CNN Money reports – Buying a Home may Never get any Cheaper

Buying a home won’t get much cheaper

By Les Christie @CNNMoney May 3, 2012: 11:48 AM EST

Several housing experts are predicting that this year will be the last chance for homebuyers to cash in on the weak housing market.

NEW YORK (CNNMoney) — Buying a home may never get any cheaper than this. Several housing experts are predicting that this year will be the last chance for bargain hunters to cash in on the best deals of the weak housing market.

With home prices down 34% nationally since 2006 and mortgage rates at historic lows, homes have never been more affordable — but it won’t stay this way for much longer.

Stuart Hoffman, chief economist for PNC Financial Services (PNC,Fortune 500), said he expects home prices to flatten out by the third quarter and start climbing by next year.

A number of factors will help bolster the housing market, he said, including a decline in the number of foreclosures and continued job growth. In addition, homebuyers will have better access to mortgages as they get their finances in order and improve their credit scores.

Some economists, like Trulia’s Jed Kolko, expect home prices to pick up even more quickly. Trulia’s data shows that the national average for asking prices already increased 1.4% in the first quarter of 2012, compared with the last three months of 2011.

“This is a strong indicator that we will start seeing home price indexes, like the S&P/Case-Shiller, start to report home price increases this summer,” he said.

Prospective homebuyers who’ve been sitting on the fence shouldn’t worry if they aren’t quite ready to make the leap. Analysts are predicting that the initial price gains will be modest, at least, in most markets.

Hoffman, for example, is forecasting a 2% increase in 2013 compared with 2012. Meanwhile David Stiff, chief economist for Fiserv, predicts that prices will turn in the last quarter of 2012 and will rise 4.2% for the 12 months through September 2013.

Foreclosures start to fade. One major factor that will drive the trend is the cooling of the foreclosure crisis. Stan Humphries, chief economist for Zillow, said that the percentage of mortgage loans 90 days or more late, a good predictor of future foreclosures, is “falling fast.”

That percentage dropped 15% year-over-year to 3.1% through the end of 2011, according to the Mortgage Bankers Association. And the decline is accelerating: More than 70% of the decline came in the last three months of the year.

Before things slow down, however, buyers should brace themselves for a temporary spike in the number of foreclosures as banks start expediting the processing of hundreds of thousands foreclosures that were stuck in the system following the robo-signing scandal. That backlog should move more quickly now that new guidelines for processing foreclosures have been outlined in the $26 billion foreclosure settlement.

Many of the bank-owned properties currently coming out of the foreclosure pipeline are being snapped up by investors who are fixing them up and renting them out — often to those who were displaced by the foreclosure of their own home. That has helped to lift prices on foreclosed properties, according to Alex Villacorte, the director of analytics for Clear Capital, which specializes in housing market valuations.

“That could have a significant impact on the market overall in terms of providing a rising floor to home values,” he said.

In some markets hit hard by foreclosures, the turnaround in prices is already underway. Phoenix recorded an 8.4% jump in home prices during the three months ended April 30, compared with the three months ended January 31, according to Clear Capital.

“It’s crazy,” said Tanya Marchiol, founder of Team Investments, a Phoenix real estate investing firm. “Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000.”

Miami saw a 4.6% increase quarter-over-quarter through April, andTampa, Fla., was up 4.4%, according to Clear Capital.

Goodbye 3.8% mortgage. In addition to home prices, mortgages could also move higher.

Mortgage rates have been at or near historic lows for much of the past six months. The average interest rate for a 30-year, fixed-rate mortgage has not topped 4.5% since July 2011 and this week, it hit 3.84%, a new low.

But rates aren’t expected to remain at these record-low levels much longer. As the economy continues to recover, rates will move higher, said Doug Lebda, CEO of LendingTree, the online lending site. Although, he said, they will “stay very reasonable.”

The Mortgage Bankers Association is forecasting that the 30-year fixed will hit 4.5% by the end of the year.

Greater demand for loans will help fuel the increase, according to Lebda.

Even though mortgage rates have been cheap, borrowing for home purchases has been sluggish. The Mortgage Bankers Association estimates that homebuyers will take out mortgage loans totaling about $415 billion this year, an increase of less than 3% compared with 2011. Next year, however, it forecasts that amount will almost double to $706 billion.

As housing markets stabilize and prices stop falling, homebuyers will be even more confident about buying, said Humphries.

“People can now see the light at the end of the tunnel,” he said. “And that can be enough to get them off the fence.” To top of page


Banks settle Robo Signing Charges for $25 Billion

Landmark settlement announced against banks for robo signing foreclosures: $12 Billion for California mortgage principal reductions

After months of negotiations, 5 major banks settled charges of fraudulently signing foreclosure documents by agreeing to pay $25 Billion dollars out to homeowners and people who lost their homes to foreclosure over the next 3 years.     Further lawsuits and actions from investors and the federal government still loom against many lenders.

Under this agreement, $12 Billion is guaranteed to go to California.

Nationwide, $17 Billion is allocated towards homeowners who are currently behind on their payments in the form of loan modifications and principal reductions.

Another $3 Billion is allocated to homeowners who are underwater and have been unable to refinance their homes,

Sadly, only $1.5 Billion has been allocated to help the people who lost their homes to foreclosure between 2008 and 2011.     $2,000 is expected to be paid out to some 750,000 borrowers.    In my opinion this is a pittance and poorly addresses the point of the charges made against the banks.   The banks admitted there were situations where uninformed people signed hundreds of thousands of false documents to accomplish foreclosure when the original loan documents had been lost.

Click here to learn how to begin getting your benefits.    Or, contact MC.

Read the original article at Reuters:

Although there are financial incentives for them to accomplish more during the 1st year, the actual terms of the settlement allow the banks 3 years to pay out the money.


It’s a great time to refinance! 30 Year Mortgage Rates below 4%

For the 6th consecutive week, average rates for the 30 year mortgage were at all time historical lows of below 4%, according to an article published on RIS Media based on Freddie Mac Research

So it’s worth repeating a segment of a blog I published last year, under the headline of

New laws affecting CA homeowners…

…because enough time has passed so the regulators and the bankers have gotten their game plan together to help underwater homeowners refinance their homes.

I’ve discovered many people aren’t aware that, if their home mortgage was a Fannie Mae or Freddie Mac, they may be able to refinance into today’s ultra low interest rates, even if their home is underwater!

HARP – the federal government’s “Home Affordable Refinance Plan” – was criticized for not helping enough people, so they’ve improved it.     There are some conditions—for example, you have to be current on your mortgage payments, and the mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.       Check the links below to see if your loan is eligible:

or call 800-7FANNIE (8 am to 8 pm ET)

or call 800-FREDDIE (8 am to 8 pm ET)

Or, you can always contact me for help.

Are you aware that the state of Californiahas funds for homeowners at risk of losing their homes?    The federal government gave the state $2 Billion for the “Keep your Home California” program to help people make their payments, but only $150 million has been granted.   Here’s an article about it, and the phone number: 888-954-KEEP (5337).

Finally, from the Ca Association of Realtors, come these “Fast Facts:” – Check out the Pending Home Sales!

Fast Facts
Calif. median home price: December 2011: $285,920 (Source: C.A.R.)
Calif. highest median home price by region/county December  2011: Marin: $693,880 (Source: C.A.R.)
Calif. lowest median home price by region/county December 2011: Madera: $106,000 (Source: C.A.R.)

Calif. Pending Home Sales IndexNovember 2011: 109.8, an increase of 11 percent compared with the prior year.

Calif. Traditional Housing Affordability Index: Third quarter 2011: 52 percent (Source: C.A.R.)

Mortgage rates: Week ending 1/12/2012 30-yr. fixed: 3.89% fees/points: 0.7% 15-yr. fixed: 3.16 fees/points: 0.8% 1-yr. adjustable: 2.76% Fees/points: 0.6% (Source: Freddie Mac)

Building A Bridge to Your Future

M.C. Dwyer, MBA, REALTOR, Century 21 Showcase REALTORS

(831) 419-9759 copyright 2012