Archive for November, 2013

With Sen. Harry Reid, D-Nev., able to change the voting threshold needed for getting administration nominations passed the U.S. Senate, the Federal Housing Finance Agency may soon find itself with a new leader in Rep. Mel Watt, D-N.C.

Such a shift would create substantial changes for the Home Affordable Refinance Program and for investors impacted by HARP-eligibility requirements.

Sarah Hu, an analyst with Royal Bank of Scotland (RBS), said a Watt reign may increase the HARP-eligibility rate from 5% to 7%, while pushing conditional repayment rates much higher.

When Reid moved the presidential nominee voting threshold from 60 votes to 51 Thursday, he essentially killed any Republican filibuster efforts, which were expected to impact the Watt confirmation vote. It’s expected Democrats in the Senate can easily get over the 51-vote threshold.

A Watt replacement for FHFA Acting Director Ed DeMarco has long been thought to be an initiative that would create a more politically driven FHFA – and one committed to principal reductions.

Hu says if the cut-off date for HARP eligibility is moved from June 2009 to June 2010, overall HARP eligibility is expected to rise, having its greatest effect on coupon 4.5s and 5s with their eligibility rates likely increasing from 3% to 8% and 7% to 20%, respectively.

Hu said this could lead to a 3 conditional prepayment rate increase for 4.5s and a 9 CPR increase for 5s.

“Higher coupons (6s and above) would be largely insulated from the cut-off date change as most of them were originated prior to 2009,” she said. But if the HARP eligibility rate is moved to June 2011, eligibility for 4.5s would grow from 3% to 14%, while 5s would move from 7% to 26%.

“We would expect speeds on 4.5s and 5s to rise by 7 and 13 CPR respectively,” Hu noted.

And if the eligibility rate is moved to December 2012, coupon 4.5s and 5s would feel the impact with eligibility rates moving from 3% to 17% and 7% to 27%, respectively.

In addition, 3% to 5% of higher coupons would face HARP-extension risk.
By: Kerri Ann Panchuk


Despite a softening market, competition among buyers remained fairly fierce in October, Redfin reported in its Real-Time Bidding Wars release for the month.

Last month, 55.9 percent of offers written by the Seattle-based brokerage’s agents faced competition from other buyers, a decline from 58.3 percent in September. Bidding wars have been on a downward slope since peaking at 79 percent in February.

October was also the third consecutive month to see a drop in competition compared to the same month last year, Redfin said.

Even with the decline, though, competition last month was higher than expected, given the effects of the government shutdown on consumer confidence.

“While many Americans paused their home-buying and selling plans during the shutdown, overall demand in October was more robust than expected, with home tours and offers rebounding once the government reopened,” said Redfin analyst Rachel Musiker. “This unexpectedly strong demand paired with dwindling inventory likely kept competition from falling even further in October.”

Out of the 22 markets reporting, Boston saw the biggest drop in competition, with 61.3 percent of offers facing bidding wars—down from 70.1 percent in September. San Diego, meanwhile, experienced the biggest increase in bidding wars, with 63.0 percent of offers competing against multiple bids compared to 56.1 percent the month prior.

For the most competitive areas, interested buyers still have to adopt aggressive tactics, including offering all cash. Mia Simon, a Redfin agent operating in Silicon Valley, tells a story of a bidder vying for a home priced just above $1.4 million:

“There were only three other offers, but they were all above $1.8 million. Although my client’s offer was not the highest overall, it was the highest of the all-cash offers,” Simon said.

“Today’s Silicon Valley home buyers realize that they long missed out on the bottom of the market, but many believe that home prices will rise even more in 2014, so they will do whatever it takes to get a home under contract before the spring,” she added.

At the same time, the less competitive markets are seeing a shift in the buyer/seller dynamic. For example, in Washington, D.C.—where 44.0 percent of Redfin offers went against other bids in October—sellers are working harder to gain attention.

“I’ve recently received a few phone calls from agents whose listings I have shown to my clients,” said agent Philip Gvinter, who works in the nation’s capital. “They’re trying to gauge my clients’ interest in the home, and some simply ask what it will take to get my client to write an offer. It’s been more than a year and a half since I’ve received a call like that.”

We usher in the holiday season on the last weekend of November with a Christmas Concert and Parade on Sunday. Grace Bible Church provides a 50 voice Christmas music choir at the Rotary Bandstand in Heritage Square Park at 3:30pm. Our annual Christmas Parade begins at 5pm at Traffic Way and Branch St., then proceeds up East Branch to Short St. The parade is followed by the Tree Lighting (at the Harvest Church) and Harvest Church Nativity. At 6:30pm there will be a free showing of “It’s a Wonderful Life” at “The Spot” Theater, 116 W. Branch St. (next to Harvest Church). For additional parade information and entry forms, please call (805) 474-4068.

The Independent Foreclosure Review settlement that ended a massive probe into the practices of 14 mortgage servicers is still generating controversy on Capitol Hill.

This week, several lawmakers – including Reps. Maxine Waters, D-Calif., Sen. Elizabeth Warren, D-Mass., and Elijah Cummings, D-MD – sent a letter to the Office of the Comptroller of Currency and Fed Chair Ben Bernanke asking for a report on the independent foreclosure reviews — a report they’ve been waiting for since this past spring.

The independent foreclosure reviews originally functioned as a key part of a massive servicing settlement reached between 14 financial firms and regulators a few years back.

However, a year after the agreement, the two main regulators ended the foreclosure reviews by inking a $9.3 billion settlement with servicers on the grounds that the IFR process had become too costly and cumbersome. Instead, they settled, ending the IFR reviews with $3.6 billion in direct payments to borrowers.

But it wasn’t over. Those payments generated more controversy when a small slice of the checks bounced,generating a new stream of bad publicity that was quickly remedied.

The Government Accountability Office made the situation worse, releasing its own report, saying the reviews became tainted by a lack of clarity, transparency and consistency.

All of this transpired months ago, but Sen. Warren and other members of Congress still want the ‘foreclosure review information’ from the OCC and Federal Reserve to determine if the settlement amounts were adequate.

In Monday’s letter, the Democratic lawmakers asked for a summary of all financial compensation received by borrowers and a description of the information discovered in borrower loan files. The members also noted that all cases of alleged criminal activity should be referred to the Department of Justice.

In response, the OCC said it does not comment on letters submitted by lawmakers, but has defended the IFR settlement in the past.

Lawmakers, on the other hand, are getting more verbal. After failing to receive the requested records, they’re pushing for a data release by year’s end.

“This information is critically important to addressing the continuing foreclosure processing problems in the mortgage servicing industry,” the lawmakers wrote. “An August 2013 [Consumer Financial Protection Bureau] report found that ‘sloppy account transfers,’ ‘poor payment processing,’ and ‘loss mitigation mistakes’ are still harming borrowers. Although the IFR process may be over, there are still many valuable lessons to be learned from it.”

The IFR controversy is centered around numerous issues, including billions of dollars in consulting fees collected by independent consultants hired to deal with the loan files.

Several consulting groups were involved in the process, including Promontory Financial Group, which alone received nearly $1 billion to review foreclosure files from 2009 and 2010.

The share of Americans moving to a new home fell this year, underscoring the lingering effects of the Great Recession and a drag on the housing market.

The main factor was an unexpectedly large drop in the mobility of young adults, who account for the largest moves among age groups and the bulk of starter-home purchases.

The Census Bureau reported Monday that the annual domestic migration rate — the share of the nation’s population that moved — declined to 11.7% after rising to 12% last year.

Some experts had thought last year’s gain, up from a post-World War II record low of 11.6% in 2011, marked the beginning of what might be a recovery. But that increase turned out to be short-lived.

“I think it’s troubling,” said William Frey, a demographer at the Brookings Institution who analyzed the Census Bureau’s data.

One of the hallmarks of the American economy has long been the mobility of its people, he and other analysts said. But after four years of recovery, many people are struggling to obtain credit and secure the kinds of jobs and income gains needed to move to a new home or apartment.

Frey said a little more than half of the overall drop in the annual migration rate could be attributed to the downturn in adults ages 25 to 34 making moves within a county.

Such short-distance moves are made generally because people want better or cheaper housing, as opposed to moves across county and state lines, which are driven largely by job changes.

For young adults, their long-distance migration rates drifted down in the last year as well, though they remained above the lows of recent years.

“That corresponds to stagnation in the job market, especially for young people,” said Jed Kolko, chief economist at Trulia, a San Francisco online real estate marketplace. Meanwhile, rising home prices further slowed short-distance moves, he said. “The decline in affordability means fewer people are moving in search of cheaper homes.”

A separate Census Bureau report this month showed that the homeownership rate for Americans under 35 years old was 36.8% in the third quarter, down from 42% in the third quarter of 2007, just before the recession began.

For all ages, the homeownership rate was 65.3% in the third quarter versus 68.2% in the same quarter six years ago.

The slowing mobility, in part the result of young adults less willing or able to start families or move out of their parents’ houses, has significant implications for the housing market and the broader economy.

David Crowe, chief economist at the National Assn. of Home Builders, said the new Census migration finding corresponds to what his builders have been telling him about the low share of first-time home buyers.

“Even if they have a job, they can’t qualify for a mortgage because of extraordinarily tight credit conditions,” he said.

Crowe noted that builders have responded by putting up more higher-end and custom-built houses as opposed to starter homes. As the economy continues to produce jobs at a mediocre pace, Crowe said, “I’m expecting that [the younger adult] cohort will be a part of the future, but at a slow rate.”

One factor that will hold down the nation’s overall migration rate is the aging of the American population. Younger people are much more likely to move than older people.

In addition, Kolko noted that the American mobility rate was sliding well before the recession, from about 20% during the 1950s and ’60s to 14% before and during the housing bubble in the last decade — to its 2011 low.

A major reason for this long-term trend, he said: “The economy has moved from manufacturing to services, to industries that tend to be more ubiquitous.”

Kolko thinks that the migration rate will recover but probably not much beyond the 13.2% figure in 2007.

The latest Census report tells a different migration story for those 55 and over. This group, which tends to move largely for retirement and job-related reasons, did not have as big a recession-related drop-off in migration as younger adults. Their overall migration rate was 4.4%, the same as last year and up from 4% in 2011.

“As the economy picked up and the stock market rebounded,” Frey wrote in a report, “the overall senior migration rose from a low in 2011.” And their long-distance moves, he said, have steadily increased since 2009.

By: Don Lee

Home sales continue to seesaw—while levels increased from the previous year, they dipped from previous month. Following historic seasonal trends, October home sales edged 2.8 percent lower than September, but still pushed 2.2 percent higher than sales in October 2012. Median home prices were 11.9 percent above prices seen last October.

“What we’re seeing now are predictable seasonal cycles, which is just another sign that the housing recovery is bringing us back to a more normal market,” said Margaret Kelly, CEO of RE/MAX. “Home sales are expected to slow down during the holidays and winter months before returning to the next growth cycle in the spring.”

Home sales have experienced year-over-year increases in both sales and prices for 21 months now. The median price of all homes sold in October was $179,950. Inventories of homes for sale were 12.2 percent lower than the levels in October last year. For the last 29 months in a row, inventories have declined at a slower rate.

The October inventory drop is half of the annual loss seen as recently as June. At the current rate of sales, the number of months required to sell the entire inventory of homes on the market was 4.9. A 6-month supply is recognized as a balanced market with an equal number of buyers and sellers.

For the most part, normal seasonal trends are responsible for slowing month-to-month changes in home sales. Of the 52 metro areas surveyed in October, 35 reported higher sales than in October 2012, with 19 reporting double-digit gains. New York, New York experienced gains of 32.6 percent; Trenton, New Jersey experienced gains of 32.5 percent; Anchorage, Alaska experienced gains of 24.2 percent; Philadelphia, Pennsylvania experienced gains of 18.2 percent; Wilmington, Delaware experienced gains of 18.1 percent; and Manchester, New Hampshire experienced gains of 17.1 percent.

In the month of October, homes stayed on the market for an average of 66 days. This is one day higher than the average seen in September, but is 16 days lower than the average seen in October 2012. An average this low is the direct result of continued high demand and a reduced inventory of homes for sale, according to RE/MAX.

The housing market has been plagued by a low inventory environment, but for seven consecutive months, inventory has declined at a slower rate than during the same month of the previous year. While not yet adding inventory, the situation is improving. In October, there were 5.1 percent fewer homes for sale than in September, and 12.2 percent fewer than in October 2012. At the rate of home sales in October, the Months Supply of inventory was 4.9.

Grover Beach Beautiful Day

Posted: November 15, 2013 in Grover Beach

Time: Meet 8:00 a.m. (City Hall parking lot)
Locations: Various locations Citywide each month

The City is sending out a call for all volunteers to participate in the next “Grover Beach Beautiful Day”. Weather permitting, volunteers are encouraged to bring gloves and meet at 8:00 a.m. in the City Hall parking lot, 154 S. 8th Street, Grover Beach. Teams of volunteers will receive assignments to clean up public areas along the City’s major streets. (Please note: in the event of rain, this event will be cancelled.)

For more information on how you might be involved or to offer suggestions for a strategic area in our community that needs to be added to the beautification list, please phone or email Parks & Recreation Program Director Kathy Petker. (Contact information is listed below.)

Date:November 16
Time:8:00 AM - 12:00 PM
Address:Grover Beach, CA 93433
Contact: (805) 473-4580