Owners who've seen a steep drop in their home's value shouldn't expect to get a break on their property taxes.
By Les Christie, CNNMoney.com staff writer
Last Updated: October 16, 2008: 2:48 PM ET
NEW YORK (CNNMoney.com) -- Housing prices have plummeted, but property tax bills probably won't budge.
This January, local tax authorities will begin to send out property assessments for 2009, telling homeowners what their property is valued at, and how much their tax bill is.
But many assessments won't reflect any of the steep home price declines that have been making headlines for the last year or so.
And even if property assessments do drop, property tax bills won't necessarily be any lower.
"I think you're going to see a lot more taxpayer protest this year," said Bruce Hahn, president of the American Homeowners foundation, a non-partisan consumer advocacy group.
A huge runup slows
Property taxes climbed relentlessly earlier this decade as home prices rose, according to Pete Sepp, spokesman for the National Taxpayers Union. This year Americans will pay more than $400 billion in property taxes, up about 25% from levels in 2004 and double what they paid ten years ago.
At best, says Sepp, those steep increases may start to level off.
Nevertheless, homeowners are already pressing assessors for lower tax assessments.
"For my first 25 years [as an assessor], nobody ever asked me to lower the assessment based on a home selling for less down the street. There are many such inquiries this year," said Ken Wilkinson, the tax assessor for Lee County Fla., which includes Cape Coral and Ft. Myers.
He estimates that 80% of county residents have seen the value of their homes decline. The median price of existing homes fell more than 25% in the 12 months ending June 30, according to the Housing Opportunity Index compiled by Wells Fargo (WFC, Fortune 500) for the National Association of Home Builders.
Home prices in Moreno Valley, Calif. a city of 187,000, have fallen by more than a third over the past two years, according to the same index. And that has many more homeowners clamoring for reassessments, according to Barry Foster, the city's economic development director.
But even if local prices are way down, taxpayers may not win a lower assessment, because there can be a big lag time between when the home sales used to calculate them take place and when the assessment is actually issued.
To calculate 2009 assessments, for example, assessors will use home sale prices from 2008 or even earlier, according to Sepp. Usually this works to taxpayers's advantage, since price increases take a while before they are fully reflected in assessments.
That's why it's typical for most homes to be under-valued, according to Bruce Hahn of the American Homeowners foundation. But that's also why many homeowners aren't likely to see their assessments shrink immediately.
Lower values, same bill
There's another reason why homeowners are unlikely to see any decrease in property tax bills. In some states, such as California, Washington State, Massachusetts and Idaho, taxes are based on the last resale price of the house. Even a home worth $500,000 in California may be taxed based on the sale price when it was bought 10 years earlier for $200,000.
"Because the assessment is based on acquisition value, it's difficult to get that re-evaluated," said Sepp.
That's why the market value of most homes in these states exceeds the assessed tax values. The owners with best case for a reassessment are the ones who bought at the top of the market and have seen their values drop by a third or more, like many of Moreno Valley's residents.
Even if citizens do receive a lower assessment - and this year Wilkinson expects to lower assessments for most taxpayers in Lee county, Fla., by 20% or more - their property tax bill may not shrink at all.
Tax collectors often raise tax rates to offset lower assessments to meet their budgets, which will be very strained this year. Assessments go down but rates go up so that the tax collections stay roughly the same.
"State and local governments depend very heavily on real estate taxes and they are reeling from a loss of revenues from sales taxes and other sources," said Bruce Hahn.
Once homeowners get their bills, they'll have several weeks to contest their assessments, according to Hahn.
He suggested they go online to real estate evaluation sites such as Zillow.com to determine how far property values have fallen in their communities. They can also cite comparable home sales for similar properties to make their cases.
"Some tax assessors have been very reasonable," said Hahn, "but others are under great pressure to keep revenues up."
Friday, October 17, 2008
Homebuilders: Confidence falls sharply
The National Association of Home Builders blames the financial crisis for the new low.
Last Updated: October 16, 2008: 2:18 PM ET
LOS ANGELES (AP) -- The business outlook among homebuilders plunged to an all-time low this month, as the U.S. financial crisis further sapped their confidence in a near-term housing market recovery, an industry trade association said Thursday.
The National Association of Home Builders/Wells Fargo housing market index, started in January 1985, tumbled three points to 14 in October. The index stood at 17 in September after registering a one-point increase in August.
Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and below 20 since April.
The Washington-based association said the latest builders' survey reflects its members reaction to the financial woes on Wall Street, rising unemployment and weakness in consumer confidence.
The group called on lawmakers to enact an economic stimulus package with incentives for homebuyers.
"The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of recession," NAHB Chief Economist David Seiders said.
Builders have been hurting from the combination of falling home prices, less demand for new and preowned homes, tighter lending standards and a torrent of foreclosed properties competing for buyers.
Major public builders such as D.R. Horton Inc. (DHI, Fortune 500), Lennar Corp. (LEN, Fortune 500), and Toll Brothers Inc. (TOL, Fortune 500), have seen their stocks hammered as housing woes have deepened.
A housing stimulus package signed into law by President Bush this summer failed to spark the kind of home buying spree many builders had hoped for. Some major builders have said the plan's temporary $7,500 tax credit for first-time home buyers was ill-conceived because it essentially worked out to a 15-year, interest-free loan.
Some builders also decried the cancellation this month of programs that let sellers channel down payment money to cash-strapped home buyers via charities. The programs were eliminated by Congress because homebuyers who used them had high default rates.
The latest index marks deepening pessimism among builders in just a few weeks. Last month, the trade association's president, Sandy Dunn, waxed far more optimistic, remarking that builders were sensing home sales were nearing a turning point.
At the time Seiders projected sales would likely stabilize by year-end.
Builders' October survey responses reflected a far less rosy outlook.
Their gauge of current sales conditions fell three points to 14, traffic by prospective buyers dropped two points to 12, and sales expectations over the next six months plunged nine points to 19, the NAHB said.
Declines in builder confidence were seen across the United States, with the biggest drops in the Northeast and South, where confidence declined by four points.
The index reflects a survey of 446 residential developers nationwide, tracking builders' perceptions of current market conditions and expectations for home sales over the next six months.
Shares of Fort Worth, Texas-based D.R. Horton fell 62 cents, or 8.5%, to $6.70 in morning trading Thursday.
Miami-based Lennar's shares were down 53 cents, or 6%, to $8.23, while shares of Toll Brothers were down $1, or 5.4%, to $17.62.
Last Updated: October 16, 2008: 2:18 PM ET
LOS ANGELES (AP) -- The business outlook among homebuilders plunged to an all-time low this month, as the U.S. financial crisis further sapped their confidence in a near-term housing market recovery, an industry trade association said Thursday.
The National Association of Home Builders/Wells Fargo housing market index, started in January 1985, tumbled three points to 14 in October. The index stood at 17 in September after registering a one-point increase in August.
Index readings higher than 50 indicate positive sentiment about the market. But the index has drifted below 50 since May 2006 and below 20 since April.
The Washington-based association said the latest builders' survey reflects its members reaction to the financial woes on Wall Street, rising unemployment and weakness in consumer confidence.
The group called on lawmakers to enact an economic stimulus package with incentives for homebuyers.
"The impacts of the record-breaking housing contraction have spilled over to other key sectors of the economy and weighed heavily on financial markets, and stabilizing housing is now the best chance we have to limit the severity of recession," NAHB Chief Economist David Seiders said.
Builders have been hurting from the combination of falling home prices, less demand for new and preowned homes, tighter lending standards and a torrent of foreclosed properties competing for buyers.
Major public builders such as D.R. Horton Inc. (DHI, Fortune 500), Lennar Corp. (LEN, Fortune 500), and Toll Brothers Inc. (TOL, Fortune 500), have seen their stocks hammered as housing woes have deepened.
A housing stimulus package signed into law by President Bush this summer failed to spark the kind of home buying spree many builders had hoped for. Some major builders have said the plan's temporary $7,500 tax credit for first-time home buyers was ill-conceived because it essentially worked out to a 15-year, interest-free loan.
Some builders also decried the cancellation this month of programs that let sellers channel down payment money to cash-strapped home buyers via charities. The programs were eliminated by Congress because homebuyers who used them had high default rates.
The latest index marks deepening pessimism among builders in just a few weeks. Last month, the trade association's president, Sandy Dunn, waxed far more optimistic, remarking that builders were sensing home sales were nearing a turning point.
At the time Seiders projected sales would likely stabilize by year-end.
Builders' October survey responses reflected a far less rosy outlook.
Their gauge of current sales conditions fell three points to 14, traffic by prospective buyers dropped two points to 12, and sales expectations over the next six months plunged nine points to 19, the NAHB said.
Declines in builder confidence were seen across the United States, with the biggest drops in the Northeast and South, where confidence declined by four points.
The index reflects a survey of 446 residential developers nationwide, tracking builders' perceptions of current market conditions and expectations for home sales over the next six months.
Shares of Fort Worth, Texas-based D.R. Horton fell 62 cents, or 8.5%, to $6.70 in morning trading Thursday.
Miami-based Lennar's shares were down 53 cents, or 6%, to $8.23, while shares of Toll Brothers were down $1, or 5.4%, to $17.62.
Mortgage rates spike - leap size tops '87
Rates saw the biggest weekly jump since 1987 - analysts predict 30-year fixed mortgage rates will climb higher, and pin the hike on government rescue efforts.
By Les Christie, CNNMoney.com staff writer
Last Updated: October 16, 2008: 6:22 PM ET
NEW YORK (CNNMoney.com) -- Low mortgage rates, the one bright spot in a devastated housing market, are on a rapid rise.
Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage has hit 6.46% - up from 5.94% the week earlier. That represented the largest weekly increase since April 1987, when the 30-year rose 0.84 points.
Bankrate.com also charted the spike. The investment Web site reported that the average interest rate on a 30-year, fixed-rate mortgage jumped to 6.74% on Wednesday from 6.2% the Wednesday before.
Translation: A borrower with a $200,000 mortgage would pay about $1,225 a month at 6.2%, and $70 more, $1,295 at 6.74%.
Mike Larson, an analyst with Weiss Research who participates in Bankrate.com's weekly mortgage rate surveys, expects to see rates top 7% in the next six months, and then turn back down.
That would be quite a bit higher than rates have been, but it's no disaster.
Keith Gumbinger of HSH Associates, a publisher of mortgage information, attributes the rate increase to the massive federal bailout. To fund the rescue and the new government guarantees, Treasury must sell a raft of new Treasury bills to raise money.
"Who even has the cash to buy them all?" he said. "The Treasury has to offer higher interest rates to sell."
And mortgage rates tend to move in conjunction with those 10-year Treasury yields, which rose rapidly during the past week, up to more than 4% Wednesday from below 3.5% the week before.
The spread - the difference between Treasury yields and mortgage rates - also expanded a bit, according to Bankrate.com.
Unintended consequences
There may be another factor at work sending rates skyward, according to FTN Financial Group analyst, Jim Vogel.
The cost of financing mortgages will grow for the biggest buyers of mortgage debt, Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500), thanks to the plan for the Federal Deposit Insurance Corp. to back the newly issued, unsecured debt of some banks.
By guaranteeing bank debt, the government is making that debt more attractive for investors, and consequently creating more competition for Fannie and Freddie when they look to sell their own securities. To compete for buyers, the mortgage giants will have to raise their own yields - and to pay for that they'll have to charge borrowers higher interest.
"In theory, I think that could be correct," said Mark Zandi, chief economist for Moody's Economy.com, who is also an adviser to John McCain's presidential campaign. "But in practice, whether it means that rates will rise is an open question. There's a strong demand for really safe assets these days and Fannie and Freddie bonds are just a step removed from Treasurys."
If there's enough demand for ultra-safe investments like Fannie and Freddie bonds, Zandi says, they may not have to boost their yields all that much to attract investors.
Zandi pointed out that the difference between Treasury yields and 30-year mortgage rates is very high right now, more than 2% compared with 1.5% normally. That's because investors fled to risk-free Treasurys when the markets panicked.
But eventually, he says, the government rescue may send mortgage rates down and narrow that spread. "If that helps bring down the general angst, than mortgage rates should fall," he said.
Gumbinger expects rates to stay higher for several more months, as financial markets and lending take some time to return to normal. But he doesn't see the current spike as the beginning of the end of affordable mortgages.
"Rates should probably settle back down," he said. "We should see an easing of credit availability and that should put downward pressure on rates."
By Les Christie, CNNMoney.com staff writer
Last Updated: October 16, 2008: 6:22 PM ET
NEW YORK (CNNMoney.com) -- Low mortgage rates, the one bright spot in a devastated housing market, are on a rapid rise.
Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage has hit 6.46% - up from 5.94% the week earlier. That represented the largest weekly increase since April 1987, when the 30-year rose 0.84 points.
Bankrate.com also charted the spike. The investment Web site reported that the average interest rate on a 30-year, fixed-rate mortgage jumped to 6.74% on Wednesday from 6.2% the Wednesday before.
Translation: A borrower with a $200,000 mortgage would pay about $1,225 a month at 6.2%, and $70 more, $1,295 at 6.74%.
Mike Larson, an analyst with Weiss Research who participates in Bankrate.com's weekly mortgage rate surveys, expects to see rates top 7% in the next six months, and then turn back down.
That would be quite a bit higher than rates have been, but it's no disaster.
Keith Gumbinger of HSH Associates, a publisher of mortgage information, attributes the rate increase to the massive federal bailout. To fund the rescue and the new government guarantees, Treasury must sell a raft of new Treasury bills to raise money.
"Who even has the cash to buy them all?" he said. "The Treasury has to offer higher interest rates to sell."
And mortgage rates tend to move in conjunction with those 10-year Treasury yields, which rose rapidly during the past week, up to more than 4% Wednesday from below 3.5% the week before.
The spread - the difference between Treasury yields and mortgage rates - also expanded a bit, according to Bankrate.com.
Unintended consequences
There may be another factor at work sending rates skyward, according to FTN Financial Group analyst, Jim Vogel.
The cost of financing mortgages will grow for the biggest buyers of mortgage debt, Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM, Fortune 500), thanks to the plan for the Federal Deposit Insurance Corp. to back the newly issued, unsecured debt of some banks.
By guaranteeing bank debt, the government is making that debt more attractive for investors, and consequently creating more competition for Fannie and Freddie when they look to sell their own securities. To compete for buyers, the mortgage giants will have to raise their own yields - and to pay for that they'll have to charge borrowers higher interest.
"In theory, I think that could be correct," said Mark Zandi, chief economist for Moody's Economy.com, who is also an adviser to John McCain's presidential campaign. "But in practice, whether it means that rates will rise is an open question. There's a strong demand for really safe assets these days and Fannie and Freddie bonds are just a step removed from Treasurys."
If there's enough demand for ultra-safe investments like Fannie and Freddie bonds, Zandi says, they may not have to boost their yields all that much to attract investors.
Zandi pointed out that the difference between Treasury yields and 30-year mortgage rates is very high right now, more than 2% compared with 1.5% normally. That's because investors fled to risk-free Treasurys when the markets panicked.
But eventually, he says, the government rescue may send mortgage rates down and narrow that spread. "If that helps bring down the general angst, than mortgage rates should fall," he said.
Gumbinger expects rates to stay higher for several more months, as financial markets and lending take some time to return to normal. But he doesn't see the current spike as the beginning of the end of affordable mortgages.
"Rates should probably settle back down," he said. "We should see an easing of credit availability and that should put downward pressure on rates."
Commercial Briefs
MBA (10/13/2008 ) Murray, Michael
Centerline Capital Group, a New York-based commercial real estate investor, and ZAIS Group, a Red Bank, N.J.-based structured products manager, formed a new venture to pursue investments in the commercial mortgage-backed securities market. ZAIS Group spoke last summer with Centerline about co-investment opportunities. Both firms said attractive opportunities exist in the commercial real estate debt markets.
The new venture would allow Centerline to "deploy the capital necessary to realize the high-quality investment returns still available in the current marketplace,” said Mark Brown, senior managing director and head of CMBS and commercial products business group at Centerline Capital Group.
John Jardine, managing director at ZAIS Group, said the CMBS sector provides some of the best risk-adjusted returns in the commercial real estate investment market. “We believe the appropriate strategy is to focus on private, 144a securities, conduct a fundamental re-underwriting of every asset within a loan pool and leverage Centerline’s proprietary systems, exchanging real-time asset and market information with our servicing partner,” Jardine said.
Centerline Capital Group, a New York-based commercial real estate investor, and ZAIS Group, a Red Bank, N.J.-based structured products manager, formed a new venture to pursue investments in the commercial mortgage-backed securities market. ZAIS Group spoke last summer with Centerline about co-investment opportunities. Both firms said attractive opportunities exist in the commercial real estate debt markets.
The new venture would allow Centerline to "deploy the capital necessary to realize the high-quality investment returns still available in the current marketplace,” said Mark Brown, senior managing director and head of CMBS and commercial products business group at Centerline Capital Group.
John Jardine, managing director at ZAIS Group, said the CMBS sector provides some of the best risk-adjusted returns in the commercial real estate investment market. “We believe the appropriate strategy is to focus on private, 144a securities, conduct a fundamental re-underwriting of every asset within a loan pool and leverage Centerline’s proprietary systems, exchanging real-time asset and market information with our servicing partner,” Jardine said.
CMBS Delinquencies Consistently Rising
MBA (10/13/2008 ) Murray, Michael
Loan delinquencies in commercial mortgage-backed securities were up nearly 13 basis points after the first three quarters of this year to 0.52 percent—0.58 percent excluding defeasance loans, based on numbers from Citigroup Securities, New York.
CMBS delinquencies seem to be increasing each month as the credit crisis starts feeding into the general economy, said Darrell Wheeler, head of CMBS at Citigroup.
“The lack of new supply is also leading to a net run-off of outstanding balance, which would tend to raise the headline delinquency rate," Wheeler said. "However, the rate still remains low for now when compared to historical delinquency rates, and dramatically different from the high rates of the subprime residential market. If the economic slowdown is prolonged, we expect to see rising delinquency rates from these low levels, possibly to the 1 percent to 1.5 percent range in early 2009 and 2 percent to 3 percent sometime in 2010.”
However, Realpoint LLC, Horsham, Pa., said more than 35 percent of delinquent unpaid balances in CMBS through August came from transactions issued in 2005-2006 vintages, and more than 20 percent of all delinquencies were found in 2006 transactions.
With 13 percent total delinquency included in the 2007 vintage, more than 48 percent of CMBS delinquency in August came from 2005-2007 vintage transactions, Realpoint's research said.
Nearly 1.4 percent of 65,028 CMBS loans in Citigroup’s universe included delinquencies of 30, 60 and 90 days, one foreclosure and loans for special servicing. They accounted for more than $10 billion out of a total of more than $714.7 billion. Citigroup’s CMBS universe consists of publicly issued, fixed-rate CMBS conduit, fusion, lease-backed, large loan and seasoned loan transactions.
After five straight months of increases, Realpoint showed August’s delinquent unpaid balance for CMBS dropping slightly to $4.07 billion through from a trailing 12-month high of $4.203 billion through July. Special servicing exposure, however, increased to $6.88 billion in August from $6.45 billion in July for $10.95 billion in delinquencies and special servicing.
Total unpaid balance for all CMBS pools reviewed by Realpoint was $862.6 billion in August, down from $863.6 billion in July, with August's delinquency ratio at 0.47 percent, down slightly from 0.49 percent in July and 0.48 percent in June.
"What is more concerning, however, is that the delinquency percentage through August 2008 is up 18 basis points or 62 percent above the 0.29 percent reported one-year prior in August 2007. The increase in both delinquent unpaid balance and delinquency ratio over this time horizon reflect a slow but steady increase from historic lows through mid-2007," said Frank Innaurato, managing director at Realpoint.
CMBS delinquency by unpaid balance increased 29 percent from January’s $3.16 billion and up 84 percent from a six-year low of $2.21 billion in March.
“While both the 30-day and 60-day delinquent loan categories decreased, the distressed 90+-day, foreclosure and REO categories grew for the ninth straight month—up 43 percent since January 2008,” Innaurato said.
Delinquencies also increased in August along with $70.7 million in liquidations reported across 18 loans. Liquidation activity slowed after increases in June and July, due to slowdown from the current credit market climate.
“We expect that these high liquidations, however, are a clear response to increased loan workout and delinquency pressures being placed on special servicers, and may be a precursor to increased distressed asset money returning to the market,” Innaurato said.
Based on Realpoint’s numbers for August, highest loss severities in 2007 were found in industrial and healthcare collateral while multifamily collateral was highest by balance before liquidation. Citigroup showed multifamily as the only sector with current elevated delinquency rates at 1.6 percent in September.
“We recently wrote about the issues facing apartments under rent controls that were aggressively underwritten assuming conversion rates that have not materialized,” Wheeler said.
CMBS delinquencies in Michigan remained elevated at 2.50 percent as the domestic auto sector continued to struggle, but Tennessee and Georgia showed a spike in their rate during September as well, Citigroup said.
Texas, Florida and Michigan—the top three states ranked by delinquency exposure for the past 10 months through August—collectively accounted for 39 percent of CMBS delinquencies, based on Realpoint's research.
Loan delinquencies in commercial mortgage-backed securities were up nearly 13 basis points after the first three quarters of this year to 0.52 percent—0.58 percent excluding defeasance loans, based on numbers from Citigroup Securities, New York.
CMBS delinquencies seem to be increasing each month as the credit crisis starts feeding into the general economy, said Darrell Wheeler, head of CMBS at Citigroup.
“The lack of new supply is also leading to a net run-off of outstanding balance, which would tend to raise the headline delinquency rate," Wheeler said. "However, the rate still remains low for now when compared to historical delinquency rates, and dramatically different from the high rates of the subprime residential market. If the economic slowdown is prolonged, we expect to see rising delinquency rates from these low levels, possibly to the 1 percent to 1.5 percent range in early 2009 and 2 percent to 3 percent sometime in 2010.”
However, Realpoint LLC, Horsham, Pa., said more than 35 percent of delinquent unpaid balances in CMBS through August came from transactions issued in 2005-2006 vintages, and more than 20 percent of all delinquencies were found in 2006 transactions.
With 13 percent total delinquency included in the 2007 vintage, more than 48 percent of CMBS delinquency in August came from 2005-2007 vintage transactions, Realpoint's research said.
Nearly 1.4 percent of 65,028 CMBS loans in Citigroup’s universe included delinquencies of 30, 60 and 90 days, one foreclosure and loans for special servicing. They accounted for more than $10 billion out of a total of more than $714.7 billion. Citigroup’s CMBS universe consists of publicly issued, fixed-rate CMBS conduit, fusion, lease-backed, large loan and seasoned loan transactions.
After five straight months of increases, Realpoint showed August’s delinquent unpaid balance for CMBS dropping slightly to $4.07 billion through from a trailing 12-month high of $4.203 billion through July. Special servicing exposure, however, increased to $6.88 billion in August from $6.45 billion in July for $10.95 billion in delinquencies and special servicing.
Total unpaid balance for all CMBS pools reviewed by Realpoint was $862.6 billion in August, down from $863.6 billion in July, with August's delinquency ratio at 0.47 percent, down slightly from 0.49 percent in July and 0.48 percent in June.
"What is more concerning, however, is that the delinquency percentage through August 2008 is up 18 basis points or 62 percent above the 0.29 percent reported one-year prior in August 2007. The increase in both delinquent unpaid balance and delinquency ratio over this time horizon reflect a slow but steady increase from historic lows through mid-2007," said Frank Innaurato, managing director at Realpoint.
CMBS delinquency by unpaid balance increased 29 percent from January’s $3.16 billion and up 84 percent from a six-year low of $2.21 billion in March.
“While both the 30-day and 60-day delinquent loan categories decreased, the distressed 90+-day, foreclosure and REO categories grew for the ninth straight month—up 43 percent since January 2008,” Innaurato said.
Delinquencies also increased in August along with $70.7 million in liquidations reported across 18 loans. Liquidation activity slowed after increases in June and July, due to slowdown from the current credit market climate.
“We expect that these high liquidations, however, are a clear response to increased loan workout and delinquency pressures being placed on special servicers, and may be a precursor to increased distressed asset money returning to the market,” Innaurato said.
Based on Realpoint’s numbers for August, highest loss severities in 2007 were found in industrial and healthcare collateral while multifamily collateral was highest by balance before liquidation. Citigroup showed multifamily as the only sector with current elevated delinquency rates at 1.6 percent in September.
“We recently wrote about the issues facing apartments under rent controls that were aggressively underwritten assuming conversion rates that have not materialized,” Wheeler said.
CMBS delinquencies in Michigan remained elevated at 2.50 percent as the domestic auto sector continued to struggle, but Tennessee and Georgia showed a spike in their rate during September as well, Citigroup said.
Texas, Florida and Michigan—the top three states ranked by delinquency exposure for the past 10 months through August—collectively accounted for 39 percent of CMBS delinquencies, based on Realpoint's research.
Residential Briefs
MBA (10/13/2008 ) Palaparty, Vijay
Freddie Mac Suspends Foreclosures Hurricane in Ike Areas
Freddie Mac, McLean, Va., ordered servicers to suspend all foreclosure sales on properties with Freddie Mac-owned mortgages in federally declared disaster areas caused by Hurricane Ike in Texas and Louisiana. The suspension will extend from October 8 to December 31 and include mortgages that were in default prior to Hurricane Ike.
Servicers will be required, after the suspension ends, to consider individual circumstances in determining whether to extend additional foreclosure relief or to proceed with foreclosure. The announcement only applies to properties with Freddie Mac-owned mortgages in Texas or Louisiana counties, municipalities or parishes that were declared federal disaster areas and where federal aid in the form of individual assistance is available.
HUD Hosts Regional Housing Summits
HUD will host three regional housing summits across the country to help launch HUD's new Neighborhood Stabilization Program. It will invite state, city and county leaders to address the country's urgent and long-term housing issues including how to deal with abandoned foreclosed properties within their communities. The summits will take place on October 10 in Los Angeles; October 14 in Columbus, Ohio; and October 16 in Orlando.
Freddie Mac Suspends Foreclosures Hurricane in Ike Areas
Freddie Mac, McLean, Va., ordered servicers to suspend all foreclosure sales on properties with Freddie Mac-owned mortgages in federally declared disaster areas caused by Hurricane Ike in Texas and Louisiana. The suspension will extend from October 8 to December 31 and include mortgages that were in default prior to Hurricane Ike.
Servicers will be required, after the suspension ends, to consider individual circumstances in determining whether to extend additional foreclosure relief or to proceed with foreclosure. The announcement only applies to properties with Freddie Mac-owned mortgages in Texas or Louisiana counties, municipalities or parishes that were declared federal disaster areas and where federal aid in the form of individual assistance is available.
HUD Hosts Regional Housing Summits
HUD will host three regional housing summits across the country to help launch HUD's new Neighborhood Stabilization Program. It will invite state, city and county leaders to address the country's urgent and long-term housing issues including how to deal with abandoned foreclosed properties within their communities. The summits will take place on October 10 in Los Angeles; October 14 in Columbus, Ohio; and October 16 in Orlando.
Declining Economy Puts Brakes on Remodeling
MBA (10/13/2008 ) Palaparty, Vijay
Remodeling activity among homeowners declined 15 percent this year—mostly in areas where homeowners have less equity—according to a report from Remodelormove.com, Sunnyvale, Calif. Eighty-four percent of respondents said possibility of a recession affected their remodeling plans.
Homeowners reported an average of $190,000 in home equity and average home value of $390,000—up by $140,000 and $342,000 respectively. The report, 2008 Remodeling Sentiment Report, corresponded with the U.S. Remodeling Permit Activity Report, also from Remodelormove.com, which showed an increase in the average cost of a remodel in markets with most expensive homes and a decrease in regions with average- and below average-priced homes.
“Homeowners who choose to remodel their homes may find this a good time,” said Dan Fritschen, real estate author and principal researcher. “With new home construction at low levels, more materials and labor are available for remodeling than several years ago, resulting in shorter project schedules and often lower project costs.”
Eighty-one percent of respondents said they plan to start their home remodel this year nonetheless.
Decline in home equity line of credit originations could be one reason for the slowdown. Benchmark Consulting International, Atlanta reported a 26.4 percent decrease in HELOC originations between the first and second quarters among small/medium-sized lenders. Applications decreased 33.8 percent, though from a book-to-look perspective, borrowers' interest found renewal in the second quarter, with the rate rising by 5 percent to 49 percent from 44 percent in the first quarter.
“With tightening of credit standards, tougher underwriting guidelines and less direct marketing focus, it is understandable why applications are down so significantly,” said Brian King, senior vice president at BenchMark Consulting.
In July, Harvard University’s Joint Center for Housing Studies reported a decline at an annual rate of 11.1 percent in home improvement activity.
Nicolas Restinas, director of the Joint Center for Housing Studies said the slumping economy and struggling housing sector will drag spending on home improvements. “Households are reluctant to undertake major improvements in the context of falling prices,” he said.
McGraw-Hill Construction, New York, however, reported that building green is advantageous, even in a down market. Forty percent of builders reported that building green eases marketing; 16 percent said it is much easier.
“Green building has definitely reached its upper tipping point,” said Harvey Bernstein, vice president of industry analytics, alliances and strategic initiatives at McGraw-Hill Construction. “Builders can no longer ignore the market advantages of green building. Especially considering today’s market and current economic situation, builders need to differentiate themselves from their competitors and hold steady or prosper in the down economy. Green building gives builders opportunity to expand their market share and ride out this economic slump.”
In 2009, 21 percent of builders expect 90 percent of projects to be green and that 60 percent of homebuyers will pay more for green homes.
Remodeling activity among homeowners declined 15 percent this year—mostly in areas where homeowners have less equity—according to a report from Remodelormove.com, Sunnyvale, Calif. Eighty-four percent of respondents said possibility of a recession affected their remodeling plans.
Homeowners reported an average of $190,000 in home equity and average home value of $390,000—up by $140,000 and $342,000 respectively. The report, 2008 Remodeling Sentiment Report, corresponded with the U.S. Remodeling Permit Activity Report, also from Remodelormove.com, which showed an increase in the average cost of a remodel in markets with most expensive homes and a decrease in regions with average- and below average-priced homes.
“Homeowners who choose to remodel their homes may find this a good time,” said Dan Fritschen, real estate author and principal researcher. “With new home construction at low levels, more materials and labor are available for remodeling than several years ago, resulting in shorter project schedules and often lower project costs.”
Eighty-one percent of respondents said they plan to start their home remodel this year nonetheless.
Decline in home equity line of credit originations could be one reason for the slowdown. Benchmark Consulting International, Atlanta reported a 26.4 percent decrease in HELOC originations between the first and second quarters among small/medium-sized lenders. Applications decreased 33.8 percent, though from a book-to-look perspective, borrowers' interest found renewal in the second quarter, with the rate rising by 5 percent to 49 percent from 44 percent in the first quarter.
“With tightening of credit standards, tougher underwriting guidelines and less direct marketing focus, it is understandable why applications are down so significantly,” said Brian King, senior vice president at BenchMark Consulting.
In July, Harvard University’s Joint Center for Housing Studies reported a decline at an annual rate of 11.1 percent in home improvement activity.
Nicolas Restinas, director of the Joint Center for Housing Studies said the slumping economy and struggling housing sector will drag spending on home improvements. “Households are reluctant to undertake major improvements in the context of falling prices,” he said.
McGraw-Hill Construction, New York, however, reported that building green is advantageous, even in a down market. Forty percent of builders reported that building green eases marketing; 16 percent said it is much easier.
“Green building has definitely reached its upper tipping point,” said Harvey Bernstein, vice president of industry analytics, alliances and strategic initiatives at McGraw-Hill Construction. “Builders can no longer ignore the market advantages of green building. Especially considering today’s market and current economic situation, builders need to differentiate themselves from their competitors and hold steady or prosper in the down economy. Green building gives builders opportunity to expand their market share and ride out this economic slump.”
In 2009, 21 percent of builders expect 90 percent of projects to be green and that 60 percent of homebuyers will pay more for green homes.
Financial Turmoil Continues Unabated
MBA (10/13/2008 ) Velz, Orawin
Equity markets around the globe hemorrhaged as the problems in the financial system threatened to cause a global recession. Commodities (including energy and agriculture products) were in free fall over the fear that a worldwide recession will lead to flagging demand. Crude oil futures fell below $80 a barrel on Friday, the lowest in a year.
Another week brought more fiscal and monetary policy actions to tackle the financial crisis. On Tuesday, the Federal Reserve made an unprecedented move to alleviate the frozen commercial paper market, which has shrunk for the fourth consecutive week. The Fed announced creation of the Commercial Paper Funding Facility to backstop issuers of the short-term debt used by many businesses to meet daily needs. The special-purpose vehicle will purchase three-month unsecured and asset-backed commercial paper. This essentially enables the Fed to lend directly to businesses rather than to just financial institutions.
On Wednesday, as a part of a coordinated effort by major central banks around the globe, the Fed cut the federal funds rate by 50 basis points. The Fed cited weakening economic activity and intensified financial market turmoil as a motive of this inter-meeting rate cut. (The next Federal Open Market Committee meeting will be on October 28-29 and fed funds futures expected a further rate cut then).
In his speech on the same day, Treasury Secretary Henry Paulson Jr. suggested the possibility of injecting capital directly into financial institutions and, in effect, partially nationalizing those institutions. The Treasury maintained that the Emergency Economic Stabilization Act gave it the authority to provide capital in exchange for ownership stakes.
These actions failed to inspire investor confidence. Banks still did not trust each other and were reluctant to lend to one another, which resulted in rising borrowing costs for interbank lending. The London interbank offered rate continued to climb on Friday, with the three-month Libor rising to 4.82 percent—the highest since late December 2007.
Economic data were sparse last week. The first drop in August consumer credit outstanding in 10 years underscored households’ concerns about their finances and pointed to a retrenchment in consumer spending ahead. The trade deficit in goods and services narrowed in August but its improvement was not a result of strong overseas demand for U.S. products, as both exports and imports fell. One housing report offered some good news: pending home sales surged in August, fueled by pending sales (i.e., contract signing) of distressed properties in the West, suggesting existing home sales (closing) may rebound in the near term.
Stock markets extended their decline into an eighth day Friday. Investors continued to shift money into safe-haven assets, especially short-term Treasuries. The yield on the three-month Treasury bill plunged to 0.18 percent from 0.52 percent on Thursday. Longer-term Treasury yields did not benefit from a flight to quality and moved higher throughout the week. The yield on the 10-year Treasury note stayed around 3.87 percent mid-Friday afternoon, 38 basis points higher than the rate at the start of the week and 23 basis points higher than the rate on the previous Friday.
Housing and Mortgage Indicators:
The National Association of Realtors Pending Home Sales Index surged 7.4 percent to 93.4. The index was up 6.8 percent from last August, the first year-over-year increase since September 2005.
Pending home sales increased in every region of the country, led by an 18.4 percent increase in the West. The relatively stronger performance of existing home sales for the region partly reflects rising shares of foreclosed and distressed homes that were sold through the Multiple Listing Service. Attractive bargain prices have helped lure some buyers back into some local markets.
Pending home sales also rose strongly by 8.4 percent in the Northeast and rose modestly in the Midwest and the South by 3.6 percent and 2.4 percent, respectively.
The index is based on signed contracts for existing single-family homes, condos and co-ops. It is a leading indicator of NAR’s existing home sales, which are based on closings, as the signed contract for the purchase of a home generally precedes its closing by one to two months. The increase in June pending home sales suggests that existing home sales should increase in the near term.
Economic Indicators:
Total consumer credit outstanding fell $7.9 billion in August to $2.57 trillion—the largest decline in the level of consumer credit on record. The measurement of consumer credit does not include any loans secured by real estate. Revolving credit balances fell $600 million, while nonrevolving credit dropped $7.3 billion or 5.3 percent—the largest percentage decline since 1992, driven by a sharp drop in new vehicle sales.
The U.S. trade deficit narrowed to $59.1 billion in August from $61.3 billion in July. Exports decreased by 2.0 percent to $164.7 billion in August, while imports decreased by 2.4 percent to $223.9 billion.
Import prices declined 3.0 percent in September, the second consecutive decline and its largest since the 2003. Over the year, import prices were up 14.5 percent, decelerating from the 18.7 percent increase in August.
Prices for petroleum products declined 9.3 percent. Import prices excluding fuels fell 0.5 percent, the first month-to-month decline since February 2007.
Equity markets around the globe hemorrhaged as the problems in the financial system threatened to cause a global recession. Commodities (including energy and agriculture products) were in free fall over the fear that a worldwide recession will lead to flagging demand. Crude oil futures fell below $80 a barrel on Friday, the lowest in a year.
Another week brought more fiscal and monetary policy actions to tackle the financial crisis. On Tuesday, the Federal Reserve made an unprecedented move to alleviate the frozen commercial paper market, which has shrunk for the fourth consecutive week. The Fed announced creation of the Commercial Paper Funding Facility to backstop issuers of the short-term debt used by many businesses to meet daily needs. The special-purpose vehicle will purchase three-month unsecured and asset-backed commercial paper. This essentially enables the Fed to lend directly to businesses rather than to just financial institutions.
On Wednesday, as a part of a coordinated effort by major central banks around the globe, the Fed cut the federal funds rate by 50 basis points. The Fed cited weakening economic activity and intensified financial market turmoil as a motive of this inter-meeting rate cut. (The next Federal Open Market Committee meeting will be on October 28-29 and fed funds futures expected a further rate cut then).
In his speech on the same day, Treasury Secretary Henry Paulson Jr. suggested the possibility of injecting capital directly into financial institutions and, in effect, partially nationalizing those institutions. The Treasury maintained that the Emergency Economic Stabilization Act gave it the authority to provide capital in exchange for ownership stakes.
These actions failed to inspire investor confidence. Banks still did not trust each other and were reluctant to lend to one another, which resulted in rising borrowing costs for interbank lending. The London interbank offered rate continued to climb on Friday, with the three-month Libor rising to 4.82 percent—the highest since late December 2007.
Economic data were sparse last week. The first drop in August consumer credit outstanding in 10 years underscored households’ concerns about their finances and pointed to a retrenchment in consumer spending ahead. The trade deficit in goods and services narrowed in August but its improvement was not a result of strong overseas demand for U.S. products, as both exports and imports fell. One housing report offered some good news: pending home sales surged in August, fueled by pending sales (i.e., contract signing) of distressed properties in the West, suggesting existing home sales (closing) may rebound in the near term.
Stock markets extended their decline into an eighth day Friday. Investors continued to shift money into safe-haven assets, especially short-term Treasuries. The yield on the three-month Treasury bill plunged to 0.18 percent from 0.52 percent on Thursday. Longer-term Treasury yields did not benefit from a flight to quality and moved higher throughout the week. The yield on the 10-year Treasury note stayed around 3.87 percent mid-Friday afternoon, 38 basis points higher than the rate at the start of the week and 23 basis points higher than the rate on the previous Friday.
Housing and Mortgage Indicators:
The National Association of Realtors Pending Home Sales Index surged 7.4 percent to 93.4. The index was up 6.8 percent from last August, the first year-over-year increase since September 2005.
Pending home sales increased in every region of the country, led by an 18.4 percent increase in the West. The relatively stronger performance of existing home sales for the region partly reflects rising shares of foreclosed and distressed homes that were sold through the Multiple Listing Service. Attractive bargain prices have helped lure some buyers back into some local markets.
Pending home sales also rose strongly by 8.4 percent in the Northeast and rose modestly in the Midwest and the South by 3.6 percent and 2.4 percent, respectively.
The index is based on signed contracts for existing single-family homes, condos and co-ops. It is a leading indicator of NAR’s existing home sales, which are based on closings, as the signed contract for the purchase of a home generally precedes its closing by one to two months. The increase in June pending home sales suggests that existing home sales should increase in the near term.
Economic Indicators:
Total consumer credit outstanding fell $7.9 billion in August to $2.57 trillion—the largest decline in the level of consumer credit on record. The measurement of consumer credit does not include any loans secured by real estate. Revolving credit balances fell $600 million, while nonrevolving credit dropped $7.3 billion or 5.3 percent—the largest percentage decline since 1992, driven by a sharp drop in new vehicle sales.
The U.S. trade deficit narrowed to $59.1 billion in August from $61.3 billion in July. Exports decreased by 2.0 percent to $164.7 billion in August, while imports decreased by 2.4 percent to $223.9 billion.
Import prices declined 3.0 percent in September, the second consecutive decline and its largest since the 2003. Over the year, import prices were up 14.5 percent, decelerating from the 18.7 percent increase in August.
Prices for petroleum products declined 9.3 percent. Import prices excluding fuels fell 0.5 percent, the first month-to-month decline since February 2007.
GSEs Still a Good Thing, Ranieri Says
IDD Magazine (10/06/08); Rozens, Aleksandrs
Speaking before senior home builder executives at Harvard University's Joint Center for Housing Research on Oct. 2, Hyperion Partners Chairman Lewis Ranieri--an early pioneer of mortgage securitization--emphasized the importance of Fannie Mae and Freddie Mac in rebuilding the mortgage market. Ranieri said the structure of the agencies needs to be made "more responsible," however, and insisted that the agencies must maintain their government guarantee without the government assuming too much of their risk. He suggested a structure similar to the Federal Home Loan Bank system, in which lenders would purchase a stake in Fannie Mae and Freddie Mac while the government charges a fee to guarantee the securities. To bolster the mortgage market, Ranieri also recommended using covered bond structures, altering risk-based capital requirements on agency debt and beefing up regulation of the credit default swaps market.
Speaking before senior home builder executives at Harvard University's Joint Center for Housing Research on Oct. 2, Hyperion Partners Chairman Lewis Ranieri--an early pioneer of mortgage securitization--emphasized the importance of Fannie Mae and Freddie Mac in rebuilding the mortgage market. Ranieri said the structure of the agencies needs to be made "more responsible," however, and insisted that the agencies must maintain their government guarantee without the government assuming too much of their risk. He suggested a structure similar to the Federal Home Loan Bank system, in which lenders would purchase a stake in Fannie Mae and Freddie Mac while the government charges a fee to guarantee the securities. To bolster the mortgage market, Ranieri also recommended using covered bond structures, altering risk-based capital requirements on agency debt and beefing up regulation of the credit default swaps market.
Consumers' Credit Getting Not So Easy
Dallas Morning News (10/13/08)
More people were able to purchase homes as credit was expanded over the past three decades, but experts now believe it will become more difficult to borrow money for a prolonged period. The credit crunch means that prospective home buyers may no longer be able to purchase homes with interest-only loans or obtain loans that allow them to borrow more than the value of the property. Home buyers will need to make substantial payments and down payments, and they also may face higher interest rates; while borrowers across the board will find it more difficult to open a credit card and carry large balances. "This entire credit crunch is a wakeup call to anybody who was attempting to borrow their way to prosperity," says Greg McBride, senior analyst at Bankrate.com.
More people were able to purchase homes as credit was expanded over the past three decades, but experts now believe it will become more difficult to borrow money for a prolonged period. The credit crunch means that prospective home buyers may no longer be able to purchase homes with interest-only loans or obtain loans that allow them to borrow more than the value of the property. Home buyers will need to make substantial payments and down payments, and they also may face higher interest rates; while borrowers across the board will find it more difficult to open a credit card and carry large balances. "This entire credit crunch is a wakeup call to anybody who was attempting to borrow their way to prosperity," says Greg McBride, senior analyst at Bankrate.com.
5,000 Show Up at Foreclosure Showcase in Uniondale
New York Newsday (10/13/08); Amon, Michael
The New York Foreclosure Showcase drew a crowd of almost 5,000 to the Marriott Hotel and Conference Center in Uniondale on Oct. 12, when 35 foreclosed properties were put on the auction block. The current market has afforded "opportunities to buy that didn't exist before," says Todd Yovino of Island Advantage Realty, who organized the event. Bidders needed to arrive with a mortgage prequalification and a certified check for $10,000. On hand to speak with attendees were realtors specializing in foreclosures, real estate attorneys and home improvement specialists; and they also had access to seminars on mortgage prequalification and quick foreclosure sales.
The New York Foreclosure Showcase drew a crowd of almost 5,000 to the Marriott Hotel and Conference Center in Uniondale on Oct. 12, when 35 foreclosed properties were put on the auction block. The current market has afforded "opportunities to buy that didn't exist before," says Todd Yovino of Island Advantage Realty, who organized the event. Bidders needed to arrive with a mortgage prequalification and a certified check for $10,000. On hand to speak with attendees were realtors specializing in foreclosures, real estate attorneys and home improvement specialists; and they also had access to seminars on mortgage prequalification and quick foreclosure sales.
NAHB: Housing Jobs Key to State and Local Economic Recovery
RISMedia (10/13/08)
National Association of Home Builders Chairman Sandy Dunn urges state and local governments to consider innovative ideas to help shore up the slumping housing market. Dunn remarks, "While the federal government has stepped forward with a series of emergency actions to stabilize and restore confidence in the financial markets, it's now time for the same sort of innovative thinking at the local and state levels where public officials are grappling with budget shortfalls that are putting a squeeze on spending for everything from schools to public safety and other essential services." Such creative thinking could range from temporarily foregoing impact fees on new development to allowing higher density zoning to build more affordable housing. Dunn concludes that it is also vital that cities and counties extend existing zoning approvals while builders secure financing for new projects.
National Association of Home Builders Chairman Sandy Dunn urges state and local governments to consider innovative ideas to help shore up the slumping housing market. Dunn remarks, "While the federal government has stepped forward with a series of emergency actions to stabilize and restore confidence in the financial markets, it's now time for the same sort of innovative thinking at the local and state levels where public officials are grappling with budget shortfalls that are putting a squeeze on spending for everything from schools to public safety and other essential services." Such creative thinking could range from temporarily foregoing impact fees on new development to allowing higher density zoning to build more affordable housing. Dunn concludes that it is also vital that cities and counties extend existing zoning approvals while builders secure financing for new projects.
Paulson Speeds Consideration of Guarantees for U.S. Bank Debt
Bloomberg (10/13/08); Christie, Rebecca; Schmidt, Robert
U.S. Treasury Secretary Henry Paulson Jr. reportedly is fast-tracking a plan to guarantee debt issued by banks after a similar move was made by European policy makers over the weekend. Such a step would be part of a three-pronged strategy to free up credit markets that also calls for the government to buy shares in financial companies and invest in distressed assets under the $700 billion program recently approved by Capitol Hill lawmakers. In order to keep a level playing field for American lenders, the Treasury may also have to offer a backstop for U.S. banks' debt. At an emergency summit in Paris on Oct. 12, European leaders agreed to offer guarantees for new bank debt and committed to using taxpayer funds to bolster lenders' capital.
U.S. Treasury Secretary Henry Paulson Jr. reportedly is fast-tracking a plan to guarantee debt issued by banks after a similar move was made by European policy makers over the weekend. Such a step would be part of a three-pronged strategy to free up credit markets that also calls for the government to buy shares in financial companies and invest in distressed assets under the $700 billion program recently approved by Capitol Hill lawmakers. In order to keep a level playing field for American lenders, the Treasury may also have to offer a backstop for U.S. banks' debt. At an emergency summit in Paris on Oct. 12, European leaders agreed to offer guarantees for new bank debt and committed to using taxpayer funds to bolster lenders' capital.
Fannie Reaches Out to FHLBs
National Mortgage News (10/13/08) Vol. 33, No. 4, P. 15; Collins, Brian
Fannie Mae will purchase mortgages originated under the Federal Home Loan Bank of Chicago's Mortgage Partnership Finance program by its member banks. These MPF Xtra loans will not involve the program's trademark credit-risk sharing element once sold to the government-sponsored enterprise, however. Chicago FHLBank President Matt Feldman says the initiative "will make it easier for the majority of our members to continue to offer competitively priced fixed-rate mortgages to their customers in their communities." Fannie Mae will assume the member banks' interest rate risk, prepayment risk and credit risk, while the banks hang onto servicing rights and servicing fee revenues.
Fannie Mae will purchase mortgages originated under the Federal Home Loan Bank of Chicago's Mortgage Partnership Finance program by its member banks. These MPF Xtra loans will not involve the program's trademark credit-risk sharing element once sold to the government-sponsored enterprise, however. Chicago FHLBank President Matt Feldman says the initiative "will make it easier for the majority of our members to continue to offer competitively priced fixed-rate mortgages to their customers in their communities." Fannie Mae will assume the member banks' interest rate risk, prepayment risk and credit risk, while the banks hang onto servicing rights and servicing fee revenues.
Fannie, Freddie to Step Up Purchases of Troubled Mortgage Bonds
Bloomberg (10/13/08); Kopecki, Dawn
Insiders say Fannie Mae and Freddie Mac will begin buying $40 billion a month in underperforming mortgage bonds, including subprime, Alt-A and non-performing prime mortgage securities. The purchases are not tied to the U.S. Treasury's $700 billion Trouble Asset Relief Program. The mortgage finance companies have not turned a profit this year and already hold up to $210 billion of bad debt, but the Federal Housing Finance Agency says the Treasury might be able to purchase some of that debt. "The overall goal of the program will be to contribute greater stability and liquidity in the mortgage market, which should enhance consumers' access to mortgage financing and ultimately result in reduced mortgage interest rates," FHFA Director James Lockhart said in a statement in September.
Insiders say Fannie Mae and Freddie Mac will begin buying $40 billion a month in underperforming mortgage bonds, including subprime, Alt-A and non-performing prime mortgage securities. The purchases are not tied to the U.S. Treasury's $700 billion Trouble Asset Relief Program. The mortgage finance companies have not turned a profit this year and already hold up to $210 billion of bad debt, but the Federal Housing Finance Agency says the Treasury might be able to purchase some of that debt. "The overall goal of the program will be to contribute greater stability and liquidity in the mortgage market, which should enhance consumers' access to mortgage financing and ultimately result in reduced mortgage interest rates," FHFA Director James Lockhart said in a statement in September.
Take a bite out of closing costs
Hold the fees please. How to save if you're buying a new home or just refinancing.
BEND, Ore. (CNN/Money) - With mortgage rates still as low as they are, financing a house is dirt cheap these days, right?
Not if you pay a fortune in closing costs.
As anyone who has shopped around for a mortgage knows, it's extremely difficult to compare one lender's offering to with that of another lender because the up-front fees vary so much and are not guaranteed. Lenders and their venders can, and sometimes do, add or inflate fees in the eleventh hour of a transaction.
Click Here for the full article
BEND, Ore. (CNN/Money) - With mortgage rates still as low as they are, financing a house is dirt cheap these days, right?
Not if you pay a fortune in closing costs.
As anyone who has shopped around for a mortgage knows, it's extremely difficult to compare one lender's offering to with that of another lender because the up-front fees vary so much and are not guaranteed. Lenders and their venders can, and sometimes do, add or inflate fees in the eleventh hour of a transaction.
Click Here
Mortgage aid program launches
The $300B initiative will help borrowers who spend more than 31% of their income on mortgage payments.
WASHINGTON (AP) -- The government kicked off a program Wednesday that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans.
Lenders, rather than borrowers, will decide whether to participate in the program, which requires them to take a loss on the initial loan. The $300 billion, three-year program is designed to help borrowers who owe more on their loans than their homes are worth.
Click Here for the full article
WASHINGTON (AP) -- The government kicked off a program Wednesday that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans.
Lenders, rather than borrowers, will decide whether to participate in the program, which requires them to take a loss on the initial loan. The $300 billion, three-year program is designed to help borrowers who owe more on their loans than their homes are worth.
Click Here
Mortgage rates slip to 5.94%
NEW YORK (CNNMoney.com) -- Rates on 30-year mortgages fell from last week, while loan applications grew slightly in the face of turbulence in the banking and finance sectors.
Mortgage finance firm Freddie Mac (FRE, Fortune 500) reported Thursday that 30-year fixed-rate mortgages averaged 5.94% this week. That's down from 6.10% last week and well below 6.40%, where the rate stood a year ago.
"Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields," said Frank Nothaft, Freddie Mac vice president and chief economist.
Click Here for the full article
Mortgage finance firm Freddie Mac (FRE, Fortune 500) reported Thursday that 30-year fixed-rate mortgages averaged 5.94% this week. That's down from 6.10% last week and well below 6.40%, where the rate stood a year ago.
"Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields," said Frank Nothaft, Freddie Mac vice president and chief economist.
Click Here
Thursday, October 16, 2008
Economic Crisis Dims Manhattan Office Forecast
MBA (10/10/2008 ) Murray, Michael
Manhattan office vacancies could fluctuate negatively following Barclays Bank's acquisition of several Lehman Brothers business units, Bank of America's acquisition of Merrill Lynch, events at AIG and other economic issues.
In a New York office forecast report, Property and Portfolio Research, Boston, said Lehman's office space could remain occupied because of Barclay's acquisition. PPR reported that Lehman Brothers occupies nearly 3.4 million square feet of office space in the New York metro, including a one million square-foot building it owns at 745 Seventh Avenue, based on recent filings with the Securities and Exchange Commission.
"In the modified base case scenario, the addition of 3.4 million square feet of vacant space to the New York office market would exacerbate an already dismal demand picture for 2008, resulting in negative net absorption of 11.4 million square feet for the year," PPR said.
In an alternate “upside” scenario that assumes Lehman vacates only half of its office space [1.7 million square feet], PPR said vacancies could reach 12.4 percent in the third quarter. “In this case, the 'upside' would still result in a vacancy rate that is 220 basis points above year-ago levels, and rent projections would remain negative through 2009. But this scenario wouldn't count likely job losses in other financial firms and knock-on effects in the market."
Bank of America's acquisition of Merrill Lynch also leaves questions; PPR reported that New York "may again bear the brunt of any downsizing, and given that Merrill occupies nearly as much space [3.2 million square feet] in the metro as Lehman did, there could be much more pain on the way."
In a worst-case scenario of further economic troubles, PPR estimated job losses in financial activities at nearly 75,000—peak-to-trough—based on severe recessionary economic conditions, compared to nearly 40,000 cuts in the base case, or moderate recession, forecast.
"The health of the financial sector is highly correlated with the health of the overall New York economy, so heavy financial losses would carry through to other job sectors, bringing total metro unemployment close to 11 percent," PPR said. "These conditions would yield substantial negative net absorption—carrying into 2010—and a vacancy rate in the high teens, similar to levels reached in the early 1990s. Rent losses in this scenario would stretch on through 2011, with 2009 and 2010 as the worst years—contracting by 13 percent and 9 percent, respectively, and values would scale back by over 13 percent through 2009."
Manhattan office vacancies could fluctuate negatively following Barclays Bank's acquisition of several Lehman Brothers business units, Bank of America's acquisition of Merrill Lynch, events at AIG and other economic issues.
In a New York office forecast report, Property and Portfolio Research, Boston, said Lehman's office space could remain occupied because of Barclay's acquisition. PPR reported that Lehman Brothers occupies nearly 3.4 million square feet of office space in the New York metro, including a one million square-foot building it owns at 745 Seventh Avenue, based on recent filings with the Securities and Exchange Commission.
"In the modified base case scenario, the addition of 3.4 million square feet of vacant space to the New York office market would exacerbate an already dismal demand picture for 2008, resulting in negative net absorption of 11.4 million square feet for the year," PPR said.
In an alternate “upside” scenario that assumes Lehman vacates only half of its office space [1.7 million square feet], PPR said vacancies could reach 12.4 percent in the third quarter. “In this case, the 'upside' would still result in a vacancy rate that is 220 basis points above year-ago levels, and rent projections would remain negative through 2009. But this scenario wouldn't count likely job losses in other financial firms and knock-on effects in the market."
Bank of America's acquisition of Merrill Lynch also leaves questions; PPR reported that New York "may again bear the brunt of any downsizing, and given that Merrill occupies nearly as much space [3.2 million square feet] in the metro as Lehman did, there could be much more pain on the way."
In a worst-case scenario of further economic troubles, PPR estimated job losses in financial activities at nearly 75,000—peak-to-trough—based on severe recessionary economic conditions, compared to nearly 40,000 cuts in the base case, or moderate recession, forecast.
"The health of the financial sector is highly correlated with the health of the overall New York economy, so heavy financial losses would carry through to other job sectors, bringing total metro unemployment close to 11 percent," PPR said. "These conditions would yield substantial negative net absorption—carrying into 2010—and a vacancy rate in the high teens, similar to levels reached in the early 1990s. Rent losses in this scenario would stretch on through 2011, with 2009 and 2010 as the worst years—contracting by 13 percent and 9 percent, respectively, and values would scale back by over 13 percent through 2009."
MBA Conducting Member Survey
MBA (10/10/2008 ) Pardo, Sheryl
The Mortgage Bankers Association is conducting a brief survey about what MBA members value most in their membership.
“In a time of limited resources, we must ensure that MBA is focusing its efforts on [members] top priorities,” said MBA Chief Operating Officer John Courson. “Only by knowing what you value most can we ensure that MBA is best supporting your company during these turbulent times.”
The survey takes less than 15 minutes to complete. It asks questions about why members choose to belong to MBA; which products, services and issues are of most importance to members, and where MBA can improve.
The survey will be distributed this week; responses are due Oct. 15.
The Mortgage Bankers Association is conducting a brief survey about what MBA members value most in their membership.
“In a time of limited resources, we must ensure that MBA is focusing its efforts on [members] top priorities,” said MBA Chief Operating Officer John Courson. “Only by knowing what you value most can we ensure that MBA is best supporting your company during these turbulent times.”
The survey takes less than 15 minutes to complete. It asks questions about why members choose to belong to MBA; which products, services and issues are of most importance to members, and where MBA can improve.
The survey will be distributed this week; responses are due Oct. 15.
Future SaaS Development Invites Customers into Cloud
MBA (10/10/2008 ) Palaparty, Vijay
Software-as-a-service’s future will expand on customer/vendor partnerships, in which vendors provide programmable platforms that yield customized technology for customers.
The model presents opportunities for customers to guide their own development, while expanding vendor offerings.
“Future trends in SaaS include the ability to provide customer-driven software development,” said David Hultquist, vice president of marketing at Dorado Corp., San Mateo, Calif. “No software vendor can have everything but technology-wise, it will become a future need of SaaS. Customers will require classical benefits such as the ease of use in a monthly subscription format, but will also demand having benefits of customization.”
London-based web hosting provider Hostway said in a recent study that 72 percent of organizations believe virtualization will drive SaaS adoption. Furthermore, two-thirds of organizations reported plans to adopt SaaS within the next five years.
"SaaS reduces overall software license spending for larger companies, while helping smaller companies adopt enterprise-level software without the large upfront investment or the need to train staff to manage and monitor applications," Hostway said. A further 72 percent of companies are certain that SaaS will make their application usage more cost-effective because of reduction in software management costs, and the ability to eliminate buying too many or too few software licenses.
"Furthermore, around half of all organizations believe that it will enable smaller companies to use enterprise-level software without the need for large upfront investment, or having to train staff to manage and monitor these applications," said Neil Barton , director of Hostway. "Given these benefits, it is unsurprising that two-thirds of organizations are planning to adopt SaaS within five years."
Hultquist said benefits of SaaS include vendors' ability to better project revenue streams and business, helping companies realize cost benefits. He said the adaptability of SaaS can more appropriately respond to market fluctuations.
“Years ago we had to do a lot of education against a built-in bias among companies that said they require all technology to be in-house," Hultquist said. “That has changed quite a lot, and we’ve observed not completely universal but growing awareness of SaaS and its benefits. The overwhelming advantages of setting up and running quickly compensates for the lingering feeling that some companies want all software in their own control.”
To deal with such reservation, along with a slow business market, companies such as Dorado have revised their marketing strategies to acquire customers in a piecemeal approach.
“We are helping companies in a phased approach in which they can move part of the business to our technology and ramp up over time," Hultquist said. "They realize quicker ROI this way and can do that without having to take an entire year to make one great big decision. The ROI will demonstrate itself.”
From a data management perspective, Hultquist said SaaS vendors are better able to meet customer requests in both managing and securing data as well as running data and formatting it as requested. “Meeting the changing regulatory landscape is a good example of companies requesting data in different formats—even management reporting,” he said.
Software-as-a-service’s future will expand on customer/vendor partnerships, in which vendors provide programmable platforms that yield customized technology for customers.
The model presents opportunities for customers to guide their own development, while expanding vendor offerings.
“Future trends in SaaS include the ability to provide customer-driven software development,” said David Hultquist, vice president of marketing at Dorado Corp., San Mateo, Calif. “No software vendor can have everything but technology-wise, it will become a future need of SaaS. Customers will require classical benefits such as the ease of use in a monthly subscription format, but will also demand having benefits of customization.”
London-based web hosting provider Hostway said in a recent study that 72 percent of organizations believe virtualization will drive SaaS adoption. Furthermore, two-thirds of organizations reported plans to adopt SaaS within the next five years.
"SaaS reduces overall software license spending for larger companies, while helping smaller companies adopt enterprise-level software without the large upfront investment or the need to train staff to manage and monitor applications," Hostway said. A further 72 percent of companies are certain that SaaS will make their application usage more cost-effective because of reduction in software management costs, and the ability to eliminate buying too many or too few software licenses.
"Furthermore, around half of all organizations believe that it will enable smaller companies to use enterprise-level software without the need for large upfront investment, or having to train staff to manage and monitor these applications," said Neil Barton , director of Hostway. "Given these benefits, it is unsurprising that two-thirds of organizations are planning to adopt SaaS within five years."
Hultquist said benefits of SaaS include vendors' ability to better project revenue streams and business, helping companies realize cost benefits. He said the adaptability of SaaS can more appropriately respond to market fluctuations.
“Years ago we had to do a lot of education against a built-in bias among companies that said they require all technology to be in-house," Hultquist said. “That has changed quite a lot, and we’ve observed not completely universal but growing awareness of SaaS and its benefits. The overwhelming advantages of setting up and running quickly compensates for the lingering feeling that some companies want all software in their own control.”
To deal with such reservation, along with a slow business market, companies such as Dorado have revised their marketing strategies to acquire customers in a piecemeal approach.
“We are helping companies in a phased approach in which they can move part of the business to our technology and ramp up over time," Hultquist said. "They realize quicker ROI this way and can do that without having to take an entire year to make one great big decision. The ROI will demonstrate itself.”
From a data management perspective, Hultquist said SaaS vendors are better able to meet customer requests in both managing and securing data as well as running data and formatting it as requested. “Meeting the changing regulatory landscape is a good example of companies requesting data in different formats—even management reporting,” he said.
HUD Program to Buy Foreclosures
Miami Herald (10/10/08)
HUD's Neighborhood Stabilization Program providing state and local governments with a total of $4 billion to buy foreclosed and abandoned properties to curtail blight and bolster homeownership will be launched at an Oct. 16 summit in Orlando. The money will be distributed to areas devastated by the housing crisis, with Florida awarded $541 million. Under the plan, foreclosed homes could be transformed into affordable rentals or for-sale dwellings.
HUD's Neighborhood Stabilization Program providing state and local governments with a total of $4 billion to buy foreclosed and abandoned properties to curtail blight and bolster homeownership will be launched at an Oct. 16 summit in Orlando. The money will be distributed to areas devastated by the housing crisis, with Florida awarded $541 million. Under the plan, foreclosed homes could be transformed into affordable rentals or for-sale dwellings.
Foreclosure Sales Halted in Hurricane-Hit Areas
Washington Post (10/10/08) P. D4
Through Dec. 31, mortgage servicers may not proceed with foreclosure sales in areas of Texas and Louisiana classified as federal disaster areas due to Hurricane Ike. Freddie Mac says mortgages in default before the storm also are covered by the firm's mandate. Servicers will consider on a case-by-case basis whether to move forward with foreclosure or offer more relief once the moratorium ends.
Through Dec. 31, mortgage servicers may not proceed with foreclosure sales in areas of Texas and Louisiana classified as federal disaster areas due to Hurricane Ike. Freddie Mac says mortgages in default before the storm also are covered by the firm's mandate. Servicers will consider on a case-by-case basis whether to move forward with foreclosure or offer more relief once the moratorium ends.
Mixed Signals for Mortgage Giants
Washington Post (10/10/08) P. D2; Goldfarb, Zachary A.
Despite a June report that Fannie Mae and Freddie Mac had $9.4 billion and $2.7 billion more capital, respectively, than its regulator requires, the Federal Housing Finance Agency has deemed the companies undercapitalized due to the mortgage crisis and increasing concerns about safety and soundness. The agency indicates that intangible assets, such as tax credits, accounted for a substantial amount of the firms' capital and that capital is no longer an accurate gauge of financial health. University of California at Berkeley finance professor Dwight Jaffee says Fannie Mae and Freddie Mac were unable to generate capital by issuing new stock following comments made by Treasury Secretary Henry Paulson prior to their takeover that government intervention "would be sure to wipe out the shareholders." Jaffee says the government hopes the companies will help the housing market recover, noting that such a move "may involve taking more risks than they would ordinarily do and accepting a lower return on the assets than they normally do."
Despite a June report that Fannie Mae and Freddie Mac had $9.4 billion and $2.7 billion more capital, respectively, than its regulator requires, the Federal Housing Finance Agency has deemed the companies undercapitalized due to the mortgage crisis and increasing concerns about safety and soundness. The agency indicates that intangible assets, such as tax credits, accounted for a substantial amount of the firms' capital and that capital is no longer an accurate gauge of financial health. University of California at Berkeley finance professor Dwight Jaffee says Fannie Mae and Freddie Mac were unable to generate capital by issuing new stock following comments made by Treasury Secretary Henry Paulson prior to their takeover that government intervention "would be sure to wipe out the shareholders." Jaffee says the government hopes the companies will help the housing market recover, noting that such a move "may involve taking more risks than they would ordinarily do and accepting a lower return on the assets than they normally do."
Commercial Realty: Market Bright Spot
American Banker (10/10/08) P. 13; Berry, Kate
According to Advantus Capital Management Inc.'s third-quarter economic update, commercial real estate remains one of the stock market's better-performing sectors. The Minnesota-based investment adviser's relatively bullish view of commercial property was based on a 4.5-percent increase in the Dow Jones Wilshire Real Estate Securities Index, which outperformed the Standard & Poor's 500 Index in the third quarter this year. Advantus noted in its report that commercial real estate funding typically is long term, "insulating it from current stresses in short-term credit." Although the fundamentals of the commercial sector are currently "solid," a braking economy would likely put pressure on certain properties, like hotels, where income is not derived from leases and other longer-term instruments.
According to Advantus Capital Management Inc.'s third-quarter economic update, commercial real estate remains one of the stock market's better-performing sectors. The Minnesota-based investment adviser's relatively bullish view of commercial property was based on a 4.5-percent increase in the Dow Jones Wilshire Real Estate Securities Index, which outperformed the Standard & Poor's 500 Index in the third quarter this year. Advantus noted in its report that commercial real estate funding typically is long term, "insulating it from current stresses in short-term credit." Although the fundamentals of the commercial sector are currently "solid," a braking economy would likely put pressure on certain properties, like hotels, where income is not derived from leases and other longer-term instruments.
30-Year Mortgage Rates Fall to Under 6 Percent
Miami Herald (10/10/08)
Freddie Mac reports a drop in the 30-year fixed mortgage rate to 5.94 percent during the week ended Oct. 9, marking the first decrease in three weeks. The 15-year fixed rate slipped to 5.63 percent from 5.78 percent the previous week. Meanwhile, the five-year adjustable mortgage rate dropped a notch to 5.9 percent from 6 percent and the one-year ARM dipped slightly to 5.15 percent.
Freddie Mac reports a drop in the 30-year fixed mortgage rate to 5.94 percent during the week ended Oct. 9, marking the first decrease in three weeks. The 15-year fixed rate slipped to 5.63 percent from 5.78 percent the previous week. Meanwhile, the five-year adjustable mortgage rate dropped a notch to 5.9 percent from 6 percent and the one-year ARM dipped slightly to 5.15 percent.
Citigroup Ends Wachovia Bid; Wells Fargo Prevails
Chicago Tribune (10/10/08)
Wells Fargo will acquire the entire operations of Charlotte-based Wachovia, including a mortgage portfolio that is expected to generate $74 billion of write-downs and losses. "The opportunities the franchise brings to us over time more than compensates for those losses," Chairman Richard Kovacevich said after announcing the deal. San Francisco-based Wells Fargo submitted a bid of $15 billion for Wachovia after Citigroup sought to purchase part of its banking operations for $2.2 billion. Citigroup said it would not interfere with the Wells takeover but did indicate that it would sue for $60 billion in damages due to breach of contract.
Wells Fargo will acquire the entire operations of Charlotte-based Wachovia, including a mortgage portfolio that is expected to generate $74 billion of write-downs and losses. "The opportunities the franchise brings to us over time more than compensates for those losses," Chairman Richard Kovacevich said after announcing the deal. San Francisco-based Wells Fargo submitted a bid of $15 billion for Wachovia after Citigroup sought to purchase part of its banking operations for $2.2 billion. Citigroup said it would not interfere with the Wells takeover but did indicate that it would sue for $60 billion in damages due to breach of contract.
Treasury Weighs Investing In Banks
Washington Post (10/10/08) P. D1; Cho, David; Appelbaum, Binyamin; Montgomery, Lori
Hoping to boost confidence in the country's troubled financial system, the White House reportedly is putting the finishing touches on a plan that would allow the U.S. government to inject cash into banks in return for ownership interests. Under the $700 billion economic stabilization package that was passed by Capitol Hill lawmakers and signed into law by President Bush a week ago, senior Treasury officials believe they have the authority to take such stakes in banks. However, the Bush administration still has to work out a number of key issues--including when the plan would take effect and how many banks should be included. The Treasury Department will likely announce the plan by the end of October, if not sooner.
Hoping to boost confidence in the country's troubled financial system, the White House reportedly is putting the finishing touches on a plan that would allow the U.S. government to inject cash into banks in return for ownership interests. Under the $700 billion economic stabilization package that was passed by Capitol Hill lawmakers and signed into law by President Bush a week ago, senior Treasury officials believe they have the authority to take such stakes in banks. However, the Bush administration still has to work out a number of key issues--including when the plan would take effect and how many banks should be included. The Treasury Department will likely announce the plan by the end of October, if not sooner.
Candidates Step Up Battle Over Mortgage Crisis, Ailing Economy
Boston Globe (10/10/08); Rhee, Foon
Presidential candidate Sen. Barack Obama, D-Ill., directly criticized the mortgage plan of Sen. John McCain, R-Ariz., for the first time while campaigning on Oct. 9, saying his opponent's proposal would punish taxpayers and not the lenders that helped create the mortgage crisis. Obama said he prefers to crack down on predatory lenders, keep the government from paying more than it needs for mortgages and allow bankruptcy judges to rework loan terms. McCain wants to spend $300 billion to buy mortgages from struggling homeowners and refinance them into more affordable loans. The plan has attracted criticism from other corners because it would not require the financial institutions holding the original mortgages to cover some of the losses.
Presidential candidate Sen. Barack Obama, D-Ill., directly criticized the mortgage plan of Sen. John McCain, R-Ariz., for the first time while campaigning on Oct. 9, saying his opponent's proposal would punish taxpayers and not the lenders that helped create the mortgage crisis. Obama said he prefers to crack down on predatory lenders, keep the government from paying more than it needs for mortgages and allow bankruptcy judges to rework loan terms. McCain wants to spend $300 billion to buy mortgages from struggling homeowners and refinance them into more affordable loans. The plan has attracted criticism from other corners because it would not require the financial institutions holding the original mortgages to cover some of the losses.
Abroad, CMBS Performance Mixed
MBA (10/14/2008 ) Sorohan, Mike
The commercial mortgage-backed securities market might be stagnant in the U.S., but in Europe, markets show a broader mix in performance.
Moody’s Investors Service, New York, reports continental European office occupational markets that support CMBS have on average performed better than the U.K. markets in the past 12 months. The Moody’s Red-Yellow-Green Report found four of 17 continental European markets showed improved scores and three remained unchanged compared with year-end 2007, while six out of seven U.K. markets deteriorated.
The semi-annual update of Moody's report includes 24 major European office markets, including London, Paris, Barcelona and Munich.
"The apparent split between the U.K. and Europe is most likely a result of the greater exposure of the office occupiers in the U.K. to the credit-crunch, which has been most pronounced in the London City and London Docklands markets," said Jeroen Heijdeman, a Moody's analyst and co-author of the report.
Between mid-year 2007 and mid-year 2008, the weighted-average composite score for the European office markets covered by Moody's analysis decreased to 56 from 63, putting them solidly in the “yellow” market.
Moody’s said the downward movement in the composite score resulted mainly from negative reclassifications of six out of the 24 markets analyzed. The number of red markets increased to six from two over the 12-month period. In total, Moody’s reported six red markets, 10 yellow markets and eight green markets. London Docklands followed by London City showed the most significant market deterioration.
"It is noteworthy that all three London office sub-markets showed further signs of deterioration for the third consecutive time," said Oliver Moldenhauer, a Moody's assistant vice president and co-author of the report. "This is mainly due to a decline in projected take-up levels.”
The most improved occupational market conditions over the 12-month period was the Paris central business district, which at 83 has the highest score of any market.
The report highlights that a “continuation of the recent turmoil in the capital markets and the expected knock-on effects on the real economy will most likely result in further deterioration of the office occupational markets. Such events have so far only been included in the data set to a limited extend.”
The full report can be found on www.moodys.com.
The commercial mortgage-backed securities market might be stagnant in the U.S., but in Europe, markets show a broader mix in performance.
Moody’s Investors Service, New York, reports continental European office occupational markets that support CMBS have on average performed better than the U.K. markets in the past 12 months. The Moody’s Red-Yellow-Green Report found four of 17 continental European markets showed improved scores and three remained unchanged compared with year-end 2007, while six out of seven U.K. markets deteriorated.
The semi-annual update of Moody's report includes 24 major European office markets, including London, Paris, Barcelona and Munich.
"The apparent split between the U.K. and Europe is most likely a result of the greater exposure of the office occupiers in the U.K. to the credit-crunch, which has been most pronounced in the London City and London Docklands markets," said Jeroen Heijdeman, a Moody's analyst and co-author of the report.
Between mid-year 2007 and mid-year 2008, the weighted-average composite score for the European office markets covered by Moody's analysis decreased to 56 from 63, putting them solidly in the “yellow” market.
Moody’s said the downward movement in the composite score resulted mainly from negative reclassifications of six out of the 24 markets analyzed. The number of red markets increased to six from two over the 12-month period. In total, Moody’s reported six red markets, 10 yellow markets and eight green markets. London Docklands followed by London City showed the most significant market deterioration.
"It is noteworthy that all three London office sub-markets showed further signs of deterioration for the third consecutive time," said Oliver Moldenhauer, a Moody's assistant vice president and co-author of the report. "This is mainly due to a decline in projected take-up levels.”
The most improved occupational market conditions over the 12-month period was the Paris central business district, which at 83 has the highest score of any market.
The report highlights that a “continuation of the recent turmoil in the capital markets and the expected knock-on effects on the real economy will most likely result in further deterioration of the office occupational markets. Such events have so far only been included in the data set to a limited extend.”
The full report can be found on www.moodys.com.
Residential Briefs
MBA (10/14/2008 ) Palaparty, Vijay
PriceMyLoan Integrates Freddie Mac’s Loan Prospector
PriceMyLoan, Costa Mesa, Calif., released technology that incorporates Freddie Mac's Loan Prospector automated underwriting system. The integration allows originators to obtain decisions from LP from within the PML system.
PML is an automated eligibility and pricing tool that is used by mortgage lenders to provide loan decisions at point of sale. The LP integration provides a method for originators to submit credit report and loan data directly to Loan Prospector system from within PML. LP responses are brought back into PML and are used to generate product and pricing decisions for specific investor loan products.
Home America Mortgage Selects Advantage Systems
Home America Mortgage, Lawrenceville, Ga., a residential mortgage lender that offers financing to consumers throughout the Southeast and in Colorado, selected Accounting for Mortgage Bankers from Advantage Systems, Irvine, Calif.
AMB is an accounting system that was designed for mortgage bankers to provide loan-level detail of accounting transactions. The system provides general ledger, accounts payable and report writing capabilities. A web-based reporting module is also available for branch managers along with a module to calculate commissions, bonuses and overrides.
Salient Business Solutions Establishes U.S. Division
Salient Business Solutions, Gurgaon, India, a provider of business process outsourcing services, created a U.S.–based division, Salient Business Solutions USA Inc., New York. The U.S. division enables Salient to establish a U.S. presence and provide customers with a domestic origination and delivery team, as well as local accountability.
Salient provides BPO services to various vertical markets, including mortgage, healthcare, telecom expense management and financial services. On the mortgage side, Salient provides clients with loan processing services from loan opening to post-close review, as well as processing in reverse and FHA lending. In addition to its vertical market offerings, Salient offers horizontally focused services, including revenue cycle management, data management, finance and accounting, human resources services and information technology services.
Wolters Kluwer Releases Version 2.0 of ComplianceOne, Partners with DPS
Wolters Kluwer Financial Services, Minneapolis, released version 2.0 of ComplianceOne, a technology platform that gives financial institutions ability to manage regulatory and operational risk. Updates to ComplianceOne include integration with Wiz Sentri: RiskID and Secure Document Exchange.
Wolters Kluwer reached agreement with Document Processing Systems Inc., Novi, Mich., to transition DPS’ customers onto its Document Services Platform. DPS provides mortgage lenders and brokers with document preparation services through the company’s DIRECT-DOCS online technology platform. The company announced that it would exit the document preparation services business.
LenderLive Network, Mavent Expand Compliance Validation Services
LenderLive Network Inc., Denver, a business process outsourcing and technology provider for the financial industry, and Mavent Inc., Irvine, Calif., an automated regulatory compliance provider, expanded compliance validation services to all LenderLive clients. Integrating Mavent’s automated compliance into LenderLive’s point-of-sale system and back-office processes is designed to provide LenderLive’s clients with cost efficiencies and risk mitigation.
ValuFinders Survey Finds Varying Appraiser Ordering Processes
More appraisers use technology to fulfill appraisal orders according to a survey conducted by ValuFinders Inc., Culver City, Calif., a provider of valuation services to national lenders, brokers and government agencies. The survey also found limited use of appraisal management companies.
Fifty-eight percent of appraisers said they use e-mail as a primary delivery method of obtaining and delivering appraisal orders and 18 percent use an online service. Forty percent responded that only one-fourth of their clients employ an online ordering system while 32 percent said between one-half and three-fourths of their clients use them;
Fifty-six percent of appraisers surveyed use AMCs for one-fourth or less of their business and 52 percent do not foresee that percentage increasing in the future. Eighty-two percent said they would consider being part of an online network where they could receive appraisal orders.
PriceMyLoan Integrates Freddie Mac’s Loan Prospector
PriceMyLoan, Costa Mesa, Calif., released technology that incorporates Freddie Mac's Loan Prospector automated underwriting system. The integration allows originators to obtain decisions from LP from within the PML system.
PML is an automated eligibility and pricing tool that is used by mortgage lenders to provide loan decisions at point of sale. The LP integration provides a method for originators to submit credit report and loan data directly to Loan Prospector system from within PML. LP responses are brought back into PML and are used to generate product and pricing decisions for specific investor loan products.
Home America Mortgage Selects Advantage Systems
Home America Mortgage, Lawrenceville, Ga., a residential mortgage lender that offers financing to consumers throughout the Southeast and in Colorado, selected Accounting for Mortgage Bankers from Advantage Systems, Irvine, Calif.
AMB is an accounting system that was designed for mortgage bankers to provide loan-level detail of accounting transactions. The system provides general ledger, accounts payable and report writing capabilities. A web-based reporting module is also available for branch managers along with a module to calculate commissions, bonuses and overrides.
Salient Business Solutions Establishes U.S. Division
Salient Business Solutions, Gurgaon, India, a provider of business process outsourcing services, created a U.S.–based division, Salient Business Solutions USA Inc., New York. The U.S. division enables Salient to establish a U.S. presence and provide customers with a domestic origination and delivery team, as well as local accountability.
Salient provides BPO services to various vertical markets, including mortgage, healthcare, telecom expense management and financial services. On the mortgage side, Salient provides clients with loan processing services from loan opening to post-close review, as well as processing in reverse and FHA lending. In addition to its vertical market offerings, Salient offers horizontally focused services, including revenue cycle management, data management, finance and accounting, human resources services and information technology services.
Wolters Kluwer Releases Version 2.0 of ComplianceOne, Partners with DPS
Wolters Kluwer Financial Services, Minneapolis, released version 2.0 of ComplianceOne, a technology platform that gives financial institutions ability to manage regulatory and operational risk. Updates to ComplianceOne include integration with Wiz Sentri: RiskID and Secure Document Exchange.
Wolters Kluwer reached agreement with Document Processing Systems Inc., Novi, Mich., to transition DPS’ customers onto its Document Services Platform. DPS provides mortgage lenders and brokers with document preparation services through the company’s DIRECT-DOCS online technology platform. The company announced that it would exit the document preparation services business.
LenderLive Network, Mavent Expand Compliance Validation Services
LenderLive Network Inc., Denver, a business process outsourcing and technology provider for the financial industry, and Mavent Inc., Irvine, Calif., an automated regulatory compliance provider, expanded compliance validation services to all LenderLive clients. Integrating Mavent’s automated compliance into LenderLive’s point-of-sale system and back-office processes is designed to provide LenderLive’s clients with cost efficiencies and risk mitigation.
ValuFinders Survey Finds Varying Appraiser Ordering Processes
More appraisers use technology to fulfill appraisal orders according to a survey conducted by ValuFinders Inc., Culver City, Calif., a provider of valuation services to national lenders, brokers and government agencies. The survey also found limited use of appraisal management companies.
Fifty-eight percent of appraisers said they use e-mail as a primary delivery method of obtaining and delivering appraisal orders and 18 percent use an online service. Forty percent responded that only one-fourth of their clients employ an online ordering system while 32 percent said between one-half and three-fourths of their clients use them;
Fifty-six percent of appraisers surveyed use AMCs for one-fourth or less of their business and 52 percent do not foresee that percentage increasing in the future. Eighty-two percent said they would consider being part of an online network where they could receive appraisal orders.
Financial Fraud Incidents Average $463,100
MBA (10/14/2008 ) Palaparty, Vijay
Losses from financial fraud have cost businesses an average of $463,100 so far this year, according to the 2008 Computer Security Institute Crime & Security Survey.
Average total losses stemming from various types of computer security incidents, however, dropped to $288,618 per business in 2008 after rising to $345,505 last year—though still higher from $167,713 reported in 2006.
“There seems little question that several sweeping changes in the overall state of IT practices—coupled with equally broad changes in the habits of the criminal world—are making significant, hard-hitting attacks easier and more lucrative for their perpetrators,” said Robert Richardson, director of CSI, San Francisco. “On most days at most organizations, attacks are less imaginative than what’s currently theoretically possible—which, for the moment, is good news.”
The survey said dealing with loss of either proprietary information or loss of customer and employee confidential data averaged $241,000 and $268,000, respectively.
“Most attacks respondents see are relatively standard attacks like viruses and theft of mobile devices like laptop computers.” Richardson said. “Although the loss of a laptop computer may be quite expensive if it contains unencrypted confidential data, many laptops are lost that don’t cost more than replacement and associated administrative costs. Virus incidents cost organizations that reported financial loss data an average of only $40,141; hardly a threat to the viability of most organizations.”
Virus incidents, the most popular source of crime, occurred at 49 percent of respondents’ organizations, the survey said. Insider abuse of networks was second-most frequent, reported by 44 percent of organizations, followed by theft of laptops and other mobile devices, reported by 42 percent of organizations. Unauthorized access accounted for 29 percent.
The 2008 Verizon Business Data Breach Investigations Report reported financial services institutions face greater data breach risk from insiders than external or partner sources as well. The report also cited deceit and misuse as the most common forms of attack.
“Enterprises should assess their security strategies knowing that challenges differ significantly and that a one-size-fits-all approach is rarely effective,” said Peter Tippett, vice president of research and intelligence at Verizon Business Security Solutions, Basking Ridge, N.J., an authors of the report. “Good security does not lend itself to a cookie-cutter approach. Understanding what happens when a data breach occurs is critical to prevention.”
End-users were responsible for 53 percent of breaches in institutions while IT administrators accounted for 31 percent, the report said. Eight percent of breaches were instigated by agents or spies and an additional 8 percent were from anonymous sources.
In the CSI survey, 27 percent of respondents said they had detected at least one targeted attack—a malware attack—aimed exclusively at their organizations or at organizations with a small subset of the general business population.
Sixty-eight percent of organizations reported that they had, and 18 percent said they were developing, formal information security policy. Only 1 percent said they had no security policy.
By November 1, U.S. financial institutions and other creditors must be compliant with the Red Flag Rules of the U.S. Fair and Accurate Credit Transactions Act of 2003, a consumer information security compliance measure. The rules require lenders to develop and implement a written Identity Theft Prevention Program to prevent, detect and mitigate ID theft.
“While there are handfuls of spectacular crimes in a year, there are millions of [crimes on] enterprise networks that do not make headlines,” Richardson said. “Furthermore, we must draw a distinction between developing threats and actual successful attacks. There is cause for great concern regarding the sorts of attacks that become possible as we move to a more service-oriented web, but these are not threats that have seen widespread use yet.”
Losses from financial fraud have cost businesses an average of $463,100 so far this year, according to the 2008 Computer Security Institute Crime & Security Survey.
Average total losses stemming from various types of computer security incidents, however, dropped to $288,618 per business in 2008 after rising to $345,505 last year—though still higher from $167,713 reported in 2006.
“There seems little question that several sweeping changes in the overall state of IT practices—coupled with equally broad changes in the habits of the criminal world—are making significant, hard-hitting attacks easier and more lucrative for their perpetrators,” said Robert Richardson, director of CSI, San Francisco. “On most days at most organizations, attacks are less imaginative than what’s currently theoretically possible—which, for the moment, is good news.”
The survey said dealing with loss of either proprietary information or loss of customer and employee confidential data averaged $241,000 and $268,000, respectively.
“Most attacks respondents see are relatively standard attacks like viruses and theft of mobile devices like laptop computers.” Richardson said. “Although the loss of a laptop computer may be quite expensive if it contains unencrypted confidential data, many laptops are lost that don’t cost more than replacement and associated administrative costs. Virus incidents cost organizations that reported financial loss data an average of only $40,141; hardly a threat to the viability of most organizations.”
Virus incidents, the most popular source of crime, occurred at 49 percent of respondents’ organizations, the survey said. Insider abuse of networks was second-most frequent, reported by 44 percent of organizations, followed by theft of laptops and other mobile devices, reported by 42 percent of organizations. Unauthorized access accounted for 29 percent.
The 2008 Verizon Business Data Breach Investigations Report reported financial services institutions face greater data breach risk from insiders than external or partner sources as well. The report also cited deceit and misuse as the most common forms of attack.
“Enterprises should assess their security strategies knowing that challenges differ significantly and that a one-size-fits-all approach is rarely effective,” said Peter Tippett, vice president of research and intelligence at Verizon Business Security Solutions, Basking Ridge, N.J., an authors of the report. “Good security does not lend itself to a cookie-cutter approach. Understanding what happens when a data breach occurs is critical to prevention.”
End-users were responsible for 53 percent of breaches in institutions while IT administrators accounted for 31 percent, the report said. Eight percent of breaches were instigated by agents or spies and an additional 8 percent were from anonymous sources.
In the CSI survey, 27 percent of respondents said they had detected at least one targeted attack—a malware attack—aimed exclusively at their organizations or at organizations with a small subset of the general business population.
Sixty-eight percent of organizations reported that they had, and 18 percent said they were developing, formal information security policy. Only 1 percent said they had no security policy.
By November 1, U.S. financial institutions and other creditors must be compliant with the Red Flag Rules of the U.S. Fair and Accurate Credit Transactions Act of 2003, a consumer information security compliance measure. The rules require lenders to develop and implement a written Identity Theft Prevention Program to prevent, detect and mitigate ID theft.
“While there are handfuls of spectacular crimes in a year, there are millions of [crimes on] enterprise networks that do not make headlines,” Richardson said. “Furthermore, we must draw a distinction between developing threats and actual successful attacks. There is cause for great concern regarding the sorts of attacks that become possible as we move to a more service-oriented web, but these are not threats that have seen widespread use yet.”
Fed Clears Wells-Wachovia Deal
Investor's Business Daily (10/14/08) P. A2
The Federal Reserve has given its approval to Wells Fargo's acquisition of Wachovia for $11.7 billion, which Wells Fargo hopes to finalize by the end of the year. Wachovia shareholders need to give the deal the green light before it can proceed. Meanwhile, Citigroup say it has no plans to challenge the acquisition in court. However, the bank will seek damages totaling $60 billion for breach of contract, having bid $2.1 billion to purchase Wachovia's banking operations prior to the deal with Wells Fargo.
The Federal Reserve has given its approval to Wells Fargo's acquisition of Wachovia for $11.7 billion, which Wells Fargo hopes to finalize by the end of the year. Wachovia shareholders need to give the deal the green light before it can proceed. Meanwhile, Citigroup say it has no plans to challenge the acquisition in court. However, the bank will seek damages totaling $60 billion for breach of contract, having bid $2.1 billion to purchase Wachovia's banking operations prior to the deal with Wells Fargo.
Spanish Bank to Buy Rest of Sovereign
Washington Post (10/14/08) P. D4; Fredrix, Emily
Banco Santander will acquire the rest of Sovereign Bancorp of Philadelphia for $1.9 billion. The Spanish bank already has a 25-percent interest in the thrift. Mortgage delinquencies continue to rise at Sovereign, whose stock has lost nearly two-thirds of its value so far this year. Sovereign also reports that it lost $982 million in the period ended Sept. 30, compared with a profit of $58.2 million during the same period a year ago.
Banco Santander will acquire the rest of Sovereign Bancorp of Philadelphia for $1.9 billion. The Spanish bank already has a 25-percent interest in the thrift. Mortgage delinquencies continue to rise at Sovereign, whose stock has lost nearly two-thirds of its value so far this year. Sovereign also reports that it lost $982 million in the period ended Sept. 30, compared with a profit of $58.2 million during the same period a year ago.
Mortgage Lenders Slam Trust-Fund Plan
Courier-Post (N.J.) (10/14/08); Ryan, Lisa G.
New Jersey's full Assembly could vote later in the month on a bill that would create a $40 million trust fund to help keep borrowers with subprime mortgages in their homes. The measure would impose a $2,000 fee on lenders that foreclose on struggling subprime borrowers, provide emergency assistance loans to homeowners, give homeowners six months to renegotiate their loans and also use some of the money to purchase and convert foreclosed homes into affordable housing. "The process being suggested is too costly and too onerous, and it could stop businesses from lending in New Jersey," warns E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey. The state had more than 134,000 subprime mortgages as of June 30, and 32.5 percent were in foreclosure or close to it, according to the Mortgage Bankers Association National Delinquency Survey.
New Jersey's full Assembly could vote later in the month on a bill that would create a $40 million trust fund to help keep borrowers with subprime mortgages in their homes. The measure would impose a $2,000 fee on lenders that foreclose on struggling subprime borrowers, provide emergency assistance loans to homeowners, give homeowners six months to renegotiate their loans and also use some of the money to purchase and convert foreclosed homes into affordable housing. "The process being suggested is too costly and too onerous, and it could stop businesses from lending in New Jersey," warns E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey. The state had more than 134,000 subprime mortgages as of June 30, and 32.5 percent were in foreclosure or close to it, according to the Mortgage Bankers Association National Delinquency Survey.
Radian Offers Homeowner Help
Philadelphia Inquirer (10/14/08); Dickey, Rhonda
The Servicer Advocacy Group has been created by Radian Guaranty Inc. to help mortgage servicers in developing loss mitigation plans. The Philadelphia-based mortgage insurer also will assist servicers with loan workouts to keep struggling homeowners out of foreclosure.
The Servicer Advocacy Group has been created by Radian Guaranty Inc. to help mortgage servicers in developing loss mitigation plans. The Philadelphia-based mortgage insurer also will assist servicers with loan workouts to keep struggling homeowners out of foreclosure.
Worries Grow Over Commercial Real Estate
Investor's Business Daily (10/14/08) P. A1; Alva, Marilyn
Aggressive commercial property buyers who closed on highly leveraged deals at the top of the real estate market are having a tough time refinancing or selling now that debt payments have come due. At the same time, more and more tenants are either scaling back or vacating space altogether, property values are on the decline in many markets and refinancing remains a challenge now that spreads for bonds backed by commercial real estate are wider than ever. Manus Clancy, managing director of a New York-based firm that tracks commercial property markets, blames "pro-forma" underwriting practices for many of the current problems, adding, "Instead of lending on leases in place, people would lend on future rollover and future repositioning, and that has led to execution risks." Real Capital Analytics reports that sales volume in commercial real estate is down more than 70 percent from last year, as a growing number of properties changing hands are either distressed or in default.
Aggressive commercial property buyers who closed on highly leveraged deals at the top of the real estate market are having a tough time refinancing or selling now that debt payments have come due. At the same time, more and more tenants are either scaling back or vacating space altogether, property values are on the decline in many markets and refinancing remains a challenge now that spreads for bonds backed by commercial real estate are wider than ever. Manus Clancy, managing director of a New York-based firm that tracks commercial property markets, blames "pro-forma" underwriting practices for many of the current problems, adding, "Instead of lending on leases in place, people would lend on future rollover and future repositioning, and that has led to execution risks." Real Capital Analytics reports that sales volume in commercial real estate is down more than 70 percent from last year, as a growing number of properties changing hands are either distressed or in default.
Obama Proposes New Recovery Package
Los Angeles Times (10/14/08); Mehta, Seema; Hook, Janet
Democratic presidential nominee Barack Obama has called on Capitol Hill lawmakers and the White House to approve measures to put off home foreclosures, help businesses create jobs, allow families to access retirement savings and stabilize state and local government budgets. One of the central parts of Obama's new package is the fact that households facing foreclosure would get a 90-day reprieve if they were working with finance firms taking part in the $700 billion rescue package Congress passed in September and if they could prove they were making a good-faith effort to pay their mortgages each month. Some of Obama's proposals, such as the foreclosure moratorium, could be put into effect under existing law. Critics charge that the plan would have little impact on the underlying sources of instability in the world economy.
Democratic presidential nominee Barack Obama has called on Capitol Hill lawmakers and the White House to approve measures to put off home foreclosures, help businesses create jobs, allow families to access retirement savings and stabilize state and local government budgets. One of the central parts of Obama's new package is the fact that households facing foreclosure would get a 90-day reprieve if they were working with finance firms taking part in the $700 billion rescue package Congress passed in September and if they could prove they were making a good-faith effort to pay their mortgages each month. Some of Obama's proposals, such as the foreclosure moratorium, could be put into effect under existing law. Critics charge that the plan would have little impact on the underlying sources of instability in the world economy.
U.S. to Pump $250 Billion Directly Into Banks
Los Angeles Times (10/14/08); Reynolds, Maura
In response to increasing volatility in stock markets worldwide, the Bush administration will announce plans on Oct. 14 to pump $250 billion directly into nine major banks--including Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley. Additionally, the plan will involve allowing the Federal Deposit Insurance Corp. to insure senior preferred bank debt, with both aspects of the plan aiming to recapitalize the banks and spur lending among them. The government would be given preferred nonvoting shares of the banks' stock, which ultimately would be sold at a profit. While the government still expects to purchase billions in troubled mortgage-backed securities, experts say that plan could take months to commence and likely will be pushed aside as the government focuses on the direct capital infusion.
In response to increasing volatility in stock markets worldwide, the Bush administration will announce plans on Oct. 14 to pump $250 billion directly into nine major banks--including Citigroup Inc., Wells Fargo & Co., JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley. Additionally, the plan will involve allowing the Federal Deposit Insurance Corp. to insure senior preferred bank debt, with both aspects of the plan aiming to recapitalize the banks and spur lending among them. The government would be given preferred nonvoting shares of the banks' stock, which ultimately would be sold at a profit. While the government still expects to purchase billions in troubled mortgage-backed securities, experts say that plan could take months to commence and likely will be pushed aside as the government focuses on the direct capital infusion.
FDIC Expands Loan Servicer Coverage
American Banker (10/14/08) P. 3; Flitter, Emily
In response to concerns that it would reduce liquidity at banks, Fannie Mae has scrapped a rule change that would have forced troubled institutions to immediately turn in principal and interest payments to it instead of holding the funds in mortgage servicing accounts. However, in a move that has received support from the mortgage industry, the Federal Deposit Insurance Corp. will insure tax and insurance funds from mortgages on a pass-through basis, shifting the money to accounts in borrowers' names and insuring them up to $250,000. The coverage limit will return to $100,000 on Jan. 1, 2010.
In response to concerns that it would reduce liquidity at banks, Fannie Mae has scrapped a rule change that would have forced troubled institutions to immediately turn in principal and interest payments to it instead of holding the funds in mortgage servicing accounts. However, in a move that has received support from the mortgage industry, the Federal Deposit Insurance Corp. will insure tax and insurance funds from mortgages on a pass-through basis, shifting the money to accounts in borrowers' names and insuring them up to $250,000. The coverage limit will return to $100,000 on Jan. 1, 2010.
144 Mitchell St, Millsboro, DE 19966
Address:
MILLSBORO, DE 19966
MLS ID# 564109
$209,900
3 Bed, 2 Bath
1,475 Sq. Ft.
0.14 Acres
Single Family Property, County: SUSSEX, Approximately 0.14 acre(s), Year Built: 2003, Garage, Fireplace(s), Laundry room
To access this page directly, use http://www.realtor.com/realestate/millsboro-de-19966-1103931996/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Year Built: 2003
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Approximately 1475 sq. ft.
Style: Ranch
Laundry room
Fireplace(s)
Garage
Interior features: Cable TV avail., Carpet, Disposal, Eat-in kitchen, Fireplace(s), Laundry rm/area, Microwave, Range and oven, Vinyl flrs, Washer/dryer hookups
Exterior features: Clear lot, Porch, Public sewer srvc
Approximate lot is 62X100
Approximately 0.14 acre(s)
Lot size is less than 1/2 acre
School District: Indian River
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Presented By
MASSENGILL RON
Office: (302) 644-6880
Office: (302) 644-7963
Mobile: (302) 233-3105
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
MILLSBORO, DE 19966
MLS ID# 564109
$209,900
3 Bed, 2 Bath
1,475 Sq. Ft.
0.14 Acres
Single Family Property, County: SUSSEX, Approximately 0.14 acre(s), Year Built: 2003, Garage, Fireplace(s), Laundry room
To access this page directly, use http://www.realtor.com/realestate/millsboro-de-19966-1103931996/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Year Built: 2003
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Approximately 1475 sq. ft.
Style: Ranch
Laundry room
Fireplace(s)
Garage
Interior features: Cable TV avail., Carpet, Disposal, Eat-in kitchen, Fireplace(s), Laundry rm/area, Microwave, Range and oven, Vinyl flrs, Washer/dryer hookups
Exterior features: Clear lot, Porch, Public sewer srvc
Approximate lot is 62X100
Approximately 0.14 acre(s)
Lot size is less than 1/2 acre
School District: Indian River
Up LeftRightDown RecenterStreetCityStateCountryZoomInZoomOut2.5 miles2.5 miles© 2008 Microsoft Corporation © 2008 NAVTEQ © AND © 2008 Microsoft Corporation © 2008 NAVTEQ © AND
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Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
MASSENGILL RON
Office: (302) 644-6880
Office: (302) 644-7963
Mobile: (302) 233-3105
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Lot 33 Finch Lane, Paynters Mill, Milton, DE 19968
Address:
MILTON, DE 19966
MLS ID# 564116
$84,900
Land Property, Subdivision: PINTAIL POINTE, County: SUSSEX
To access this page directly, use http://www.realtor.com/realestate/milton-de-19966-1103946825/
Property Features
Land Property
Status: Active
County: SUSSEX
Subdivision: PINTAIL POINTE
Approximate lot is 135X185
Topography: Clear
School District: Cape Henlopen
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Presented By
! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127
Office: (302) 644-3133
Mobile: (302) 841-2127
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broker: (302) 644-6880
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MILTON, DE 19966
MLS ID# 564116
$84,900
Land Property, Subdivision: PINTAIL POINTE, County: SUSSEX
To access this page directly, use http://www.realtor.com/realestate/milton-de-19966-1103946825/
Property Features
Land Property
Status: Active
County: SUSSEX
Subdivision: PINTAIL POINTE
Approximate lot is 135X185
Topography: Clear
School District: Cape Henlopen
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127
Office: (302) 644-3133
Mobile: (302) 841-2127
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Friday, October 10, 2008
Home buyers balk amid Wall Street meltdown
As the financial crisis intensifies, the few home buyers that are out there are reconsidering a purchase.
By Les Christie, CNNMoney.com staff writer
October 10, 2008: 9:00 AM ET
NEW YORK (CNNMoney.com) -- The Dow has lost over 2,200 points in the last seven trading sessions - and that's giving the few home buyers that are out there right now reason to reconsider.
The National Association of Home Builders (NAHB) for instance has seen its contract cancellations spike recently to as high as 30%, compared with an average rate of about 20%. During the housing boom, as few as 5% of sales were cancelled.
"The events of the past couple of weeks have people's heads spinning," said Steve Melman, NAHB's director of economic surveys.
The National Association of Realtors (NAR) estimates that there are about 25% fewer people shopping for homes than there normally would be at this time of year. Potential buyers are worried about their jobs, their declining investments and falling housing prices, which is keeping them on the sidelines, according to spokesman Walter Molony
"You have to have a lot of confidence to make this kind of big-ticket purchase in the current environment," said Molony.
Real estate agent Bob Rose was helping one couple look for an investment property in battered Contre Costa County, hoping to find a bargain that they could sell in a few years.
Then, on September 29 the Dow dove nearly 800 points and the couple decided not to buy. "They told me they had lost about a quarter of their retirement portfolio," said Rose, and that they could no longer afford it.
Even some buyers who are already in contract are managing to pull out of sales amidst all the economic turmoil.
Deal or no deal
Two weeks ago, one Washington state couple, Sharif Tai and Gaby Ghafari, went into contract on a new $450,000, three bed, three bath, house in central Seattle. Soon afterwards, the stock market began its steep descent.
"It wasn't that we lost money [in the market] or that we were worried about our jobs," said Tai, a software developer in his mid-20s, "but we thought we could get a better deal, so we decided to wait."
The couple backed out of the deal by citing problems with the inspection, but they haven't given up on making a purchase.
"We're keeping our eyes out," said Tai. "We want to see how things shake out. If we see a great deal, we'll take it."
Other buyers are demanding sweeteners before they close a deal during such a rocky time. San Francisco agent Jim Holt had clients go into contract on September 29, on a $750,000 home in town. But by the end of the week the Dow had lost over 800 points and the buyer demanded a whopping $50,000 price cut.
"Buyers are seeing the [market implosion] as an opportunity to get concessions," said Holt. In the end, the seller only agreed to reduce the price by $5,000 - but that's better than nothing.
Other house hunters are managing to wring more concessions out of sellers even on top of existing discounts.
Rich Machado, an agent with the Smart Homebuyer Team in New Bedford Westport Mass., had already helped one buyer get a seller to take $9,000 off the price of a house listed for $229,000, and throw in $6,000 in closing costs, $1,800 for an electric upgrade and $400 for a home service contract.
The deal went into contract two weeks ago, but despite that impressive array of incentives, "the buyer is balking," said Machado. "He's asking for another $10,000 off the price."
The seller hasn't caved in yet - but with demand drying up, he may be forced to come around.
As the losses mount on Wall Street - the Dow lost 678 points on Thursday alone - things will undoubtedly become even more difficult for sellers.
"In the midst of such chaos, everyone is just shaking their heads," said NAHB's Melman."
By Les Christie, CNNMoney.com staff writer
October 10, 2008: 9:00 AM ET
NEW YORK (CNNMoney.com) -- The Dow has lost over 2,200 points in the last seven trading sessions - and that's giving the few home buyers that are out there right now reason to reconsider.
The National Association of Home Builders (NAHB) for instance has seen its contract cancellations spike recently to as high as 30%, compared with an average rate of about 20%. During the housing boom, as few as 5% of sales were cancelled.
"The events of the past couple of weeks have people's heads spinning," said Steve Melman, NAHB's director of economic surveys.
The National Association of Realtors (NAR) estimates that there are about 25% fewer people shopping for homes than there normally would be at this time of year. Potential buyers are worried about their jobs, their declining investments and falling housing prices, which is keeping them on the sidelines, according to spokesman Walter Molony
"You have to have a lot of confidence to make this kind of big-ticket purchase in the current environment," said Molony.
Real estate agent Bob Rose was helping one couple look for an investment property in battered Contre Costa County, hoping to find a bargain that they could sell in a few years.
Then, on September 29 the Dow dove nearly 800 points and the couple decided not to buy. "They told me they had lost about a quarter of their retirement portfolio," said Rose, and that they could no longer afford it.
Even some buyers who are already in contract are managing to pull out of sales amidst all the economic turmoil.
Deal or no deal
Two weeks ago, one Washington state couple, Sharif Tai and Gaby Ghafari, went into contract on a new $450,000, three bed, three bath, house in central Seattle. Soon afterwards, the stock market began its steep descent.
"It wasn't that we lost money [in the market] or that we were worried about our jobs," said Tai, a software developer in his mid-20s, "but we thought we could get a better deal, so we decided to wait."
The couple backed out of the deal by citing problems with the inspection, but they haven't given up on making a purchase.
"We're keeping our eyes out," said Tai. "We want to see how things shake out. If we see a great deal, we'll take it."
Other buyers are demanding sweeteners before they close a deal during such a rocky time. San Francisco agent Jim Holt had clients go into contract on September 29, on a $750,000 home in town. But by the end of the week the Dow had lost over 800 points and the buyer demanded a whopping $50,000 price cut.
"Buyers are seeing the [market implosion] as an opportunity to get concessions," said Holt. In the end, the seller only agreed to reduce the price by $5,000 - but that's better than nothing.
Other house hunters are managing to wring more concessions out of sellers even on top of existing discounts.
Rich Machado, an agent with the Smart Homebuyer Team in New Bedford Westport Mass., had already helped one buyer get a seller to take $9,000 off the price of a house listed for $229,000, and throw in $6,000 in closing costs, $1,800 for an electric upgrade and $400 for a home service contract.
The deal went into contract two weeks ago, but despite that impressive array of incentives, "the buyer is balking," said Machado. "He's asking for another $10,000 off the price."
The seller hasn't caved in yet - but with demand drying up, he may be forced to come around.
As the losses mount on Wall Street - the Dow lost 678 points on Thursday alone - things will undoubtedly become even more difficult for sellers.
"In the midst of such chaos, everyone is just shaking their heads," said NAHB's Melman."
BofA to slash mortgage payments
The foreclosure prevention program is the most aggressive initiative undertaken yet to help stem the housing crisis.
By Les Christie, CNNMoney.com staff writer
Last Updated: October 9, 2008: 5:28 PM ET
NEW YORK (CNNMoney.com) -- A plan announced today by Bank of America will be the most aggressive foreclosure prevention effort ever undertaken by a U.S. bank.
The program, scheduled to start in December, will be open to distressed borrowers who signed up with Countrywide Financial between January 1, 2004 and December 31, 2007. Countrywide was acquired by Bank of America (BAC, Fortune 500) in July.
It came in a legal settlement that the company entered into with the attorney general offices of 11 states, who had sued Countrywide over predatory lending practices, but the company stated that borrowers in all 50 states will be eligible to participate in the program.
"The Countrywide settlement is a watershed moment for loan modification programs," said Mark Pearce, North Carolina's Deputy Commissioner of Banks and a member of the State Foreclosure Prevention Working Group. "This is, by far, the best [program ever], even better than the FDIC program with IndyMac Bank."
As part of the initiative, Bank of America will cut monthly housing payments, including mortgage, property taxes and insurance, to no more than 34% of gross income. The move is expected to help keep as many as 400,000 troubled borrowers in their homes.
The program targets holders of subprime adjustable rate mortgage (ARMs), subprime fixed rate loans and option ARMs, but prime and Alt-A borrowers, who did not document their income, will be eligible as well.
No other foreclosure prevention effort has aimed to keep borrowers' house payments so low.
"[The program's] affordability is far better than any other program out there," said Rick Simon, spokesman for Bank of America.
By contrast, the much heralded foreclosure-prevention initiative announced in August by the FDIC for customers of IndyMac Bank, the subprime lender that the agency took over in July, said it will keep borrower payments to no more than 38% of gross income.
"This is the biggest mandatory modification of loans in U.S. history," said Jerry Brown, attorney general of California, the state with the largest number of borrowers who may benefit from the settlement. "Of course, we never saw such a big rip-off by any other company either."
According to Simon, the Countrywide program will proactively screen all of its borrowers for eligibility, and then contact them directly to offer loan workouts. No prepayment penalties or modification fees will apply. But the program can't help every Countrywide borrower. Some, because of illness, divorce, job loss and the like, simply won't be able to afford any reasonable mortgage payment.
Simon added that Bank of America is training personnel and putting systems into place that it hopes will enable staff to deal with a large number of mortgages all at once.
Cheaper than foreclosure
The new program comes with a price tag of $8.4 billion, but Simon says that it will cost much less than foreclosing on homes en masse.
As the credit crisis continues, more and more lenders and mortgage servicers are coming to grips with the fact that preventing a foreclosure is usually cheaper than going through the repossession process and then reselling the property in a declining market.
Depending on each borrower's circumstances, Bank of America might freeze or lower a loan's interest rate or even cut the principal loan balance. The bank said it will also participate in the government's Hope for Homeowners program, a provision of the housing rescue bill which went into effect Oct. 1 and makes FHA-insured loans available for delinquent borrowers.
The announcement of the program came on the heels of Friday's approval of the $700 billion Wall Street bailout, a measure which has been criticized for failing to address the foreclosure crisis head on.
The hope is that other lenders and servicers will follow Countrywide's lead.
"Now that we've gotten this with Countrywide, I would expect that we'll be talking with other major servicers to implement similar programs in the near future," said North Carolina Deputy Commissioner of Banks Mark Pearce, who worked on this settlement.
But he and other members of the the State Foreclosure Prevention Working Group have been pushing other lenders to do something this drastic for months, without much luck.
"So far, they have failed to show the leadership required to get it done," said Pearce. "I hope, having the market leader do this will spur the other servicers to greater action."
By Les Christie, CNNMoney.com staff writer
Last Updated: October 9, 2008: 5:28 PM ET
NEW YORK (CNNMoney.com) -- A plan announced today by Bank of America will be the most aggressive foreclosure prevention effort ever undertaken by a U.S. bank.
The program, scheduled to start in December, will be open to distressed borrowers who signed up with Countrywide Financial between January 1, 2004 and December 31, 2007. Countrywide was acquired by Bank of America (BAC, Fortune 500) in July.
It came in a legal settlement that the company entered into with the attorney general offices of 11 states, who had sued Countrywide over predatory lending practices, but the company stated that borrowers in all 50 states will be eligible to participate in the program.
"The Countrywide settlement is a watershed moment for loan modification programs," said Mark Pearce, North Carolina's Deputy Commissioner of Banks and a member of the State Foreclosure Prevention Working Group. "This is, by far, the best [program ever], even better than the FDIC program with IndyMac Bank."
As part of the initiative, Bank of America will cut monthly housing payments, including mortgage, property taxes and insurance, to no more than 34% of gross income. The move is expected to help keep as many as 400,000 troubled borrowers in their homes.
The program targets holders of subprime adjustable rate mortgage (ARMs), subprime fixed rate loans and option ARMs, but prime and Alt-A borrowers, who did not document their income, will be eligible as well.
No other foreclosure prevention effort has aimed to keep borrowers' house payments so low.
"[The program's] affordability is far better than any other program out there," said Rick Simon, spokesman for Bank of America.
By contrast, the much heralded foreclosure-prevention initiative announced in August by the FDIC for customers of IndyMac Bank, the subprime lender that the agency took over in July, said it will keep borrower payments to no more than 38% of gross income.
"This is the biggest mandatory modification of loans in U.S. history," said Jerry Brown, attorney general of California, the state with the largest number of borrowers who may benefit from the settlement. "Of course, we never saw such a big rip-off by any other company either."
According to Simon, the Countrywide program will proactively screen all of its borrowers for eligibility, and then contact them directly to offer loan workouts. No prepayment penalties or modification fees will apply. But the program can't help every Countrywide borrower. Some, because of illness, divorce, job loss and the like, simply won't be able to afford any reasonable mortgage payment.
Simon added that Bank of America is training personnel and putting systems into place that it hopes will enable staff to deal with a large number of mortgages all at once.
Cheaper than foreclosure
The new program comes with a price tag of $8.4 billion, but Simon says that it will cost much less than foreclosing on homes en masse.
As the credit crisis continues, more and more lenders and mortgage servicers are coming to grips with the fact that preventing a foreclosure is usually cheaper than going through the repossession process and then reselling the property in a declining market.
Depending on each borrower's circumstances, Bank of America might freeze or lower a loan's interest rate or even cut the principal loan balance. The bank said it will also participate in the government's Hope for Homeowners program, a provision of the housing rescue bill which went into effect Oct. 1 and makes FHA-insured loans available for delinquent borrowers.
The announcement of the program came on the heels of Friday's approval of the $700 billion Wall Street bailout, a measure which has been criticized for failing to address the foreclosure crisis head on.
The hope is that other lenders and servicers will follow Countrywide's lead.
"Now that we've gotten this with Countrywide, I would expect that we'll be talking with other major servicers to implement similar programs in the near future," said North Carolina Deputy Commissioner of Banks Mark Pearce, who worked on this settlement.
But he and other members of the the State Foreclosure Prevention Working Group have been pushing other lenders to do something this drastic for months, without much luck.
"So far, they have failed to show the leadership required to get it done," said Pearce. "I hope, having the market leader do this will spur the other servicers to greater action."
Mortgage rates slip to 5.94%
Rates on 30-year fixed mortgages were down for the first time in three weeks, as loan applications grew slightly.
By Lara Moscrip, CNNMoney.com contributing writer
October 9, 2008: 10:58 AM ET
NEW YORK (CNNMoney.com) -- Rates on 30-year mortgages fell from last week, while loan applications grew slightly in the face of turbulence in the banking and finance sectors.
Mortgage finance firm Freddie Mac (FRE, Fortune 500) reported Thursday that 30-year fixed-rate mortgages averaged 5.94% this week. That's down from 6.10% last week and well below 6.40%, where the rate stood a year ago.
"Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields," said Frank Nothaft, Freddie Mac vice president and chief economist.
Meanwhile, mortgage applications for home purchases and refinancing grew slightly over the week ending Oct. 3, reversing a two-week decline, according to data from the Mortgage Bankers Association.
Rates on 15-year fixed-rate mortgages fell to 5.63%, from 5.78% last week. A year ago, that rate was 6.06%
The five-year adjustable-rate mortgage fell to 5.90%, down from last week at 6.00%. A year ago, the rate was 6.12%.
The rate on a one-year adjustable-rate mortgage increased slightly to 5.15%, compared to 5.12% last week. At this time last year, the rate was 5.73%.
In September, the government took control of the mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac with a rescue plan that could inject $200 billion into them to keep them afloat.
By Lara Moscrip, CNNMoney.com contributing writer
October 9, 2008: 10:58 AM ET
NEW YORK (CNNMoney.com) -- Rates on 30-year mortgages fell from last week, while loan applications grew slightly in the face of turbulence in the banking and finance sectors.
Mortgage finance firm Freddie Mac (FRE, Fortune 500) reported Thursday that 30-year fixed-rate mortgages averaged 5.94% this week. That's down from 6.10% last week and well below 6.40%, where the rate stood a year ago.
"Longer-term mortgage rates fell for the first time in three weeks, roughly following bond market yields," said Frank Nothaft, Freddie Mac vice president and chief economist.
Meanwhile, mortgage applications for home purchases and refinancing grew slightly over the week ending Oct. 3, reversing a two-week decline, according to data from the Mortgage Bankers Association.
Rates on 15-year fixed-rate mortgages fell to 5.63%, from 5.78% last week. A year ago, that rate was 6.06%
The five-year adjustable-rate mortgage fell to 5.90%, down from last week at 6.00%. A year ago, the rate was 6.12%.
The rate on a one-year adjustable-rate mortgage increased slightly to 5.15%, compared to 5.12% last week. At this time last year, the rate was 5.73%.
In September, the government took control of the mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac with a rescue plan that could inject $200 billion into them to keep them afloat.
Pending home sales show surprise rise
The National Association of Realtors says pending home sales increased 7.4% from July to August; highest since June 2007.
October 8, 2008: 10:40 AM ET
WASHINGTON (AP) -- The National Association of Realtors says pending home rose 7.4% from July to August, an unexpected piece of positive news for the battered U.S. housing market.
The group said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.
Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.
The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007.
October 8, 2008: 10:40 AM ET
WASHINGTON (AP) -- The National Association of Realtors says pending home rose 7.4% from July to August, an unexpected piece of positive news for the battered U.S. housing market.
The group said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.
Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.
The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007.
Housing rescue efforts slowed in August
Nearly 189,000 at risk borrowers got help during the month, according to Hope Now, down slightly from the number of homeowners helped in July.
By David Goldman, CNNMoney.com staff writer
Last Updated: October 2, 2008: 1:32 PM ET
NEW YORK (CNNMoney.com) -- Fewer troubled borrowers got help with their mortgages in August than in July, according to figures released Thursday.
Hope Now, the alliance of mortgage servicers, counselors, and investors assembled to combat foreclosures, said it helped 189,000 homeowners avert foreclosure in August, down 1.7% from the number of people helped in July.
"It's difficult to look at any one month and see a trend," said Faith Schwartz, executive director of Hope Now. "We're still outpacing the second quarter in total workouts."
The news comes as the government's plan to rescue the financial system returns to the House for a vote after it passed the Senate Wednesday night. The legislation would permit the Treasury to buy up $700 billion of bad assets - most of which are backed by mortgages - from banks in an effort to clean up their balance sheets so that they can resume lending.
But many experts and economists say that the U.S. credit crisis cannot be resolved until the housing market stabilizes, with foreclosures slowing and steep home price declines leveling off. But home prices are still declining; the Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3% in July from a year earlier.
"Hope Now is absolutely successful in that it is saving people from going into final foreclosure, and that won't change," said Schwartz. "But any further direction that helps homeowners offered by the government would be helpful," she added in reference to the bailout.
Different workouts
Hope Now said that nearly 79,000 at-risk mortgage borrowers had the terms of their loans permanently modified in August to make them more affordable, with lower interest rates, reduced principal or both.
Another 110,000 homeowners, about 58% of the total workouts, got repayment plans, which means that they'll have extra time to make up missed payments. That's down from the 112,000 who got repayment plans in July.
These workouts are generally considered to be less effective at helping homeowners because they don't reduce the borrowers' total monthly payments, and in fact often increase them.
But since the Hope Now program began, the organization has succeeded in increasing the proportion of loan modifications that make up the total number of loan workouts.
For instance, only 17% of total workouts were modifications in the third quarter of 2007, compared to 42% in the second quarter of 2008. The ratio has held steady at 42% in the past two months.
"We're trying to tackle the broader issue for people who have the desire and capability to stay in their homes," Schwartz said. "That's why we try to restructure their loans."
Hope Now says it has helped a total of 2.3 million homeowners since its program launched in July, 2007. The group also reported that foreclosure sales fell to 86,594 in August, down 5.9% from July.
But a different report from RealtyTrac, an online marketer of foreclosure properties, showed that the number of homes lost to foreclosure rose 18% to 91,000 in August.
Subprime loans
Hope Now also issued the results of a separate study on subprime loans, which most economists believe are at the root of the housing crisis.
The coalition said it helped modify 91,000, or 8.3%, of the 1.1 million subprime adjustable rate mortgages that are scheduled to reset between January and August 2008. More than three-quarters of the modifications were for five or more years.
About 13,200 of the loans scheduled to reset went into foreclosure, while another 449,000 of them were paid off in full when the borrower was able to refinance the loan or sell the house.
By David Goldman, CNNMoney.com staff writer
Last Updated: October 2, 2008: 1:32 PM ET
NEW YORK (CNNMoney.com) -- Fewer troubled borrowers got help with their mortgages in August than in July, according to figures released Thursday.
Hope Now, the alliance of mortgage servicers, counselors, and investors assembled to combat foreclosures, said it helped 189,000 homeowners avert foreclosure in August, down 1.7% from the number of people helped in July.
"It's difficult to look at any one month and see a trend," said Faith Schwartz, executive director of Hope Now. "We're still outpacing the second quarter in total workouts."
The news comes as the government's plan to rescue the financial system returns to the House for a vote after it passed the Senate Wednesday night. The legislation would permit the Treasury to buy up $700 billion of bad assets - most of which are backed by mortgages - from banks in an effort to clean up their balance sheets so that they can resume lending.
But many experts and economists say that the U.S. credit crisis cannot be resolved until the housing market stabilizes, with foreclosures slowing and steep home price declines leveling off. But home prices are still declining; the Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3% in July from a year earlier.
"Hope Now is absolutely successful in that it is saving people from going into final foreclosure, and that won't change," said Schwartz. "But any further direction that helps homeowners offered by the government would be helpful," she added in reference to the bailout.
Different workouts
Hope Now said that nearly 79,000 at-risk mortgage borrowers had the terms of their loans permanently modified in August to make them more affordable, with lower interest rates, reduced principal or both.
Another 110,000 homeowners, about 58% of the total workouts, got repayment plans, which means that they'll have extra time to make up missed payments. That's down from the 112,000 who got repayment plans in July.
These workouts are generally considered to be less effective at helping homeowners because they don't reduce the borrowers' total monthly payments, and in fact often increase them.
But since the Hope Now program began, the organization has succeeded in increasing the proportion of loan modifications that make up the total number of loan workouts.
For instance, only 17% of total workouts were modifications in the third quarter of 2007, compared to 42% in the second quarter of 2008. The ratio has held steady at 42% in the past two months.
"We're trying to tackle the broader issue for people who have the desire and capability to stay in their homes," Schwartz said. "That's why we try to restructure their loans."
Hope Now says it has helped a total of 2.3 million homeowners since its program launched in July, 2007. The group also reported that foreclosure sales fell to 86,594 in August, down 5.9% from July.
But a different report from RealtyTrac, an online marketer of foreclosure properties, showed that the number of homes lost to foreclosure rose 18% to 91,000 in August.
Subprime loans
Hope Now also issued the results of a separate study on subprime loans, which most economists believe are at the root of the housing crisis.
The coalition said it helped modify 91,000, or 8.3%, of the 1.1 million subprime adjustable rate mortgages that are scheduled to reset between January and August 2008. More than three-quarters of the modifications were for five or more years.
About 13,200 of the loans scheduled to reset went into foreclosure, while another 449,000 of them were paid off in full when the borrower was able to refinance the loan or sell the house.
Bailout: Little help for homeowners
If it does pass, the plan calls for the Treasury to work with loan servicers to stem the tide of foreclosures. But just how that will happen remains unclear.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 29, 2008: 3:28 PM ET
NEW YORK (CNNMoney.com) -- The $700 billion bailout legislation now under consideration by Congress calls for the Treasury Secretary to implement a plan to stem foreclosures by working with servicers to modify loans.
But many housing experts question whether the bill will help struggling homeowners refinance into more affordable mortgages. They stress that the economy won't recover until the tide of foreclosures stops, and the million-plus foreclosed homes on the market find buyers.
"It's impossible to know whether it will help anybody but the banks stay open another week," said Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University. "Until we see a plan to get people to buy those empty homes, we're just going to go from one band-aid to the next."
The legislation was unveiled Sunday, but voted down by the House on Monday. It's now up to lawmakers to revise the bill so it can garner approval from enough members to pass. The main objections were levied by House Republicans and are centered around the potential risk to taxpayers.
Since the credit crisis began a year ago, Democratic lawmakers and the Bush administration have tussled over how much to help borrowers who have fallen behind in their mortgage payments. Until now, efforts have focused on prodding lenders to work with distressed borrowers.
In Sunday's version of the bill, federal agencies holding mortgages and mortgage securities would be required to identify loans that could be modified without causing big losses for taxpayers. It calls for encouraging servicers to refinance loans through the Hope for Homeownership program, which begins Oct. 1 and allows borrowers who can't meet their current mortgage terms to refinance into more affordable, fixed-rate loans backed by the Federal Housing Administration.
However, exactly how the modifications would be done isn't totally clear.
Generally, when considering whether to modify a loan, servicers determine whether the borrower has the means to make payments on their loan, if the loan terms were changed slightly. At the same time, the servicer considers whether it would cost less for it to modify the loan instead of foreclose.
Often when a borrower is up-to-date on payments, but faces a big spike in rates, the modification may call for freezing interest rates at the introductory level. The workout could also reduce principal balance or stretch out the term of the loan, from 30 years to 40 years, for example.
In addition to the Treasury Department, agencies that would promote the modifications would include the Federal Reserve, Federal Deposit Insurance Corp., and the Federal Housing Finance Agency, which controls mortgage insurers Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
The bill also allows the Secretary to use loan guarantees and credit enhancements to avoid foreclosures, though on a press call Treasury officials declined to elaborate on these provisions. Loan guarantees generally refer to mortgages backed by a federal agency, such as the Federal Housing Administration, or by mortgage insurers Fannie Mae and Freddie Mac. Credit enhancements usually reduce the risk of mortgage securities or loans in case borrowers default.
Avoiding 'preventable foreclosures'
Servicers have been under pressure to modify loans since the mortgage meltdown began a year ago. However, they say the biggest roadblock to changing loan terms are the investors who hold the securities created from those mortgages.
"It's really not the servicers' decision," said John Harding, real estate finance professor at the University of Connecticut School of Business.
But, as the owner of a large number of mortgage securities, the federal government would have the power to modify more troubled loans, said Treasury officials. The government may also buy the mortgage loans themselves from banks, which it can then adjust more easily.
The government would try to avoid "preventable foreclosures" in a way that "makes sense for taxpayers," the officials said on a press call.
"We will have a lot of influence," they added.
But just how far the government will go to help homeowners remains in doubt. Treasury Secretary Henry Paulson said last week that the "vast majority" of foreclosures in this country are happening to people who took out loans they couldn't afford or who don't want to stay in their homes.
Will it help?
Some housing counselors said the legislation falls far short of helping troubled homeowners. One of the best ways to stop foreclosures would be to allow bankruptcy judges to change the terms of some mortgages to make them more affordable, a measure the banking industry strenuously opposed.
"There is nothing in the bailout that will mitigate widespread damage caused by foreclosures," said Michael Calhoun, president of the Center for Responsible Lending.
"The bill includes a vague provision that calls for the government to buy mortgages and securities and then try to modify them, but this will have very limited impact," he continued. "It doesn't stop the [foreclosure] epidemic that will continue to drag down property values for everyone."
The bill's failure in Congress pleased some community activists, who saw it as an opportunity to renegotiate the housing provisions in the bill. In addition to including the bankruptcy provision, housing groups would like to see stronger language in the legislation to help homeowners, said Bill Austin, director of Acorn Financial Justice Center. For instance, the Treasury Department could put a higher priority on buying securities that have underlying mortgages that need to be modified.
Still, even if some homeowners are helped, it's not going to quickly put the American economy back on its feet, said Shaun Bond, associate professor of real estate at University of Cincinnati's business school.
"The adjustment in the housing market will still be a long, drawn-out process," Bond said. "It will be several years before we see a return to normal conditions."
By Tami Luhby, CNNMoney.com senior writer
Last Updated: September 29, 2008: 3:28 PM ET
NEW YORK (CNNMoney.com) -- The $700 billion bailout legislation now under consideration by Congress calls for the Treasury Secretary to implement a plan to stem foreclosures by working with servicers to modify loans.
But many housing experts question whether the bill will help struggling homeowners refinance into more affordable mortgages. They stress that the economy won't recover until the tide of foreclosures stops, and the million-plus foreclosed homes on the market find buyers.
"It's impossible to know whether it will help anybody but the banks stay open another week," said Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University. "Until we see a plan to get people to buy those empty homes, we're just going to go from one band-aid to the next."
The legislation was unveiled Sunday, but voted down by the House on Monday. It's now up to lawmakers to revise the bill so it can garner approval from enough members to pass. The main objections were levied by House Republicans and are centered around the potential risk to taxpayers.
Since the credit crisis began a year ago, Democratic lawmakers and the Bush administration have tussled over how much to help borrowers who have fallen behind in their mortgage payments. Until now, efforts have focused on prodding lenders to work with distressed borrowers.
In Sunday's version of the bill, federal agencies holding mortgages and mortgage securities would be required to identify loans that could be modified without causing big losses for taxpayers. It calls for encouraging servicers to refinance loans through the Hope for Homeownership program, which begins Oct. 1 and allows borrowers who can't meet their current mortgage terms to refinance into more affordable, fixed-rate loans backed by the Federal Housing Administration.
However, exactly how the modifications would be done isn't totally clear.
Generally, when considering whether to modify a loan, servicers determine whether the borrower has the means to make payments on their loan, if the loan terms were changed slightly. At the same time, the servicer considers whether it would cost less for it to modify the loan instead of foreclose.
Often when a borrower is up-to-date on payments, but faces a big spike in rates, the modification may call for freezing interest rates at the introductory level. The workout could also reduce principal balance or stretch out the term of the loan, from 30 years to 40 years, for example.
In addition to the Treasury Department, agencies that would promote the modifications would include the Federal Reserve, Federal Deposit Insurance Corp., and the Federal Housing Finance Agency, which controls mortgage insurers Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
The bill also allows the Secretary to use loan guarantees and credit enhancements to avoid foreclosures, though on a press call Treasury officials declined to elaborate on these provisions. Loan guarantees generally refer to mortgages backed by a federal agency, such as the Federal Housing Administration, or by mortgage insurers Fannie Mae and Freddie Mac. Credit enhancements usually reduce the risk of mortgage securities or loans in case borrowers default.
Avoiding 'preventable foreclosures'
Servicers have been under pressure to modify loans since the mortgage meltdown began a year ago. However, they say the biggest roadblock to changing loan terms are the investors who hold the securities created from those mortgages.
"It's really not the servicers' decision," said John Harding, real estate finance professor at the University of Connecticut School of Business.
But, as the owner of a large number of mortgage securities, the federal government would have the power to modify more troubled loans, said Treasury officials. The government may also buy the mortgage loans themselves from banks, which it can then adjust more easily.
The government would try to avoid "preventable foreclosures" in a way that "makes sense for taxpayers," the officials said on a press call.
"We will have a lot of influence," they added.
But just how far the government will go to help homeowners remains in doubt. Treasury Secretary Henry Paulson said last week that the "vast majority" of foreclosures in this country are happening to people who took out loans they couldn't afford or who don't want to stay in their homes.
Will it help?
Some housing counselors said the legislation falls far short of helping troubled homeowners. One of the best ways to stop foreclosures would be to allow bankruptcy judges to change the terms of some mortgages to make them more affordable, a measure the banking industry strenuously opposed.
"There is nothing in the bailout that will mitigate widespread damage caused by foreclosures," said Michael Calhoun, president of the Center for Responsible Lending.
"The bill includes a vague provision that calls for the government to buy mortgages and securities and then try to modify them, but this will have very limited impact," he continued. "It doesn't stop the [foreclosure] epidemic that will continue to drag down property values for everyone."
The bill's failure in Congress pleased some community activists, who saw it as an opportunity to renegotiate the housing provisions in the bill. In addition to including the bankruptcy provision, housing groups would like to see stronger language in the legislation to help homeowners, said Bill Austin, director of Acorn Financial Justice Center. For instance, the Treasury Department could put a higher priority on buying securities that have underlying mortgages that need to be modified.
Still, even if some homeowners are helped, it's not going to quickly put the American economy back on its feet, said Shaun Bond, associate professor of real estate at University of Cincinnati's business school.
"The adjustment in the housing market will still be a long, drawn-out process," Bond said. "It will be several years before we see a return to normal conditions."
Freddie, Fannie roll back fees
The mortgage finance giants will not increase fees to .5% from .25% on loans they purchase.
October 3, 2008: 12:14 PM ET
WASHINGTON (AP) -- Mortgage finance companies Fannie Mae and Freddie Mac, seized by the federal government last month, are rolling back fees imposed as they struggled to shore up their finances over the past year.
Freddie Mac (FRE, Fortune 500) said Friday it would not impose a fee increase scheduled to go into effect next month. The announcement followed a similar reversal by Fannie Mae (FNM, Fortune 500) Thursday night.
Freddie Mac, however, will raise fees next year for riskier loan products, including mortgages that allow interest-only payments for the first few years. Freddie also will require higher credit scores for "piggyback" loans that allow borrowers to make smaller down payments by taking out two mortgages.
Taken together, Freddie Mac said the changes would provide "some relief from the challenges in the current market environment," but added that it is following lending practices "that are prudent and largely applicable in all market conditions."
Both companies had announced plans to hike a fee on all loans purchased by the companies to 0.5% next month from 0.25%. For a $200,000 loan, that's a savings of $500.
The decision comes nearly a month after the companies, the largest buyer and backer of U.S. mortgages, were taken over by the government and saw their top executives ousted.
In recent months, Fannie and Freddie have hiked several fees for borrowers with blemished credit, while asking for bigger down payments. Real estate agents, mortgage brokers and homebuilders have all complained that the moves were stifling the housing market.
Fannie Mae Chief Executive Herb Allison said in a statement Thursday that the company is "evaluating all of our risk-management, underwriting guidelines, pricing and costs."
James Lockhart, director of the Federal Housing Finance Agency - which regulates Fannie and Freddie - said last month that any changes made by the companies should "reflect both safe and sound business strategy and attentiveness to the [companies'] mission."
October 3, 2008: 12:14 PM ET
WASHINGTON (AP) -- Mortgage finance companies Fannie Mae and Freddie Mac, seized by the federal government last month, are rolling back fees imposed as they struggled to shore up their finances over the past year.
Freddie Mac (FRE, Fortune 500) said Friday it would not impose a fee increase scheduled to go into effect next month. The announcement followed a similar reversal by Fannie Mae (FNM, Fortune 500) Thursday night.
Freddie Mac, however, will raise fees next year for riskier loan products, including mortgages that allow interest-only payments for the first few years. Freddie also will require higher credit scores for "piggyback" loans that allow borrowers to make smaller down payments by taking out two mortgages.
Taken together, Freddie Mac said the changes would provide "some relief from the challenges in the current market environment," but added that it is following lending practices "that are prudent and largely applicable in all market conditions."
Both companies had announced plans to hike a fee on all loans purchased by the companies to 0.5% next month from 0.25%. For a $200,000 loan, that's a savings of $500.
The decision comes nearly a month after the companies, the largest buyer and backer of U.S. mortgages, were taken over by the government and saw their top executives ousted.
In recent months, Fannie and Freddie have hiked several fees for borrowers with blemished credit, while asking for bigger down payments. Real estate agents, mortgage brokers and homebuilders have all complained that the moves were stifling the housing market.
Fannie Mae Chief Executive Herb Allison said in a statement Thursday that the company is "evaluating all of our risk-management, underwriting guidelines, pricing and costs."
James Lockhart, director of the Federal Housing Finance Agency - which regulates Fannie and Freddie - said last month that any changes made by the companies should "reflect both safe and sound business strategy and attentiveness to the [companies'] mission."
The other housing rescue starts today
The FHA's $300 billion Hope for Homeownership program is now open for business. But will banks be willing to sign up?
By Tami Luhby, CNNMoney.com senior writer
Last Updated: October 1, 2008: 6:35 PM ET
NEW YORK (CNNMoney.com) -- Amidst all the chaos surrounding the $700 billion Wall Street bailout plan, the federal government's other housing rescue program quietly opened for business Wednesday.
But will any mortgage servicers come knocking?
The Federal Housing Administration unveiled its $300 billion Hope for Homeowners program, which allows struggling borrowers to refinance into more affordable mortgages backed by the federal government. The legislation, which was signed into law in late July, was hotly debated for months on Capitol Hill with Democrats supporting it and Republicans opposed.
Before the so-called Wall Street bailout emerged, this FHA program was the federal government's answer to the mortgage crisis. It was seen as a primary means to stemming the foreclosure tide and stabilizing the housing market.
Even now, foreclosure prevention measures in the current bailout legislation call for the Treasury Secretary to modify more loans through the FHA program.
"For homeowners in trouble, this may be the help they need," said Steve Preston, secretary of the federal Department of Housing and Urban Development, which oversees FHA. "It is yet one more way that families may be helped to weather the current turbulence in the housing market."
Banks, however, didn't receive the program's details from the FHA until Wednesday, and say it will likely be weeks before they can offer it to their customers.
Even then, lenders probably won't rush to participate in the program, which is voluntary, since it requires them to take a pretty significant losses on the loan principal in most cases. Instead, banks have said that they'd prefer to use their own mortgage modification programs where they can better control the terms.
"We will continue to plow ahead with our own efforts to keep homeowners in their homes," said David Bradley, spokesman with Bank of America, which completed 15,750 loan modifications in August. "We've already been pretty aggressive in that regard."
Program details
Eligible borrowers must:
have taken out their mortgages on or before Jan. 1, 2008 and have made at least six payments.
be unable to afford their current loan, but did not intentionally miss payments.
have a debt-to-income ratio of at least 31%.
live in the house and not own other homes.
have provided accurate information on their loan documents and not been convicted of fraud in the past decade.
Under the program, borrowers will get:
a 30-year, fixed rate mortgage of up to $550,440.
a new appraisal and loan for no more than 90% of the home's value.
released from second mortgages and prepayment penalties.
But homeowners must pay a premium of 3% of the loan's value upfront, and 1.5% of the outstanding mortgage amount annually. Also, they must share any appreciation in the home's value with the FHA when they sell.
The law allows the FHA to insure up to $300 billion in new loans.
"This program can contribute meaningfully to stability in the housing market, while at the same time providing the appropriate safeguards and limitations to protect the interest of taxpayers," said Elizabeth Duke, Federal Reserve governor.
But HUD officials Wednesday backed away from the Congressional Budget Office's original estimate that the bill will help 400,000 troubled borrowers.
"It's very very difficult to really put a finger on it," Preston said.
Last resort
It's tough to forecast the program's success in part because banks have had a very lukewarm reaction to it. Four large servicers told lawmakers two weeks ago that they would use the program only as a last resort.
The problem is that the Hope for Homeowners program requires banks to reduce the loan's principal to 90% of a home's current appraised value, which is likely to be much less than the owner paid for it. Lenders prefer to freeze or cut interest rates so they can at least recover the original amount of the loan, said Tom Kelly, spokesman for JPMorgan Chase, which has worked with 110,000 customers to modify or rework their loans between January 2007 and July 2008.
"You lock in your loss," Kelly said, by reducing loan principal.
Banks might turn to Hope for Homeownership if they feel the loan is hopeless and just want to get rid of it, he continued.
Lenders also won't be pleased with the new home appraisals, which will show them just how underwater their borrowers are, said James Gaines, research economist at the Real Estate center at Texas A&M University.
He doesn't see a lot of lenders flocking to the program.
"It will help some people, but it won't be the universal panacea that people would like it to be," he said.
By Tami Luhby, CNNMoney.com senior writer
Last Updated: October 1, 2008: 6:35 PM ET
NEW YORK (CNNMoney.com) -- Amidst all the chaos surrounding the $700 billion Wall Street bailout plan, the federal government's other housing rescue program quietly opened for business Wednesday.
But will any mortgage servicers come knocking?
The Federal Housing Administration unveiled its $300 billion Hope for Homeowners program, which allows struggling borrowers to refinance into more affordable mortgages backed by the federal government. The legislation, which was signed into law in late July, was hotly debated for months on Capitol Hill with Democrats supporting it and Republicans opposed.
Before the so-called Wall Street bailout emerged, this FHA program was the federal government's answer to the mortgage crisis. It was seen as a primary means to stemming the foreclosure tide and stabilizing the housing market.
Even now, foreclosure prevention measures in the current bailout legislation call for the Treasury Secretary to modify more loans through the FHA program.
"For homeowners in trouble, this may be the help they need," said Steve Preston, secretary of the federal Department of Housing and Urban Development, which oversees FHA. "It is yet one more way that families may be helped to weather the current turbulence in the housing market."
Banks, however, didn't receive the program's details from the FHA until Wednesday, and say it will likely be weeks before they can offer it to their customers.
Even then, lenders probably won't rush to participate in the program, which is voluntary, since it requires them to take a pretty significant losses on the loan principal in most cases. Instead, banks have said that they'd prefer to use their own mortgage modification programs where they can better control the terms.
"We will continue to plow ahead with our own efforts to keep homeowners in their homes," said David Bradley, spokesman with Bank of America, which completed 15,750 loan modifications in August. "We've already been pretty aggressive in that regard."
Program details
Eligible borrowers must:
have taken out their mortgages on or before Jan. 1, 2008 and have made at least six payments.
be unable to afford their current loan, but did not intentionally miss payments.
have a debt-to-income ratio of at least 31%.
live in the house and not own other homes.
have provided accurate information on their loan documents and not been convicted of fraud in the past decade.
Under the program, borrowers will get:
a 30-year, fixed rate mortgage of up to $550,440.
a new appraisal and loan for no more than 90% of the home's value.
released from second mortgages and prepayment penalties.
But homeowners must pay a premium of 3% of the loan's value upfront, and 1.5% of the outstanding mortgage amount annually. Also, they must share any appreciation in the home's value with the FHA when they sell.
The law allows the FHA to insure up to $300 billion in new loans.
"This program can contribute meaningfully to stability in the housing market, while at the same time providing the appropriate safeguards and limitations to protect the interest of taxpayers," said Elizabeth Duke, Federal Reserve governor.
But HUD officials Wednesday backed away from the Congressional Budget Office's original estimate that the bill will help 400,000 troubled borrowers.
"It's very very difficult to really put a finger on it," Preston said.
Last resort
It's tough to forecast the program's success in part because banks have had a very lukewarm reaction to it. Four large servicers told lawmakers two weeks ago that they would use the program only as a last resort.
The problem is that the Hope for Homeowners program requires banks to reduce the loan's principal to 90% of a home's current appraised value, which is likely to be much less than the owner paid for it. Lenders prefer to freeze or cut interest rates so they can at least recover the original amount of the loan, said Tom Kelly, spokesman for JPMorgan Chase, which has worked with 110,000 customers to modify or rework their loans between January 2007 and July 2008.
"You lock in your loss," Kelly said, by reducing loan principal.
Banks might turn to Hope for Homeownership if they feel the loan is hopeless and just want to get rid of it, he continued.
Lenders also won't be pleased with the new home appraisals, which will show them just how underwater their borrowers are, said James Gaines, research economist at the Real Estate center at Texas A&M University.
He doesn't see a lot of lenders flocking to the program.
"It will help some people, but it won't be the universal panacea that people would like it to be," he said.
Record 16% drop in July home prices
July home prices plunge 16.3% in 12 months, according to the Standard & Poor's/Case-Shiller 20-city housing index.
Last Updated: September 30, 2008: 9:53 AM ET
NEW YORK (AP) -- A closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, but the rate of monthly declines is slowing.
The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3% in July from a year earlier, the largest drop since its inception in 2000. The 10-city index plunged 17.5%, the biggest decline in its 21-year history.
No price gains
Prices in the 20-city index have plummeted nearly 20% since peaking in July 2006. The 10-city index has fallen more than 21% since its peak in June 2006.
No city in the Case-Shiller 20-city index saw annual price gains in July, the fourth straight month that has happened.
However, the pace of monthly declines is slowing, a possible silver lining. Between May and July, for example, home prices fell at a cumulative rate of 2.2% - less than half the cumulative rate experienced between February and April.
But there's "no evidence of a bottom," said David M. Blitzer, chairman of the index committee at S&P.
Trouble in Vegas
Las Vegas prices plunged the most at nearly 30%, with Phoenix diving 29% and Miami 28%. Prices in the seven cities in the Sunbelt all fell between 20% and 30% from a year ago.
Only seven cities showed positive or flat returns from June to July, down from nine that showed month-over-month gains in June. Atlanta, Boston, Dallas, Denver and Minneapolis all posted positive returns for three months or more.
Last Updated: September 30, 2008: 9:53 AM ET
NEW YORK (AP) -- A closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, but the rate of monthly declines is slowing.
The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3% in July from a year earlier, the largest drop since its inception in 2000. The 10-city index plunged 17.5%, the biggest decline in its 21-year history.
No price gains
Prices in the 20-city index have plummeted nearly 20% since peaking in July 2006. The 10-city index has fallen more than 21% since its peak in June 2006.
No city in the Case-Shiller 20-city index saw annual price gains in July, the fourth straight month that has happened.
However, the pace of monthly declines is slowing, a possible silver lining. Between May and July, for example, home prices fell at a cumulative rate of 2.2% - less than half the cumulative rate experienced between February and April.
But there's "no evidence of a bottom," said David M. Blitzer, chairman of the index committee at S&P.
Trouble in Vegas
Las Vegas prices plunged the most at nearly 30%, with Phoenix diving 29% and Miami 28%. Prices in the seven cities in the Sunbelt all fell between 20% and 30% from a year ago.
Only seven cities showed positive or flat returns from June to July, down from nine that showed month-over-month gains in June. Atlanta, Boston, Dallas, Denver and Minneapolis all posted positive returns for three months or more.
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