Mortgages Continue Record-Breaking.

Mortgage Rates Continue Record-Breaking

Record-reaching rates have practically become a weekly mainstay the last few weeks for 30-year and 15-year fixed-rate mortgages. For the past 16 weeks, the 30-year fixed-rate mortgage alone has averaged below 4 percent, increasing affordability by cheapening the costs of borrowing.

In its weekly mortgage market survey, Freddie Mac reports that average fixed-rate mortgages continue to reach all-time record lows from easing bond yields and a dismal June employment report.

Here’s a closer look at rates for the week ending July 12:

• 30-year fixed-rate mortgages: averaged a new low of 3.56 percent, with an average 0.7 point, down from last week’s previous record of 3.62 percent. A year ago at this time, 30-year rates averaged 4.51 percent.
• 15-year fixed-rate mortgages: averaged a new record of 2.86 percent, with an average 0.7 point, dropping from last week’s previous record of 2.89 percent. The 15-year fixed-rate mortgage has been below 3 percent for the last seven weeks. Last year at this time, 15-year rates averaged 3.65 percent.
• 5-year adjustable-rate mortgages: averaged 2.74 percent, with an average 0.6 point, dropping from last week’s 2.79 percent average. Last year at this time, 5-year ARMs averaged 3.29 percent.
• 1-year ARMs: averaged 2.69 percent, with an average 0.4 point, up slightly from last year’s 2.68 percent average. A year ago at this time, 1-year ARMs averaged 2.95 percent.

Source: Freddie Mac

Home Owners Gain Equity.

Home Owners Gain Equity

Rebounding home prices are lowering the number of home owners who are considered “underwater” on their mortgage, according to a new report by CoreLogic.

More than 700,000 home owners are no longer considered “underwater,” owing more on their mortgage than their home is currently worth.

At the end of March, 23.7 percent — or 11.4 million — of home owners with mortgages were considered underwater on their mortgage, according to CoreLogic’s latest report. Three months prior, that percentage was 25.2 percent, or 12.1 million home owners.

Mark Fleming, CoreLogic’s chief economist, attributes the decrease to recent gains in home prices, a drop in for-sale inventory, and fewer distressed sales, which are all helping more home owners see the values of their houses increase.

About 1.9 million home owners were 5 percent underwater during the first quarter. If prices continue to inch upward, these owners are expected to climb out of underwater territory, according to CoreLogic.

“While the overall stagnating economic recovery will likely slow [the] housing market recovery in the second half of this year, reducing the number of underwater households is an important step toward reducing future mortgage default risk,” Fleming says.

Source: “700,000 Home Owners no Longer Underwater on Mortgages,” CNNMoney (July 12, 2012)

Housing Crisis Over?

Housing Crisis Over?

It’s official: The Housing Crisis market has reached bottom, at least according to 44 forecasters surveyed by The Wall Street Journal. Only three economists surveyed said they didn’t think the market had reached bottom yet.

The recent momentum in housing has plenty of economists and forecasters convinced that the worst is behind. According to many real estate indices, home prices are up, sales of existing and new homes are picking up year-over-year, and inventories of for-sale homes have fallen dramatically.

The decrease in for-sale inventory is the key and will likely help maintain the rise in home prices, Mark Fleming, CoreLogic chief economist, told The Wall Street Journal.

What’s more, the number of vacant homes is at its lowest point since 2006, The Wall Street Journal reports.

Now that the “bottom” has been reached in the Housing Crisis, economists admit there’s still a long way to go for a full recovery. In particular, more than one in every four home owners with mortgages are still underwater, owing more on their loan than their home is currently worth. However, analysts note that rising home prices are chipping away at that Housing Crisis number. Also, shadow inventory of unsold homes and foreclosures still threaten the momentum of the recovery as well.

“From here on, housing is unlikely to drag the U.S. economy down further,” JPMorgan Chase economists note. “It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.”

Source: “Housing Passes a Milestone,” The Wall Street Journal (July 11, 2012)

Hidden ‘Second’ Foreclosure Crisis?

New Report Warns of Hidden ‘Second’ Foreclosure Crisis

An unpaid tax bill of just $400 could cost you your entire home in some states. A new report is calling such growing cases a second “foreclosure crisis.”

Local governments are stepping up their efforts to collect unpaid taxes from home owners, facing shortfalls in their budgets to pay for services like schools, road maintenance, and police and fire department costs.

So in some states, laws allow municipalities to sell tax liens to investors on properties of home owners who fail to pay their property taxes or other municipal bills, like for sewers. Until the home owner pays up on the overdue bills, the investors can own a claim to the property. If the home owner fails to pay, the investor can take possession of the home through foreclosure.

Investors are being drawn to buying up the tax liens on these properties because of the interest they can charge to collect on the overdue bills, sometimes at rates of 18 percent or more on the outstanding debt, according to a new report from the National Consumer Law Center.

“It’s a win-win for investors,” John Rao, author of the report, told CNNMoney. The investors stand to get their investment back with the high interest to boot, or they may get the entire home at a big discount.

The National Consumer Law Center says that states need to do more to warn home owners that this can occur. The center also is pushing for states to lower the maximum interest rates that investors are permitted to charge home owners on the back taxes. The center also says states need to allow home owners to set up a payment plan for paying back the taxes they owe, instead of requiring them to come up with a big lump sum.

Source: “The Other Foreclosure Crisis: Losing a Home for $400 in Back Taxes,” CNNMoney (July 10, 2012)

FHA Loans Post Higher Delinquencies, Foreclosure.

FHA Loans Post Higher Delinquencies, Foreclosures

At a time when the mortgage market is seeing steady signs of improvement, loans backed by the Federal Housing Administration (FHA) continue to see an increase in the number of borrowers seriously delinquent on their mortgage and falling into foreclosure, according to a new quarterly report issued by the Office of the Comptroller of the Currency.

For the year ending March 31, FHA loans delinquent 90 days or more increased nearly 27 percent, while foreclosures soared nearly 17 percent. Meanwhile, bank loans saw delinquencies decrease by 39 percent and foreclosures fall nearly 10 percent.

FHA loans tend to be attractive among first-time home buyers, since they offer low down-payments of 3.5 percent and require lower credit scores and incomes to qualify. The low down-payment requirements with FHA-backed loans, however, mean that borrowers have less cushion if their property drops in value and borrowers can quickly find themselves underwater on their mortgage, housing experts say.

The share of FHA loans in the mortgage market has drastically increased in recent years. Housing analysts warn of more FHA loan delinquencies over the next few years if the economy doesn’t improve, Inside Mortgage Finance publisher Guy Cecala told CNNMoney.

However, FHA says it has been trying to help offset losses in recent months by increasing its insurance premiums, ramping up its requirements for minimum credit scores of its borrowers, requiring larger down payments for any borrowers with credit scores below 580, and prohibiting home sellers from helping borrowers with the down-payment, CNNMoney reports.

“We expect the new books will continue with their better performance, primarily because of the steps that were put in place,” FHA officials told CNNMoney. “And we are benefiting from having more high-credit borrowers.”

Source: “Closer to Bailout? FHA’s Mortgage Delinquencies Soar,” CNNMoney (July 9, 2012)

Retail Real Estate Inches Toward Recovery.

Retail Real Estate Inches Toward Recovery

The rows of vacant shopping centers plaguing many U.S. cities may slowly be vanishing. For the second quarter in a row, vacancy rates improved while rents continued to inch up in the retail real estate market, signaling a recovery for the hardest-hit commercial sector, according to Reis, a commercial real estate research firm.

“Although we still remain hesitant to claim that the  retail real estate market has reached stabilization, two consecutive quarters of vacancy and rent improvement is the strongest evidence to date that the sector is on the road to recovery,” says Ryan Severino, Reis senior economist.

Vacancies in strip malls for the second quarter declined to 10.8 percent. Meanwhile, asking rents increased 0.2 percent. According to Reis, the decreases in vacancies and slight increases in rents were first recorded in the first quarter of this year, after nearly seven years of falling numbers for the sector. Reis predicts that vacancies will continue to gradually fall for the remainder of the year as new construction remains largely stalled in the retail real estate.

Source: “Retail Real Estate Recovery Taking Hold: Research Firm,” Reuters (July 6, 2012)