The surge in mortgage applications last week was attributed to a jump in refinance applications, which rose 13 percent for the week. Refinance applications make up nearly 75 percent of all mortgage applications.

Surprisingly, mortgage applications for home purchases dropped 2.4 percent last week.

“Low rates have convinced many home owners to refinance their mortgages, though tougher lending requirements still keep many prospective home buyers from taking out new debt,” The Wall Street Journal reports. We agree, your thoughts?  

Source: “Mortgage Application Volume Rose 9.2% Last Week: MBA,” The Wall Street Journal (5/16/12)

Fannie posted a profit in the first quarter of the year, reporting a net income of $2.7 billion compared to a $6.5 billion loss they reported in the first quarter of 2011.

“We expect our financial results for 2012 to be significantly better than 2011,” says Susan McFarland, Fannie Mae’s chief financial officer. “As our serious delinquency rate declines and home prices stabilize, we expect to reduce our reserves, which combined with revenue from our high-quality new book of business, will drive our future results.”

Freddie Mac, also a government-sponsored enterprise and mortgage giant, recently reported a profit as well — a $577 million quarterly net income for the first quarter.

Our region is showing other signs of the housing market stabilizing: The decline in home prices is slowing, more are buying homes than a year ago, and housing starts have climbed in the last year. Comments about your local market conditions improving? 

Source: “Fannie Mae Profit Signals a Stabilizing Housing Market,” The New York Times (May 9, 2012)

At the same congressional hearing, Michael Stegman — Treasury Secretary Timothy Geithner’s advisor on housing finance policy — said the initiative, if successful, could close a shortfall in owner-occupied housing demand and “serve as a model for private market participants.”

So what are their housing policies or real intentions? Please provide your comments!

Source: “FHFA Downplays Potential of Foreclosure-to-Rental Program,” American Banker (5/8/12)

Recent surveys have shown that foreclosure sales have dropped to their lowest point in more than two years. And while according to March data, 8 percent more homes did enter the foreclosure process from the previous month, that number is down more than 30 percent from a year ago, according to Lender Processing Services.

CNBC real estate reporter Diana Olick notes that it could be another delay in the foreclosure system “as banks try to modify more loans to meet some of the terms of the [$25 billion] servicing settlement . The foreclosure sales decline also appears to be exclusively in private and portfolio loans, which again points to the settlement.”

Meanwhile, banks are increasing their number of short-sale transactions, and some surveys have shown that short sales are actually now outpacing foreclosure sales— the first time that’s ever occurred.

“Lenders are increasingly recognizing that short sales may be a better alternative for them than foreclosure,” RealtyTrac’s Daren Blomquist told CNBC. “This trend began in markets with stronger demand and where the distressed inventory tends to be newer homes (Phoenix, Los Angeles, Las Vegas), but the trend appears to be spreading to other markets like Atlanta and Detroit.” Please provide thoughts about your local market.

Source: “Flood of Foreclosures Still Fails to Materialize,” CNBC (May 2, 2012)

1. Lowball offers won’t likely stick:  Buyers may be better off asking for seller concessions, such as closing cost assistance or making home repairs, rather than making offers way below the asking price. “Keep in mind that a lowball number may turn off the seller and close down any chance at negotiation,” the U.S. News & World Report article cautions potential buyers.

2. Get pre-approved: Getting a loan isn’t easy nowadays as lenders have tightened their credit standards in recent years. Serious buyers should check their credit and get pre-appoved for a loan to determine how much of a home they can even afford even before they start their home search.

3. Get realistic about the market: Real estate agents can show buyers comparable nearby sales to help educate them about local market conditions. Transactions from the last few months are the most important.

4. Expect some competition. Housing inventories are dropping in many of our areas and spurring an increase in demand. Home buyers may face increased competition for the home they want, particularly among short sales and foreclosed properties, in which they may be up against investors who are making all-cash offers.

5. Conduct property research: Real estate agents will help guide clients on what all they need to do when they find a property they like.  Other important efforts nowadays: we recommend hiring a home inspector, verifying the accuracy of the property line (by asking seller for the survey or having your own conducted), and make sure all necessary disclosures about the property, required by various sources, have been made.

Source: “Traditional ‘Rules’ of Home Buying Return,” US News & World Report (5/1/12)

Some of the consequences of foreclosures are obvious: family displacements, crime in vacant properties, ruined credit, and the loss of equity. Other, less obvious consequences have emerged as well. About 8 million children could be affected, including kids of home owners and renters who were evicted due to a foreclosure. Julia Isaacs of the Brookings Institution calls these children the “invisible victims” of the foreclosure crisis, as foreclosures not only can cause emotional trauma, but also interfere with a child’s educational development.

Researchers also have found a connection between rising foreclosures and an increase in medical visits for mental health, such as anxiety, or preventable conditions such as high blood pressure. Plus, let’s don’t forget possible job related problems. 

Our region is strapped because of a loss of property tax revenue caused by foreclosures, which can lead to cuts in services — including fire protection, senior centers, and local law enforcement. Please provide comments about your local market contitions. 

Source: “Three Hidden Costs of the Foreclosure Crisis,” MarketWatch (4/ 24/12)

According to a survey this March of 4,500 agents and brokers, no REALTORS® complained about low-ball offers. The main problem nowadays: The sudden drop in inventory of for-sale homes has led to fewer homes available to sell.

For home buyers who still think they have a chance of hitting it lucky with a low-ball offer, they’re finding in many markets that their offers are more often being rejected or countered closer to the original asking price, the Los Angeles Times reports. Please comment, is your local market reflecting similar changes?

Source: “Low-ball Offers Decline in Some Housing Markets,” Los Angeles Times (4/22/12)

 About 8 million children have been hurt by foreclosure, according to a newly-released report by First Focus, a bipartisan advocacy group for families. “Children are the often invisible victims of the foreclosure crisis,” says Julia Isaacs, the author of the report.

The report highlights the widespread affect the foreclosure crisis has had on the nation’s children: About 2.3 million children have lived in homes lost to foreclosure; 3 million have lived in homes at-risk of foreclosure; and another 3 million have lived in rental homes lost to foreclosure or currently live in rentals that are at-risk of foreclosure.

The foreclosure impact has been greatest on children in Nevada, where nearly one in five — or 20 percent — of children lived or live in a home that was lost to foreclosure or is at-risk of being lost to foreclosure. In Florida, 15 percent of children have been affected by foreclosure, followed by Arizona (14%) and California (12%).

Foreclosures have been found to hamper children’s performance at school. Children who have been affected by foreclosure often see math and reading scores drop as much as if they’d missed school for a month, Isaacs says. Please provide your comments.

Source: “Report Estimates 8 Million Children Hurt by Foreclosures”  USA Today (4/18/12)

So why are banks getting more agreeable to short sales? Banks are realizing that short sale transactions usually sell for higher prices than foreclosures. In fact, foreclosed homes tend to sell for 29 percent less, on average, than comparable non-distressed properties. Short sales tend to sell at a 23 percent discount, according to Lending Processing Services data from January.

Banks and government agencies in recent weeks have taken steps to speed up the short sale process, setting new timelines for how long mortgage servicers have to respond to short sales offers. Also, some banks, such as Wells Fargo and JPMorgan Chase, are even offering some home owners cash incentives — up to $35,000 — if they agree to do a short sale instead of let the home fall into foreclosure.

Source: “Short Sales Surpass Foreclosures as Banks Agree to Deals,” Bloomberg News (April 17, 2012)

Investors some times take on more than they can handle, and do not devote enough attention — and budget — into the rehabilitation of many of the properties they buy.

Nearly 95 percent of distressed homes are in bad shape and unsuitable for renting out, Morgan Stanley analysts estimate. Correcting conditions could require permits, etc! 

“The importance of getting construction — or specifically, re-construction or rehabilitation — right cannot be overstated,” according to a recent report sent to Morgan Stanley clients. “The quality and cost of rehabilitation can continue to benefit or haunt the asset far past the initial completion of work. For example, shoddy plumbing or other infrastructure work can result in significantly higher maintenance costs over time, and can also affect eventual exit pricing.”

Morgan Stanley provided estimates to investors in the report, citing estimates of renovation work to cost about 25 percent of the purchase price. Your thoughts?

Source: “Rehabilitation Vital to REO-to-Rental Success,” HousingWire (4/13/12)