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A Reprieve for Unemployed Borrowers

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A Reprieve for Unemployed Borrowers

The New York Times

Fannie Mae and Freddie Mac recently extended their foreclosure forbearance programs to give short-term aid to unemployed homeowners, but housing counselors warn that these borrowers will need to look at longer-term solutions.
Making sense of the story

  • In a forbearance program, a lender agrees not to foreclose on a property and gives the borrower several months’ grace from or reduction in monthly mortgage payments.  The programs work best for temporary setbacks, like job loss, health problems, or natural disasters.
  • There are drawbacks to the forbearances though. The most-significant drawback is a larger total debt from the smaller payments.  The unpaid balance continues to increase during this time.
  • The new temporary mortgage payment is often set to 31 percent of the household income; in some cases lenders agree to accept no payments.  Fannie Mae’s extended unemployment program, first offered in the fall of 2010, limits any nonpayment or other forbearance plans to one year, with the second six months requiring approval by both Fannie Mae and the lender.
  • However, even with the program in place, the lender could still report a mortgage as delinquent, which could adversely affect the borrower’s credit score.
  • Because some agreements add onerous term and conditions, homeowners should also consult with a housing counselor certified by the Dept. of Housing and Urban Development.
  • In a forbearance program, a lender agrees not to foreclose on a property and gives a borrower several months’ grace from or reduction in monthly mortgage payments. The programs work best for temporary setbacks, like job loss, health problems or natural disasters.
  • Along with the reprieve come drawbacks — most significantly a larger total debt from the smaller payments. “Your unpaid balance keeps getting higher and higher and higher,” said Jennifer Murphy, the director of lender-servicer relations for the nonprofit Center for New York City Neighborhoods.
  • The new temporary mortgage payment is often set to 31 percent of your household income; in some cases lenders agree to accept no payments. Fannie Mae’s extended unemployment program, first offered in the fall of 2010, limits any nonpayment or other forbearance plans to one year, with the second six months requiring its approval as well as the lender’s.

But even with the program in place, your lender could still report a mortgage as delinquent, which would adversely affect your credit, so ask about its policy, said Martha Cedeno-Ross, a foreclosure assistance counselor with Neighborhood Housing Services of Waterbury, Conn. Because some agreements may add onerous terms and conditions, homeowners should also consult with a real estate lawyer, or a housing counselor certified by the Department of Housing and Urban Some 26,801 homeowners completed Fannie Mae loan forbearance and repayment plans in the first nine months of 2011, up 13 percent from the same period in 2010. By comparison, the total for all of 2008 was 7,892, according to Fannie Mae’s financial filings with the Securities and Exchange Commission.

To qualify, borrowers must be unemployed, which means not working at all, though a co-borrower could still be employed, said Brad German, a Freddie Mac spokesman.

To get started, gather up your financial information and consider writing a “hardship letter,” an overview that clearly states what happened and when, Ms. Cedeno-Ross said. The letter could also serve as a starting point for a loan modification and other programs. Give details about your previous salary, severance payments and unemployment benefits; if you have had job interviews, include those details, she said.

You will need to fill out the four-page uniform borrower assistance form used by both Freddie and Fannie, Mr. German said. It is also good for government mortgage assistance programs like Making Home Affordable — http://www.makinghomeaffordable.gov — and Knowyouroptions.com.

Be sure to plan an “end strategy” well before the forbearance agreement runs out.

“The big question every homeowner should find out: Where will this forbearance lead me?” said Charles Das, a housing counselor for Brooklyn Housing and Family Services. Homeowners usually get a repayment plan or a loan modification, he said, but he has seen some denied the modification because of low income.

Ms. Murphy says homeowners should use the 6 to 12 months of reduced payments to work with a financial or housing counselor, and if possible, save money and pay off secured debts.

Sometimes borrowers may determine after counseling that they cannot afford the home, said John Walsh, the president of Total Mortgage Services of Milford, Conn. They may then need to sell the home or arrange for “a graceful exit” — for instance, agreeing to give up the deed in lieu of foreclosure, or pursuing a short sale, in which the lender agrees to accept less than the mortgage balance.

To get started, gather up your financial information and consider writing a “hardship letter,” an overview that clearly states what happened and when, Ms. Cedeno-Ross said. The letter could also serve as a starting point for a loan modification and other programs. Give details about your previous salary, severance payments and unemployment benefits; if you have had job interviews, include those details, she said.

You will need to fill out the four-page uniform borrower assistance form used by both Freddie and Fannie, Mr. German said. It is also good for government mortgage assistance programs like Making Home Affordable — http://www.makinghomeaffordable.gov — andKnowyouroptions.com.

Be sure to plan an “end strategy” well before the forbearance agreement runs out.

“The big question every homeowner should find out: Where will this forbearance lead me?” said Charles Das, a housing counselor for Brooklyn Housing and Family Services. Homeowners usually get a repayment plan or a loan modification, he said, but he has seen some denied the modification because of low income.

Ms. Murphy says homeowners should use the 6 to 12 months of reduced payments to work with a financial or housing counselor, and if possible, save money and pay off secured debts.

Sometimes borrowers may determine after counseling that they cannot afford the home, said John Walsh, the president of Total Mortgage Services of Milford, Conn. They may then need to sell the home or arrange for “a graceful exit” — for instance, agreeing to give up the deed in lieu of foreclosure, or pursuing a short sale, in which the lender agrees to accept less than the mortgage balance.

By VICKIE ELMER, The New York Times
Published: Monday, January 23, 2012

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More mortgage relief from White House, Congressional OK doubtful

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More mortgage relief from the White House — but congressional OK doubtful

President Barack Obama on Wednesday announced a sweeping plan to help underwater homeowners refinance into lower-interest loans, but funding for the proposal must be approved by a combative Congress, lowering the possibility that it will help anyone soon.

The refinancing program would be a major source of relief for the many Bay Area homeowners whose loans are for amounts higher than the value of the home but are not held by two government-sponsored entities — Fannie Mae and Freddie Mac.

Operated by the Federal Housing Administration, the plan would allow underwater homeowners to refinance into cheaper federally insured loans up to $729,750 — the FHA’s conforming loan limit in the Bay Area. Borrowers with good credit who are current on their loan payments are eligible.

Since a highly partisan Congress must approve $5 billion to $10 billion in funding, housing experts were skeptical about it passing this year, but they praised its objectives.

“We’re supporting it because it will help to stabilize an already difficult housing market,” said LeFrancis Arnold, president of the California Association of Realtors.

“It is a big deal for homeowners here who can’t qualify under normal criteria,” said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley. “A lot of people would take advantage of this if it were up and running.”

The measure also streamlines the process of refinancing an underwater mortgage, eliminating the need for an appraisal or submitting a new tax return.

Obama announced the plan in a speech in Fairfax, Va., saying it would save an average $3,000 a year per borrower. “No more red tape,” Obama said. “No more runaround from the banks. And a small fee on the largest financial institutions will make sure that it doesn’t add to the deficit.”

The plan will help “millions of responsible homeowners,” Obama continued. “If you’re ineligible for refinancing just because you’re underwater on your mortgage, this plan changes that. You’ll be able to refinance at a lower rate, saving hundreds of dollars a month you can put back in your pocket.”

To qualify, borrowers must be current on their mortgage, have a minimum credit score of 580, and they must be refinancing a loan on a single-family, owner-occupied principal residence. Lenders only need to confirm that the borrower is employed. Loans that are more than 140 percent of the home value probably would not qualify until banks wrote down part of the balance.

Under the administration’s Home Affordable Refinance Program, more than 900,000 underwater homeowners whose loans are held by Fannie Mae or Freddie Mac already have refinanced their mortgages. That is fewer than the administration hoped, and a revision to the program was announced recently that removed limits on the size of the loan relative to the value of the house.

“There are so many people that could be helped” by the new plan, said Cathy Warshawsky, a San Jose mortgage broker and officer in the California Association of Mortgage Professionals. “They are people who are making lots and lots of money, who purchased homes that are now upside-down. They are making enough money to be able to pay their mortgages, but nobody will refinance them. If we drop their mortgage payment, they are going to go out there and spend money, buy cars and washing machines.”

Mortgage market and housing analysts were doubtful that the plan will become a reality this year.

“The goal of the program is good,” said Kevin Stein of the California Reinvestment Coalition who is also concerned about Congress. “Whether they can reach the goal is another question.”

Dustin Hobbs of the California Mortgage Bankers Association called the plan “a positive sign,” but added that “the proposal is a long way from being a reality, so at this point it’s tough to say what the end result would be.”

The proposal to pay for the program with a tax on large banks will likely be dead on arrival at a fiercely partisan Congress in an election year, noted Ed Mills, a financial policy analyst with FBR Capital Markets in Washington, D.C.

“It sounds great, but in an election year, unfortunately, it has little to no chance of ever coming into reality,” Mills said. “This is likely to be another mortgage program that comes out with great fanfare, overpromises and underdelivers.”

Underscoring that prediction, a leading House Republican released a statement blasting the plan.

Rep. Scott Garrett, R-N.J., head of the House finance subcommittee that oversees Fannie Mae and Freddie Mac, called the plan the “latest salvo of the federal government’s unprecedented expansion into our nation’s housing market.”

The White House also announced several other measures to shore up the housing market, several of which were announced by Obama in his State of the Union address. The measures include a “homeowner bill of rights” to protect borrowers from hidden fees and penalties and provide an appeal process for families fighting “inappropriate” foreclosure; a pilot program to transition foreclosures into rental housing and a program to rehabilitate neighborhoods hit by foreclosures.

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Mortgage Deal Could Bring Billions in Relief

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Mortgage Deal Could Bring Billions in Relief

WASHINGTON (CNNMoney) — In the largest deal to date aimed at addressing the housing meltdown, federal and state officials on Thursday, February 8, 2012  announced a $26 billion foreclosure settlement with five of the largest home lenders.

The deal settles potential state charges about allegations of improper foreclosures based on robosigning, seizures made without proper paperwork.

The settlement includes the Justice Department and the U.S. Department of Housing and Urban Development, as well as 49 state attorneys general — all but Oklahoma.

“We are using this opportunity to fix a broken system,” said U.S. Attorney General Eric Holder at the news conference announcing the settlement.

The settlement sets up a federal monitor to oversee the process and try to prevent roadblocks and red tape that tripped many homeowners seeking help in earlier programs designed to address the housing crisis.

President Obama said the settlement will “begin to turn the page on an era of recklessness that has left so much damage in its wake.”

“No action, no matter how meaningful, is going to by itself entirely heal the housing market,” he said in separate remarks. “But this settlement is a start.”

Most of the relief will go to those who owe far more than their homes are worth, known as being underwater on the loans. That relief will come over the course of the next three years, with the banks having incentives to provide most of the relief in the next 12 months.

“This settlement is about homeowners, homeowners in distress,” said Iowa Attorney General Tom Miller at the news conference with state and federal officials.

Most of the relief will go to those who owe far more than their homes are worth, known as being underwater on the loans. That relief will come over the course of the next three years, with the banks having incentives to provide most of the relief in the next 12 months.

“This settlement is about homeowners, homeowners in distress,” said Iowa Attorney General Tom Miller at the news conference with state and federal officials.

What the settlement means to you

Principal reduction: At least $17 billion will go to reducing the principal owed by homeowners who are both underwater and behind on their mortgages.

The agreement calls for principal reduction for as many as 1 million people. But it’s unlikely the money will go that far, because many people need more than the $17,000 average reduction that would result if the money is split among 1 million homeowners.

At the same time, total principal reduction could go higher — to as much as $34 billion — since the agreement requires deeper principal reductions for the most troubled loans.

Refinancing: Officials say up to 750,000 other underwater homeowners who are current on their mortgages will be able to refinance their current loans at lower rates. They will not receive a reduction in principal, but with mortgage rates now near record lows, they could receive substantial savings on their monthly payments.

The settlement sets aside $3 billion to account for the reduced interest payments the banks will receive after the refinancing.

Robosigning payments: About $1.5 billion of the settlement will go to homeowners who had their homes foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. They will receive up to $2,000 each.

Accepting that payment does not preclude homeowners who lost their home in an improper foreclosure from suing the bank to recover damages, Donovan said.

Federal officials say negotiations are underway to expand the settlement to nine other major servicers, which would raise the overall value of the settlement to $30 billion.

Related settlements: The deal spurred pacts between the authorities and banks in similar cases.

Oklahoma Attorney General Scott Pruitt announced a separate $18.6 million settlement that addressed homeowners whose homes were foreclosed through improper means, but did not provide help to those whose mortgages were underwater. He said he believes the broader agreement “overreached” the authority of both federal and state governments.

“We had concerns that what started as an effort to correct specific practices harmful to consumers, morphed into an attempt by President Obama to … fundamentally restructure the mortgage industry in the United States,” Pruitt said.

The Federal Reserve said it had reached an agreement with the five banks to pay $766.5 million in sanctions related to their servicing practices.

And Loretta Lynch, the U.S. Attorney in Brooklyn, N.Y., announced a $1 billion settlement with Bank of America to resolve claims of underwriting and mortgage origination fraud by B of A and mortgage lender Countrywide Financial, which B of A bought in 2008.

The bigger foreclosure problem: The $26 billion deal announced Thursday is the second biggest settlement ever involving states. It trails only the $206 billion pact in 1998 with the tobacco industry.

And it dwarfs any settlements that major Wall Street firms have reached to resolve other allegations of misdeeds related to the financial markets meltdown and the Great Recession.

Still it only will help a faction of those homeowners who are struggling with mortgages. The relief would not be available to those homeowners whose mortgages have been sold to the government-sponsored mortgage guarantors Fannie Mae and Freddie Mac.

There are 1.5 million homeowners who are 90 days or more delinquent on their mortgages but not yet in foreclosure, according to the most recent estimate from the Mortgage Bankers Association. An additional 1.9 million are in the foreclosure process. And Core Logic estimates that 11 million homeowners are underwater on their mortgages.

Obama proposes new home refinancing plan

The settlement does not preclude criminal prosecutions from being pursued. It also doesn’t stop investigations into other allegations of misdoings, such as the process of bundling loans into mortgage-backed securities and selling them to investors.

“It wasn’t the servicing practices that created the bubble nor caused the collapse,” said Donovan. “It was the origination and the securitization of these horrendous products. We will be aggressive about going after those claims.”

The deal is supposed to protect consumers when it comes to robosigning, and ensure that mortgage servicers agree to communicate better, avoid delays and give homeowners who are late on mortgage payments a fairer shake.

New York’s participation had been shaky this week, because some of the banks involved in the multi-state deal had also been sued by Attorney General Eric Schneiderman last week. Those banks — Bank of America, Wells Fargo and JPMorgan Chase — had also asked for a legal pass from Schneiderman’s lawsuit, which accuses them of deceptive foreclosure practices for relying on the Mortgage Electronic Registration System.

The big question throughout the negotiations was how much money would be available to help homeowners, which depended on how many states agreed to the deal. California’s participation raises the total settlement value by several billion dollars.

At least one consumer advocacy group, the Center for Responsible Lending, has said the deal — while “no silver bullet” — leaves room to hold banks accountable in other mortgage probes, said Kathleen Day, a spokeswoman for the nonprofit.

But other left-leaning groups, including Move On and the New Bottom Line, are continuing to urge states to hold out for a big criminal investigation and a $300 billion settlement award.

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New Residential Construction in December 2011

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For information about distinguished Southern California luxury real estate in Los Angeles County, as well as coastal Orange County homes and San Diego homes, call Bob Cumming of Keystone Group Properties at 310-496-8122. Keystone Group Properties serves discriminating buyers and sellers of California exclusive real estate in Newport Beach, Laguna Beach, and Marina Del Rey homes; Manhattan Beach, Hermosa Beach, and Pacific Palisades homes; Mission Viejo, Redondo Beach, Santa Monica, Malibu, along with exclusive Los Angeles homes in Beverly Hills and Beverly Glen California.

U.S. Census Bureau News

Joint Release
U.S. Department of Housing and Urban Development

NEW RESIDENTIAL CONSTRUCTION IN DECEMBER 2011

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for December 2011:

BUILDING PERMITS

Privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 679,000. This is 0.1 percent (±1.2%)* below the revised November rate of 680,000, but is 7.8 percent (±2.2%) above the December 2010 estimate of 630,000.

Single-family authorizations in December were at a rate of 444,000; this is 1.8 percent (±1.2%) above the revised November figure of 436,000. Authorizations of units in buildings with five units or more were at a rate of 209,000 in December.

An estimated 611,900 housing units were authorized by building permits in 2011. This is 1.2 percent (±1.3%)* above the 2010 figure of 604,600.

HOUSING STARTS

Privately-owned housing starts in December were at a seasonally adjusted annual rate of 657,000. This is 4.1 percent (±11.6%)* below the revised November estimate of 685,000, but is 24.9 percent (±18.3%) above the December 2010 rate of 526,000.

Single-family housing starts in December were at a rate of 470,000; this is 4.4 percent (±11.3%)* above the revised November figure of
450,000. The December rate for units in buildings with five units or more was 164,000.

An estimated 606,900 housing units were started in 2011. This is 3.4 percent (±2.4%) above the 2010 figure of 586,900.

HOUSING COMPLETIONS

Privately-owned housing completions in December were at a seasonally adjusted annual rate of 605,000. This is 9.2 percent (±15.1%)  above the revised November estimate of 554,000 and is 7.1 percent (±10.9%)* above the December 2010 rate of 565,000.

Single-family housing completions in December were at a rate of 448,000; this is 0.9 percent (±11.7%)* below the revised November rate of 452,000. The December rate for units in buildings with five units or more was 147,000.

An estimated 583,900 housing units were completed in 2011. This is 10.4 percent (±2.8%) below the 2010 figure of 651,700.

U.S. Department of Commerce Washington, D.C. 20233

  • Privately-owned housing starts in December were at a seasonally adjusted annual rate of 657,000. This is 4.1 percent (±11.6%)* below the revised November estimate of 685,000, but is 24.9 percent (±18.3%) above the December 2010 rate of 526,000.
  • Single-family housing starts in December were at a rate of 470,000; this is 4.4 percent (±11.3%)* above the revised November figure
  • The December rate for units in buildings with five units or more was 164,000.
  • An estimated 606,900 housing units were started in 2011. This is 3.4 percent (±2.4%) above the 2010 figure of 586,900.

HOUSING COMPLETIONS

  • Privately-owned housing completions in December were at a seasonally adjusted annual rate of 605,000. This is 9.2 percent (±15.1%)*above the revised November estimate of 554,000 and is 7.1 percent (±10.9%)* above the December 2010 rate of 565,000.
  • Single-family housing completions in December were at a rate of 448,000; this is 0.9 percent (±11.7%)* below the revised November rate of 452,000. The December rate for units in buildings with five units or more was 147,000.
  • An estimated 583,900 housing units were completed in 2011. This is 10.4 percent (±2.8%) below the 2010 figure of 651,700.

New Residential Construction data for January 2012 will be released on Thursday, February 16, 2012, at 8:30 A.M. EST.
://www.census.gov/new resconst

EXPLANATORY NOTES

In interpreting changes in the statistics in this release, note that month-to-month changes in seasonally adjusted statistics often show movements which may be irregular. It may take 2 months to establish an underlying trend for building permit authorizations, 4 months for total starts, and 5 months for total completions.

The statistics in this release are estimated from sample surveys and are subject to sampling variability as well as non-sampling error including bias and variance from response, non-reporting, and under coverage. Estimated relative standard errors of the most recent data are shown in the tables. Whenever a statement such as “2.5percent (±3.2%) above” appears in the text, this indicates the range (-0.7 to +5.7 percent) in which the actual percent change is likely to have occurred.

All ranges given for percent changes are 90-percent confidence intervals and account only for sampling variability. If a range does not contain zero, the change is statistically significant. If it does contain zero, the change is not statistically significant; that is, it is uncertain whether there was an increase or decrease. The same policies apply to the confidence intervals for percent changes shown in the tables. On average, the preliminary seasonally adjusted estimates of total building permits, housing starts and
housing completions are revised about three percent or less. Explanations of confidence intervals and sampling variability can be found on our web site listed above.

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.census.gov/new resconst

Table 1. New Privately-Owned Housing Units Authorized in Permit-Issuing Places
[Thousands of units. Detail may not add to total because of rounding]

2 to 4 5 units

Total 1 unit units or more Total 1 unit Total 1 unit Total 1 unit Total 1 unit

2010: December 630 445 25 160 114 70 97 66 257 211 162 98

2011:

January 568 419 20 129 77 49 94 65 286 216 111 89
February 534 382 15 137 63 39 86 59 288 209 97 75
March 574 392 16 166 60 37 94 64 296 215 124 76
April 563 395 21 147 59 38 94 64 284 210 126 83
May 609 406 20 183 80 36 97 67 293 218 139 85
June 617 402 21 194 71 35 99 68 306 217 141 82
July 601 403 21 177 60 37 96 68 312 214 133 84
August 625 418 25 182 61 34 107 74 313 224 144 86
September 589 413 20 156 64 36 107 74 288 221 130 82
October 644 428 23 193 61 39 107 71 345 232 131 86
November (r) 680 436 21 223 77 41 104 70 339 236 160 89
December (p) 679 444 26 209 72 37 110 73 337 239 160 95

Average RSE (%)1 1 1 9 1 3 3 2 2 1 1 2 2

Percent Change:

December 2011 from November 2011 -0.1% 1.8% 23.8% -6.3% -6.5% -9.8% 5.8% 4.3% -0.6% 1.3% 0.0% 6.7%

90% Confidence Interval 3 ± 1.2 ± 1.2 ± 6.2 ± 2.0 ± 4.6 ± 6.6 ± 3.9 ± 5.3 ± 1.9 ± 2.4 ± 1.9 ± 2.6

December 2011 from December 2010 7.8% -0.2% 4.0% 30.6% -36.8% -47.1% 13.4% 10.6% 31.1% 13.3% -1.2% -3.1%

90% Confidence Interval 3 ± 2.2 ± 1.9 ± 9.2 ± 3.1 ± 7.3 ± 10.5 ± 3.7 ± 5.0 ± 2.4 ± 3.0 ± 4.7 ± 6.5

2010: 604.6 447.3 22.0 135.3 73.8 49.1 103.5 75.4 299.1 232.3 128.2 90.6

2011: (p) 611.9 413.7 21.0 177.2 67.5 38.4 101.4 69.7 310.1 221.6 132.8 84.0

RSE (%) 1 1 5 (Z) 3 3 1 1 1 1 2 2

Year to Year Percent Change 4 1.2% -7.5% -4.5% 31.0% -8.5% -21.8% -2.0% -7.5% 3.7% -4.6% 3.6% -7.2%
90% Confidence Interval 3 ± 1.3 ± 1.1 ± 6.5 ± 2.3 ± 5.1 ± 6.8 ± 1.7 ± 2.1 ± 0.8 ± 0.9 ± 2.7 ± 3.4

2010: December 47.6 30.6 2.0 15.0 8.9 5.3 6.3 3.6 19.9 14.8 12.5 6.9

2011:

January 36.0 26.3 1.2 8.5 4.6 2.9 4.4 2.7 19.9 15.1 7.2 5.5
February 37.2 26.5 1.0 9.7 3.6 2.0 4.5 3.3 22.0 15.9 7.1 5.2
March 53.7 37.6 1.4 14.7 4.7 3.0 8.0 6.0 29.4 21.3 11.6 7.3
April 49.9 36.9 1.8 11.2 4.9 3.3 9.0 6.8 24.8 19.2 11.2 7.7
May 56.3 39.2 1.8 15.3 7.2 3.5 9.6 7.1 26.6 20.4 12.8 8.2
June 62.4 40.9 2.0 19.6 8.2 3.6 9.9 7.3 29.9 21.3 14.4 8.8
July 51.2 35.3 1.8 14.2 5.0 3.3 8.9 6.3 26.5 18.3 10.9 7.4
August 60.9 40.8 2.5 17.6 5.8 3.3 11.1 7.6 30.1 21.6 13.9 8.3
September 51.8 35.6 1.8 14.5 5.8 3.5 10.3 6.8 24.3 18.3 11.4 7.0
October 50.5 33.6 1.9 15.0 5.6 3.4 9.9 6.4 24.9 17.2 10.1 6.6
November (r) 50.3 30.9 1.7 17.7 6.3 3.4 8.3 5.2 24.4 16.3 11.3 6.1
December (p) 50.7 29.3 2.0 19.3 5.6 2.7 7.3 4.0 25.7 16.3 12.1 6.4

Average RSE (%)1 1 1 9 1 3 3 2 2 1 1 2 2

(p) Preliminary. (r) Revised. RSE Relative standard error. S Does not meet publication standards because tests for identifiable and stable seasonality do not meet reliability standards.
X Not applicable. Z Relative standard error is less than 0.5 percent.

  1. Average RSE for the latest 6-month period.
  2. Reflects revisions not distributed to months.
  3. See the Explanatory Notes in the accompanying text for an explanation of 90% confidence intervals. 4 Computed using unrounded data.

Table 2. New Privately-Owned Housing Units Authorized, but Not Started, at End of Period
[Thousands of units. Detail may not add to total because of rounding]

2 to 4 5 units

Total 1 unit units or more Total 1 unit Total 1 unit Total 1 unit Total 1 unit

2010: December 84.8 47.2 2.3 35.2 11.9 7.0 7.6 5.3 42.2 24.5 23.1 10.5

2011:

January 79.4 46.3 2.3 30.7 11.5 7.6 6.2 4.5 39.5 24.1 22.2 10.2
February 79.3 46.3 2.0 30.9 11.0 7.6 6.9 4.8 38.8 23.7 22.6 10.3
March 81.9 48.6 1.8 31.5 10.1 7.3 8.3 6.0 38.8 24.6 24.6 10.7
April 81.8 48.2 2.1 31.5 9.7 6.8 8.8 6.9 38.5 23.9 24.8 10.6
May 82.6 47.6 1.8 33.2 11.1 6.5 7.9 6.0 39.4 24.3 24.2 10.8
June 84.7 45.5 1.7 37.5 11.7 6.2 5.7 4.5 42.4 23.5 24.9 11.2
July 80.7 43.4 1.9 35.5 8.3 5.8 6.2 4.2 43.2 23.6 23.1 9.8
August 87.4 45.5 2.5 39.4 8.7 5.9 7.8 5.9 46.2 23.6 24.8 10.1
September 79.9 45.0 3.5 31.4 8.9 5.8 7.9 5.9 41.6 23.8 21.5 9.5
October (r) 75.3 42.8 3.0 29.5 8.0 5.6 7.0 4.9 39.9 22.8 20.3 9.4
November (r) 73.2 41.8 3.2 28.2 6.7 4.8 7.9 5.0 40.2 22.4 18.4 9.6
December (p) 78.8 42.3 3.0 33.5 8.1 4.7 6.3 4.0 43.1 23.2 21.2 10.4

Average RSE (%)1 5 7 19 9 15 18 15 15 7 10 12 17

Percent Change: 2

December 2011 from November 2011 7.6% 1.3% -6.6% 18.6% 21.6% -1.5% -20.4% -19.7% 7.2% 3.7% 15.6% 8.0%
90% Confidence Interval 3 ± 5.2 ± 4.4 ± 9.7 ± 12.6 ± 14.0 ± 12.0 ± 14.4 ± 8.3 ± 7.3 ± 6.9 ± 9.7 ± 8.3
December 2011 from December 2010 -7.1% -10.4% 28.0% -4.9% -32.0% -32.7% -16.3% -24.2% 2.1% -5.1% -8.0% -0.8%
90% Confidence Interval 3 ± 7.8 ± 8.1 ± 52.8 ± 14.8 ± 16.4 ± 15.1 ± 17.4 ± 20.6 ± 10.1 ± 11.5 ± 18.5 ± 16.6

(p) Preliminary. (r) Revised. RSE Relative standard error. S Does not meet publication standards because tests for identifiable and stable seasonality do not meet reliability standards.

  1. Average RSE for the latest 6-month period.
  2. Computed using unrounded data.
  3. See the Explanatory Notes in the accompanying text for an explanation of 90% confidence intervals.

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Mortgage Crimes are Focus of New Task Force

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Mortgage crimes are focus of new task force

WASHINGTON (CNNMoney) — A new special task force to investigate and prosecute those responsible for bad mortgages during the housing boom will be part of President Obama’s 2012 agenda.

Obama announced Tuesday that he’s asked the Justice Department to create a special unit of prosecutors and state attorneys general to investigate abusive lending and packaging of risky mortgages that led to the housing crisis. And he’s tapped an avowed Wall Street enemy, New York Attorney General Eric Schneiderman, to help run the crime unit, according to a White House official.

“This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama said in his State of the Union speech.

The new unit’s goal will be to investigate banks, financial firms and mortgage originators that broke the law, and to compensate victims and provide relief for homeowners, the White House official said.

Although the housing bust is more than four years old, this is the first time the Obama administration has indicated it will go after mortgage originators and Wall Street banks that got homeowners into loans they couldn’t afford — actions seen as a key culprit of the financial crisis.

The mortgage industry has often been blamed for its role helping homeowners get lines or credit and bigger mortgages during the housing boom. The industry saw little downside, unloading the risk that the loans would go bad on to the financial markets.

With Schneiderman, who has been working on his own investigations into big banks, Obama is signaling he’s ready to go after financial crimes. And left-leaning progressive groups cheered the news.

“Schneiderman has shown himself to be a courageous hero in his defense of the struggling underwater homeowners in his state and across the country,” according to a statement released by a coalition of left-leaning advocates such as MoveOn and New Bottom Line.

The news came as a surprise to the financial industry, which had been predicting Obama would tout a proposed settlement under discussion among federal regulators, state attorneys general and the largest bank mortgage servicers under investigation for improperly foreclosing on homeowners.

“We believe the industry is worried that this new task force will go after the banks for the origination of many of the mortgages that have defaulted or are now underwater,” said Jaret Seiberg, a senior policy analyst for the Washington Research Group.

The state attorneys general, the Justice Department and the Department of Housing and Urban Development have been in talks for nearly a year with big bank servicers that stand accused of using robo-signers to service home loans. The five largest mortgage servicers involved in the talks are: Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM).

According to people familiar with the talks, a draft settlement would result in those banks paying $20 billion to $25 billion toward housing relief. About 1 million underwater homeowners would be eligible for an average $20,000 off the principal owed.

In return, state attorneys general would not be able to file future lawsuits against the bank mortgage servicers that agree to the deal. The amount of relief available for homeowners depends on how many state attorneys general agree to the deal.

Obama didn’t mention the talks in his State of the Union speech. A White House official said Wednesday that the new task force would not prevent progress that has been made on that deal.

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Real Estate Recovery Expects to be Slow

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Real Estate Recovery Expects to be Slow

Fair warning to U.S. real estate players: Resign yourselves to “a slowing grind-it-out recovery” in 2012, as “enduring economic doldrums” continue to weigh heavily on the market.

Your best bets: a small handful of “property-wealth islands,” including San Francisco and San Jose/Silicon Valley, both seen as “primary 24-hour gateways located along global pathways,” according to a report being released today at the Urban Land Institute conference in San Francisco.

San Francisco ranks third out of 51 cities as a place to invest in and develop commercial and multifamily apartment properties and fourth in for-sale home building, with San Jose two or three rungs lower in each category, according to the survey compiled by the institute and Pricewaterhouse Coopers.

Washington, Austin and New York are the other top-rated cities.

“We come out very well as top investment places, although even here it’s still a bit of a chug,” said Kate White, executive director of ULI San Francisco.

Put the “chug” down to the enduring doldrums in the housing market, which continues to weigh on San Francisco and San Jose, if not as badly as in other parts of the Bay Area and nation. Even though both rank high in the home-building category, according to the report, their prospects for investment and development are described only as “fair.”

“There’s still an understandable reluctance by potential homeowners to get into the market,” said White.

Not so, however, when it comes to renting or leasing commercial space in high-tech areas like San Francisco’s Mid-Market and South of Market, a trend driven largely by the influx of a younger, more mobile and urban-oriented workforce.

“Gen Y is driving up the demand for apartments and driving up rents, which makes investing in apartments a safer bet,” said White.

Depending on how long it lasts, such a trend could be a game-changer for real estate.

“Living smaller, closer to work, and preferably near mass transit holds increasing appeal as more people look to manage expenses wisely,” notes the report. “More companies concentrate in urban districts where sought-after generation-Y talent wants to locate in 24-hour environments.”

A separate Urban Land Institute report, examining land use changes in California, takes the point further.

Projecting out to 2035, the report says demand for traditional single- family homes will decline, by as much as 10 percent, while “changing demographics” and other factors shift the real estate focus to smaller lots and “multiple or intergenerational households” within walking distance of “transit station areas.”

“California’s future is a lot more urban and transit-oriented than it has been historically. There’ll be an increasing demand for the 24-hour, livable city model,” said White. “The next generation is ushering it in, and local agencies need to plan accordingly.”

Survey Indicates Mood Improves on Home Prices

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Survey Indicates Mood Improves on Home Prices

Consumer expectations for U.S. home prices perked up in December, matching a modest fourth-quarter improvement in the U.S. economy, according to a monthly survey from mortgage market firm Fannie Mae.

For its December reading, Fannie Mae said survey respondents now expect home prices to rise by 0.8% over the next year, up from the 0.2% gain predicted in November.

Views on the direction of the U.S. economy also improved: 22% of respondents indicated a belief that the U.S. economy is on the right track, marking a 6-percentage-point jump from November’s survey.

On personal finances, 40% of respondents said they anticipate their personal financial situation to strengthen over the next year. Fannie Mae noted the response marks the first time since February that a larger share of respondents indicated they expect improved personal finances rather than finances that will remain the same over the next year.

Despite the marked improvement in consumer sentiment, Fannie Mae Chief Economist Doug Duncan cautioned that consumer attitudes remain at depressed levels, with over two-thirds over respondents in December’s survey still indicating a belief that the U.S. economy is headed in the wrong direction.

The survey is based upon a monthly poll of roughly 1,000 adults and has a margin of error of plus or minus 3.1%

5 Reasons to get a New Mortgage in 2012

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5 Reasons to get a New Mortgage in 2012

Mortgage interest rates, near all-time lows, are likely to remain attractive throughout 2012. That means opportunities for new homebuyers and for homeowners who want to refinance.

Here are five reasons why you might want to get a new mortgage, and what you should know.

While depressed housing prices and low mortgage rates have made homes more affordable, economic uncertainty and volatile housing markets have discouraged so many homebuyers that mortgage purchase applications dropped to a 15-year low in August, the Mortgage Bankers Association reported.

In qualifying for loans, buyers face hurdles including a down payment and the ability to document at least two years of income, says Justin Lopatin, vice president of Baytree National Bank & Trust in Chicago. Income documentation can be hard for people who’ve suffered temporary unemployment and those who are self-employed or have irregular wages.

Many investors pay cash to purchase residential rental properties. But some take out a mortgage to increase their leverage, says Julie Miller, sales manager at Prospect Mortgage in Irvine, Calif.

Lopatin says low interest rates are an inducement for investment property buyers.

“If you can take out an investment loan at 4.5 percent and rent out (the property) and make a few dollars a month, annually, the return will be worth the loan,” he says. “Not to mention the tax write-offs and other advantages of owning real estate.”

Mortgage insurance isn’t an option for investment property, so a fat down payment, typically 20 percent or more, is a must.

Investment buyers also need to show that they have enough income and reserves to afford the payments even if the tenant fails to pay the rent or moves out. Lenders typically will count 75 percent of the rent toward the borrower’s income-qualifying ratios, Lopatin says. For example, a monthly rent of $1,000 would count as $750 of income.

Low rates can make rate-and-term refinancing a smart financial move. This type of new loan is exactly what the name implies: a refinance in which the interest rate or term is changed, but the loan amount stays the same.

Another benefit might be locking in a fixed interest rate instead of an adjustable rate.

Homeowners who want to refinance must provide income documentation and have a “decent” credit score, to use Miller’s characterization.

Equity is also required for most loan refinance programs. This hurdle can be troublesome because homeowners don’t control a property’s market value, Lopatin says.

If your loan amount exceeds your home’s value, consider the Home Affordable Refinance Program, or HARP, part of the federal government’s Making Home Affordable initiative. If your loan is insured by the Federal Housing Administration, the FHA Short Refi program might enable you to refinance in a negative equity position.

A home equity loan or line of credit can be a good way to get cash for financial needs such as remodeling, major home repairs or financing a college education. The benefits, Lopatin says, include immediate cash, low-cost debt and potentially an income tax write-off.

There’s a catch: You can’t borrow against your equity if your mortgage debt exceeds your home’s value.

Taking out cash isn’t free money. In fact, a cash-out refinance increases your debt, which is “just not wise today,” says Alfred McIntosh, principal of McIntosh Capital Advisors, a financial planning firm in Los Angeles.

Co-signing a home loan for someone might sound like a feel-good proposition. But those warm fuzzies are the only benefit to co-signing.

“I see no reason why anyone should co-sign on anything for anyone, unless it’s a relative, because you’re putting yourself in a position to jeopardize your credit,” Lopatin says.

Miller sees “more negatives than positives” because the co-signer is equally responsible for the loan. If the borrower fails to make payments, the co-signer is on the hook.

Mortgage rates fell this week, reaching new record lows as investors seemed to ignore the latest signs of economic recovery.

The 30-year fixed-rate mortgage fell 3 basis points to 4.18 percent. A basis point is one-hundredth of 1 percentage point.

The 15-year fixed-rate fell 4 basis points to 3.4 percent. The average rate for 30-year jumbo mortgages, or generally for those of more than $417,000, fell 2 basis points to 4.62 percent.

The 5/1 ARM fell 1 basis point to 3.19 percent. With a 5/1 ARM, the rate is fixed for five years and adjusted annually thereafter.

Fewer Major Metros Show Home Value Declines

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U.S. Home Values Unchanged in November; Fewer Major Metros Show Value Declines

More than half of local markets appreciated or remained flat month-over-month in November according to Zillow Real Estate Market Reports

Home values in the United States were essentially unchanged in November, decreasing a marginal 0.1 percent from October, according to this month’s Zillow® Real Estate Market Reports[i]. Annually, the Zillow Home Value Index[ii] fell 4.6 percent from November 2010 to $147,800 and has returned to late 2003 levels.

Regionally, home values appreciated or remained flat from October to November in 60 percent of the 165 housing markets covered by Zillow, compared to 24 percent last year. Major metropolitan statistical areas (MSAs) that experienced flat or increasing home values include Los Angeles, Washington, Miami-Ft. Lauderdale, Fla., San Francisco and Detroit. On an annual basis, the median home value is down for nearly all (90 percent) of the 165 MSAs covered by Zillow, although the rate of annualized depreciation has slowed significantly in the majority of the markets.

Meanwhile, foreclosure liquidation rates have fallen steadily since the robo-signing controversy in late 2010 as banks slowed down their processing of foreclosures. In November, 8.1 out of every 10,000 U.S. homes were foreclosed upon. Foreclosure liquidations peaked in October 2010 at 11 out of every 10,000 homes and could rise again pending the attorneys general settlement which will give banks more certainty over the foreclosure process, therefore opening the backlog of foreclosures.

“Overall, we are seeing encouraging signs in housing data such as sequential months of slowing depreciation rates, stabilizing markets and organic improvement in value trends, largely in the absence of government policy intervention,” said Zillow Chief Economist Dr. Stan Humphries. “However, we’re not out of the woods yet. Supply and demand are still not in balance in many markets and we do expect higher foreclosure liquidation rates near-term, which will put additional downward pressure on home values.”

Dr. Humphries continued, “Even with the anticipated increase in foreclosures, look for 2012 to be a transitional year in which home values fall modestly followed by a prolonged period of flat home values. We’re still three to five years away from ‘normal’ housing market conditions.”

Obama Administration Releases December 2011 Housing Scorecard

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OBAMA ADMINISTRATION RELEASES DECEMBER 2011 HOUSING SCORECARD

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today [1/9/12] released the December edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the December Housing Scorecard show some subtle improvements in the market over the past year, but underscore fragility as the overall outlook remains mixed. For example, new and existing home sales rose compared to the prior month and remain higher than a year ago, and homes are more affordable than they have been since 1971. Median-income families today have nearly double the funds needed to cover the cost of the average home. However, home prices showed a slight dip from the prior month and remain below year ago levels. The full report is available online at hud.gov/scorecard.

HUD Assistant Secretary Raphael Bostic said, “As we compare today’s data to market data from last year – and certainly from the economic conditions when we took office in 2009 – it’s clear that we’ve made important progress in recovering from this housing crisis. But with so many homeowners still struggling to pay their mortgages or move into more sustainable loans, we cannot rest on our laurels. There is still a lot of work to do. That’s why the Obama Administration continues to push hard for effective implementation of our recovery programs to help more underwater borrowers and unemployed or underemployed homeowners stay in their homes whenever possible.”

“The Administration’s programs have set standards that have benefitted millions of families across the country and helped them avoid foreclosure,” said Treasury Assistant Secretary for Financial Stability Tim Massad. “We remain committed to helping as many families as we can while the housing market continues to recover.”

The December Housing Scorecard features key data on the health of the housing market and the impact of the Administration’s foreclosure prevention programs, including:

  • The Administration’s recovery efforts continue to help millions of families deal with the worst economic crisis since the Great Depression, even as new mortgage delinquencies continue to decline. More than 5.5 million modification arrangements were started between April 2009 and the end of November 2011 – including more than 1.7 million HAMP trial modification starts and more than 1.1 million FHA loss mitigation and early delinquency interventions. Nearly 910,000 homeowners have received a HAMP permanent modification to date, saving an estimated $9.9 billion in monthly mortgage payments. The Administration’s programs continue to encourage improved standards and processes in the industry, with HOPE Now lenders offering families and individuals more than 2.6 million proprietary mortgage modifications through November.
  • Eligible homeowners entering HAMP have a high likelihood of earning a permanent modification and realizing long-term success.Eighty-three percent of eligible homeowners entering HAMP since June 1, 2010 received a permanent modification, with an average trial period of 3.5 months. The Office of the Comptroller of the Currency (OCC)’s Mortgage Metrics Reportfor the Third Quarter of 2011 found that HAMP continues to prove more sustainable for homeowners than industry modifications, as a result of HAMP’s emphasis on affordability relative to a homeowner’s income and successful completion of a trial payment period.