Housing Opportunity Resources

Fannie Mae Offers New Closing Cost Assistance and Appliance Incentive for Homebuyers
Fannie Mae is offering a 3.5% incentive for buyers who purchase and close on a Fannie Mae-owned home between January 28 and April 30, 2010. Buyers purchasing properties listed on HomePath.com that are closed within this period may receive up to 3.5% of the final sales price for closing costs; the purchase of new Whirlpool® appliances by Fannie Mae; or a mix of closing costs and appliances, at the buyer’s discretion, up to the maximum 3.5%. Read the details.

Will Federal Short-Sale Rules Speed Deals?
Lenders have until April 5 to implement procedures for complying with federal short-sale guidelines released in November. In an interview with REALTOR® Magazine, NAR Managing Director of Regulatory Policy Jeff Lischer walks your members through the new rules and the forms that go with them, and shares his assessment of what their impact could be. Watch the video.

The Basics: Short Sales
Stay up to date on the latest federal short sales guidance and forms under the new Home Affordable Foreclosure Alternatives Program (HAFA), which provides financial incentives to servicers, borrowers, and investors for a closed short sale or a deed-in-lieu of foreclosure. Read “The Basics” now.

Local Market Reports Video
The Local Market Reports provide insights into the fundamentals and direction of the nation’s largest metropolitan housing markets. In this short video, economist Ken Fears discusses the contents of the Reports, explains what data is included and why it is relevant to you and your market. The reports themselves, which reflect data from the third quarter of 2009, evaluates a number of factors affecting home prices.

2009 State Residential Mortgage Foreclosure Laws
Highlights legislation enacted by states in 2009 to prevent and mitigate foreclosures. Read the National Governors Association’s Report.

REALTOR® Neighborhood Stabilization Project

NAR has partnered with the National Community Stabilization Trust (Stabilization Trust) to develop the REALTOR® Neighborhood Stabilization Project, which will help communities effectively implement the Neighborhood Stabilization Program (NSP). Through the NSP, the federal government has provided $6 billion to assist communities hardest hit by foreclosures to acquire and rehabilitate foreclosed and abandoned properties.

REALTORS®—who are best equipped to market properties and promote neighborhoods—provide invaluable information that can enhance local deliberations on strategies for identifying and reclaiming neighborhoods devastated by high concentrations of foreclosed and abandoned property. Through this project, the Stabilization Trust and NAR will enable REALTORS® and their state and local Associations to play active roles in foreclosure recovery efforts in their communities.

The NAR/Stabilization Trust partnership has established the following goals:

• In cooperation with targeted state Associations, Stabilization Trust and NAR staff and consultants will devise strategies for providing high-impact training and tools necessary for success in mitigating the negative effects of foreclosures on local communities.
• The Stabilization Trust will use its housing industry relationships in cities severely impacted by foreclosures to establish connections for REALTORS® in local government, allowing them to influence program strategies.
• NAR and Stabilization Trust staff and consultants will provide hands-on assistance in initiating and maintaining a REALTOR® presence in local planning and implementation of neighborhood stabilization efforts.

Toyota Down, Ford Up

U.S. automakers — particularly Ford — are poised to gain from Toyota’s defect problems.

The Kiplinger Letter

January 28, 2010

Look for Ford to recapture the No. 2 spot in U.S. auto sales on the heels of Toyota’s recall woes, which come as a gift to beleaguered U.S. car companies. Ford, which last year recorded its first annual net profit — $2.7 billion — since 2005, was already well on its way to doing so, riding a tide of anti-General Motors consumer sentiment.

Ford and GM are moving swiftly to grab sales lost by the Japanese giant. They’ll reap huge benefits, though Honda, Nissan and Hyundai/Kia will gain as well.

“With a perennial leader taken out of the competition, the field suddenly is wide open” for a variety of competing models, including Ford’s Escape, Fusion and F-150 truck, Chevy’s Malibu, Honda Accords and CRVs and Suzuki’s new Kizashi, says Rebecca Lindland, director of automotive research for North and South America at IHS Global Insight, an economics consulting firm.

Overtures to Toyota owners are already in the works. GM will offer Toyota and Lexus owners a choice of incentives if they buy new GM vehicles through Feb. 28. Other automakers are likely to do the same.

The recall to fix defects that have caused vehicles to accelerate unexpectedly — and the resulting sales halt — will deal a mighty blow to Toyota, crippling production for at least a month and damaging sales for years to come.

Plants in Kentucky and Indiana, where Camrys and Highlanders are produced, don’t expect layoffs, but suppliers will feel the pain since Toyota has closed production lines that make the recalled vehicles. Weaker suppliers may go bankrupt before lines are restarted.

Toyota dealers will also take a big hit. The sales stoppage affects at least 65% of the company’s vehicles, which must now sit on dealers’ lots until replacement gas pedals can be manufactured and installed on more than 3 million vehicles.

In the long run, Toyota won’t tumble to also-ran status among auto manufacturers, though it could slip to the No. 4 spot, behind Honda. Toyota’s sales will be depressed this year; a flurry of sales promotions and incentives won’t be enough to salvage the year.

Average interest on 30-year fixed loans slipped a notch to 4.98 percent from 4.99 percent and was down from 5.10 percent a year ago.

Here’s how other rates fared for the week:

• 15-year fixed loans dropped down to 4.39 percent from 4.40 percent.
• Five-year adjustable-rate mortgages dipped to 4.25 percent from 4.27 percent.
• One-year ARMs came down to 4.29 percent from 4.32 percent.

While still higher than the historic lower of 4.71 percent established in early December, long-term mortgage rates have hovered around a very favorable 5 percent thanks to the Federal Reserve’s mortgage-backed securities program meant to keep rates low and make home buying more affordable.

The central bank’s policymaking committee confirmed on Jan. 27 that it will keep rates near those record lows in order to prop up the economy; but it still plans to terminate the program at the end of March.

Low rates also trigger more refinancing activity, according to Freddie Mac. In the 2009 fourth quarter, it said, about a third of borrowers who refinanced a home loan — the highest share since at least 1985 — opted to slash their principal balance rather than tap into their equity.

As a result, only around $11 billion in home equity — the smallest quarterly volume in about nine years — was tapped by consumers who refinanced a conventional, prime mortgage.

A new report from the Urban Land Institute predicts two major changes in the U.S. housing market as we began a new decade.

• Home appreciation will slow considerably to about 1 percent to 2 percent annually.
• The current U.S. homeownership rate, now at 67 percent (which is down from a record high of 69 percent), will fall further to about 62 percent.

4 Major Demographic Trends

The report also cites four major U.S. demographic trends that will have a major impact on housing.

1. Aging baby boomers (ages 55 to 64 years old): They will keep working, and many will be forced to stay in their suburban homes until values recover. Those who are able to move will choose mixed-age living environments that cater to active lifestyles. Walkable suburban town centers also will appeal to this group.

2. Younger baby boomers (46 to 54 years old): They are now entering their prime earning years but they will lack home equity and unlike the older members of their generation, they won’t be able to purchase second homes. This will likely curb the prospects for the second-home market.

3. Generation Y: They are larger than the baby boom generation (with a population of about 86 million). As they enter the housing market, they are less interested in homeownership than their parents were when they were young adults. “They will be renters by necessity or choice for years ahead,” says John K. McIlwain, author of the report.

4. Immigrants – both legal and illegal: They are nearly 40 million strong. They often prefer multi-generational households and if they can afford them, larger homes in neighborhoods with a strong sense of community.

Source: The Urban Land Institute (01/27/2010)

Markets don’t like uncertainty, and a little of that was removed yesterday as Federal Reserve Chairman Ben Bernanke was approved by the Senate for a second four-year term by a 70-30 vote. Supporters admitted that that the Federal Reserve under Bernanke had missed signs leading up to the recent economic crisis, but argued that under Bernanke’s leadership the Fed had helped steer the U.S. economy away from utter catastrophe. But no one wants to switch horses in midstream, even if there could be found a “new horse” that was qualified.

Overall, how have the programs designed to stop mass foreclosures been working? Not so well, and for a variety of reasons. Servicers often don’t have the ability to do renegotiations in bulk, and sometimes make more money by dragging their feet. Loans being placed into securities, which are then sliced and diced, make things more complicated, and borrowers usually are not even sure if they’re eligible. We should all keep in mind, according to a recent paper by the Boston Fed, that foreclosing is often more profitable than renegotiating. Almost a third of delinquent borrowers “self cure”. And of those who have their mortgages modified, more than a third end up defaulting eventually anyway.  So in both cases, modifications make the servicer worse off. The housing bubble was very expensive – it will be surprising if we can deal with its consequences on the cheap.

At least there is no ambiguity about what the Fed is doing in their mortgage purchase program. Last week the Fed purchased a net $12 billion in agency MBS, bringing its total net purchase to $1.161 trillion. But everyone has a pretty good sense of how this movie is going to end, right? Well, perhaps not. The odds are highly in favor of the Fed keeping overnight rates where they are through June. In fact, an article in the Wall Street Journal yesterday points out that there is a growing belief among investors that when the Fed’s mortgage security purchase program ends at the end of March, mortgage rates won’t soar. “They argue that investors, searching for higher-yielding securities, will find government-backed mortgage-backed securities a bargain relative to other investments, like corporate debt, that have rallied for much of the past year.”

I don’t think that anyone believes that the US government will suddenly leave the entire housing and mortgage market on its own. Those markets have had either implicit or explicit government backing for decades, which makes investors much more likely to buy mortgage-related securities. Lately production has dropped, as has the weekly amount of Fed purchases from $21 billion to $12 billion, yet mortgage rates are still relatively low. Yes, mortgage rates may move higher, and in fact rates in general may move higher, but at some point the yields look more attractive to investors, and as they buy these securities, the price goes up and rates move back down. Thus goes the argument against lenders saying, with regard to mortgage rates, “The end is near!” Now, if we could only get underwriting guidelines to loosen up!

Yesterday, only one day after the FOMC meeting (which had its first dissenter in over a year), the market started off slightly worse, but then came back later in the day. A weak stock market helped, as did a very good $32 billion 7-yr Note auction. Today we saw Gross Domestic Product for the 4^th quarter, estimated to be 4.6% versus the 2.2% annual rate in the prior quarter. The 5.7% pace was certainly stronger than expected, and the highest pace in more than six years.

Growth was boosted a sharp slowdown in the pace of inventory liquidation, but even stripping out inventories the economy expanded at an annual rate of 2.2 percent. Later we’ll have the Chicago Purchasing Manager’s Survey and the University of Michigan Consumer Sentiment Survey. But the GDP number has pushed rates higher, and mortgage prices are worse by about .250 and the yield on the 10-yr is up to 3.68% again.

450,000 at risk in foreclosure-prevention program

NEW YORK (CNNMoney.com) — Hundreds of thousands of troubled homeowners who are making lower mortgage payments on a trial basis are at risk of being kicked out of President Obama’s foreclosure-prevention program.

Companies that service the mortgages have until Jan. 31 to review all trial modifications that have been underway for several months under the Home Affordable Modification Program (HAMP), according to a Treasury Department guideline issued late last month. The Treasury Dept. said it would issue new guidelines next week, but wouldn’t give details.

During the review period, servicers must determine whether borrowers have made all their payments and have handed in all the necessary paperwork. Those who haven’t will get letters giving them 30 days to comply.

The goal is to clear up the backlog of borrowers stuck in trial modifications, in which a homeowner’s monthly payments are lowered to no more than 31% of pre-tax income.

Some homeowners have spent seven or eight months waiting to hear if they qualify for a permanent adjustment to their mortgages.

This directive, however, has some bank regulators concerned.

“About 450,000 homeowners currently have HAMP trial modifications and have demonstrated a willingness and ability to make timely payments for at least three months,” said Richard Neiman, superintendent of the New York State Banking Department.

“Now, unfortunately and very alarmingly, these same homeowners face the prospect of foreclosure strictly on account of documentation issues,” he said.

Paperwork has proved a major stumbling block for the president’s foreclosure-prevention program. Homeowners complain that their servicers continuously lose the documents they send in, while financial institutions argue that borrowers have not been sending in their paperwork.

Aware of the problem, Treasury officials said they plan to issue new guidance to servicers next week that will help expedite the conversion of borrowers in the trial period to permanent modification. It may also lighten the documentation requirements.

Under fire for the low number of people receiving long-term help, the Treasury Department in late November ramped up pressure on servicers to convert borrowers to permanent modifications.

Some 66,500 people have received permanent adjustments, with another 787,200 homeowners in trial modifications.

Under the president’s plan, delinquent borrowers are put into trial modifications for several months to make sure they can handle the new payments and to give them time to submit their financial paperwork.

Once the modification becomes permanent, servicers, investors and homeowners are eligible to receive thousands of dollars in incentive payments.

Overall, about three-quarters of people are making their payments on time, according to the Treasury Department.

Treasury officials already lightened the documentation requirements in the fall in hopes of speeding up the conversion process. But more needs to be done, Neiman said.

For instance, Treasury should accelerate its implementation of a standardized documentation form and the creation of a Web portal that will allow homeowners to track the receipt of the paperwork, he said. Also, it should allow servicers more flexibility in accepting alternative documents.

If this isn’t done, a lot of homeowners could soon face foreclosure, he said.

“This is a real concern to borrowers, particularly borrowers who’ve continued to make payments for three, four, five, even seven months,” Neiman said. 

• Home prices will plummet in most cities
• Check the forecast for your town

The San Francisco metro area has seen its home values drop by a quarter, and the city still has some pain to work through. The city’s median home price is expected fall another 8.3% by June 2010.

After that, however, the market there may come roaring back: Fiserv predicts a 14.3% gain between June 2010 and June 2011. Averaged out, that means a 4.8% gain over the next two years.

One reason for the sharp comeback is that much of the area’s excess inventory will have been sold. It’s already dropped by nearly in half over the past year.

The recovery will be delayed, though, as the area — particularly Oakland and the East Bay — works through its foreclosure problems. During the first six months of 2009, one of every 52 homes had at least one foreclosure filing.

The good news, according to Mark Fleming, chief economist for First American CoreLogic, is that core city neighborhoods don’t have nearly as many foreclosures as those out on the fringe. The steady demand in those communities will serve as a base as other neighborhoods rebuild.

 Existing-home sales fell as expected in  December after first-time buyers rushed to complete deals during the  months leading up to the original November deadline for the tax credit.  However, prices rose from December 2008 and annual sales improved in  2009, according to the National Association of REALTORS®. 

 Existing-home sales—including single-family, townhomes, condominiums  and co-ops—fell 16.7 percent to a seasonally adjusted annual rate of  5.45 million units in December from 6.54 million in November, but remain  15 percent above the 4.74 million-unit level in December 2008.

 There were approximately 5,156,000  existing-home sales in 2009, which was 4.9 percent higher than the  4,913,000 transactions recorded in 2008. It was the first annual sales  gain since 2005.

 Tax Credit Creates Swing in Market

 Lawrence Yun, NAR chief economist, says there were no surprises in the  data. 

 “It’s significant that home sales remain  above year-ago levels, but the market is going through a period of  swings driven by the tax credit,” he said. “We’ll likely have another  surge in the spring as home buyers take advantage of the extended and  expanded tax credit. By early summer the overall market should benefit  from more balanced inventory, and sales are on track to rise again in  2010." 

 However, Yun says, the job market remains a  concern and could dampen the housing recovery. "Job creation is key to a  continued recovery in the second half of the year,” he says.

 An NAR practitioner survey shows first-time  buyers purchased 43 percent of homes in December, down from 51 percent  in November. Repeat buyers rose to 42 percent of transactions in  December from 37 percent in November; the remaining sales were to  investors.

 The national median existing-home price for  all housing types was $178,300 in December, which is 1.5 percent higher  than December 2008. 

 “The median price rose because of an  increased number of mid- to upper-priced homes in the sales mix,” Yun  says. It was the first year-over-year gain in median price since August  2007.

 Falling Inventories

 NAR President Vicki Cox Golder said market conditions are challenging in some areas. 

 “There’s a shortage of lower-priced homes  for sale in much of the country, resulting in multiple bids in some  areas,” she says. “Raw unsold inventory has been trending down. As the  market heats up again this spring, buyers may need to be prepared to  move quickly on a particular home."

 Total housing inventory at the end of  December fell 6.6 percent to 3.29 million existing homes available for  sale, which represents a 7.2-month supply at the current sales pace.  That is an increase from a 6.5-month supply in November. 

 Raw unsold inventory is 11.1 percent below a  year ago, is at the lowest level since March 2006, and is 28.2 percent  below the record of 4.58 million in July 2008.

 Distressed homes, which accounted for 32  percent of sales last month, continue to downwardly distort the median  price because they generally sell at a discount relative to traditional  homes in the same area. 

 For all of 2009, the median price was  $173,500, down 12.4 percent from $198,100 in 2008. Distressed homes  accounted for 36 percent of total sales last year.

 According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage  rose to 4.93 percent in December from 4.88 percent in November; the rate  was 5.29 percent in December 2008.

 Single-Family Home, Condo Sales Dip

 Single-family home sales fell 16.8 percent to a seasonally adjusted annual  rate of 4.79 million in December from a pace of 5.76 million in  November. Sales are 12.7 percent above the 4.25 million level in  December 2008. For all of 2009, single-family sales rose 5 percent to  4,566,000.

 The median existing single-family home price  was $177,500 in December, which is 1.4 percent above a year ago. For  all last year, the median price for a single-family home was $173,200,  down 11.9 percent from 2008.

 Meanwhile, existing condominium and co-op  sales fell 15.4 percent to a seasonally adjusted annual rate of 660,000  in December from 780,000 in November. Sales are 34.7 percent higher than  the 490,000-unit pace a year ago. For all of 2009, condo sales rose 4.8  percent to 590,000 units.

 The median existing condo price was $183,700  in December, up 1 percent from December 2008. For all of last year, the  median condo price was $176,100, which is 16.1 percent below 2008.

 Regional Breakdown

 Here are existing-home sales figures by  region:

Northeast: sales dropped 19.5 percent to an annual level  of 910,000 in December but are 21.3 percent above a year ago. Median price: $241,700, up 3.2 percent from December 2008.
Midwest: sales fell 25.8 percent in December to a level  of 1.15 million but are 8.5 percent higher than December 2008. Median price: $143,200, which is 1.8 percent above a year ago. 
South: sales dropped 16.3 percent to an annual pace of  2.01 million in December but are 15.5 percent above December 2008. Median price: $152,000, down 1 percent from a year ago.
West: sales declined 4.8 percent to an annual rate of  1.38 million in December but are 15 percent higher than a year ago. Median price: $236,000, up 2.7 percent from December 2008.

Life is ever-changing and so are your
estate-planning needs.
Here are seven situations in which you'll want to
re-evaluate your will.
								 







1. You Get Married

Your new spouse doesn't automatically become your chief heir.
Most states give a spouse one-third or one-half of an estate.
If you don't have any children, your parents or siblings would
get the rest.
To leave all your property to your spouse, you'll need a will.
You cannot  disinherit a spouse without his or her consent.

If you are living with someone but are not married and you want
your significant other to inherit any of your property, you need a will.
2. You Become a Parent

Obviously, the big question is how your children
will be cared
for if both you and your spouse die.
Now you definitely need a will to name a guardian
for your children, as discussed earlier.

Consider using trusts, perhaps in your will,
to handle assets that would go to your
children.
Execute a durable power of attorney naming your spouse or
someone else to
act for you in financial matters when you  can't.
Durable power remains
effective even if you become mentally unable to handle
your own affairs.
3. You Approach Middle Age

Your assets are growing, so tax planning could save your heirs
thousands in federal estate taxes. The time to act is when you a
and your
spouse have a combined net worth, including house,
retirement plans, and
insurance proceeds,
that approaches the amount vulnerable to the
federal estate tax. You can give an unlimited
amount to your spouse
tax-free,
by designating it in your will or by owning all assets
jointly, for example.
But with a little more planning, a married couple
can leave twice the amount
of the estate-tax exemption-up to $4 million in 2007 through 2008,
and $7 million by 2009-tax-free after the second  spouse dies.

Update your will to reflect family births, deaths,
separations,
or divorces. Review guardian, trustee,
and personal-representative
appointments. Reevaluate the nature of specific
gifts to people or
groups. And recalculate how much life insurance
you need.
4. You Get Divorced

Review absolutely everything. The people in your life
are changing.
So must your estate plan. You need a new will altogether
because in most
states a divorce automatically revokes the provisions
of a will that
apply to a former spouse. In some states a divorce revokes
the entire will.

You'll want to set up trusts to control the assets you
plan to leave
your children. And revise any living trusts to remove your
former spouse
as a beneficiary or trustee. Do likewise with a durable
power of
attorney or a living will (see Basics of Family Finance:
Parents).
Plus, unless restricted by a divorce decree, change the
eneficiaries
on your life insurance, pensions, and IRA.
5. You Remarry

You and your new spouse may have to plan for families from prior
marriages and for children you have together. Consider a prenuptial
agreement, should you want to keep assets separate and nullify your
inheritance rights to each other's estates.

You'll want to provide for your new spouse and still be certain your
children are taken care of. To do this, talk to an estate-planning
lawyer about a qualified terminable interest property trust -- QTIP, for
short. This trust can be set up in a will to give your spouse the
income from the trust property and some rights to principal.
But when he or she dies, the assets go to beneficiaries you have chosen.
6. You Retire or Move to Another State

If you retire to another state (or any time you move to
a new state,
for that matter),
have your estate-planning documents reviewed in light
of that state's laws and your current needs.

Durable powers of attorney become even more important.
For example, if you are stricken with Alzheimer's disease,
you may become
unable to give the required consent for financial transactions.
Life insurance  coverage may not be needed anymore.
But if your estate faces an  estate-tax liability or if your spouse
is dependent on retirement income  that will end with your death,
consider keeping the coverage.
7. Your Spouse Dies

This loss can leave you emotionally vulnerable to financial mistakes.
For at least several months, avoid selling your house or
making other drastic changes.

Seek expert advice. There may be tax benefits to disclaiming
some of your inheritance in favor of alternate beneficiaries,
such as your children, if your spouse's estate is subject to
the federal estate tax  and you have enough assets of your own,
including liquid assets.

You'll need to get a new will and, if needed, a revocable living trust.
Execute a new durable power of attorney and a living will
(which  expresses your wishes in case of an illness t
that leaves you permanently  incapacitated). Put these in a safe place,
and tell people who need to know where they are.

 The Kiplinger Washington Editors, Inc.