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Pre-Foreclosure Short Sales Jump 19% in Second Quarter by Carrie Bay, DSNEWS.com

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Short sales shot up 19 percent between the first and second quarters, with 102,407 transactions completed during the April-to-June period, according to RealtyTrac.  Over the same timeframe, a total of 162,680 bank-owned REO homes sold to third parties, virtually unchanged from the first quarter.

RealtyTrac’s study also found that the average time to complete a short sale is down, while the time it takes to sell an REO has increased.

Pre-foreclosure short sales took an average of 245 days to sell after receiving the initial foreclosure notice during the second quarter, RealtyTrac says. That’s down from an average of 256 days in the first quarter and follows three straight quarters in which the sales cycle has increased.

REOs that sold in the second quarter took an average of 178 days to sell after the foreclosure process was completed, which itself has been lengthening across the country. The REO sales cycle in Q2 increased slightly from 176 days in the first quarter, and is up from 164 days in the second quarter of 2010.

Discounts on both short sales and REOs increased last quarter, according to RealtyTrac’s study, but homes sold pre-foreclosure carried less of a markdown when compared to non-distressed homes.

Sales of homes in default or scheduled for auction prior to the completion of foreclosure had an average sales price nationwide of $192,129, a discount of 21 percent below the average sales price of non-foreclosure homes. The short sale price-cut is up from a 17 percent discount in the previous quarter and a 14 percent discount in the second quarter of 2010.

Nationally, REOs had an average sales price of $145,211, a discount of nearly 40 percent below the average sales price of non-distressed homes. The REO discount was 36 percent in the previous quarter and 34 percent in the second quarter of 2010.

Commenting on the latest short sale stats in particular, James Saccacio, RealtyTrac’s CEO, said, “The jump in pre-foreclosure sales volume coupled with bigger discounts…and a shorter average time to sell…all point to a housing market that is starting to focus on more efficiently clearing distressed inventory through more streamlined short sales.”

Saccacio says short sales “give lenders the opportunity to more pre-emptively purge non-performing loans from their portfolios and avoid the long, costly and increasingly messy process of foreclosure and the subsequent sale of an REO.”

Together, REOs and short sales accounted for 31 percent of all U.S. residential sales in the second quarter, RealtyTrac reports. That’s down from nearly 36 percent of all sales in the first quarter but up from 24 percent of all sales in the second quarter of 2010.

States with the highest percentage of foreclosure-related sales – REOs and short sales – in the second quarter include Nevada (65%), Arizona (57%), California (51%), Michigan (41%), and Georgia (38%).

States where foreclosure-related sales increased more than 30 percent between the first and second quarters include Delaware (33%), Wyoming (32%), and Iowa (30%).

 

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Mortgage Apps Rise as FHA Loan Demand Surges, Thetruthaboutmortgage.com

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Mortgage application volume increased 5.3 percent on a seasonally adjusted basis during the week ending April 15 as government mortgage demand surged, the Mortgage Bankers Association reported today.

The refinance index increased a meager 2.7 percent from the previous week, but purchase money mortgages jumped 10.0 percent, mostly due to a 17.6 percent spike in FHA loan lending.

“Purchase application volume jumped last week largely due to another sharp increase in applications for government loans. Borrowers were likely motivated to apply for loans before the scheduled increase in FHA insurance premiums,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

“Refinance activity increased somewhat, as rates dropped to their lowest level in a month towards the end of the week.”

That pushed the refinance share of mortgage activity to 58.5 percent of total applications from 60.3 percent a week earlier.

So it looks as if purchases will eclipse refinances in the near future, which is good news for the flagging housing market.

Meanwhile, the popular 30-year fixed-rate mortgage dipped to 4.83 percent from 4.98 percent, keeping the hope of refinancing alive for more borrowers.

The 15-year fixed averaged 4.07 percent, down from 4.17 percent a week earlier, meaning mortgage rates are still very, very low historically.

That alone could bring more buyers to the signing table this summer.

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RealtyTrac: Foreclosure Activity at Lowest Level in Three Years, by Carrie Bay, DSNEWS.com

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RealtyTrac says processing delays have reduced foreclosure activity to its lowest level since the first quarter of 2008.

New data released by the tracking firm shows that foreclosure filings were reported on 681,153 properties during the first three months of this year. That represents a 15 percent decline from the previous quarter and a 27 percent drop from a year ago.

Commenting on the latest numbers, James J. Saccacio, RealtyTrac’s CEO, said despite the recent plunge in foreclosure activity, the nation’s housing market continued to languish in the first quarter.

“Weak demand, declining home prices and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork,” Saccacio said.

A total of 197,112 U.S. properties received default notices for the first time in the January to March period, a 17 percent decrease from the previous quarter and a 35 percent decrease from the first quarter of 2010.

Foreclosure auctions were scheduled for the first time on 268,995 homes. That’s down 19 percent from the previous quarter and 27 percent from the first quarter of last year.

Lenders completed foreclosure actions on 215,046 homes last quarter, a 6 percent drop from the fourth quarter of 2010 and a 17 percent decrease from the first quarter of last year. However, in states where the non-judicial foreclosure process is primarily used, RealtyTrac says bank repossessions (REOs) increased 9 percent from the previous quarter.

Illustrating the extent to which processing delays pressed foreclosure activity to artificially low levels, RealtyTrac says states where a judicial foreclosure process is used accounted for some of the biggest quarterly and annual decreases in the first quarter.

Florida foreclosure activity decreased 47 percent from the previous quarter and was down 62 percent from the first quarter of 2010, although the state still posted the nation’s eighth highest foreclosure rate with one in every 152 housing units receiving a filing in Q1.

First quarter foreclosure activity in Massachusetts fell 46 percent from the previous quarter and was down 62 percent from a year ago. The state’s foreclosure rate – one in every 549 housing units with a foreclosure filing – ranked No. 38 among the states.

New Jersey’s first quarter foreclosure rate of one in every 401 housing units with a filing ranked No. 34 among the states, thanks in part to a 43 percent decrease in foreclosure activity from the previous quarter and a 44 percent decline from the first quarter of 2010.

Connecticut’s first quarter foreclosure activity dropped 39 percent from the fourth quarter of 2010 and was down 65 percent from a year earlier. Pennsylvania posted a 35 percent decline from the previous quarter and a 29 percent drop from the same period last year.

Looking at the nationwide data for March, RealtyTrac’s report indicates that activity is already beginning to pick up some. Foreclosure filings were reported on 239,795 U.S. properties last month, up 7 percent from February. Both default notices and REOs increased in March compared to the previous month; scheduled auctions was the only stat to post a monthly decline.

 

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Mortgage Rates Continue to Climb, Closing in on 5% Mark, by Carrie Bay, DSNEWS.com

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Borrowing costs on home loans continue to increase, with mortgage rates rising sharply for the past five weeks in a row. New data released Thursday show that the average rate for a 30-year mortgage jumped 22 basis points over the last seven days. Freddie Mac reports that rates for a 30-year fixed mortgage averaged 4.83 percent (0.7 point) for the week ending December 16, 2010. That’s up from last week’s average of 4.61 percent. Last year at this time, the 30-year rate was 4.94 percent.

The GSE’s weekly rate survey is based on data gathered from about 125 lenders across the country, and it showed increases across the board.
The 15-year fixed-rate mortgage this week averaged 4.17 percent (0.7 point) in Freddie’s study. Last week, it was 3.96 percent, and a year ago at this time, it was 4.38 percent.

Adjustable-rate mortgages (ARMs) also climbed higher. Freddie says the 5-year ARM averaged 3.77 percent (0.7 point) this week, up from 3.60 percent. Rates on 1-year ARMs came in at 3.35 percent (0.7 point), compared to 3.27 percent the previous week.
A separate study released by Bankrate Thursday, which derives its figures from data provided by the top 10 banks and thrifts in the top 10 U.S. markets, shows that 30-year rates among its covered lenders already hit the 5.00 percent (0.4 point) mark this week. That’s up from a 4.89 percent average reported by Bankrate last week.
It’s the first time since May that the 30-year rate has hit the 5 percent threshold in Bankrate’s study. As recently as November 3, mortgage rates were at a record low of 4.42 percent, according to the tracking firm’s analysis.
The average 15-year fixed mortgage increased to 4.37 percent (0.38 point), and the larger jumbo 30-year fixed rate rose to 5.58 percent in Bankrate’s study.
Adjustable rate mortgages were also higher, with the average 5-year ARM jumping to 3.95 percent and the average 7-year ARM climbing to 4.36 percent.
Bankrate surveys a panel of mortgage experts each week to gauge which way they think rates are headed over the next seven days. Nearly three-quarters of the panelists, 73 percent, expect mortgage rates to increase and only 7 percent predict rates to decline. The other 20 percent forecast that rates will remain more or less unchanged over the next week.

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Nearly 40 Percent of Purchase Mortgages in 2010 FHA Loans,

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FHA loans were used to close 38 percent of all home purchase mortgages, including 60 percent of all African-American and Hispanic home purchases, during the nine-month period ending in June 2010.

The FHA’s single-family insurance program also accounted for nine percent of all refinanceloans during that time period.

And recently originated loans actually boosted the FHA’s capital resources by $1.5 billion since last year to $33.3 billion, their highest level ever.

Unfortunately, loans originated prior to 2009 continue to be the downfall of the FHA, namely so-called “seller-financed down payment assistance loans,” which have already chalked $6.6 billion in losses.

They’re ultimately expected to cost the FHA $13.6 billion, which is why they were eventually banned.

In fact, without these loans, the FHA’s capital ratio would have remained above the congressionally mandated two percent threshold.

Now the FHA’s capital ratio is around .50 percent, and is expected to near two percent in 2014 and finally exceed the statutory requirement in 2015.

Recent Changes Should Save the FHA

That’s due in part to recent changes made at the FHA, including the introduction of a minimum credit score (500) and higher insurance premiums.

Over the past year, the FHA insured $319 billion in single-family mortgages for 1.75 million households, including 882,000 first-time homebuyers.

Additionally, it helped 450,000 borrowers avoid foreclosure through loss mitigation actions, and provided refinance loans to 556,000 borrowers, savings households an average of $140 a month on mortgage payments.

An FHA loan allows borrowers to put down as little as 3.5 percent to obtain financing, making it a popular choice for prospective homeowners these days.

FHA Lending Volume Since 2000

fha volume

 

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U.S. Apartment Vacancies Decline for the First Time Since 2007, by Hui-yong Yu, Bloomberg.com

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U.S. apartment vacancies dropped for the first time in almost three years in the third quarter, suggesting the trend of people moving in with family or friends might be abating, Reis Inc.said today.

The national vacancy rate fell to 7.2 percent from 7.9 percent a year earlier and 7.8 percent in the second quarter, the New York-based research firm said. It was the lowest rate since 2008’s fourth quarter, when it was 6.7 percent, and the first year-over-year drop since 2007’s fourth quarter. Vacancies reached a three-decade high of 8 percent late last year.

Rental demand usually goes up during the second and third quarters, when people tend to lease apartments, said Victor Calanog, director of research at Reis. The U.S. recession interrupted that pattern starting two years ago as widespreadjob cuts prompted many people to move in with parents or friends instead of renting their own apartments.

“Those guys are starting to move back to the rental market,” Calanog said in a telephone interview. “What we’re seeing might be these folks who realized, ‘Hey, I love my father and mother, but I don’t think I can live with them forever. I’ll take a chance on a yearlong lease and maybe I can find a job in six to nine months.’”

The change in occupied space, known as net absorption, rose by 84,382 units, a record since Reis began keeping the data in 1999, the company said. Net absorption totaled 157,788 apartments from January through September, compared with almost 21,000 units vacated a year earlier.

Concessions, Jobs

Signing of apartment leases has risen as a surge in home foreclosures forced many people to rent and landlords offered concessions amid a weak economy. Job growth will determine whether the apartment market continues to improve, Calanog said.

“If the pace of job growth is really lackluster, then I wouldn’t be shocked if vacancies suddenly rose in the fourth quarter,” Calanog.

About 90 percent of the rise in net absorption came from leasing up existing apartments, Reis said. New properties came to market almost half empty, and the total supply of new stock was the smallest since 2007’s second quarter. The 21,906 new units that came to market in the third quarter had an average vacancy rate of 60 percent, said Reis.

Landlords’ asking rents climbed to $1,037, little changed from $1,033 a year earlier and $1,032 in the second quarter, according to Reis. Actual rents paid by tenants, known as effective rents, rose to an average $980 from $971 a year earlier and $974 in the second quarter

New Haven, Connecticut, had the lowest vacancy rate in the third quarter, at 2.3 percent, followed by New York City; Long Island, New York; San Jose; and Central New Jersey, according to Reis. New Haven is home to Yale University.

The Reis survey measures about 9.1 million apartments.

To contact the reporter on this story: Hui-yong Yu in Seattle at hyu@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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Home Purchase Loan Applications Highest Since May, thetruthaboutmortgage.com

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It was a good week for home purchase applications as refinance apps fell for a fifth straight week, according to the Mortgage Bankers Association.

Overall, mortgage application volume decreased 0.2 percent on a seasonally adjusted basis for the week ending October 1.

The refinance index slipped 2.5 percent from the previous week and the seasonally adjusted purchase index jumped 9.3 percent to the highest level since the week ending May 7.

The unadjusted purchase index was up 9.1 percent compared with the previous week, but still 34.7 percent lower than the same week a year ago.

“The increase in purchase activity was led by a 17.2 percent increase in FHA applications, while conventional purchase applications also increased by 3.6 percent,” said Jay Brinkmann, MBA’s Chief Economist, in a release.

“This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program.

Brinkmann noted that FHA loan apps may have jumped as borrowers rushed to get applications in before the new FHA requirements took effect on October 4th, which include higher credit score and down payment requirements.

The increase in purchase activity pushed the refinance share of mortgage activity to 78.9 percent of total applications from 80.7 percent the previous week.

Mortgage Rates Hit New Record Lows

Meanwhile, the popular 30-year fixed-rate mortgage hit a new record low 4.25 percent, down from 4.38 percent a week earlier.

The 15-year fixed also hit a record low, falling to 3.73 percent from 3.77 percent.

Finally, the one-year adjustable-rate mortgage increased to 7.11 percent from 7.04 percent.

The mortgage rates are good for mortgages at 80 percent loan-to-value – pricing adjustmentscan lower or raise your actual interest rate.

Keep in mind the MBA’s weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or rejected apps, which have surely increased since the mortgage crisis got underway a few years back.