Does Foreclosure Counseling Work?

Borrowers who underwent foreclosure counseling are more likely — nearly twice as likely — to receive a loan modification and stay current on their mortgage, according to a new study by the Urban Institute, which analyzed about 800,000 borrowers who participated in the National Foreclosure Mitigation Counseling program from January 2008 to December 2009.

Through the program, foreclosure counselors assist home owners on budgets and guide them in how they can avoid foreclosure.

Home owners who participated in the program were at least 67 percent more likely to stay current on their mortgage within nine months after receiving a loan modification, according to the study. Also, home owners who participated in the program had their mortgage payments, on average, reduced by $176 per month, the study found.

However, the counseling program has been on the chopping block in recent months, HousingWire reports. Earlier this year, Congress cut the funding for HUD’s housing counseling programs, but in November voted to restore $40 million to counselors.

Source: “Foreclosure Counseling Doubles the Chance of Mortgage Modification,” HousingWire (Dec. 19, 2011)

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The Growing Business of Green

Pike Research estimates the market for bringing energy efficient to commercial buildings will increase to $100 billion by 2017.

Companies doing retrofits — as well as property managers — are promoting the cost savings and other benefits of energy efficient buildings. President Obama is making a renewed pitch for his green buildings initiative, with an additional $4 billion pledged for energy retrofits.

The government has been a leader in making its buildings green, using its long-time horizon to make the energy investments pay for themselves. However, the private sector will need to see a return on investment in the two-year time frame, not the six to 20 years the government will wait.

Even though increased energy efficiency can pay dividends in lower energy costs, it has yet to prove its value in rents and resale, according to Eric Bloom of Pike Research. He adds that while there is plenty of anecdotal evidence about the energy efficiency and desirability of green building, “there still isn’t enough data to factor the added value of green into appraisal and lending processes.”

There is a push to establish the value of green building. The Department of Energy and the Appraisal Foundation want energy performance to be considered and is training appraisers how to do it.

Source: “Going Green Could Be a $100 Billion Business by 2017,” CNBC News (12/14/11)

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First-time Home Buyers Scared Off?

Home prices have fallen to 2002 levels and mortgage rates are at record lows — so why are the number of first-time home buyers decreasing instead of increasing?

First-time home buyers used to account for about half of all housing sales, but over the past year, they’ve made up only about a third of buyers, according to a recent New York Times article.

“The obstacles facing first-time buyers are big, and it’s changing the way they look at home ownership,” Dan McCue, research manager at Harvard University’s Joint Center for Housing Studies, told The New York Times.

Higher downpayment requirements, job insecurity, and tougher credit standards may all be holding back first-time home buyers — which tend to be dominated by young professionals. The median down payment for a single-family home in 2002 was 4 percent in nine major metro areas, but now stands at 22 percent, according to Zillow.com.

What’s more, while mortgage rates are hovering at record lows, fewer buyers are able to qualify. About one-third of households have credit scores that aren’t good enough to qualify for a mortgage. The median required credit score from FICO Inc. has increased from 720 in 2007 to 760 currently, according to The New York Times article.

Source: “Home Market Being Held Back by Wary First-Timers,” The New York Times (Nov. 30, 2011)

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Study: Women Get Worse Mortgage Rates Than Men

Women aren’t getting the best mortgage rate when getting a loan compared to men, but it’s not because of gender discrimination. It’s because women aren’t doing enough shopping when it comes to mortgage rates, a new study published in the Journal of Real Estate Finance and Economics finds.

Women tend to rely on recommendations from their friends when it comes to mortgage rates, while men are more likely to shop around and talk to several lenders in finding the best rate, the researchers note.

Researchers aimed to shed light on why a 2006 study found that women are 32 percent more likely to get a subprime mortgage than men.

Researchers suggest that “gender disparity in mortgage rates may be addressed by policies aimed at improving women’s financial literacy and search skills.”

Source: “When it Comes to Mortgages, Women Don’t Shop Enough,” AOL Real Estate (Nov. 18, 2011)

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Are the Holidays a Good Time to Sell?

Sixty percent of real estate professionals advise their sellers to list a home during the holidays because it’s a good time to sell, according to a new survey conducted by Realtor.com.

Why are the holidays such a good time to sell? Seventy-nine percent of the agents surveyed said that more serious buyers come out during the holidays, and 61 percent say less competition from other properties make it a great time to sell. Plus, 17 percent of agents say the cold weather is actually a benefit, making homes feel more cozy.

But online listing photos become even more crucial during the holiday season, according to the survey. Slightly more than half of agents say that the photos are more important because sellers tend to offer less open houses around the holidays, and so the online photos help buyers decide the properties to see and which ones to possibly bypass.

The biggest hurdles sellers face during the holidays, however, are keeping a home ready to show (clean and staged) as well as winter weather conditions and buyers’ vacation schedules, the Realtor.com survey found.

Source: “Survey Data Reveals Majority of Real Estate Professionals Recommend Clients List Their Homes During the Holidays,” Realtor.com (Dec. 2, 2011)

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Despite Improvements, Foreclosure Concerns Remain

Foreclosures continued to fall in November, dropping 3 percent from October and 14 percent year-over-year, according to the latest data from RealtyTrac.

Repossessions — the last stage of the foreclosure process — are down 45 percent from the peak reached in September 2010, in which 102,000 homes were repossessed in foreclosure compared to 56,124 in November 2011.

Following last fall’s robo-signing scandal, banks have been slowing the foreclosure process as they spend more time reviewing paperwork before taking action and doing more loan workouts, which has caused foreclosures to slow the last few months.

But a new wave of foreclosures may be looming in the new year, experts warn.

“Despite a seasonal slowdown similar to what we’ve seen in each of the past four years, November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometimes early next year,” James Saccacio, CEO of RealtyTrac, told CNNMoney.

Signaling possible trouble ahead in the November data, according to RealtyTrac, is the uptick in bank auctions. Scheduled auction sales soared 13 percent in November compared to October. “Many of the new defaults that started the foreclosure process over the past few months are now being scheduled for public foreclosure auction,” Saccacio said.

Yet, one positive signal: Initial default notices — the first notice banks send out to borrowers when they’ve missed a payment — dropped 8 percent in November from October, and is down 9 percent year-over-year.

Source: “Foreclosures Fall, But Outlook Isn’t Bright,” CNNMoney (Dec. 15, 2011)

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Fannie Mae Halts Foreclosures for the Holidays

Fannie Mae says it will suspend evictions for single-family foreclosures and two- to four-unit properties during the holiday season, from Dec. 19 through Jan. 2, 2012.

“The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” Terry Edwards, executive vice president of Credit Portfolio Management for Fannie Mae, said in a statement. “No family should have to give up their home during this holiday season.”

While the holiday moratorium is in place, legal and administrative proceedings for evictions may continue, but “families living in foreclosed properties will be permitted to remain in the home,” Fannie Mae announced in a statement.

Source: Fannie Mae

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10 States Hit Hardest by Foreclosures

For the 59th month in a row, Nevada continues to have the highest foreclosure rate in the country — despite a new law that took effect in October that changed the state’s foreclosure process and was expected to curtail foreclosures there.

Although foreclosures were down 43 percent year-over-year in Nevada, its foreclosure rate still remained higher than any other state.

The following are the top 10 states with the highest foreclosure rates in the country in November, according to RealtyTrac data.

Nevada: 1 in every 175 home received a foreclosure filing in November
California: 1 in every 211 homes
Arizona: 1 in every 256 homes
Utah: 1 in every 290 (This state saw a 74 percent increase in November from October in foreclosure activity.)
Georgia: 1 in every 330 homes
Michigan: 1 in every 330 homes
Florida: 1 in every 358 homes
Illinois: 1 in every 427 homes
Ohio: 1 in every 500 homes
South Carolina: 1 in every 517 (This is the first time South Carolina has made it into the top 10 for foreclosure activity since RealtyTrac began tracking in 2005.)

Source: RealtyTrac

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Home Owners to Lawmakers: Do More to Help Housing

The government isn’t doing enough to help home owners at risk of default, foreclosure, and underwater on their homes, a majority of Americans say in the Home Horizons 2012 study, a survey conducted by Yahoo! Real Estate of 1,500 current and aspiring home owners.

Fifty-one percent of home owners say the government needs to pass more legislation to help home owners who are at risk of losing their house. About two-thirds of Americans surveyed say the government needs to offer more assistance like low-cost loans to help home owners more.

Four out of five adults polled say the 2012 presidential election will have a small or large influence on the housing market, with 43 percent predicting it will have a large impact. However, one-third of those surveyed doubt either party — Republican or Democrat — will have either a positive or negative impact on the real estate market.

“A large-scale government policy that’s going to fix all of this — no one has seen such a thing,” Stan Humphries, chief economist at Zillow, told Yahoo! Real Estate. “Stabilization in home prices and then a slow upward movement in prices to work down negative equity — that’s a multiyear affair.”

Source: “Yahoo! Study: Home Owners Want Political Action,” Yahoo! Real Estate (Dec. 12, 2011)

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Banks Post Higher Profits off Each Loan

Banks are making more profits on each loan they originate — a 377 percent increase in just a six-month period, according to the Mortgage Bankers Association.

On average, mortgage banks made a profit of $1,263 for each loan they originated during the third quarter — that’s up from $575 per loan in the second quarter of 2011. In the first quarter, they made $346 per loan.

“Higher volume helped profitability as production costs were spread over a greater number of loans,” said Marina Walsh, MBA’s associate vice president of industry analysis. “Third quarter production expenses dropped on a per-loan basis as volume rose, although expenses remained high by historical standards when compared to other quarters with similar volume.”

Refinancings made up the biggest bulk of originations — by dollar volume it was 45 percent in the third quarter compared to 36 percent in the second quarter.

Source: “Mortgage Banks’ Profits on Originations Soar 377 Percent,” RISMedia (Dec. 14, 2011)

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