One of the biggest scars from the housing crisis – foreclosures – is rapidly fading away. Foreclosure activity posted a 15 percent month-to-month drop from October to November – the largest monthly drop in three years, RealtyTrac reports in its latest foreclosure report. What’s more, foreclosure filings have posted a 37 percent decrease from year ago levels.

Reports on foreclosure filings, default notices, auctions, and bank repossessions all showed big declines in the latest report.

“I think that [the housing crisis is] really in the rear-view mirror,” Daren Blomquist, vice president at RealtyTrac, told ABC News.

The number of homes entering the foreclosure process has dropped by two-thirds since the peak of the housing crisis in 2010. The number of homes that have started the foreclosure process has fallen to its lowest level since December 2005.

“While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed,” says Blomquist. “While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold.”

Source: RealtyTrac and “Foreclosures Plunge as Housing Crisis Retreats,” ABC News (Dec. 12, 2013)

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The U.S. Department of Housing and Urban Development released its final ruling on the definition of “Qualified Mortgage,” which includes new requirements that mortgages must meet starting Jan. 10, 2014, in order to be insured, guaranteed, or administered by HUD or the Federal Housing Administration.

HUD’s rule is similar to the existing qualified mortgage rule that was issued by the Consumer Financial Protection Bureau earlier this year.

According to HUD’s rule, “qualified mortgage” loans will have to meet the following criteria in the new year:

  • Require periodic payments without risky features;
  • Have terms that do not exceed 30 years;
  • Limit upfront points and fees to no more than 3 percent with adjustments to facilitate smaller loans (there are a few exceptions, such as for manufactured housing);
  • Be insured or guaranteed by FHA or HUD.

HUD says the first two elements of the rule — periodic payments without risky features and terms that don’t exceed 30 years — are already part of its current underwriting processes. The requirement that limits upfront points and fees is not, but it’s consistent with private-sector and conventional mortgages guaranteed by Fannie Mae and Freddie Mac, HUD notes.

HUD’s rule also establishes two types of qualified mortgages: Rebuttable Presumption QM and Safe Harbor QM. The Rebuttable Presumption QM will contain annual percentage rates that are greater than the rate for the average borrower receiving a conventional mortgage. The Safe Harbor QM, which offers lenders the greatest legal certainty, will have a smaller APR. Both types of qualified mortgages hold different protections for consumers and consequences for lenders.

Read more on HUD’s ruling of “Qualified Mortgage.” 

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires HUD to have a “qualified mortgage” definition that meets the ability-to-repay criteria, requiring borrowers to have the finances to be able to one day repay the loan.

The qualified mortgage rule will have a major effect on determining the underwriting standards that most lenders will use to qualify borrowers, the National Association of REALTORS® has said. NAR has actively worked with lawmakers in shaping the qualified mortgage rule issued by the Consumer Financial Protection Bureau. Read a full summary of the issues that NAR views as a concern.

Source: U.S. Department of Housing and Urban Development; “HUD Releases Final Rule on Qualified Mortgages,” American Banker (Dec. 11, 2013); and “HUD QM Rule Announced; Closely Mirrors CFPB QM,” Mortgage News Daily (Dec. 11, 2013)

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NAR Resource Page on Qualified Mortgages 








The Obama administration’s Housing Scorecard for November showed an improving housing market, with home prices remaining strong and foreclosures falling. But the administration cautions in the report that the recovery remains “fragile.”

Economic and job growth and rising home prices “have helped to reduce foreclosure starts to levels not seen since 2005,” says Kurt Usowski, the U.S. Department of Housing and Urban Development’s deputy assistant secretary for economic affairs. “And although the number of home owners ‘underwater’ … is down more than 40 percent from its peak, the number remains historically elevated, meaning more work needs to be done to ensure the continued stability of the housing market.”

The scorecard reviews housing data to gauge the health of the housing market.

Existing-home sales dropped in November, but remained strong over last year’s numbers (426,700 in November 2013 compared to 402,500 in November 2012), according to National Association of REALTORS® data.

New-home sales also posted year-over-year gains: 37,000 in October 2013, up from 30,400 in October 2012, according to U.S. Census and HUD data.

Inventory levels of existing homes inched up slightly in November to a 5-month supply compared to a 4.9-month supply in October, NAR reports. But inventory levels are down from a 5.2-month supply last year.

The inventory of new homes for sale took a big fall, to a 4.9-month supply in November compared to a 6.4-month supply in October, the Census bureau and HUD report.

“Although the housing market has largely recovered, there are still home owners struggling, and it is key that we continue to help them,” says Treasury Deputy Assistant Secretary Tim Bowler.

The government’s foreclosure mitigation programs are providing some relief to struggling home owners. For example, more than 1.8 million home owner assistance actions have taken place through the Making Home Affordable Program. Home owners who have taken part through the government’s Home Affordable Modification Program have saved on average about $547 monthly on their mortgage payments — nearly a 40 percent savings from their previous payment.

View the full Housing Scorecard at www.hud.gov/scorecard.

Source: U.S. Housing and Urban Development 

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The momentum in the housing market is losing some steam as more Americans say they are feeling more cautious about the economy and their personal finances, according to Fannie Mae’s November National Housing Survey of more than 1,000 Americans.

Nearly two-thirds of Americans surveyed say they believe the economy is on the wrong track. What’s more, the number of Americans who expect their personal finances to worsen in the next year has risen to 22 percent.

Expectations about rising home prices is also curtailing: Only 45 percent of Americans now say they think home prices will increase in the next 12 months. For those who do believe home prices will rise, they expect the increase to be 2.5 percent, down from 2.9 percent a few months ago. More Americans expect mortgage rates to rise in the next year, too.

“We continue to see caution as the defining feature of Americans’ attitudes toward the economy and their personal financial situation. In this environment, the housing recovery is likely to improve, but only at a gradual pace,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “Our November National Housing Survey results show a loss of momentum in expectations for home prices and personal finances. Also, the majority of consumers expecting higher mortgage rates implies a slowing of housing market momentum. As the economy continues to improve and household balance sheets for most Americans are slow to repair, we continue to see the transition to a full housing recovery as a slow process. Upcoming fiscal policy discussions and labor market developments may also lead to some bumps along the way.”

Source: Fannie Mae

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States in the West and in the South are expected to see the highest price gains in the next 12 months of about 4 to 8 percent, according to the REALTORS® Confidence Index Survey, a survey of about 3,000 REALTORS®. Tight inventory conditions persist in these areas, driving up home prices.

Nationally, REALTORS® expect prices to move up by about 4 percent in the next 12 months, according to the latest survey, based on data gathered in November.

The highest price growth in the next year is projected for California, Nevada, Utah, Arizona, Texas, Louisiana, Florida, Georgia, and South Carolina. Other states outside of the region that also are expected to see some of the larger price jumps include North Dakota, Minnesota, Michigan, and Massachusetts.

Source: “Expected Price Growth Strongest in West and South Markets,” National Association of REALTORS®’ Economists Outlook (Dec. 9, 2013)

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Though foreclosures have fallen nationwide, one housing sector has seen a big increase: ultra-high-end homes.

Foreclosure activity on homes valued at $5 million or more has soared 61 percent since October 2012, RealtyTrac reports. Meanwhile, the overall national foreclosure rate for all housing types has fallen 23 percent this year.

Still, the number of $5 million-and-up homes facing foreclosure is small — less than 200 — compared to the 1.2 million homes of all housing values that have received foreclosure notices this year.

“But each of these high-value properties represents a much bigger potential loss for the foreclosing lender compared to a median-priced property,” says Daren Blomquist, vice president of RealtyTrac.

There was a delay in high-end foreclosures compared to other housing types, possibly because the home owners had the financial means to hold out longer, RealtyTrac notes.

The top five markets for high-end foreclosure activity are Miami-Fort Lauderdale-Pompano Beach, Fla.; Los Angeles-Long Beach-Santa Ana, Calif.; Atlanta-Sandy Springs-Marietta, Ga.; Orlando-Kissimmee, Fla.; and New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.

An improving housing market will likely mean these ultra-high-end properties won’t sit unoccupied long.

“Any foreclosure properties in this type of ultra-luxury market usually get purchased very quickly, since there is one thing all super-rich buyers want: an outstanding deal on a real estate transaction. And in most cases, foreclosures of this magnitude come with several million more dollars of built-in value,” says Emmett Laffey, CEO of Laffey Fine Home International, which covers the New York area.

Source: “High-end Foreclosures up 61 Percent Year-to-Date in 2013,” RealtyTrac (Dec. 3, 2013) 

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Twenty-three states are within 10 percent of their 2006 home price peaks, CoreLogic reports in its latest housing data report reflecting October data.

Home prices have increased 12.5 percent year-over-year. However, prices had a more modest month-over-month gain of 0.2 percent from September to October. CoreLogic’s Home Price Index also reflects distressed sales.

“In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013,” says Anand Nallathambi, president and CEO of CoreLogic. “The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates.”

The following five states have seen the highest home price appreciation year-over-year:

  • Nevada: +25.9%
  • California: +22.4%
  • Georgia: +14.2%
  • Michigan: +14.1%
  • Arizona: +14%

The only state in the CoreLogic index that has seen prices fall is New Mexico, where home prices fell 0.5 percent year-over-year.

Soaring home prices are allowing more states to catch up to their home price peaks in 2006. Sixteen states are all within 5 percent or less of their peak home prices: Arkansas, Colorado, District of Columbia, Iowa, Louisiana, Nebraska, Montana, New York, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, Vermont, Wyoming, and Alaska.

“The slowdown in appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks,” says Mark Fleming, chief economist for CoreLogic.

Meanwhile, the following five states remain the furthest from their peak values as of October, according to CoreLogic:

  • Nevada: -40.7%
  • Florida: -37.4%
  • Arizona: -31.5%
  • Rhode Island: -29.3%
  • West Virginia: -28%

The National Association of REALTORS® recently reported that its existing-home sales index saw home prices tick up 12.8 percent in October year-over-year. A persistent tight inventory of homes for sale is holding back sales but pushing up home prices in most areas of the country, Lawrence Yun, NAR’s chief economist, said in the report.

–REALTOR® Magazine Daily News

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