FHA Announces Revised Loss Mitigation Home Retention Options

WASHINGTON –The Federal Housing Administration (FHA) announced changes on Friday to its loss mitigation program which are intended to allow more borrowers to take advantage of opportunities that enable them to keep their homes.   Through revisions made to FHA’s Loss Mitigation Home Retention Options, a greater number of distressed borrowers will be able to qualify for FHA loss mitigation interventions, and the level of assistance available to them will be larger than under previous guidelines.  These changes will not only assist families in keeping their homes, but will also reduce the number of full claims against the FHA Mutual Mortgage Insurance Fund.

“FHA’s Loss Mitigation Program has long been an industry leader in helping to ensure that distressed borrowers are afforded maximum opportunities to retain their homes,” said Acting FHA Commissioner Carol Galante.  “Not only are we taking steps to make sure more borrowers can benefit from FHA loss mitigation assistance, but we are also targeting our assistance to provide more sustainable payments for borrowers so that they are successful in retaining their homes over the long term.  At the same time, these efforts will reduce losses to FHA from foreclosures, benefiting our insurance fund.”

Included among the changes being announced to FHA’s existing Loss Mitigation options are the following:

• Streamlining FHA’s Loss Mitigation Home Retention Option priority order to a new 3-tier incentive structure, consisting of Special Forbearance, Loan Modification, and FHA-HAMP;
  • Special Forbearance is a written agreement between a lender and borrower to reduce and/or suspend mortgage payments.
  • Loan Modification is a permanent change to one or more of the terms of a mortgage loan.
  • FHA-HAMP typically involves the combination of a Loan Modification and a Partial Claim where the lender will advance funds on behalf of the borrower in an amount necessary to reinstate the delinquent loan.
• Redefining “Special Forbearance” to apply only in cases where the mortgagors are unemployed;
• Eliminating some requirements which limited lenders’ ability to provide the assistance borrowers needed;
• And expanding the FHA-HAMP program so that greater numbers of borrowers find sustainable long term assistance through FHA-HAMP modifications.

The entire list of changes can be found in FHA’s Mortgagee Letter 2012 – 22.

FHA lender/servicers have no longer than 90 days after issuance of this Mortgagee Letter to begin assessing delinquent borrowers under these new guidelines.

California pending home sales post monthly and annual gains in October;share of equity sales continues to expand

LOS ANGELES (Nov. 21) – California pending home sales rose both from the previous month and year in October for the first time in seven months, while the share of equity sales grew slightly, marking a four-year high, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. 

Pending home sales data:

C.A.R.’s Pending Home Sales Index (PHSI)* rose 4.3 percent from a revised 115.2 in September to 120.2 in October, based on signed contracts.  Pending sales were up 3.6 percent from the 116.1 index recorded in October 2011.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“The strong pace of pending sales in October is a continuation of what we’ve experienced for most of 2012, with demand remaining robust across all parts of the state,” said 2013 C.A.R. President Don Faught.  “Non-distressed sales – which are up nearly 50 percent from a year ago – are especially strong, while REO sales are down more than 51 percent, primarily due to a short supply of REOs.  The significant increase in non-distressed sales has driven the share of equity sales to its highest level in more than four years.”

Distressed housing market data:

• The share of equity sales – or non-distressed property sales – compared with total sales expanded slightly in October.  The share of equity sales in October increased to 63.4 percent, up from 63 percent in September, the highest level since June 2008.  Equity sales made up about half (49 percent) of all sales in October 2011.
• The share of REO sales statewide contracted in October, while the share of short sales essentially was unchanged.  The combined share of all distressed property sales dipped to 36.6 percent in October, down from 37 percent in September and down from 51 percent in October 2011.
• Of the distressed properties, the share of short sales was 24.4 percent in October and 22.6 percent a year ago. 
• The share of REO sales fell further in October, dropping from 12.3 percent in September to 11.8 percent in October and was down from 28 percent in October 2011. 
• The available supply of REOs tightened in October, with the Unsold Inventory Index for REOs falling from 2.2 months in September to 1.9 months in October.  The Unsold Inventory Index for short sales was 3.1 months and was 3.2 months for equity sales.

Charts:

• Closed housing sales in October by sales type (equity, distressed).
• Pending sales compared with closed sales.
• Historical trend in the share of equity sales compared with distressed sales.
• Housing supply of REOs, short sales, and equity sales in October.
• A historical trend of REO, short sale, and equity sales housing supply.
• Year to year change in sales by property type.

Share of Distressed Sales to Total Sales(Single-family)

Type of Sale	Oct. 2011	Sept. 2012	Oct. 2012
Equity Sales	49.0%	63.0%	63.4%
Total Distressed Sales	51.0%	37.0%	36.6%
REOs	28.0%	12.3%	11.8%
Short Sales	22.6%	24.3%	24.4%
Other Distressed Sales (Not Specified)	0.4%	0.4%	0.4%
All Sales	100.0%	100.0%	100.0%

Single-family Distressed Home Sales by Select Counties
(Percent of total sales)

County	Oct. 2011	Sept. 2012	Oct. 2012
Alameda	NA	28%	21%
Amador	46%	38%	38%
Butte	43%	36%	35%
Contra Costa	NA	29%	26%
El Dorado	48%	38%	36%
Fresno	61%	51%	48%
Humboldt	28%	28%	20%
Kern	67%	45%	41%
Kings	NA	39%	42%
Lake	78%	47%	50%
Los Angeles	48%	37%	37%
Madera	89%	60%	55%
Marin	26%	24%	21%
Mendocino	49%	47%	43%
Merced	58%	46%	47%
Monterey	61%	40%	45%
Napa	46%	37%	30%
Orange	36%	25%	28%
Placer	58%	43%	40%
Riverside	63%	50%	50%
Sacramento	64%	50%	47%
San Benito	72%	55%	58%
San Bernardino	65%	45%	46%
San Diego	28%	15%	14%
San Joaquin	63%	52%	49%
San Luis Obispo	46%	28%	29%
San Mateo	23%	20%	17%
Santa Clara	34%	22%	22%
Santa Cruz	40%	31%	28%
Siskiyou	37%	40%	32%
Solano	72%	59%	62%
Sonoma	51%	37%	29%
South Lake Tahoe	31%	33%	25%
Stanislaus	67%	57%	55%
Tehama	49%	49%	43%
Tulare	NA	NA	46%
Yolo	61%	51%	45%
California	51%	37%	37%

**Note:  C.A.R.’s pending sales information is generated from a survey of more than 70 associations of REALTORS® and MLSs throughout the state.  Pending home sales are forward-looking indicators of future home sales activity, offering solid information on future changes in the direction of the market.  A sale is listed as pending after a seller has accepted a sales contract on a property.  The majority of pending home sales usually becomes closed sales transactions one to two months later.  The year 2008 was used as the benchmark for the Pending Homes Sales Index.  An index of 100 is equal to the average level of contract activity during 2008.

Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Home Prices Rise for the Sixth Straight Month According to the S&P/Case-Shiller Home Price Indices

New York, November 27, 2012 – Data through September 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that home prices continued to rise in the third quarter of 2012. The national composite was up 3.6% in the third quarter of 2012 versus the third quarter of 2011, and was up 2.2% versus the second quarter of 2012. In September 2012, the 10- and 20-City Composites showed annual returns of +2.1% and +3.0%. Average home prices in the 10- and 20-City Composites were each up by 0.3% in September versus August 2012. Seventeen of the 20 MSAs and both Composites posted better annual returns in September versus August 2012; Detroit and Washington D.C. recorded a slight deceleration in their annual rates, and New York saw no change.

The chart above depicts the annual returns of the U.S. National, the 10-City Composite and the 20-City Composite Home Price Indices. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, recorded a 3.6% gain in the third quarter of 2012 over the third quarter of 2011. In September 2012, the 10- and 20-City Composites posted annual increases of 2.1% and 3.0%, respectively. 

“Home prices rose in the third quarter, marking the sixth consecutive month of increasing prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In September’s report all three headline composites and 17 of the 20 cities gained over their levels of a year ago. Month-over-month, 13 cities and both Composites posted positive monthly gains.
“The National Composite increased by 3.6% from the same quarter in 2011 and by 2.2% from the second quarter of 2012. The 10- and 20-City Composites have posted positive annual returns for four consecutive months with a +2.1% and +3.0% annual change in September, respectively. Month-over-month, both Composites have recorded increases for six consecutive months, with the most recent monthly gain being +0.3% for each Composite.
“We are entering the seasonally weak part of the year. The headline figures, which are not seasonally adjusted, showed five cities with lower prices in September versus only one in August; in the seasonally adjusted data the pattern was reversed: one city fell in September versus two in August. Despite the seasons, housing continues to improve.
“Phoenix continues to lead the recovery with a +20.4% annual growth rate. Atlanta has finally reversed 26 months of annual declines with a +0.1% annual rate as observed in September’s housing data. At the other end of the spectrum, Chicago and New York were the only two cities to post annual declines of 1.5% and 2.3% respectively and were also down 0.6% and 0.1% month-over-month.

“Thirteen of the 20 cities recorded positive monthly returns; Boston, Charlotte, Chicago, Cleveland and New York saw modest drops in home prices in September as compared to August; Tampa and Washington D.C. were flat. With six months of consistently rising home prices, it is safe to say that we are now in the midst of a recovery in the housing market.”

The chart on the previous page shows the index levels for the U.S. National Home Price Index, as well as its annual returns. As of the third quarter of 2012, average home prices across the United States are back at their mid-2003 levels. At the end of the third quarter of 2012, the National Index was up 2.2% over the second quarter of 2012 and 3.6% above the third quarter of 2011. 

The chart above shows the index levels for the 10-City and 20-City Composite Indices. As of September 2012, average home prices across the United States for the 10-City and 20-City Composites are back to their autumn 2003 levels. Measured from their June/July 2006 peaks, the decline for both Composites is approximately 29% through September 2012. For both Composites, the September 2012 levels are approximately 9% above their recent lows seen in March 2012.

In September 2012, 13 MSAs and both Composites posted positive monthly gains. Home prices in Tampa and Washington DC saw no change from August to September. Boston, Charlotte, Chicago, Cleveland and New York saw a slight drop in prices in September. Phoenix recorded the highest increase in annual rate, up 20.4% from its September 2011 level. Chicago and New York were the only two cities that fared worse year-over-year with respective annual rates of -1.5% and -2.3%.

Atlanta, Detroit and Las Vegas remain the only three cities with average home prices below their January 2000 levels. Detroit with a 79.82 print, is nearly 20% below its January 2000 level.

The table below summarizes the results for September 2012. The S&P/Case-Shiller Home Price Indices are revised for the 24 prior months, based on the receipt of additional source data. More than 25 years of history for these data series is available, and can be accessed in full by going to www.homeprice.standardandpoors.com. 

Since its launch in early 2006, the S&P/Case-Shiller Home Price Indices have published, and the markets have followed and reported on, the non-seasonally adjusted data set used in the headline indices. For analytical purposes, S&P Dow Jones Indices publishes a seasonally adjusted data set covered in the headline indices, as well as for the 17 of 20 markets with tiered price indices and the five condo markets that are tracked.

National Home Prices are Surging

The Mortgage Corner

National Home Prices Are Surging

We are seeing further confirmation of the housing recovery. The Case-Shiller Home Price Index reported the fourth consecutive year-over-year (YoY) gain in their house price indexes since 2010 - and the increase back in 2010 was related to the housing tax credit. Excluding the tax credit, the previous YoY increase was back in 2006. The YoY increase in September suggests that house prices probably bottomed earlier this year.

And this is the slow time of year when families that have already moved and put their children in new school districts.  It really means that those at the bottom of the housing bubble—Las Vegas (up 1.4 percent, 3.8 percent YoY), Phoenix (up 1.1 percent, 20.4 percent YoY), San Diego (up 1.4 percent, 4.1 percent YoY)—are finally seeing some relief from the worst economic slump since the Great Depression.

Graph: Calculated Risk

“Home prices rose in the third quarter, marking the sixth consecutive month of increasing prices,” says David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “In September’s report all three headline composites and 17 of the 20 cities gained over their levels of a year ago. Month-over-month, 13 cities and both Composites posted positive monthly gains.”

                The Federal Housing Finance Authority (FHFA) house price index posted also another monthly increase in September. This measure is up 4.4 percent YOY, a bigger YOY gain than the 3 percent rise in the S&P/Case-Shiller index. Also, the FHFA index is down just 16 percent from its peak, about half the cumulative decline in the Case-Shiller gauge. Most of the discrepancy reflects the fact that the FHFA index is much less affected by distress sales, since it covers only properties financed with conventional GSE mortgages (Fannie Mae and Freddie Mac), which have more stringent qualification guidelines.

This may be because of the continuing rise in consumer confidence.  The Conference Board’s Consumer Confidence survey rose again with buying plans for homes a special positive, said the report. The consumer confidence index rose to a new recovery high of 73.7 in November from an upwardly revised 73.1 in October. Strength is centered in the expectations component which is up 1.1 points to 85.1. The present situation component is down one tenth to 56.6.

                                                                                             Graph: Econoday

A major reason for the increased confidence is a 1.5 percentage point jump to 6.9 percent in those who expect to buy a house in the next six months. This is the latest indication of building momentum for the housing sector. Inflation expectations are another plus in the report, down two tenths for the 12-month outlook to 5.6 percent in what is a reflection of falling gas prices.

California is also doing well.  I reported last week that Southern California home sales also rose sharply in October as move-up buyers joined investors, according to San Diego-based DataQuick, shifting the mix of homes selling upward as foreclosure resales hit a five-year low. Southern California's real estate market bucked the typical fall slowdown last month, with buyers snapping up pricier homes and sales roaring up 18 percent over the prior month.

Sales hit a three-year high for an October, rising 25 percent from the same month last year. The median sale price for a Southland house last month was $315,000, equal to September and up 17 percent from October 2011.

Harlan Green © 2012

Case Shiller up 6th Month in a row

Mortgage Bonds are trading slightly higher today ahead off some big supply set to hit this week from the Treasury Department in the form of T-Note offerings.  In economic data, Durable orders were unchanged in October, while the Case Shiller Home Price 20-city index rose to its 6th straight monthly gain. In addition, Lender Processing Services reported that home prices rose in September from the prior month, and are higher from a year ago while Consumer Confidence jumped to its best level in more than four years. I believe it is tough to see home loan rates move significantly higher from current levels.  The Federal Reserve continues to keep home loan rates near record lows in an effort to shore up the housing market, and that should continue well into 2013, or until such time that the sector can stand on its own two feet. Rates remain at historic lows.

Southland Home Sales Up, Foreclosures Down

Southern California home sales rose sharply in October as move-up buyers joined investors, according to San Diego-based DataQuick, shifting the mix of homes selling upward as foreclosure resales hit a five-year low. Southern California's real estate market bucked the typical fall slowdown last month, with buyers snapping up pricier homes and sales roaring up 18 percent over the prior month.

Sales hit a three-year high for an October, rising 25 percent from the same month last year. The median sale price for a Southland house last month was $315,000, equal to September and up 17 percent from October 2011, according to DataQuick.

Sales rose sharply in most mid- to-higher-cost markets. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – jumped 41.5 percent year-over-year. October sales over $500,000 rose 55.2 percent year-over-year, while sales over $800,000 rose 52.4 percent compared with October 2011.

Gary Wood’s analysis of Santa Barbara County’s MLS sales including Carpinteria/Summerland, Montecito, Hope Ranch, downtown Santa Barbara and Goleta through October 2012 were similar. Sales rose to 100 from 83 in September. The median sales price also came up from $750,000 in September to about $815,000 in October with escrows rising from 94 to about 120 for the month. The median list price on those escrows showed the biggest upswing—going from $762,540 to almost $900,000.

Year over year, the numbers of sales are still way up with about 1,050 transactions completed compared to 780 last year. The median sales price is basically unchanged but down just a little from $800,050 in 2011 to about $795,000 now. The escrows are also still way up from 841 last year to about 1,150 this year while the median list price on those escrows has risen a little from about $825,000 last year to approximately $830,000 now.

Graph: RealtyTrac

Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 16.3 percent of the Southland resale market last month. That was down from 16.6 percent the month before and 32.8 percent a year earlier. Last month’s level was the lowest since it was 16.0 percent in October 2007. The foreclosure resales had hit a high of 56.7 percent in February 2009 during the Great Recession.

The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 7.40 percent of all loans outstanding as of the end of the third quarter of 2012, a decrease from the second quarter of 2012, and a decrease of 59 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

“Mortgage delinquencies decreased compared to last quarter overall, driven mainly by a decline in loans that are 90 days or more delinquent,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “The 90 day delinquency rate is at its lowest level since 2008, and together with the decline in the percentage of loans in foreclosure, this indicates a significant drop in the shadow inventory of distressed loans-a real positive for the housing market. The 30 day delinquency rate increased slightly, but remains close to the long-term average for this metric.  Given the weak economic and job growth in third quarter, it is not surprising that this metric has not improved. ”

And foreclosures nationwide are declining as well, mostly in the 26 so-called non-judicial states that enable Trust Deed auctions, such as California and Texas. This was the largest decline in foreclosure inventory ever recorded. Judicial states’ foreclosure inventory was at 6.61 percent, and the non-judicial states’ inventory was at 2.42 percent, reports the MBA.

Harlan Green © 2012

Home Prices Rise in 81% of U.S. Cities as Markets Recover

By Prashant Gopal - Nov 7, 2012 8:20 AM PT

Prices for single-family homes rose in 81 percent of U.S. cities as the property market extends a recovery from the worst crash since the 1930s.

The median sales price increased in the third quarter from a year earlier in 120 of 149 metropolitan areas measured, the National Association of Realtors said in a report today. In the second quarter, 110 areas had gains.

Values are climbing after a six-year slump as buyers compete for a shrinking supply of properties listed for sale. U.S. home prices jumped 5 percent in September from a year earlier, the biggest 12-month increase since July 2006, CoreLogic Inc., anIrvine, California-based real estate data provider, said yesterday.

“The housing recovery still faces a number of potential headwinds,” Paul Diggle, property economist for Capital Economics Ltd. in London, said in a note to clients after CoreLogic’s report was released. “But our central case is that tight supply conditions will mean that house prices will continue to rise steadily next year.”

At the end of the third quarter, 2.32 million existing homes were available for sale, 20 percent fewer than a year earlier, according to the Chicago-based Realtors group.

Short Sales

The national median price for an existing single-family home was $186,100 in the third quarter, up 7.6 percent from the same period last year, the Realtors said. Foreclosures and short sales, in which the price is less than the mortgage balance, accounted for 23 percent of third-quarter deals, down from 30 percent a year earlier.

The share of all-cash home purchases fell to 27 percent in the third quarter from 29 percent a year earlier. Investors, who make up the bulk of cash purchasers and compete with first-time buyers, accounted for 17 percent of all transactions, down from 20 percent a year earlier.

The best-performing metro area was Phoenix, where prices increased 35 percent from a year earlier. Prices rose 28 percent in the Cape Coral, Florida, area, and 27 percent in Akron, Ohio.

The Raleigh, North Carolina, area had the biggest decline, with the median selling price falling 16 percent in the quarter. It was followed by York, Pennsylvania, with an 9.4 percent decrease; and Binghamton, New York, with a 6.6 percent drop.

A survey by Fannie Mae, the nation’s biggest mortgage- finance company, showed Americans expect home prices to increase an average of 1.7 percent in the next 12 months. The share of respondents who said they expect home prices to decrease fell to 10 percent last month, down 13 percentage points from a year earlier and the lowest level since the monthly survey began in June 2010, Washington-based Fannie Mae said today.

List of Improving Housing Markets Expands to 125 in November

November 6, 2012 - The number of U.S. housing markets showing consistent improvement in three key measures of strength expanded by 22 in November to a total of 125, according to the National Association of Home Builders/First American Improving Markets Index (IMI), released today.  This marks a third consecutive monthly gain for the index, which now includes representatives from across 38 states as well as the District of Columbia.

The index identifies metropolitan areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Markets added to the list in November include such geographically diverse locations as San Diego, Calif.; Gainesville, Ga.; Omaha, Neb.; Louisville, Ky.; and Charlotte, N.C.

“Not only did 22 additional markets qualify for the improving list in November, but the geographic distribution of included metros expanded from 33 states to 38 (plus the District of Columbia), while 97 out of 103 markets retained their spots on the list from the previous month,” observed Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “This shows that a housing recovery is firmly taking root and helping generate needed jobs and economic growth across much of the country -- though we know that this expansion could be even stronger were it not for ongoing challenges including overly tight lending conditions and difficult appraisals.”

“The solid increase in the number of improving housing markets this month illustrates the degree to which the housing recovery has gained momentum since we initiated the IMI last year,” noted NAHB Chief Economist David Crowe. “Compared to the 30 markets that made the list as of November 2011, we now have 125, which is about one-third of all the markets surveyed for this index.”

“This new high point for the Improving Markets Index provides the latest evidence that housing has turned a corner due to rising demand from consumers who are increasingly confident about the direction of local home values,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company.

The IMI is designed to track housing markets throughout the country that are showing signs of improving economic health. The index measures three sets of independent monthly data to get a mark on the top improving Metropolitan Statistical Areas. The three indicators that are analyzed are employment growth from the Bureau of Labor Statistics, housing price appreciation from Freddie Mac and single-family housing permit growth from the U.S. Census Bureau. NAHB uses the latest available data from these sources to generate a list of improving markets. A metropolitan area must see improvement in all three measures for at least six consecutive months following those measures’ respective troughs before being included on the improving markets list.

A complete list of all 125 metropolitan areas currently on the IMI, and separate breakouts of metros newly added to or dropped from the list in November, is available at www.nahb.org/imi.

Editor’s Note: The NAHB/First American Improving Markets Index (IMI) is released on the fourth business day of each month at 10:00 a.m., ET, unless that day falls on a Friday – in which case, the index is released on the following Monday. A full calendar of future release dates can be found at www.nahb.org/imi.