Monday, May 21, 2012

Bank of America offering up to $30,000 for short sales - May. 15, 2012

Bank of America offering up to $30,000 for short sales - May. 15, 2012

NEW YORK (CNNMoney) -- Bank of America is offering some struggling homeowners payments of up to $30,000 if they sell their homes in a short sale and avoid ending up in foreclosure.
Under the plan, Bank of America (BAC, Fortune 500) will offer homeowners so-called relocation payments of between $2,500 and $30,000 if they sell their home in a short sale. In short sale deals, the sale price of the home is less than what the seller owes the bank.

The bank first tested the payments in a pilot program in Florida last fall. Under that initiative, Bank of America paid up to $20,000 to borrowers who sold their homes in short sales.
"This program can help customers make a planned transition from ownership when home retention options have been exhausted or they have made a decision not to keep the home," said Bob Hora, an executive for the bank.

Chase (JPM, Fortune 500) started a similar initiative in late 2010 that pays as much as $35,000 to short sellers. Wells Fargo (WFC, Fortune 500) has also paid five-figure incentives to short sellers or to owners who turned over their deeds to the bank.
BofA said it has completed 200,000 short sales over the past two years. These sales are generally more cost effective for banks than foreclosures. By avoiding foreclosure, the lenders get distressed properties back from delinquent borrowers more quickly, which helps them to avoid property tax payments, maintenance expenses and legal fees that can build up for months, even years, as foreclosures work through the system.

In addition, the incentives help guarantee the homes will return to the lenders in better condition. Foreclosed properties are often poorly maintained, even sometimes sabotaged, by angry former owners, making them worth far less to the banks.
During the last three months of 2011, foreclosures sold for an average of about $150,000, according to RealtyTrac. Meanwhile, short sales sold for an average of about $185,000.
To qualify for Bank of America's relocation payments, borrowers must obtain pre-approval on sale prices for their homes. The sale must begin by the end of 2012 and close by September 26, 2013.
The exact compensation is determined case-by-case based on a calculation that involves the home's value, mortgage balance and other factors.
Borrowers can call 877-459-2852 to find out if they may be eligible for the program. To top of page

Thursday, December 22, 2011

Mortgages rates fall to record lows — again

NEWS SUMMARY – From Freddie Mac’s weekly survey, the average 30-year fixed-rate mortgage fell to 3.91% this week — the lowest in at least four decades and the sixth such record this year. Interest charged on adjustable-rate mortgages (ARMs) likewise fell to record territory:  The 5-year ARM fell to a record-low 2.85% and the 1-year ARM fell to a record-low 2.77%. The 15-year fixed was unchanged from last week’s record low of 3.21%.
Rates on 30-year fixed mortgages been at or below 4% for the past two months, Freddie Mac reported. Payments on a $200,000 loan are now at least $100 a month lower than at the start of the year. (See chart upper right.)
WHAT I SEE – From rate sheets hitting my desk that are not part of Freddie Mac’s survey: A 10-year fully amortized fixed rate is available at 2.99 percent and 1 point. The 30-year conforming plus fixed rate ($417,001 to $625,500) is 3.875 percent and 1 points. A 15-year conforming plus fixed rate loan is at 3.25 percent and 1 point. FHA 30-year fixed jumbo ($417,001 to $729,750) is 3.75 percent and zero points.
WHAT I THINK – The Federal Housing Finance Agency is considering a 5-year reprieve from interest payments for underwater borrowers who file a Chapter 13 reorganization bankruptcy. This is for borrowers with federally insured loans. Congressional approval is not in play.
It sounds like you may have an opportunity of free rent for 5 years should you meet the criteria. It looks to me that the underlying issue is finding new solutions to end a further collapse in property values caused by underwater borrowers walking away. It’s estimated that 25% of all homes with mortgages are upside down.
Fannie Mae’s chief economist, Doug Duncan thinks there is a 40% chance of a double-dip recession next year.
All of this means definitely continued low rates next year.

Posted in: Lending/rates     

Saturday, December 10, 2011

House Prices Are Finally Nearing A Bottom – But Don’t Look For A Rapid Recovery

Since the beginning of the house-price crash in 2007, analyst after analyst has predicted that "the bottom" in house prices is just around the corner - only to be wrong every time.
But now, finally, it looks as though house prices may actually be nearing a bottom.
Because, after falling nearly 35% from their 2007 peak, nationwide house prices are finally approaching "normal" levels on two key valuation measures: The "price-to-rent ratio," which measures house prices relative to what the houses might rent for, and the "price-to-income ratio," which measures house prices relative to average incomes.
Using the first ratio, economists at Goldman Sachs have concluded that national house prices will decline another 2.5% in 2012 and then bottom over the course of the following year.
(To see a recent chart of the national price-to-rent and other ratios, please click here.)
House prices differ markedly depending on where you live, of course, and Goldman's analysts have considerably different predictions for different markets. Prices in New York, Portland and Atlanta, Goldman predicts, will still see significant declines. While prices in Detroit, Miami and Cleveland should rise.
Importantly, after a price bubble similar to the one the U.S. just experienced, prices often don't stop at "average" levels on the way down. On the contrary, they often plunge straight through "fair value" and spend years below average levels. And that certainly could happen to house prices this time around.
But Goldman's economists believe house prices will level out in a year or two. And unlike other analysts who have made similar predictions in prior years, Goldman's economists actually have data on their side: The price-to-rent ratio really has fallen to normal levels.
Of course, even if house prices do bottom in 2013, that doesn't mean that they'll quickly shoot up again - or that housing will once again be the "great investment" that everyone thought it was back in the boom years.
One of the reasons house prices are expected to bottom soon is that houses are currently more affordable than they have been in the past. But housing "affordability" is judged, in large part, on mortgage rates, and mortgage rates are currently near an all-time low. If and when the economy begins to recover in earnest, mortgage rates will likely rise, and, as they do, houses will become less affordable.
So it is likely that, even after they bottom, U.S. house prices will face headwinds for a long time.

Monday, November 21, 2011

The Wall Street Journal

How to Figure the Fuzzy Math of Internet Home Values


Jason Gonsalves worked hard to turn his 6,500-square-foot stucco-and-stone home in the suburbs of Sacramento into the ultimate grown-up party pad, complete with game room, custom wine cellar and an infinity-edge pool overlooking Folsom Lake. When interest rates fell recently, Mr. Gonsalves, who runs a lobbying firm, looked into refinancing his $750,000 mortgage. That's when he got startling news—the home had dropped more than $200,000 in value while he was renovating.

Or at least, that's what one real-estate website told him. Another valued the house at only $640,500. And these online estimates left him all the more confused when a real-life appraiser, assessing the house for the refinancing loan, pinned its value at $1.5 million. "I have no idea how those numbers could be so different," Mr. Gonsalves says.

Right or wrong, they're the numbers millions of consumers are clamoring for. After years of real-estate pros holding all the informational cards in the home-sale game, Web-driven companies like Zillow, and are reshuffling the deck, giving home shoppers and owners estimates of what almost any home is worth. People have flocked to the data in startling numbers: Together, four of the biggest sites that offer home-value estimates get 100 million visits a month, with web surfers using them to determine what to ask or bid for a home, or whether to refinance.
Zillow, Trulia and other websites post estimates of home values. But as Alyssa Abkowitz explains on Lunch Break, these popular sites can be -- by their own admission -- wildly inaccurate.

But for figures that can carry such weight, critics say, the estimates can be far rougher than most people realize. Valuations that are 20% or even 50% higher or lower than a property's eventual sale price are not uncommon, as the sites themselves acknowledge. The estimates frequently change, too—sometimes by hundreds of thousands of dollars—as sites plug new data into their algorithms.
All of the competitors make it clear their numbers are guesstimates, not gospel. "A Trulia estimate is just that—an estimate," says a disclaimer on that site's new home-value tool. Zillow goes a step further, publishing precise numbers about how imprecise its estimates can be. And every major site urges home-price hunters to consult appraisers or real-estate agents to refine their results.

But despite the disclaimers, homeowners and real-estate agents say, many Web surfers put enough faith in the estimates to sway the way they shop and sell.

After Frank and Sue Parks put their manor-style house in Louisville, Ky., on the market, they watched as Zillow put a $331,000 value on the dwelling in May; by July it had climbed to $1.5 million. (Zillow says the lower estimate reflected errors in its statistical model.) The couple got potential buyer referrals from the site, but they fended off a stream of lowball offers before they sold this fall. Mrs. Parks says the estimate roller coaster "really affected our ability to move the place."

Determining a home's value has traditionally been the job of an appraiser, who gathers data on recently sold homes and compares them with the "subject property" to arrive at an estimate.

In the late 1980s, economists started developing automated valuation models, or AVMs, computer models that could analyze data about comparable sales, square footage, number of bedrooms and the like, in a matter of seconds. For years, these tools were mostly reserved for in-house analysts at lending banks.
It wasn't until 2006 that Zillow took them to the masses, with its Zestimates, which now offer values for more than 100 million homes based on the company's own algorithms. "Humans don't make these decisions," says Stan Humphries, chief economist at Zillow.

Numbers like these have become weapons in the arsenal of consumers like Simms Jenkins, an Atlanta marketing executive, who has recently relied on online estimates to help him both buy and sell homes. "I can't imagine 25 years ago, when people would just go out and spend their entire Saturday looking at homes," he says. "You don't have to do that now."

But appraisers and real-estate consultants say the online models can veer off target with alarming frequency. Most data for the models come from two sources: records from tax assessors and listing data for recent sales. Collection is a challenge, however, because not every county tracks properties the same way—some calculate home size by number of bedrooms, others by overall square footage. And automated models aren't designed to account for the unique construction details that often make or break a deal, or for intangible factors like a neighborhood's gentrification. "You cannot use a computer model in certain areas and expect the value to come out right," says John May, the former assessor of Jefferson County, Ky., which includes the state's largest city, Louisville.

For all these reasons, models that banks use often add a "confidence score" to their estimates. Consumer-oriented sites, meanwhile, rely on disclaimers, some of which are eye-opening. Zillow surfers who read the "About Zestimates" page find out that the site's overall error rate—the amount its estimates vary from a homes' actual value—is 8.5%, and that about one-fourth of the estimates are at least 20% off the eventual sale price. In some places, the numbers are far more dramatic: In Hamilton County, Ohio, which includes Cincinnati, it's 82%.

The sites argue that, over time, edits and corrections will help them perfect their numbers—with many fixes coming from their customers.

On, anyone who knows a homeowner's surname and the year the home was last purchased, can edit the details of a property listing in ways that can eventually change the estimated value.

Zillow has accepted revisions on 25 million homes—perhaps the strongest testament to how seriously consumers take its estimates. Today, the site says its figures are accurate enough to give consumers a good sense of any home's value. In the meantime, says Mr. Humphries, its economist, "We're always tweaking the algorithm or building a new one."

Thursday, November 10, 2011

More financial help is on its way to those fighting to remain in their homes throughout the state, including the San Diego region.

Mortgage aid open to more Calif. borrowers             

A state-run program that helps homeowners struggling to pay their mortgages now has broader eligibility guidelines, opening up help to borrowers who did "cash-out" refinances and own multiple properties, said California Housing Finance Agency officials on Monday.

The mortgage-aid effort, called Keep Your Home California, so far has helped close to 8,000 low- and moderate-income households that are behind on loan payments or close to default, according to agency leaders.

"This expanded eligibility will allow more families to qualify and receive greater assistance," said California Housing Finance Agency Executive Director Claudia Cappio, in a statement. "We are continuously evaluating our experience so far and making adjustments like these based on the initial results of the Keep Your Home California program."

Keep Your Home California has four parts that include: mortgage help for the unemployed, mortgage aid for homeowners with documented financial hardship, relocation help for those in the midst of a short sale or deed-in-lieu of foreclosure, and reduction of principal. The programs, paid for by the U.S. Treasury Department's Hardest Hit Fund, is costing taxpayers $2 billion.

Monday's announced changes include:

--Allowing homeowners who completed "cash-out" mortgage refinancing to take part in the four programs. Such borrowers were excluded before.

--Allowing borrowers who own more than one property to apply. Program officials said this will be particularly helpful to those who co-signed on properties for family members.

--Offering mortgage aid to unemployed borrowers for nine months, instead of six. Such homeowners can get up to $3,000 a month. To qualify, you must receive unemployment benefits.

--Reinstating up to $20,000 in past-due mortgage payments instead of the previous $15,000 cap.

To qualify, your mortgage servicer must take part in Keep Your Home California. Click here for the list of servicers.

Info: Call 888-954-KEEP(5337) between 7 a.m. and 7 p.m. Monday through Friday, and 9 a.m. to 3 p.m. on Saturdays. Visit: or

Reported by reporter Lily Leung at or 619-293-1719.