If there is evidence of fraud by our membership, we would like to be part of an effort to develop policies that effectively address these

Thomas’s letter also raised concerns about how a prohibition on dual listing would affect agents’ and brokers’ ability to effectively serve their clients.

“More homeowners are at risk of falling into foreclosure if they cannot find a real estate agent, especially one who is knowledgeable about the short sale process, to list their homes,” Thomas said. “Some real estate brokers have hundreds of agents across multiple offices. If one of those offices chooses to list a short sale, under HUD’s new policy, none of the other agents can bring a buyer to that property. Members have told me that they will no longer list short sales because they do not want to restrict agents from representing their buyers, many of whom have been loyal customers for years.”

NAR announced Wednesday that, following talks withHUD, the proposed prohibition had been delayed indefinitely. “The result is that the dual agency policy will not be implemented on Oct. 1, allowing NAR to continue the dialogue with agency officials on a formal solution to the dual agency issue,” NAR said in a statement.

The total United States mortgage loan delinquency rate fell to 6.2 percent in August according to a new report by Lender Processing Services (LPS). August’s rate represented a 3.31 percent decrease from the previous month and a 9.71 percent decrease from August 2012.

The report examined data from LPS’s loan-level database representing approximately 70 percent of the overall market.

The total U.S. foreclosure pre-sale inventory rate stood at 2.66 percent, a 5.74 percent decrease from the previous month and a 34.08 percent decrease from August 2012.

The states with the highest percentage of non-current loans were Florida, Mississippi, New Jersey, New York, and Maine.

The states with the lowest percentage of non-current loans were Montana, Colorado, Wyoming, South Dakota, and North Dakota.

LPS will provide more detail in its monthly Mortgage Monitor Report, which will appear on the company’s website by October 7.

Arroyo Grande Harvest Festival

Posted: September 27, 2013 in Arroyo Grande

Arroyo Grande Harvest Festival

The Arroyo Grande Harvest Festival is here! For more information click on the image or visit:

The Parade is tomorrow, Saturday(28th) at 10am in the Village.

The median sale price for a distressed residential property was $116,000, up one percent from a month ago but down three percent from a year ago, according to the August 2013 U.S. Residential Foreclosure and Sales Report released Thursday by RealtyTrac. The national median sales price for other residential properties was $175,000, up three percent from last month and up six percent from a year ago, making August the 17th consecutive month that home prices have increased annually.

“Seven years after the housing bubble burst, U.S. home prices are clearly on the rise again, up 23 percent from the bottom in March 2012 although still 26 below the peak of the housing price bubble in August 2006,” said Daren Blomquist, vice president at RealtyTrac. “This recovery in home prices and sale volume continues to be driven in large part by cash buyers and institutional investors, as evidenced by the increasing share of sales represented by those two categories in August.”

Sales volume increased from the previous month in 39 out of the 42 states tracked in the report and was up from a year ago in 37 states, including Texas, (up 31 percent), Illinois (up 29 percent), Pennsylvania (up 28 percent), Virginia (up 26 percent), and Florida (up 22 percent). Notable exceptions where sales volume decreased from a year ago included California (down 17 percent), Arizona (down 12 percent), Nevada (down 6 percent).

The report also noted that among metro areas with a population of 1 million or more, those with the biggest annual increases in median prices included San Francisco (up 35 percent), Sacramento (up 35 percent), Riverside-San Bernardino in Southern California (up 28 percent), Atlanta (up 28 percent), Los Angeles (up 26 percent), Las Vegas (up 26 percent), and Phoenix (up 25 percent).

The Fed’s decision to continue its economic stimulus program unabated has sent fixed mortgage rates plunging to their lowest level in two months, according to Freddie Mac’s weekly survey, with the 30-year loan averaging 4.32%, down from 4.5% a week earlier.

 Lenders were offering 15-year fixed mortgages to solid borrowers at 3.37% early this week, down from 3.54% last week. Initial rates for variable mortgages fell as well, Freddie Mac said Thursday.

The Fed announced last week that the economy was still not strong enough to allow the central bank to cut back on its $85 billion a month in purchases of Treasury securities and bonds backed by mortgages. The effect is to push down interest rates, stimulating the economy by making it cheaper to borrow.

The low rates should “somewhat” offset recent increases in home prices, improving housing affordability, Freddie Mac chief economist Frank Nothaft said.

Freddie Mac, which buys and guarantees home loans, asks lenders each Monday through Wednesday about the terms they are offering to borrowers with good credit, 20% down payments or home equity, and sufficient income to handle payments on home loans.

The borrowers in the latest survey would have paid an average of 0.7% of the loan balance in upfront lender fees and discount points to obtain the fixed mortgages.