Nicely wrote piece discussing what to expect in the way of market appreciation. 

BY: CARRIE BAY

A number of the industry’s closely-watched home price gauges indicate that stabilization has been slowly creeping into the picture since mid-2009. Analysts at Barclays Capital agree that the tail risk of a sharp decline in housing continues to recede with every passing month.

But they caution that there’s still a bit more of a drop in the cards and little chance of sustained gains any time soon thanks to an inflated supply of foreclosures.

Barclays predicts that home prices nationally will drop another 4 to 5 percent before officially hitting bottom. The firm called this further decline “limited” because lately new foreclosure growth has been curbed, which means these properties can be more easily absorbed by the market without pressuring prices down.

Mortgage modification programs and other policy measures have ensured that the millions of foreclosures yet to hit the market will do so over an extended period of a few years instead of a few quarters, Barclays said, noting that this smoothed-out supply should limit any future decline in home prices.

Barclays says the stability we’ve been seeing in home prices has been a direct result of slowing down the supply of foreclosures. But the company’s analysts warn that stability in the present comes at a cost to the future of home price appreciation.

The overhang of distressed inventory is a “huge negative technical,” according to Barclays, because it suggests that any price rise will probably be met by increased distressed sales.

As a result of the resolution paralysis caused by modification delays, the distressed supply of REOs has stayed low relative to the number of foreclosures, Barclays said. Every time home prices start to rise, distressed sales, which trade at a discount, should pick up as banks and investors holding these properties try to take advantage of the price rise, Barclays explained.

Unabated foreclosure moratoriums and massive modifications with low re-defaults would be needed to keep distressed supply permanently off the market, Barclays says. In addition, the firm contends that fundamentals such as mortgage credit would have to loosen quite a bit and incomes would have to rise sharply.

With all these constraints, Barclays expects home prices to remain disproportionately low without any form of a notable rebound for years to come.

“In sum, policy makers might have managed to engineer a soft landing in U.S. home prices, at least from the second half of 2009. But the by-product of these policies is that home prices look set to simply muddle along not only in the short term, but also over the next few years,” Barclays analysts wrote in their report.

Looks like BOA is gearing up for the shadow inventory that is to come. Pretty good article to give you an inside look at what the banks are doing to get ready for the next couple years. 

BY: BRITTANY DUNN

According to a recent company announcement, Matt Vernon has been named short sale and real estate owned (REO) executive for Bank of America Homes Loans.

In his new position, Vernon will develop and implement initiatives to manage and streamline the bank’s efforts to use short sales and other property liquidation tools to prevent foreclosures. In addition, Vernon will oversee the management and marketing of properties in the bank’sREO portfolio.

“The distressed economy is creating extraordinary volume on mortgage servicers in short sales and post-foreclosureREO activities,” Vernon said. “We know we need to improve processes and efficiencies in these areas. We have begun taking productive steps, and I look forward to working with real estate professionals, customers, investors, and our team on ways we can accelerate that progress.”

Vernon, a 15-year veteran of the financial industry, moves to the loan servicing division from roles in the bank’s residential mortgage origination business. His most recent position in new loan production was as enterprise sales executive, leading mortgage originations and cross-selling efforts through Bank of America’s network of more than 6,000 banking centers.

Previously, Vernon led the bank’s consumer real estate retail sales channel, overseeing 150 offices and more than 2,000 mortgage loan officers. He began his Bank of America career in a banking center in Baltimore and was promoted to broader leadership positions to become division executive sales manager over 479 banking centers in five Mid-Atlantic states before moving into consumer real estate financing.

“Throughout his 15 years with Bank of America, Matt has demonstrated tremendous acumen in strategic planning, performance, customer focus and, other areas that will serve him well in his new position,” said Rebecca Mairone, national servicing executive for Bank of America Home Loans. “This gives him a clear understanding of realty markets and the real estate professionals who play such an important role in short sales and REO marketing.”

Here is another great article I found for you guys. I realize what they are trying to do but why not just bring back the 100% loan products with stricter qualification guidelines? Am I the only one that thinks this is the same exact thing? 

BY: CARRIE BAY

Fannie Mae says it will cover the closing costs on purchases of its REO homes – an incentive the GSE hopes will help it pare down a bloated supply of repossessed foreclosed properties.

The nation’s largest mortgage financier has announced a temporary seller-assistance program under which people purchasing a property through Home Path, Fannie Mae’sREO disposition operation, will receive up to 3.5 percent of the final sales price, which can be applied toward closing costs or used to purchase appliances for their new home.

The offer is available to any owner-occupant who closes on the purchase of a property listed on HomePath.com before May 1, 2010, the company said. In addition, many Fannie Mae-owned properties are eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing, with as little as 3 percent down.

“Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover,” said Terry Edwards, EVP of credit portfolio management for Fannie Mae. “Many families are taking advantage of the federal home buyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help.”

Recent data from Fannie Mae show an increase in the acquisition of foreclosed properties and an escalating rate of seriously delinquent loans, which means even larger volumes of REOs could be coming down the pipeline.

According to the GSE’s most recent quarterly filing, Fannie Mae acquired 98,428 homes through foreclosure during the first nine months of last year and sold 89,691REO properties during the same period. But at the end of September, Fannie Mae still had 72,275 REO properties on its books, marking a 7 percent increase year-over-year.

Furthermore, Fannie Mae’s monthly summary shows significant growth in seriously delinquent single-family mortgages held or guaranteed by the company. Up from 2.13 percent in November 2008, loans three or more months behind in payments or in the foreclosure process soared to 5.29 percent in November 2009.

USHUD.com Predicts Resurgence of FHA Foreclosures

01/27/2010

 

 

By: Carrie Bay

I just wanted to share an interesting article that I came across today written by Brittany Dunn at DSnews.com:  

I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates up, it could cost you even more to service a mortgage on an identical home!

While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.