Some of the pertinent facts about the market that Dave brought out in his presentation were:

• “90% of all residential loans originated in the first quarter of 2009 were sold to either Freddy Mac or Fannie Mae
• 80% of insured loans in 2009 were to first-time Buyers (So it looks like the tax credits to these Buyers did work)
• FHA did a “terrible job” of monitoring lenders. Within the past 6 months, FHA has suspended the licenses of 359 lenders …That’s more than all of the suspensions since the year 2000.
• The cost of FHA insurance to Borrowers has been increased by 35%. This represents an increase in closing costs and monthly charges. The increase was to make up for the costs of foreclosures and short sales and to bring FHA’s charges into proper balance as a federal agency.
• When Seller concessions of up-to 6% were allowed, over 50% of the loans became delinquent. For that reason, FHA reduced the maximum allowable concessions to 3%.
• As of January 1, 2010, every loan officer must be licensed.”

The housing market is a HUGE market–and, as they say, it takes time to turn a big ship.  Signs are indicating that real estate markets continue to be “local markets” and the nation is still showing “soft” markets.

Because of these changes and trends, it is more imperative now that you seek wise counsel for real estate needs from a qualified & educated real estate agent.  We can be that agent for you.

December 2nd Congressional Hearing

HUD Secretary Donovan and FHA Commissioner testified that they expect FHA to annouce major changes to ensure FHA’s long-term financial soundness.  Some examples are as follows:

1.  Increas the down payment required from 3.5% to 5%

2.  Increase upfront premium from 1.75%  to up to 3%

3.  Eliminate the ability to include the upfront premium into the loan amount

4.  Increase the monthly mortgage insurance premium (MIP) to .55%

5.  Reduce the amount of seller concessions to the buyer from up to 6% to up to 3%

6.  Increase the minimum FICO score of the buyer

7.  Loan to Value (LTV) ratios possibly determined by buyer’s FICO score

8.  Increase accountability of FHA lenders for fraud

One important thing to note:  none of these proposed changes require Congressional approval.  These only require administrative approval and can quickly implemented.

That being said, these changes, and others that might be on the table, could make it more difficult and expensive for borrowers to obtain an FHA loan.  In essence, the number of eligible buyers may, in fact, be greatly decreased.

HUD TAKES ACTION TO SPEED RESALE OF FORECLOSED PROPERTIES TO NEW OWNERS
Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON - In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.

In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

• All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
• In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
• The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Nevada Foreclosure Activity Up in Third Quarter
By RealtyTrac Staff   

Total foreclosure filings up 10 percent from Q2, and up 59 percent from Q3 2008.

Nevada reported 47,925 properties with foreclosure filings in the third quarter of 2009, an increase of 10 percent from the previous quarter and 59 percent above the level reported in the third quarter of 2008, according to the latest RealtyTrac^® U.S. Foreclosure Market Report.

One in every 23 Nevada housing units received a foreclosure filing in the third quarter, the highest state foreclosure rate in the nation.

Foreclosure activity in the Silver State was up 5 percent in September from the previous month to 18,766 properties with foreclosure filings, and remained elevated on a yearly basis, up 44 percent from September 2008. The state’s foreclosure rate was highest in the nation for the month — with one in every 59 housing units receiving a foreclosure filing — 6.3 times the national average.

“Nevada foreclosures continued to climb during the third quarter,” said James J. Saccacio, chief executive officer of RealtyTrac. “The largest increase was in bank-owned properties, which jumped nearly 30 percent during the quarter. Nevada’s 13.3 percent unemployment rate is at a historic high and contributing to the rising foreclosure activity. Rising joblessness is making it harder for borrowers to meet mortgage payments.”

As it has for almost two years now, California continues to lead the nation in total foreclosure activity by a large margin on both a monthly and quarterly basis. For the third quarter, it reported 250,054 properties with foreclosure filings. Florida posted the second highest activity level — 156,924 properties with foreclosure filings. Arizona reported 50,342 properties with foreclosure filings, third highest level in the nation. Nevada came in fourth highest, reporting 47,925 properties with foreclosure filings during the quarter, while Illinois tallied the fifth highest total, documenting 37,270 properties with foreclosure filings. The top five states alone represented 58 percent of all foreclosure filings in the nation during the quarter.

For September, the nation’s top 5 states for total foreclosure filings were California (86,337), Florida (55,036), Nevada (18,766), Michigan (16,767), and Georgia (14,972). Activity in the top five states accounted for 58 percent of the nation’s foreclosure total in September.

Clark County posts state’s top foreclosure rate in third quarter

Clark County posted the highest county foreclosure rate in the state for the third quarter, with one in every 20 housing units receiving a foreclosure filing — seven times the national average. Lyon County was a close second, with one in every 20 housing units receiving a foreclosure filing during the quarter — 6.9 times the national average. Nye County posted the third highest foreclosure rate, where one in every 22 housing units received a foreclosure filing — 6.2 times the national average.

Five counties accounted for 99 percent of foreclosure activity for third quarter

Clark County led the way, tallying 40,408 properties with foreclosure filings for the quarter. Washoe County came in second highest, reporting 4,799 properties with foreclosure filings. Lyon County came in third, tallying 906 properties with foreclosure filings. Fourth highest for the quarter was Nye County, reporting 751 properties with foreclosure filings. Douglas County documented 386 properties with foreclosure filings, the state’s fifth highest foreclosure total in the quarter.

State contributes 5 percent to nation’s foreclosure activity for quarter and month

Nevada accounted for 5 percent of the 937,840 properties with foreclosure filings reported nationwide for the third quarter and 5 percent of the 343,638 properties with foreclosure filings reported for September. Total U.S. activity declined 5.4 percent between the second and third quarter of the year, but was up 23 percent from the third quarter of 2008. One in every 136 U.S. housing units received a foreclosure filing during the quarter, the highest quarterly foreclosure rate since RealtyTrac began issuing its report in 2005.

Report methodology

The RealtyTrac Monthly U.S. Foreclosure Market Report provides a count of the total number of properties with at least one foreclosure filing reported during the month — broken out by type of filing at the county, state and national level. RealtyTrac’s report incorporates documents filed in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank). If more than one foreclosure document is filed against a property during the month — which is extremely rare — only the most recent filing is counted in the report. The report also checks if the same type of document was filed against a property in a previous month. If so, and if that previous filing occurred within the estimated foreclosure timeframe for the state the property is in, the report does not count the property in the current month.

Nevada Top Foreclosure Rates by County – Q3 2009

Nevada Top Foreclosure Totals by County – Q3 2009

Nevada Top Foreclosure Rates by County – Sept 2009

Nevada Top Foreclosure Totals by County – Sept 2009

As reported in the Biz Times Daily:

Thursday, November 12, 2009

Real estate experts say we’re in a ‘U-shaped’ recovery

By Rick Sharga

If you believe the hype, it appears that the next phase of the housing market recovery is going to rely heavily on short sales to help remove distressed properties from the home sales pipeline. 

A “short sale” is a sale where the bank accepts as full value a price that’s less than what’s owed on the property. The debt is forgiven (although not always without some tax consequences), a foreclosure is avoided, a buyer gets a good deal on a property, the bank saves thousands of dollars in legal fees and the real estate agent makes a commission. Elegant. Practical. Simple. But as we’ll see later, not really quite so simple. 

Short sales were never intended to be a mass market solution. Rather, they were relatively rare occurrences that took place when an unfortunate homeowner had a financial catastrophe — a job loss, a divorce, a medical problem — at precisely the same time his or her home lost significant value. When that happened, a loss mitigation manager at a bank would research the market, review the homeowner’s financial documents, carefully consider whether the borrower and loan in question met the criteria to justify a short sale and act accordingly. 

This approach worked well when there was one request a week or a few a month. But with over 1.1 million homes in various stages of pre-foreclosure in the RealtyTrac database, the workload for these loss mitigation managers has exploded from several a month to hundreds a week, with no drop-off in the amount of paperwork or research needed. So there are unavoidable delays in simply processing the volume of paperwork. 

But it gets worse. Each lending institution has slightly different versions of short sale forms. Property valuations, even — perhaps especially — appraisals, are in a state of flux, so loss mitigation managers are at a loss to know whether a short sale offer is reasonable or just plain silly. And there are some accounting issues: in many cases, lenders may opt to decline a good short sale offer today so that they can defer the loss (even though it may be a much greater loss) to a subsequent quarter — or even later.

And there’s more. A second loan on a property makes it much more than twice as difficult to execute the sale. The second loan either needs to be negotiated away completely, or satisfied with some nominal payment. In other cases, the holder of the primary mortgage may find it better financially to foreclose, wipe out the second lien, and simply use that amount as a discount to sell the property at a profit. Similarly, if there’s mortgage insurance on the note, the investor may decide it’s better to foreclose, collect the insurance, and let the insurer worry about getting value for the house.  

 So why all the hype? Well, with the REO pipeline clogged and choking, and loan modification programs failing to make a dent in foreclosure numbers, short sales represent an opportunity to feed the demand for discounted properties while reducing the number of foreclosures. What can you do to help make this happen? What does the government have in mind? We’ll cover all that and more in next month’s column. 

New Foreclosure Hot Spots Emerge in Q3 2009

By Daren Blomquist

Cities in California, Florida, Nevada and Arizona accounted for all but one of the top 20 metro foreclosure rates in the third quarter among metro areas with a population of 200,000 or more. But one city in the Top 20 was a surprise. Boise City-Nampa, Idaho, posted the nation’s 19th highest metro foreclosure rate, with one in every 57 housing units receiving a foreclosure filing during the quarter — more than twice the national average. Foreclosure activity in Boise increased nearly 142 percent from the third quarter of 2008.

Five of the Top 10 metro areas reported decreasing foreclosure activity from the third quarter of 2008, while many other metro areas with Top 50 foreclosure rates reported sharp increases in foreclosure activity.

“Rising unemployment and a new variety of mortgage resets continued to gradually shift the nation’s foreclosure epicenters in the third quarter away from the hot spots of the last two years and toward some metro areas that had avoided the brunt of the first foreclosure wave,” said James J. Saccacio, chief executive officer of RealtyTrac. “While toxic subprime mortgages drove much of that first wave of foreclosures, high unemployment and exotic Alt-A Option ARMs are spreading the foreclosure flood to more metro areas in 2009.”

New foreclosure hot spots flare up
Among the top 50 metro foreclosure rates, the three biggest year-over-year increases were in Boise City-Nampa, Idaho, and Provo-Orem and Salt Lake City in Utah. In several states the largest increases were posted in cities not previously a focal point for foreclosure activity. The Chico metro area posted the biggest year-over-year increase in California, with foreclosure activity up 98 percent from the third quarter of 2008. The medium-sized metro about 100 miles north of Sacramento had a 12.8 percent unemployment rate in August, above the state and national averages.
A similar trend was seen in cities like Reno-Sparks, Nev., with an 80 percent year-over-year increase in foreclosure activity, Prescott, Ariz., with a 77 percent increase, Jacksonville, Fla., with a 64 percent increase, Rockford, Ill., with a 64 percent increase, and Lansing-East Lansing, Mich., with a 41 percent increase. 

Top metro foreclosure rates
Las Vegas posted the nation’s highest metro foreclosure rate, with 5.13 percent (one in 20) of its housing units receiving a foreclosure filing during the quarter — nearly seven times the national average. A total of 40,408 Las Vegas properties received a foreclosure filing during the quarter, an increase of nearly 9 percent from the previous quarter and an increase of nearly 54 percent from the third quarter of 2008.

Despite a 13 percent decrease in foreclosure activity from the previous quarter, Merced, Calif., posted the nation’s second highest foreclosure rate, with 3.72 percent (one in 27) of its housing units receiving a foreclosure filing during the third quarter. A total of 3,092 Merced properties received a foreclosure filing during the quarter, down 11 percent from the third quarter of 2008.

Foreclosure activity in the Cape Coral-Fort Myers metro area in Florida also decreased from the previous quarter and from the third quarter of 2008, but the metro area still registered the nation’s third highest metro foreclosure rate — with 3.67 percent (one in 27) of its housing units receiving a foreclosure filing during the quarter. A total of 13,206 Cape Coral-Fort Myers properties received a foreclosure filing during the quarter, a decrease of 5 percent from the previous quarter and  down 2 percent from the third quarter of 2008.

Other metro areas in the top 10 were the California cities of Stockton (3.53 percent), Modesto (3.39 percent), Riverside-San Bernardino (3.37 percent), Bakersfield (2.88 percent), and Vallejo-Fairfield (2.85 percent), along with the Reno-Sparks metro area in Nevada (2.67 percent) and the Florida metro areas of Port St. Lucie (2.63 percent) and Orlando-Kissimmee (2.57 percent).

View all metro data.