February Home Sales Up from January, Down from 2008

Market Statistics/Performance, News 1 Comment »

MAAR released the February Home Sales Report today showing an increase in sales from January but a decline from February 2008. Other data from February:

  • Pending sales up 8.2% from January
  • Inventory down slightly from January, down 15.3% from February 2008 and down 23.6% from the peak in July 2007
  • Foreclosures up from January but down 14.5% from February 2008

Lower interest rates and the first-time buyer tax credit are likely behind the jump in pending sales and we hope to see that trend continue as we get into the typically busier spring an summer months. It also supports the anecdotal feedback we’ve heard from REALTORS® that they’re seeing more interest from buyers in recent weeks.

The continued decline in inventory is good news as well, though we’re still a bit removed from the more balanced inventory of 8,000 units that we’d like to see.

Posted by Scott Sherrin at 3:55 pm

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Details Unveiled for Obama’s Foreclosure Avoidance Plan

Governmental Affairs, News No Comments »

On February 18, President Obama unveiled the Homeowner Affordability and Stability Plan, the administration’s $75 billion effort to help up to 7 to 9 million families avoid foreclosure by refinancing or modifying their mortgages. Today we heard the asministration’s details on how the “Making Home Affordable” program will work.

While you can read the summary or the entire set of guidelines, the three key elements are:

  1. The Home Affordable Refinance Program. Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee.  The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.  Cash out refinancings are not permitted.  The program ends in June 2010.
  2. The Home Affordable Modification Program. This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).  Loan modifications under the program may be made until December 31, 2012.
  3. More Support for the GSEs. President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth. The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

The government has established the financialstability.gov site to help consumers navigate the different options and determine eligibility for any of them. You can also review the following resources that offer more specific details on each program.

Posted by Scott Sherrin at 3:58 pm

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Obama Announces Plan to Help Struggling Homeowners

Governmental Affairs, Mortgage Lending, News 1 Comment »

Yesterday, President Obama unveiled the Homeowner Affordability and Stability Plan, the administration’s $75 billion effort to help up to 7 to 9 million families avoid foreclosure by refinancing their mortgages.

The key components of the plan are:

  • Government Sponsored Enterprises (GSEs) Refinancing for Up to 4 to 5 Million Responsible Homeowners with GSE loans to Make Their Mortgages More Affordable
  • A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
  • Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac

NAR has developed a good summary of the plan to help REALTORS® understand how it is structured.

Posted by Scott Sherrin at 12:15 pm

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Foreclosures: Part of the Problem or the Solution?

Governmental Affairs, Mortgage Lending, News 3 Comments »

In this past weekend’s edition of The Wall Street Journal, opinion writer Ramsey Su argues that the government should not step in to prevent foreclosures, which he believes are the free market’s way of dealing with the current real estate crisis. By not allowing the market to deal with its own problems, Su argues that the government would be creating “a generation of mortgage slaves.”

What is the market telling us? Dataquick recently released December sales data for Southern California, once the hotbed of speculative excesses supported by nontraditional financing. Foreclosures now dominate sales. Prices are down. Sales volume is up. New home construction is down. These are beautiful textbook illustrations of supply and demand driving price and market equilibrium.

It seems Su is not alone in this opinion. In an interview with Memphis native Sarah Lacy on the Yahoo! Finance Tech Ticker yesterday, investor Paul Kedrosky agreed with Su and cited California as an example of free-market forces at work:

Kedrosky cites California as an example: Real estate prices fell so hard, so fast here that a lot of the foreclosure protection programs didn’t get a chance to work. And, as a result, prices have bottomed out and property is starting to move again.

So should the government work to prevent foreclosures, or will that just prolong the pain?

Posted by Scott Sherrin at 3:16 pm

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Little-Known USDA Mortgage Program Getting a Second Look

Mortgage Lending, News No Comments »

Yesterday’s Wall Street Journal included an article (Home Buyers Turn to USDA for Mortgages) about an obscure home-loan program offered through the U.S. Department of Agriculture. The program was created as a way to boost homeownership in rural areas, but is now being used by buyers in some areas outside of major cities that still qualify for the loan terms.

The article shares this story from a recent buyer:

When Erick Moore first read about the USDA’s Rural Development Guaranteed Loan program, he says he imagined it would be “restricted to some little farmhouse.” Instead, the 33-year-old computer programmer moved last month into a four-bedroom, three-bath home in Fuquay-Varina, N.C., 17 miles outside Raleigh. The house sits on nearly one acre and features a brick facade, 10-foot ceilings and hardwood floors.

“I couldn’t believe it until we closed,” says Mr. Moore, who paid only $1,200 out of pocket to move into the $228,000 home. The seller contributed $5,000 in closing costs, and Mr. Moore rolled the 2% fee charged by the USDA into the loan. Mr. Moore, who owned a home in St. Louis before he relocated to the Raleigh area last year, says a 60% drop in his stock portfolio made it difficult to come up with a down payment. He directed his Realtor to show him only homes that were eligible for the USDA program.

There are many areas within our area that would likely qualify for this program. To qualify, borrowers must meet specific income limits based on the number of people in the household the median income of the county where the borrower is buying the home. For most of the Memphis area, the income limit for a household of four individuals would be $70,750. Detailed income limits by state are here.

Despite the low- or no-down payment requirements of these loans, the USDA program has a default rate slightly better than that of loans guaranteed through the Federal Housing Administration. But unlike FHA the USDA loan programs rely on a fixed allocation of funds from Congress, and no additional loans can be made once that money is committed.

In today’s tighter credit market, the USDA program might be a viable and attractive alternative for some buyers.

Posted by Scott Sherrin at 3:46 pm

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FHFA Director Responds to Questions Raised by REALTORS® at NAR Conference

Market Statistics/Performance, Mortgage Lending, News No Comments »

On December 4, 2008, the Director of the Federal Housing Finance Agency, Jim Lockhart, wrote to NAR President Charles McMillan to follow up on the questions raised by REALTORS® at the Orlando meetings that he was unable to answer at the time. Director Lockhart is the conservator for Fannie Mae and Freddie Mac and the federal regulator of the two government sponsored enterprises (GSEs). In Orlando, Director Lockhart spoke at a standing-room-only session to 600 REALTORS® and then fielded questions for nearly an hour. He also attended the meeting of the Conventional Finance and Lending Committee to discuss GSE issues in a smaller setting.

Here are highlights of the Director’s responses to REALTOR® recommendations that the GSEs:

  • Increase the 4-unit investor loan limit. Director Lockhart advised that one of the GSEs is considering raising the 4-loan limit on investor loans (both GSEs permit waivers). [Note: When one GSE makes a policy change, the other very often follows suit.]
  • Adopt a process to appeal servicer decisions. Mr. Lockhart notes that the GSEs are working to streamline their loss mitigation procedures. On short sales, they are working on a number of initiatives. He did not indicate that the GSEs are developing an appeals process.
  • Establish better foreclosure policies (including concern about banks refusing to work with borrowers until they are at least 90 days delinquent). Mr. Lockhart reviewed the streamlined loan modification program announced shortly after the Orlando meetings by FHFA, Treasury, HUD, and HOPE Now to reduce preventable foreclosures. He did not explain the logic of limiting the new program to borrowers at least 90 days delinquent, but he did refer to other initiatives targeted at borrowers at earlier stages of delinquencies or even those not yet delinquent.
  • Reform owner-occupied condo rules. Mr. Lockhart made two points: (1) in an established project, the 51% owner occupancy requirement does not apply to any loan secured by an owner-occupant principal residence or second home, and (2) at least one of the GSEs is considering clarifying the 51% requirement to exclude bank-owned units from being counted as investor units.
  • Apply the same underwriting standards to jumbo conforming loans (loans above $417,000 that may be purchased by the GSEs) (the member questioned the assumption that jumbo conforming loans are more risky. Mr. Lockhart believes that jumbo conforming loans are riskier because defaults involving larger loans result in higher losses. He also notes that most jumbos have been ARMS which are relatively riskier and may be hard to refinance.

Download the full letter.

Posted by Scott Sherrin at 6:02 pm

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Will Proposed Interest-Rate Buydown Make an Impact?

Market Statistics/Performance, Mortgage Lending, News 1 Comment »

As the overall economy continues to falter, the federal government is now looking at a plan to push down mortgage interest rates to below 5% - far lower than any rate seen ever. This proposal was detailed in yesterday’s Wall Street Journal, and is beyond the plan announced last week to buy up to $600 billion in debt issued or backed by Fannie Mae or Freddie Mac. The Journal reports:

Treasury views this plan as potentially halting the slide in home prices by enabling borrowers to afford bigger loans, thus increasing demand and pushing up home values. The lower interest rates would be available only to borrowers who are buying a home, not those refinancing a mortgage.

Borrowers would have to qualify for a mortgage guaranteed by Fannie, Freddie or the Federal Housing Administration. Those guarantees apply to loans where borrowers can document their income and afford their monthly payments, steering the government away from backing loans considered risky.

The National Association of REALTORS® (NAR) has expressed support for such action, and it is part of a Four-Point Plan NAR unveiled a few months ago to stimulate the housing market.

But the plan has critics, who question how effective such action will be considering that home prices continue to fall and that unemployment rates are expected to climb into 2009.

What do you think? Is this the right approach for the government to take, or will the results have little impact on the housing market?

We Want to See Your Memphis

Community, Events, News No Comments »

Do you love your neighborhood? Your house? The people you see every day when you walk your dog? For each of us, those are the things that make our Memphis uniquely home. And no matter what makes Memphis home to you, we want you to show it off. Until November 24, you have the opportunity to create a three-minute video that showcases your Memphis to the rest of the world and in the process you could win $10,000.

The contest is open to anyone 18 years of age or older and all we ask is that the video be less than 3 minutes long and include the words “My Memphis” in some form, whether spoken or in printed text. The videos can be funny or serious, staged or off the cuff - what you showcase and how you present it is completely up to you.

Since this is a contest there are a bunch of legal rules, of course, and we encourage you to completely review those for eligibility requirements and other fine details. You should also review the instructions for entering the contest.

A panel of judges will evaluate entries on three simple criteria:

  • Relevance to the theme
  • Creativity
  • Entertainment value

We’ll announce winners on or before December 19 on the contest Web site.

So grab your camera and start creating a video showing why you love your Memphis. We can’t wait to see it.

Posted by Scott Sherrin at 5:28 am

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REALTOR® Safety Week Tip #5: Making Safety a Year-Round Priority

Education, News No Comments »

Of course we all know that safety isn’t just limited to one week a year - it must become a part of our everyday lives. In addition to the tips we’ve posted here this week, NAR offers countless resources on safety for both REALTORS and their clients. Here’s just a small sampling of what you can find any day of the year:

  • Get your own safety-related products, including a DVD version of the video and publications.
  • Further reinforce the tenets of staying safe on the job, at home, and in the car with A 3-hour online safety course.
  • Test your safety knowledge with an interactive safety quiz.
  • Expand your understanding with resources from other government institutions and police departments.

If you’ve come across any other great safety-related resources we’d love if you shared them here.

Posted by Scott Sherrin at 6:13 am

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REALTOR® Safety Week Tip #4: Helping Your Clients Stay Safe

Education, News 1 Comment »

REALTORS® not only need to be aware and concerned with their personal safety, but also the safety of their clients. As you continually educate yourself on ways to improve your own safety, share that information with your buyers and sellers. They can face dangerous situations as they allow strangers into their homes or visit other people’s property.

Here are some basic points to start with; be sure to add your own as you become more aware through your personal experiences.

  • Remind sellers that strangers will be walking through their home during showings or open houses. Tell them to hide any valuables in a safe place, including prescription medications and alcohol, as well as personal information such as bank statements that could be used for identity theft.
  • Warn your clients that not all agents, buyers and sellers are who they say they are. Strangers who stop by a listing unannounced should be asked to make an appointment with the REALTOR®. Stress that your clients should never show a home without an agent present.
  • Inform your clients that they are responsible for their pets. If possible, animals should be removed during showings. Make clients aware that buyers and agents are sometimes attacked, and the owner will be held liable.
  • At an open house, be alert to the pattern of visitors’ arrivals, especially near the end of showing hours. In some areas, a group of thieves will show up together near the end of the open house and, while a string of supposed buyers distracts the REALTOR®, the rest of the group walks through the house, stealing valuables.
  • When you leave a property, whether after an open house or a showing, make sure that all doors and windows are locked. Thieves commonly use open houses to scout for valuables and possible points of entry, then return after the agent leaves.
  • Let your clients know that you will take all of the above safety precautions, but that when they return home, they should immediately verify that all doors are locked and all valuables accounted for.

You might also want to watch and share this short video from NAR, which highlights some of the same tips as well as some other more general safety information for homeowners.

Posted by Scott Sherrin at 6:13 am

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