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By James Williams | Agent in Kissimmee, FL
  • Real estate market is picking up, but foreclosures expected to surge

    Posted Under: Home Buying in Kissimmee, Foreclosure in Kissimmee, Investment Properties in Kissimmee  |  April 6, 2012 5:02 PM  |  318 views  |  No comments
    Real estate market is picking up, but foreclosures expected to surge

    GARFIELD HEIGHTS, Ohio – April 5, 2012 – Even as real estate sales are picking up across most of the country, a painful second act of the housing slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

    “We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio. “Last year was an anomaly, and not in a good way.”

    In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

    Five major banks eventually struck that settlement with 49 states in February. Signs are growing that the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

    Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

    More conclusive national data are not yet available. But watchdog group 4closurefraud.org, which helped uncover the “robo-signing” scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash.

    Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo’s rose 68 percent, and Bank of America’s, including BAC Home Loans Servicing, jumped nearly seven-fold – 251 starts vs. 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.

    According to Moody’s Analytics, sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, Bloomberg News reported. Prices for the foreclosed homes could drop as much as 10 percent because they deteriorated as they were held in reserve during the investigations by state officials resolved in February, according to online foreclosure marketplace RealtyTrac. That month, 43 percent of foreclosures were delinquent for two or more years, from a 21 percent share in 2010, according to Lender Processing Services.

    “The longer a foreclosed home is in the mill, the bigger the losses,” Todd Sherer, who manages distressed mortgage investments for Dalton Investments, a Los Angeles-based hedge fund, said in an interview with Bloomberg News. “We have a bulge of these properties coming through the system.”

    Real estate company Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.

    Copyright © 2012 washingtonpost.com; Nick Carey, Reuters.

    Related Topics: Foreclosures

  • Considering A Short Sale?

    Posted Under: Home Selling in Kissimmee, Foreclosure in Kissimmee, Credit Score in Kissimmee  |  March 31, 2012 4:04 AM  |  352 views  |  No comments

  • Seller financing expands pool of homebuyers, carries risk

    Posted Under: Home Buying in Kissimmee, Home Selling in Kissimmee, Investment Properties in Kissimmee  |  March 30, 2012 3:33 PM  |  285 views  |  No comments
    Seller financing expands pool of homebuyers, carries risk

    MINNEAPOLIS – March 30, 2011 – Deann Gayles refused to let her marred credit history stop her from realizing her dream of buying a house.

    The St. Paul, Minn., resident knew she wouldn’t qualify for a traditional mortgage in such a tight credit market, so she sought an alternative form of financing: a contract for deed.

    Also known as a land contract and an installment sale agreement, a contract for deed is an arrangement where the seller provides the financing for the buyer.

    Through a program offered through Bluff Neighborhood Housing Services in Dayton, Minn., Gayles was able to buy a tidy four-bedroom, multilevel house. She’s already busy painting and making improvements.

    “They led me the right way,” she said of the St. Paul nonprofit.

    Gayles and her husband, Steven, were able to finance the $149,900 St. Paul home at a rate of 7 percent for 30 years. She plans to refinance in three years.

    While a popular last resort for house hunters who can’t get financed otherwise, contracts for deeds are largely unregulated and are ripe for abuse. Some housing advocates warn that these arrangements have now taken the place of the mortgage scams that contributed to the fall of the housing market six years ago.

    “At this moment it’s the most prevalent form of predatory lending,” said Kristin Siegesmund, head of the consumer unit at Legal Aid Society of Minneapolis.

    Seller financing isn’t new. Contracts for deeds were popular in the 1980s when interest rates were in the double digits. Many sellers would use contracts with a lower rate as a way to entice buyers. Siegesmund herself bought a house on a contract in the mid-’80s when the mortgage rate was 16 percent.

    “The concept in and of itself is not bad,” she said. “The problem is that a lot of people on both sides of the equation don’t understand what they are.”

    Complaints about contracts for deeds have swelled, said Luke Grundman, an attorney for the Legal Aid Society of Minneapolis.

    The most common problems are associated with terms that favor sellers, including high interest rates and short repayment terms.

    Typically, a contract for deed is offered by a seller who doesn’t have a mortgage on the property. The sales price is paid in installments. Often, the interest rate is a couple of percentage points higher than market rate and the term is usually five to seven years, which requires the buyer to refinance or make a large balloon payment when the contract expires. Once all the payments have been made, the owner gives the buyer the deed to the property.

    Some sellers tout the low cost of executing a contract because an appraisal isn’t required, but that’s risky because a buyer could agree to pay more than the house is worth, making an eventual refinancing impossible.

    One of the most troublesome forms of abuse, Grundman said, is when seller financing is used as a way to avoid complying with rental licensing laws. In Minneapolis, there have been property owners who have owned fixer-uppers that couldn’t pass a rental license inspection, so they “sold” the property using a contract for deed, which requires no property inspection.

    And in many ways, buyers have less protection than they would with a signed rental agreement. If the buyer misses a payment, the property owner often has the right to cancel the contract and evict the buyer quickly.

    Several housing groups recently published “The Contract For Deed Guidebook,” which gives pointers to help protect buyers and sellers alike.

    “There is still room for a lot of mischief, and it’s important for the buyer to beware,” said Warren Hanson, president of the Greater Minnesota Housing Fund, one of the groups that helped produce the guide.

    The Greater Metropolitan Housing Corp., a Minneapolis-based group, has also gotten involved by offering contracts for deeds through its SHOP Home Mortgage program on rehabbed houses that it sells to people who might not otherwise qualify for bank financing. It requires them to attend homeownership courses and credit counseling before they buy.

    The program is partnering with Bluff Neighborhood Housing Services, the program Gayles used to buy her home. Already, 40 homeowners have successfully financed houses through the nonprofit. The program has been so successful, the group is trying to raise more money to expand the program. Gary Beatty, vice president of SHOP Home Mortgage, sees it a way to help stabilize neighborhoods that have been ravaged by the foreclosure crisis.

    “This also benefits the community because it puts another family in the house,” Beatty said.

    Copyright © 2012 the Star Tribune (Minneapolis), Jim Buchta. Distributed by McClatchy-Tribune News Service.

  • Housing Is ‘Awakening From Hibernation,’ Freddie Says

    Posted Under: Home Buying in Kissimmee, Foreclosure in Kissimmee, Investment Properties in Kissimmee  |  March 29, 2012 1:43 PM  |  297 views  |  No comments

    Housing Is ‘Awakening From Hibernation,’ Freddie Says


    An improving economy is contributing to a gradual rebound in home prices across the country, according to mortgage giant Freddie Mac’s 2012 Economic Outlook report, released Wednesday. But there is still a way to go in the road to recovery for the housing market, the report noted. 

    “The housing market is showing some signs of shaking off the depression-like conditions that have plagued it for much of the past few years,” according to the report. “As if awakening from hibernation, housing starts and home sales moved to higher levels of activity.”

    In fact, the signs have prompted Freddie Mac to revise its forecast upwards for home sales and originations. One economic contributor that’s helping to stabilize housing: The drop in the unemployment rate to 8.3 percent, its lowest level in three years, according to the report. 

    “A variety of encouraging indicators suggest that the housing market may be feeling a nascent recovery ... and more neighborhoods may see a stabilization in overall demand and housing values this spring,” says Frank Nothaft, Freddie Mac’s chief economist. 

    Median home sale prices are up, despite a slight drop in new and existing home sales, Freddie Mac reports. About a half of the increase in housing starts has been for construction of rental apartments in multi-unit buildings to meet the increasing demand, the report notes. New rental construction, at its current pace, is expected to reach its highest level since 2005. 

    “Housing starts continue to run below net household formations [and will allow for absorption of existing vacant homes],” according to the report. 

    Source: “Freddie Mac: Economic Growth Expected to Stabilize Housing Market,” Dow Jones Newswires (March 28, 2012)

  • FHA Loan Apps Rise as Borrowers Try to Beat Fee Hikes

    Posted Under: Home Buying in Kissimmee, Foreclosure in Kissimmee, Investment Properties in Kissimmee  |  March 29, 2012 1:40 PM  |  281 views  |  No comments

    FHA Loan Apps Rise as Borrowers Try to Beat Fee Hikes


    Mortgage applications for Federal Housing Administration loans soared 11 percent from the previous week as borrowers try to rush their applications in to beat the higher FHA costs that will start rolling out on Monday, according to the U.S. Mortgage Market Index report released from Mortech Inc. and Mortgage Daily. 

    Starting April 1, the FHA will be increasing its annual mortgage insurance premiums on all FHA loans. The annual premium is paid with the monthly mortgage payment. The FHA also will be increasing the FHA mortgage insurance premium that is paid up front during closing, also starting April 1. 

    Borrowers who are trying to avoid the higher fees are trying to get their FHA mortgage applications approved before the changes take effect. The new fees also will apply to home owners who refinance their mortgages.

    FHA loans have soared in popularity in recent years since they allow for smaller down payments, as low as 3.5 percent compared to traditional loans, and often carry less stringent credit requirements.

    Source: “Mortgage Applications for FHA Loans Increase Ahead of Higher Fees,” Realty Times (March 28, 2012)

  • FHFA to states: Stop the roadblocks, speed up foreclosures

    Posted Under: Home Buying in Kissimmee, Foreclosure in Kissimmee, Investment Properties in Kissimmee  |  March 29, 2012 1:31 PM  |  282 views  |  No comments
    FHFA to states: Stop the roadblocks, speed up foreclosures

    WASHINGTON – March 27, 2012 – States and municipalities that prolong the foreclosure process, such as extending mediation services, may inadvertently cost taxpayers more, according to Alfred Pollard, general counsel for the Federal Housing Finance Agency (FHFA), in testimony before a U.S. House panel.

    Many of those delayed foreclosures are homes held by one of the government-sponsored enterprises, Fannie Mae and Freddie Mac, which FHFA regulates. Fannie and Freddie have posted big losses the last few years from delinquent loans and already owe the Treasury Department more than $150 billion in taxpayer bailouts.

    “It would be very valuable for states and localities to pause in their passage of rules that may create impediments to smooth foreclosures, and to review the balance between homeowner protections and the movement to efficient and professionally-undertaken foreclosures,” Pollard told the House panel. “Simply permitting homeowners to stay in their homes for five or six hundred days or longer – while not paying their mortgages – costs neighborhoods, costs lenders and, ultimately, costs taxpayers and future borrowers.”

    As of Dec. 31, Fannie and Freddie had more than 568,000 loans on their books that have been delinquent for at least a year. Thirty percent of those come from Florida alone. More than 166,000 mortgages that Fannie and Freddie guarantee in the state are sitting in limbo – stretching more than a year without a payment, HousingWire reports.

    Florida lawmakers in February tried to get a bill approved to quicken the pace of foreclosures, but the bill died in the state Senate. In Florida, where foreclosures must wind through the courts, foreclosures average 676 days.

    Source: “Fannie, Freddie Suffer Florida Foreclosure Woes,” HousingWire (March 19, 2012)

    © Copyright 2012 INFORMATION, INC. Bethesda, MD (301) 215-4688

  • NAR: Investment, vacation home sales up in 2011

    Posted Under: Home Buying in Kissimmee, Home Selling in Kissimmee, Foreclosure in Kissimmee  |  March 29, 2012 1:10 PM  |  196 views  |  No comments
    NAR: Investment, vacation home sales up in 2011

    WASHINGTON – March 29, 2012 – Sales of investment and vacation homes jumped in 2011, with the combined market share rising to the highest level since 2005, according to the National Association of Realtors® (NAR).

    NAR’s 2012 Investment and Vacation Home Buyers Survey, covering existing- and new-home transactions in 2011, shows investment-home sales surged 64.5 percent to 1.23 million last year from 749,000 in 2010. Vacation-home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010. Owner-occupied purchases fell 15.5 percent to 2.78 million.

    Vacation-home sales accounted for 11 percent of all transactions last year, up from 10 percent in 2010, while the portion of investment sales jumped to 27 percent in 2011 from 17 percent in 2010.

    NAR Chief Economist Lawrence Yun said investors with cash took advantage of market conditions in 2011. “During the past year investors have been swooping into the market to take advantage of bargain home prices,” he said. “Rising rental income easily beat cash sitting in banks as an added inducement. In addition, 41 percent of investment buyers purchased more than one property.”

    Yun said the shift in investment buyer patterns in 2011 shows the market, for the large part, is able to absorb foreclosures hitting the market.

    “Small-time investors are helping the market heal since REO (bank real estate owned) inventory is not lingering for an extended period,” he said. “Any government program to sell REO inventory in bulk to large institutional companies should be limited to small geographic areas. Even where alternatives are needed, it’s best to rely on the expertise of local businesses, nonprofit organizations and government.”

    All-cash purchases have become fairly common in the investment- and vacation-home market during recent years: 49 percent of investment buyers paid cash in 2011, as did 42 percent of vacation-home buyers. Half of all investment home purchases in 2011 were distressed homes, as were 39 percent of vacation homes.

    “Clearly we’re looking at investors with financial resources who see real estate as a good investment and who aren’t hesitant to use cash,” Yun said. Of buyers who financed their purchase with a mortgage, large downpayments were typical. The median downpayment for both investment- and vacation-home buyers in 2011 was 27 percent.

    “Given the tight credit in recent years, many would-be normal home buyers for owner occupancy declined,” Yun said.

    The median investment-home price was $100,000 in 2011, up 6.4 percent from $94,000 in 2010, while the median vacation-home price was $121,300, down 19.1 percent from $150,000 in 2010.

    Investment-home buyers in 2011 had a median age of 50, earned $86,100 and bought a home that was relatively close to their primary residence – a median distance of 25 miles, although 30 percent were more than 100 miles away.

    “The share of investment buyers who flipped property remained low in 2011, and many of those homes likely were renovated before reselling,” Yun said. Five percent of homes purchased by investment buyers last year have already been resold, up from 2 percent in 2010. The typical investment buyer plans to hold the property for a median of 5 years, down from 10 years for buyers in 2010.

    The typical vacation-home buyer was 50 years old, had a median household income of $88,600 and purchased a property that was a median distance of 305 miles from the primary residence; 35 percent of vacation homes were within 100 miles and 37 percent were more than 500 miles. Buyers plan to own their recreational property for a median of 10 years.

    Lifestyle factors have consistently been the primary motivation for vacation-home buyers, while the desire for rental income drives investment purchases. Vacation homes purchased last year were more likely to be in suburban or rural areas; investment homes were concentrated in suburban locations.

    Eighty-two percent of vacation-home buyers said the primary reason for buying was to use the property themselves for vacations, or as a family retreat. Thirty percent plan to use the property as a primary residence in the future, and only 22 percent plan to rent to others.

    Half of investment buyers said they purchased primarily to generate rental income, and 34 percent wanted to diversify their investments or saw a good investment opportunity.
    Sixteen percent of vacation buyers and 14 percent of investment buyers purchased the property for a family member, friend or relative to use. In many cases the home is intended for a son or daughter to use while attending school.

    Forty-two percent of vacation homes purchased last year were in the South, 30 percent in the West, 15 percent in the Northeast and 12 percent in the Midwest; 1 percent were located outside of the U.S.

    Forty-four percent of investment properties were in the South, 23 percent in the West, 17 percent in the Midwest and 15 percent in the Northeast.

    Eight out of 10 second-home buyers said it was a good time to buy. Nearly half of investment buyers said they were likely to purchase another property within two years, as did one-third of vacation-home buyers.

    Currently, 42.1 million people in the U.S. are ages 50-59 – a group that has dominated second-home sales since the middle part of the past decade and established records. An additional 43.5 million people are 40-49 years old, while another 40.2 million are 30-39.

    “Given that the number of people who are in their 40s is somewhat larger than the 50-somethings, the long-term demographic demand for purchasing vacation homes is favorable because these younger households are likely to enter the market as their desire for these kinds of properties grows, and individual circumstances allow,” Yun said.

    NAR’s analysis of U.S. Census Bureau data shows there are 8.0 million vacation homes and 42.8 million investment units in the U.S., compared with 75.3 million owner-occupied homes.

    NAR’s 2012 Investment and Vacation Home Buyers Survey, conducted in March 2012, includes answers from 2,241 usable responses about home purchases during 2011. The survey controlled for age and income, based on information from the larger 2011 NAR Profile of Home Buyers and Sellers, to limit any biases in the characteristics of respondents.

    © 2012 Florida Realtors®

    Related Topics: Home sales

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