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Corey Sprague, Realtor, REOS's Blog

By Corey Sprague, Realtor | Agent in Milton, MA
  • Credit Score of 500 OK for FHA Loans with Wells Fargo

    Posted Under: Market Conditions in Plymouth, Home Buying in Plymouth, Financing in Plymouth  |  February 10, 2011 4:13 AM  |  1,242 views  |  No comments
    After NAR, FHA and others criticized the country’s major banks for requiring credit scores as high as 650 before making loans, Wells Fargo is accepting FHA mortgages for borrowers with credit scores as low as 500 as of January 15.

    FHA Commissioner David Stevens said banks’ credit policies were out of sync with FHA and artificially restraining home sales by as much as 20% of the potential market. Under its new policy, Wells Fargo will accept borrowers with credit scores of 500-579 if they put down 10% (no gifted funds or down payment assistance allowed).

    For borrowers with credit scores of 580-599, borrowers must put down 5%, with the same restriction on gifts and assistance funds. Borrowers with credit scores of 600 or higher can make a 3.5% down payment. 
  • Massachusetts January 2011 Pending Homes Sales Down as Snow Plays Factor

    Posted Under: Market Conditions in Plymouth, Home Buying in Plymouth, Home Selling in Plymouth  |  February 10, 2011 4:10 AM  |  663 views  |  No comments
    February 3, 2011 – The Massachusetts Association of REALTORS® (MAR) reported today that the number of single-family homes put under agreement in January was down7.3 percent compared to the same time last year.  The number of condominiums put under agreement in January was down 12 percent. 
    “Despite our general toughness as New Englanders, the significant snow in January kept buyers busy shoveling rather than making offers to buy  homes last month,” said 2011 MAR President Laurie Cadigan, broker/owner of Barrett & Company in Concord. “We still believe consumer confidence is better than it has been recently and when you combine that with declining prices, the opportunity is there for the number of homes put under agreement to go up in February.” 
    The number of single-family homes put under agreement in January was down 7.3 percent compared to the same time last year (2,791 homes in 2010 to 2,587 homes in 2011).  On a month-to-month basis, single-family homes put under agreement were down 10.4 percent from 2,888 homes in December 
    The number of condos put under agreement in January was down 12 percent compared to January 2010 (1,194 units in 2010 to 1,046 units in 2011).  On a month-to-month basis, condos put under agreement were exactly even at 1,046 units in December. 
    About Pending Sales:
    The tracking of signed purchase and sales agreements (also called “pending sales”) provide reliable information about where the real estate market is heading in coming months.  
    A pending sale or a sale “under agreement” is when the buyer and seller agree on the terms of the sale of a home and have a signed purchase and sale agreement, but have yet to close and be recorded as such.  MAR is the only organization which compiles this statewide information from Multiple Listing Services each month.
  • Home-Loan Relief

    Posted Under: Market Conditions in Massachusetts, Financing in Massachusetts, Foreclosure in Massachusetts  |  February 4, 2011 1:02 PM  |  654 views  |  No comments

      As the federal government's flagship mortgage-modification program comes under scrutiny for failing to meet its goal of helping three to four million troubled homeowners, state-level efforts to boost modifications appear to be picking up momentum.

    The Treasury reported Monday that the government's Home Affordable Modification Program, or HAMP, had provided permanent help to 521,630 homeowners since the program began in spring 2009.

    By comparison, over the same period, banks negotiating directly with borrowers have made about two million permanent loan modifications outside the government's program. These modifications continued to rise in recent months even as the number of HAMP modifications trailed off.

    Critics of HAMP say the program has made little impact on the housing market and should be ended. Last week, House Republicans introduced a bill to end the effort, calling it a "colossal failure." The administration defends the program.

    "I think we've got to remember that HAMP has achieved over a half-million modifications. These are people that make $50,000 a year, so to sort of write it off and say, 'Well, it's a failure,' I think is not really appropriate," said Tim Massad, an acting assistant Treasury secretary, in a hearing on Capitol Hill last week.

    Banks say they are doing more of their own modifications—and fewer HAMP mods—because eligibility requirements for HAMP are more stringent. Once a borrower is deemed ineligible for the government program, a modification worked out directly with the bank sometimes is the best option.

    But also having a big impact are state mandates requiring banks and loan-servicing companies to hold mediation sessions with borrowers prior to foreclosing, said lawyers for delinquent borrowers and judges handling foreclosure cases.

    About 20 states encourage some type of foreclosure mediation program to allow borrowers and lenders to hammer out a settlement, according to the Center for American Progress, a liberal Washington think tank. Three of those states—New York, Florida and Connecticut—and a handful of cities make mediation mandatory.

    In Florida, Fannie Mae has begun testing a foreclosure-prevention program to get banks to meet with troubled borrowers to negotiate mortgage modifications and other alternatives before filing foreclosure documents in court.

    "If they're looking at mounting legal costs and risks to foreclose, then the workout process might seem like the best option," said Alan M. White, a professor of law at Valparaiso University in Indiana, who has written extensively on the mortgage crisis. "Banks have got states preventing you from foreclosing...dismissing cases and ordering mediation, those are just two tools that state judges have."

    Others say banks are more willing to modify loan terms—which generally means reducing interest rates, forgoing late fees and extending the terms of loans—because it's starting to be cheaper than completing a foreclosure. In some cases, in some states, that process can take years and thousands of dollars in legal fees to complete.

    Among the banks to ramp up modifications isWells Fargo & Co., which plans to hold 20 large-scale mediation sessions across the country this year. More than 150,000 borrowers who have missed payments, or have been in modification negotiations, have or will be invited to come to hotels and convention centers for rapid-fire meetings the bank hopes will result in loan modifications.

    That's what happened to Patricia Yador, 53, of West Orange, N.J. at a "home preservation workshop" held at the Marriott hotel in downtown Brooklyn last Tuesday. Wells Fargo, her mortgage servicer, agreed after a mediation conference to knock more than 2 percentage points off the interest rate on her $300,000 mortgage.

    That cut her monthly payments from $3,257 to $2,833.

    "These are tears of joy because [before] they always turned me down," said Ms. Yador, who has owned her home for 17 years and lives on $2,100 in disability and pension payments since she stopped working as a hospital accounts manager about three years ago.

    Ms. Yador was one of 30,000 borrowers that Wells Fargo invited to participate in the modification fair in the New York-New Jersey area. Borrowers like Ms. Yador, who end up in a non-HAMP modification, are far more common than those who go through the government program. Of the roughly 600,000 loan modifications made by Wells Fargo since January, 2009, 86% have been done outside of HAMP, and 14% through HAMP.

    HAMP offers servicers financial incentives to reduce loans to 31% or less of a borrower's income, but it also has stringent requirements for eligibility. Borrowers who have lost their jobs or who have expensive medical conditions or other debts often are rejected by HAMP.

    A Wells Fargo spokesman said the modification fairs are driven by the bank's desire to do right by its customers. But others say the stepped up efforts are in response to ratcheted-up pressure from the states.

    For the last two years in Philadelphia, where foreclosures are handled by judge, courts have moved to a system where they automatically schedule a "conciliation conference" within 30 to 45 days of each foreclosure filing.

    Servicers are required to send a representative in person or by telephone to these conferences. If they fail to do so, the case can be postponed. The courts also keep mediators and pro bono housing lawyers on hand to serve borrowers.

    "Yes, we are asserting pressure, but it's almost as if they want the pressure," said Annette Rizzo, a judge with the Court of Common Pleas in Philadelphia. "The banks always say that reaching out to homeowners, it's a black hole. It's so hard to connect with them. That's what we offer, to connect with them."

    About 75% of eligible, struggling homeowners show up for and participate in mediation sessions in Philadelphia court rooms, and they have produced about a 35% success rate for about 14,000 loans according to an evaluation of the program to be released next month. Programs in Staten Island, NY and Bloomington, Indiana, have produced similarly high participation rates.

    To be sure, not every mediation or modification results in significant savings for homeowners and it's not clear how these modification will perform over time.

    In the third quarter, modifications done in the HAMP program reduced monthly payments by an average of $585, almost double the $332 reduction in payments for modifications done outside the HAMP program. Those loans with modifications that reduced payments by 10% or more were almost twice as likely to be current than those loans with modifications that reduced payments by less than 10%.

    Article Provided by WSJ

  • Mortgage Applications Climb After two Year Low

    Posted Under: Market Conditions in Massachusetts, Home Buying in Massachusetts, Financing in Massachusetts  |  February 4, 2011 8:54 AM  |  621 views  |  No comments

    Mortgage applications in the U.S. rebounded last week from a two-year low.

    The Mortgage Bankers Association’s index of loan applications rose 11 percent in the week ended Jan. 28 after dropping 13 percent the prior period, figures from the Washington-based group showed today. The previous reading, the lowest since November 2008, was not adjusted to reflect a shortened work schedule due to the Martin Luther King Jr. holiday on Jan. 17, the group said.

    The housing market is being held in check by an unemployment rate near a 26-year high, even as manufacturing and consumer spending strengthen. Mounting foreclosures and increasing borrowing costs may also depress the industry at the center of the last recession.

    “What little momentum we did have late last year is, slowly but surely, slowing,” Leif Thomsen, chief executive officer of Mortgage Master, a Walpole, Massachusetts-based lender, said before the report. “We could see a very difficult year for real estate.”

    The group’s refinancing gauge rose 12 percent after dropping 15 percent the prior week, the mortgage bankers’ group said. The purchase applications index advanced 9.5 percent following an 8.7 percent drop that left it at the lowest level in three months.

    The average rate on a 30-year fixed loan rose to 4.81 percent last week from 4.80 percent the prior week. The rate reached 4.21 percent in October, the lowest since the group’s records began in 1990.

    Monthly Payments

    At the current 30-year rate, monthly payments for each $100,000 of a loan would be $525.27 or about $12 less than the same week the prior year, when the rate was 5.01 percent.

    The average rate on a 15-year fixed mortgage increased to 4.13 percent from 4.12 percent.

    The share of applicants seeking to refinance a loan fell to 69.3 percent last week from 70.3 percent the prior week.

    “We had a fantastic run for almost two years with refinancing being a large percentage of all the applications,” said Thomsen. “With rates having gone up a bit, most of the people who can and wanted to refinance have done so by now.”

    Demand for traditional prime mortgages weakened in the final three months of last year at 32 percent of banks in the Federal Reserve’s quarterly survey of senior loan officers released this week. Sixty-two percent of respondents said demand remained the same.

    Record-Low Sales

    With sales of new homes at a record low and prices still falling, housing continues to struggle while other parts of the economy recover. Spending on new-home construction decreased 4.1 percent in December, according to a report released yesterday by the Commerce Department.

    Residential real-estate prices dropped in November by 1.6 percent from a year earlier, the biggest annual decline in almost a year, the S&P/Case-Shiller index of home values in 20 cities showed last week.

    For all of 2010, new-home sales in the U.S. fell 14 percent from the prior year to 321,000, the fewest in data going back to 1963, according to Commerce Department figures.

    D.R. Horton Inc., the second-largest U.S. homebuilder by stock-market value, last week reported a fiscal first-quarter loss that was wider than analysts expected as revenue dropped from a year earlier.

    “I think 2011 will be a marginal weak year in the homebuilding industry,” Chief Executive Officer Donald Tomnitz said during a conference call on Jan. 27. “Our goal is still to be profitable in 2011 and we’re going to struggle more in ‘11 than we did in ‘10 to be profitable.”

    Article Provided by Bloomberg

  • Home Equity Lending Is Back

    Posted Under: Market Conditions in Massachusetts, Home Selling in Massachusetts, Financing in Massachusetts  |  February 4, 2011 8:44 AM  |  288 views  |  No comments

    Once every homeowner's answer to a cash shortfall, the ability to borrow against your home equity all but disappeared a few years ago right along with, well, home equity. But now, at a growing number of banks around the country, home equity loans and lines of credit are back – and so are the pitfalls that go with them.

    After more than three years, some lenders are cautiously re-entering the second mortgage market. The effect hasn't registered in the national statistics yet, but regional banks are reporting significant increases. In the Midwest, Associated Bank issued nearly three times more home equity loans in the second half of 2010 compared to the same period the year before. SunTrust Bank, which operates mostly in the south and Mid-Atlantic, has issued 25% more home equity lines of credit in the past six months compared to the first half of 2010. And during the past year at Citizens Bank, which has branches mostly in the northeast, HELOC originations were up 35%. Unlike the largest lenders, these banks have been less affected by the subprime mortgage meltdown and they lend in limited areas, often where homes have lost less value, says Stu Feldstein, president at SMR Research, which tracks home loan data.

    These aren't small loans, either. At Associated, the average home equity loan, taken once as a lump sum, is around $75,000; at Citizens, the average credit line on a HELOC, which borrowers can tap over time, is around $100,000. That's enough for cash-strapped homeowners to pay for renovations or home repairs – especially if they've decided to stay in a house they can't, or don't want, to sell in the current market. "We found an opportunity that we can take advantage of," says Val Glytas, director of consumer lending at Associated Bank.

    This generosity, of course, is restricted only to the best borrowers: homeowners with at least a 720 FICO score, at least 20% equity in the home, and income verification, like pay stubs, for the past two years. That's a stark change from pre-2008, when credit score thresholds were lower, income wasn't always checked, and borrowers received loans for up to 100% of a home's value -- or more.

    But even with the more stringent requirements, borrowers could still end up underwater if home prices in their neighborhood drop – a particular risk in areas where foreclosures are mounting. Another five million homes will go into foreclosure in 2011 and 2012 -- cities like Boise, Idaho, Charleston, S.C., and Salt Lake City have been hit especially hard, says Rick Sharga, senior vice president at RealtyTrac.com, which tracks foreclosures.

    For qualified borrowers willing to take that risk, the price of the borrowed money is steep. Average interest rates on home-equity loans and HELOCs are 7.15% and 5.22%, respectively, according to HSH Associates, which tracks the mortgage market. That's lower than they were a year ago, but still significantly higher than, for example, the 4.2% average rate on car loans offered by dealerships and the 4.24% average rate on 15-year mortgages.

    A home equity loan or HELOC may still be a better deal than refinancing, because many lenders are willing to waive loan origination fees and closing costs – something they typically won't do for refinancing. But in exchange for waiving these fees, banks may impose other requirements, like borrowing a minimum amount, or keeping a line of credit or loan open for a set number of years. At SunTrust, for example, borrowers avoid closing costs if their HELOC is at least $10,000 and if they keep their line of credit for at least three years. And regardless, some banks will charge an early termination fee, commonly 1% of the outstanding balance, or a set fee that can be as high as $500, says Keith Gumbinger, vice president at HSH Associates, which tracks the mortgage market.

    However, for homeowners who are in good financial standing but don't have the cash on hand for a renovation, Junior's college tuition, or aging parents' medical bills, now could be a good time to sign up. Many banks offer variable or fixed rates; fixed rates are a better bet especially for the long term, because interest rates are likely to rise, says Feldstein. The relatively lower interest rates mean that, over 10 years at a fixed rate, a $50,000 HELOC will be nearly $1,000 cheaper than it would have been if the money had been borrowed last year. And with contractors cutting costs to win new business, some are slashing prices by up to 20%. With a typical bathroom or major kitchen remodeling costing $16,634 and $58,367 on average, respectively, according to Remodeling Magazine, haggling with a contractor now could save around $3,300 and $11,700, respectively.

    Article provided by Smart Money

  • Could Foreclosures Peak in 2011?

    Posted Under: Market Conditions in Massachusetts, Home Buying in Massachusetts, Foreclosure in Massachusetts  |  February 3, 2011 9:41 AM  |  635 views  |  2 comments

    Lenders are poised to take back more homes this year than any other since the US housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages, and industry analysts say more people will miss payments because of job losses and also loans that exceed the value of the homes they are living in.

    “2011 is going to be the peak,’’ said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.

    The blistering pace of foreclosures this year will top 2010, when a record 1 million homes were lost, RealtyTrac said yesterday.

    One in every 45 US households received a foreclosure filing last year, a record 2.9 million of them. That’s up 1.67 percent from 2009.

    Freddie Mac reported yesterday that fixed mortgage rates dipped this week for the second straight time, extending a sliver of hope for some homeowners.

    The average rate on the 30-year mortgage dropped to 4.71 percent from 4.77 percent the previous week. The rate on the 15-year loan, a popular refinance choice, slipped to 4.08 percent from 4.13 percent.

    But both are a half-point higher than in November, when 30-year loan rate hit a 40-year low of 4.17 percent and the 15-year mortgage rate fell to 3.57 percent, the lowest on records starting in 1991.

    The dip has led more borrowers to apply for a refinance, but would-be buyers remain hesitant, according to Wednesday’s mortgage indexes from the Mortgage Bankers Association. It will take more than low mortgage rates to jumpstart a housing market plagued by high unemployment, falling prices, and tighter credit standards.

    The glut of foreclosures has compounded the problem, and while the pace moderated in the final months of 2010, that isn’t expected to last.

    Banks temporarily halted actions against borrowers severely behind on their payments after allegations of improper eviction surfaced in September.

    However, most banks have since resumed foreclosures, and the first quarter will probably bear that out, Sharga said.

    The pain is expected to be the most acute in states that have already suffered the worst. Largely, those are states that saw the biggest housing booms: Nevada, Arizona, Florida, and California. They will be joined by states hit hardest by the economic downturn, including Michigan and Illinois.

    Nevada posted the highest foreclosure rate in 2010 for the fourth straight year: One in every 11 households received a foreclosure filing last year in the state.

    One in every 17 Arizona households got a foreclosure filing last year, while one in 18 received a notice in Florida.

    Article Provided by Globe Newspaper Company

  • MA housing market will stabalize in 2011

    Posted Under: Market Conditions in Massachusetts, Home Buying in Massachusetts, Home Selling in Massachusetts  |  February 3, 2011 9:35 AM  |  1,414 views  |  1 comment

    The Massachusetts housing market will remain stable in 2011, with no dizzying ascents or dramatic drops. With home buyer tax credits of up to $8,000 long gone, the new year should see more natural balance between supply and demand. An improving economy should entice more potential buyers to take the plunge, while sellers, who have been waiting out the downturn, put homes on the market in hopes of stronger prices and better bargaining power.

    Foreclosures, meanwhile, will slow in 2011 as the number of struggling homeowners decreases, either because they have already lost their properties or were helped by the improving economy. Between January and November of last year, foreclosure petitions, the first step in the home seizure process, declined. That will translate into fewer homes taken this year.

    Still, the climb will be slow and long. Home sales, which slowed significantly during the second half of 2010, should pick up slightly in the spring, but will still be restrained by tight credit, tougher lending standards, and lingering economic uncertainty. Interest rates, which hit historic lows in 2010, won’t set any new records. But they should not spike over the next year.

    Home values won’t budge much either. Prices in Massachusetts are largely anchored by the relatively small inventory, which creates competition among home buyers. In the past, that has led to quickly rising prices. But overall housing prices will be restrained by the large number of foreclosed homes heading into the market, especially in the suburbs and rural areas of the state.

    The state housing market, of course, is an amalgamation of smaller and diverse local markets. Homeowners in Boston’s downtown and higher priced suburbs, where values held up relatively well during the recession, should see some lift in sales and prices as wealthier residents grow increasingly comfortable spending again. Lower income communities, however, will still struggle because of stricter lending requirements that will deter many first-time and moderate-income home buyers.

    Massachusetts homeowners were hurt less by the national housing downturn that wiped out billions of dollars in home equity. Nationally, median home prices dropped by more than 30 percent in the downturn, compared to 20 percent in Massachusetts. Since hitting bottom in 2009, home values here have increased by about 7 percent — with some dips and surges along the way.

    Most housing industry analysts do not expect 2011 to provide any surprises, but then again, few predicted the recession in 2008. Paul Willen, a senior economist at the Federal Reserve Bank of Boston, said it’s difficult to predict the exact moment when buyers will stop worrying that homes will lose value and start to panic that values will rise rapidly, leaving them priced out of the market.

    “The minute it happens, it is sort of a surprise,’’ he said. “Unexpected things happen in the housing market a lot more than they should.’’

    Article Provided By Globe Newspaper Company.
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