Short sales continue to represent a significant portion of the real estate market. According to the National Association of Realtors®, short sales accounted for 9 percent of transactions during the first quarter of 2013.
The short sale process can be frustrating for home buyers, sellers and Realtors® given that approvals are often complex, inconsistent, slow and cumbersome. Tim McCallum, director of short sales at Fannie Mae, said the agency is working to expedite the short sales process. “We are improving transparency and have created a dedicated short sales team to negotiate directly with real estate agents,” he said.
“We now order a valuation as soon as an owner indicates they want a short sale, rather than waiting for an offer to be received,” McCallum said. “If there is no response to an offer from the loan servicer within 30 days, the case can be escalated. Our process is to counter every short sale offer.”
A foreclosure can be postponed if a short sales offer is received in a reasonable amount of time, preferably at least two weeks from a scheduled foreclosure. Fannie Mae created a web-based channel to help agents escalate short sale issues and receive confirmation that the agency is actively working to get those issues resolved.
Bob Martin, vice president of valuations at Fannie Mae, said they have a dedicated team to estimate values for all foreclosed and short sale properties. “To help estimate the values of distressed homes, the team uses appraisals, which are required for all short sales, as well as Broker Price Opinions, and data from other internal and external sources, including current listings, pending sales and sold properties,” he said.
The Fannie Mae valuation team includes 2,000 appraisers around the U.S., who have local competency and produce valuations within three weeks. Sales of comparable properties used for valuation need to be within the past 60 days.
Fannie Mae announced a policy late last year to guide the short sale process for all loans owned or guaranteed by Fannie Mae. Freddie Mac’s policy is very similar, and many larger servicers have comparable programs.
Under Fannie Mae’s policy, after a borrower contacts their mortgage servicer to determine eligibility, the buyer and their agent receive a recommended list price and have the opportunity to respond to the valuation. When an agent submits an offer to the servicer, Fannie Mae may review, and if approved it will proceed to closing.
There are a range of eligibility requirements, but if a borrower is 90-days or more delinquent, and has a FICO credit score under 620, then no documents, hardship or contribution are required to qualify for streamlined documentation. Other borrowers must have an eligible hardship, such as unemployment, reduced income, divorce, death or disability.
Borrowers may qualify even if not delinquent if they are at risk of imminent default and should talk to their mortgage servicer. Owner-occupants who are waived of a contribution requirement receive a $3,000 relocation incentive, less any other assistance; loan servicers may contribute additional incentives.
Mortgage servicers must respond to short sale offers within 30 to 60 days, and Fannie Mae may make a counter offer. Any payments on second loans must not exceed $6,000; if accepted, the borrower is released from any liability for the second loan and may not be required to make a contribution.
Among the requirements, sellers must not remain in the property as a tenant, or later obtain title to the property. Outside of relocation assistance, neither the seller nor the buyer can receive funds or commissions from the sale, and no fees can be paid to a third party to negotiate a short sale with the servicer.
Mark R. Johnson, senior vice president at Lender Processing Services Inc., said loan failures in the past five years continue to have reverberations. “Under the Dodd-Frank Act there can be no undue influence on appraisers, they need to be paid customary and reasonable fees, and each state must implement legislation for Appraisal Management Companies, which includes a reasonable separation between appraisers and clients.”
To date, 37 states have passed AMC legislation, and the remaining states have until 2015 to implement. Although clients and real estate agents technically may communicate with appraisers, many lenders have their own rules. “It’s a good idea to provide the appraiser with documentation about comparable sales, facts about the home and local market conditions prior to their examining a property,” Johnson said.
Martin Wagar, chief operating officer at Midwest Appraisal Management Group, said it’s important to match appraisers with the location of the property being evaluated. “AMCs need to improve the appraisal process and not get in the way of the transaction,” he said. “Appraisers must have local competency to produce good appraisals.”
Wagar said appraisers with his firm have at least three years of experience, belong to local MLSs and are members of local associations of Realtors®.
Ultimately, the Consumer Federation Protection Bureau will regulate AMCs, but hasn’t released any guidelines. In the absence of case history, attorneys are unwilling to offer opinions on operational policy, so AMCs must rely on their own experience and interpretation of the Dodd-Frank regulations.
Is your credit report telling lies about you? Credit report errors happen all the time, especially if you have a common name. Dispute them pronto, so you don’t end up paying more than you should for your mortgage and home owners insurance, or have trouble getting credit.
Just remember: Removing errors is a DIY project. So don’t get baited by credit repair servicers (“Pay us before we do any work on your behalf;” “Don’t contact the credit reporting companies directly” ) — these pitches are usually scams. Instead, try these seven tips for fixing credit report mistakes.1. Do it now. As soon as you find out there’s an error (check your credit report at least annually), take immediate action to repair the damage. The longer you put off reporting the error, the harder it’ll be to find the evidence to prove you’re right and they’re wrong. Plus, you can lose consumer protections if you wait longer than a month to send a written dispute of certain mistakes, like when you get an incorrect debt-collection notice.2. Don’t assume the mistake you know about is the only mistake in your credit history. About 5% of U.S. consumers have a credit report error in one of their three major credit bureau reports, the Federal Trade Commission says. Find out what each of the three big bureaus is reporting about you by ordering a free credit report.3. If your credit report error involves identity theft (you see credit card accounts you didn’t open or loans you didn’t take out), call each of the three credit reporting bureaus and ask them to put a fraud alert on your file. Then, fill out a Federal Trade Commission identity theft report and call the police to report the theft. The FTC and police reports help prove you had your identity stolen.
?4. Complain to everyone who screwed up. Write or file an online dispute with the credit reporting company and the business that made the mistake in the first place. If the mistake was made by:
For credit bureaus, use these websites:
5. If all this complaining does nothing, and according to a 60 Minutes investigation it’s quite possible nothing is exactly what will happen, consider contacting your state attorney general’s office to see if they can offer any guidance.
6. Back up your story with proof. If you could get a late payment report removed by just calling and saying you paid on time, we’d all do it. You’ve got to prove your case by sending copies (never trust the credit bureau with the originals!) of the records that show you’re right and the company that made the error is wrong.
Of course it’s harder to prove you didn’t do something (like when you don’t owe an unpaid $300 debt to a dentist in a state you’ve never even been to) than to mail a bank statement showing the credit card company cashed the check they say they never got.
Either way, set up a file folder where you keep:
7. If at first you don’t succeed, keep complaining until you do. If you don’t get satisfaction after your DIY attempts to repair the error:
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 0.6 percent to a seasonally adjusted annual rate of 4.92 million in March from a downwardly revised 4.95 million in February, but remain 10.3 percent higher than the 4.46 million-unit pace in March 2012.
Sales have been above year-ago levels for 21 consecutive months, while prices show 13 consecutive months of year-over-year price increases.
Lawrence Yun , NAR chief economist, said there is more demand than supply in the current market. "Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity," he said. "In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents."
Total housing inventory at the end of March increased 1.6 percent to 1.93 million existing homes available for sale, which represents a 4.7-month supply 2 at the current sales pace, up from 4.6 months in February. Listed inventory remains 16.8 percent below a year ago when there was a 6.2-month supply.
"The inventory improvement last month results from a seasonal gain, but conditions continue to broadly favor sellers. We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers, but it's unlikely we'll get there without greater increases in housing construction," Yun said.
The national median existing-home price3 for all housing types was $184,300 in March, which is 11.8 percent higher than March 2012. The March increase is the strongest since November 2005 when it rose 12.9 percent from a year earlier, and the last time there were 13 consecutive months of year-over-year price increases was from May 2005 to May 2006.
Distressed homes4 - foreclosures and short sales - accounted for 21 percent of March sales, down from 25 percent in February and 29 percent in March 2012. Thirteen percent of March sales were foreclosures, and 8 percent were short sales. Foreclosures sold for an average discount of 15 percent below market value in March, while short sales were discounted 13 percent.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage increased to 3.57 percent in March from 3.53 percent in February; it was 3.95 percent in March 2012.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said homes are selling much faster. "The typical home sold in March was on the market for one month less than it took to sell a year ago," he said. "Multiple bidding is becoming more common, and more homes are selling above the asking price, so buyers need to move quickly and follow their Realtor®'s advice for contingencies when making contract offers."
The median time on market for all homes was 62 days in March, down from 74 days in February and is 32 percent below 91 days in March 2012. Short sales were on the market for a median of 81 days, while foreclosures typically sold in 46 days and non-distressed homes took 66 days. Thirty-seven percent of all homes sold in March were on the market for less than a month.
First-time buyers accounted for 30 percent of purchases in March, unchanged from February; they were 33 percent in March 2012.
All-cash sales were at 30 percent of transactions in March, down from 32 percent in February; they were 32 percent in March 2012. Individual investors, who account for most cash sales, purchased 19 percent of homes in March, down from 22 percent in February; they were 21 percent in March 2012.
Single-family home sales slipped 0.2 percent to a seasonally adjusted annual rate of 4.32 million in March from 4.33 million in February, but are 9.1 percent above the 3.96 million-unit level in March 2012. The median existing single-family home price was $185,100 in March, up 12.1 percent from a year ago.
Existing condominium and co-op sales fell 3.2 percent to an annualized rate of 600,000 units in March from 620,000 in February, but are 20.0 percent higher than the 500,000-unit pace a year ago. The median existing condo price was $178,900 in March, which is 10.4 percent above March 2012.
Regionally, existing-home sales in the Northeast were unchanged at an annual rate of 630,000 in March and are 6.8 percent above March 2012. The median price in the Northeast was $237,000, up 3.0 percent from a year ago.
Existing-home sales in the Midwest rose 1.8 percent in March to a pace of 1.16 million and are 14.9 percent above a year ago. The median price in the Midwest was $141,800, up 7.8 percent from March 2012.
In the South, existing-home sales slipped 1.5 percent to an annual level of 1.95 million in March but are 12.7 percent above March 2012. The median price in the South was $161,700, which is 10.4 percent above a year ago.
Existing-home sales in the West declined 1.7 percent to a pace of 1.18 million in March but are 4.4 percent above a year ago. With notably constrained inventory conditions, the median price in the West rose to $258,100, up 26.1 percent from March 2012.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries. For additional commentary and consumer information, visit www.houselogic.com and http://retradio.com
NAR’s 2013 Investment and Vacation Home Buyers Survey,* covering existing- and new-home transactions in 2012, shows vacation-home sales rose 10.1 percent to 553,000 from 502,000 in 2011. Investment-home sales declined 2.1 percent to 1.21 million from 1.23 million in 2011, but those sales had been well under a million during the market downturn. Owner-occupied purchases jumped 17.4 percent to 3.27 million last year from 2.79 million in 2011.
Vacation-home sales accounted for 11 percent of all transactions last year, unchanged from 2011, while the portion of investment sales was 24 percent in 2012, down from 27 percent in 2011, marking the second highest share since 2005.
NAR Chief Economist Lawrence Yun said favorable conditions are driving second-home sales. “We had a strong stock market recovery, which helps more people in the prime ages for buying vacation homes. Attractively priced recreational property is also a big draw,” he said.
Yun notes an ongoing investor presence. “Investors have been very active in the market over the past two years, attracted mostly by discounted foreclosures that could be quickly turned into profitable rentals,” he said. “With rising prices and limited inventory, notably in the low price ranges, investors are likely to step back in coming years.”
The median investment-home price was $115,000 in 2012, up 15.0 percent from $100,000 in 2011, while the median vacation-home price was $150,000, compared with $121,300 in 2011, reflecting a greater number of more expensive recreational property sales in 2012.
All-cash purchases remain common in the investment- and vacation-home market: half of investment buyers paid cash in 2012, as did 46 percent of vacation-home buyers. Forty-seven percent of investment homes purchased in 2012 were distressed homes, as were 35 percent of vacation homes.
Of buyers who financed their purchase with a mortgage in 2012, large downpayments remain typical. The median downpayment for both investment- and vacation-home buyers was 27 percent, the same as in 2011.
Investment-home buyers in 2012 had a median age of 45, earned $85,700 and bought a home that was relatively close to their primary residence – a median distance of 21 miles, although 29 percent were more than 100 miles away. Thirty-five percent of investment buyers purchased more than one property.
“Property flipping modestly increased in in 2012,” Yun said. “However, this isn’t flipping in the sense of what took place during the housing boom. Rather, investors generally are renovating and improving properties before placing them back on the market to resell at a profit.”
Six percent of homes purchased by investment buyers last year have already been resold, and another 8 percent are planned to be sold within a year. In the 2011 study, 5 percent of investment homes were already resold, and 8 percent were planned to be sold within a year. Overall, investment buyers plan to hold the property for a median of 8 years, up from 5 years in 2011.
Seventy-eight percent of all second-home buyers said it was a good time to buy, compared with 68 percent of primary residence buyers. “This suggests that second-home buyers tend to be a step ahead of general buyers in sensing a market recovery,” Yun said.
The typical vacation-home buyer was 47 years old, had a median household income of $92,100 and purchased a property that was a median distance of 435 miles from their primary residence; 34 percent of vacation homes were within 100 miles and 46 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.
Lifestyle factors remain the primary motivation for vacation-home buyers, while rental income is the main factor in investment purchases.
Buyers listed many reasons buyers for purchasing a vacation home: 80 percent want to use the property for vacations or as a family retreat, 27 percent plan to use it as a primary residence in the future, 23 percent plan to rent to others and 23 percent wanted to diversify their investments or saw a good investment opportunity.
Fifty-five percent of investment buyers said they purchased for rental income, 30 percent wanted to diversify their investments or saw a good investment opportunity, and 20 percent wanted to use the home for vacations or as a family retreat.
Eleven percent of vacation buyers and 16 percent of investment buyers purchased the property for a family member, friend or relative to use, often for a son or daughter to use while attending school.
Forty-five percent of vacation homes purchased last year were in the South, 25 percent in the West, 17 percent in the Northeast and 12 percent in the Midwest.
Thirty-six percent of investment properties purchased last in the South, 28 percent in the West, 20 percent in the Northeast and 16 percent in the Midwest.
Forty-seven percent of investment buyers said they were likely to purchase another investment property within two years, as did 37 percent of vacation-home buyers. Twenty-nine percent of vacation buyers said they were likely to purchase another vacation home within two years, as did 31 percent of investment buyers.
Approximately 42.8 million people in the U.S. are ages 50-59 – a group that dominated second-home sales in the middle part of the past decade and established records. An additional 43.1 million people are 40-49 years old, which is the prime age for current buyers, while another 40.1 million are 30-39.
NAR’s analysis of U.S. Census Bureau data shows there are 7.9 million vacation homes and 43.7 million investment units in the U.S., compared with 75.2 million owner-occupied homes.
NAR’s 2013 Investment and Vacation Home Buyers Survey, conducted in March 2013, includes answers from 2,326 usable responses about homes purchased during 2012. The survey controlled for age and income, based on information from the larger 2012 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.
Will be online on Wednesday....beautiful, interior unit townhome with finished basement in popular Penns Manor. 3 BR/2.5 BA. $259,900. More info to come!
All FHA loans with case numbers assigned after April 1, 2013 will be subject to the following changes:
The biggest change will be having to pay MIP (mortgage insurance premium) for entire term of the loan. It used to be that once you reached a LTV of 78%, and you have had the loan for at least 5 years, you could get the MIP waived. This is set to change.
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