28 December 2012

Luxury Snaps Back

originally appeared in The Wall Street Journal:

With their children through college, a California couple decided to sell their three-bedroom Santa Monica, Calif., home in May and move to San Diego. Given the soft housing market, they weren't sure how buyers would react to their $1.8 million asking price.

They found out quickly. Within hours of listing the property, they had an offer for $25,000 above their listing price. They soon had six others. We got extremely lucky, says the 55-year-old actress, who bought the home 10 years ago for $1.1 million.

After a soft 2011, the luxury home market made a comeback in 2012, driven by growing buyer confidence, strong foreign demand, low mortgage rates, more realistic sellers and sharp drops in the number of home listings. Sales of homes priced at $1 million and above rose by 9% in the first nine months of 2012 compared with the same period one year ago to the highest level in four years, according to DataQuick MDA, a real-estate data firm that tracks public records in the 98 largest U.S. metro areas.

Still, many homeowners are finding that their homes are worth less than the peak values of six years ago. That has likely prompted some to hold their properties off the market. The supply of million-dollar-and-above homes being offered for sale dropped by nearly 8% this year, according to Realtor.com. Also, banks are taking back fewer foreclosed properties. Nearly 2,000 million-dollar homes went through foreclosure this year through October, down by 33% from the same period last year and by more than half from 2010, according to Zillow.

That has left more buyers chasing fewer homes, giving some sellers the upper hand.

There's a real shortage of inventory throughout our markets in the United States, according to the chief executive of Sotheby's International Realty Inc. We have many more buyers than the high-end homes that we have to sell.

At the current sales pace, it would take nearly 12 months to sell the supply of million-dollar properties available for sale in October, down sharply from 21 months one year ago, according to the National Association of Realtors. The supply shortage is becoming particularly acute in the West, where the supply of million-dollar homes stood at just six months in October.

In California, some 18,760 previously owned homes sold for more than $1 million in the first nine months of the year, a 14.8% increase from last year and the highest level since 2007, according to DataQuick. Buyers had better come to the table prepared, says a real-estate agent with Rodeo Realty in Los Angeles who represented the couple. She says 2011 was lethargic, adding, We didn't have a lot of inventory, but then, we didn't have a lot of buyers.

This year, bidding wars have become commonplace in affluent California markets from Brentwood to Palo Alto, where new land is scarce and where investors have pushed up prices by making all-cash offers to buy older homes that can be torn down and rebuilt.

I had so many calls this year from disappointed buyers who thought they had a deal, and the next thing they knew, it was a bidding war and they lost, according to the chief executive of the luxury brokerage Corcoran Group.

Those disappointments are helping to create urgency among buyers. When you have 25 offers on a property, you now have another 24 buyers who didn't get that home, according to the president of J. Rockcliff Realtors in San Francisco's East Bay. They realize very quickly that prices aren't going to get any better.

The real-estate agent with Rodeo Realty represented a buyer from Dallas who flew to Los Angeles to sign a purchase contract last month on the same morning that a $3.7 million Brentwood home hit the market. The four-bedroom home, which has a swimming pool and a guest house, drew better offers. But her client acted quickly and got the house, she says.

To be sure, many sellers are finding that their homes aren't worth anywhere near what they fetched at their peak, and sales are rising from extremely depressed levels of the past few years. Sales of $1 million properties for the first nine months of the year were nearly half of what they were in at the peak of the housing boom in 2006. Lending standards are still conservative. Banks generally require at least 20% down payments and excellent credit and are thoroughly scrutinizing a borrower's income and the property appraisal.

A local Chicago-area homebuyer and his wife were shocked when their offer to pay $1.3 million for a five-bedroom home in Glenview, Ill., listed at $1.6 million was accepted. We thought there was a 1% chance they'd say yes, he said, who is thrilled with the home that sits on the golf course of the local country club.

The homebuyer was ready to buy last year, but he had trouble qualifying for a loan. Because he runs his own small business, a sales-consulting firm, he struggled to meet tougher underwriting criteria that require him to prove his income with two years of tax returns. After renting for 18 months in the suburbs, he found a bank that was willing to make the loan.

For the past few years, strong foreign demand has also helped to push prices higher for trophy properties in Manhattan, beachfront properties in Long Island's Hamptons, and newly built condominium towers in South Florida. Canadians, Asians, Brazilians and Europeans have been lured by a range of factors: fears of a real-estate bubble at home, a favorable exchange rate and the desire for a safe place to park their cash.

The big difference this year was that the Americans finally got off the fence, according to the owner of Daley and Company in Vero Beach, Fla. Europeans and Canadians had accounted for the bulk of her sales in 2011.

Few luxury markets did as well this year as those benefiting from the technology stock boom in the Silicon Valley. Atherton, Calif., topped the list of the most-expensive markets in the U.S., with an average home value of $3.77 million, up 18% from one year ago, according to Zillow. Values rose by 20% in Los Altos, Calif., to $2.16 million, and by 19% in Marin County's San Anselmo, to $2.17 million.

26 December 2012

Ga. counties sue HSBC for bad home loans

originally appeared in USA Today from The Associated Press:

Three counties in Georgia have filed a lawsuit claiming that British bank HSBC cost them hundreds of millions of dollars in expenses and damage to their tax bases by aggressively signing minorities to housing loans that were likely to fail.

The Georgia counties' failure or success with the relatively novel strategy could help determine whether other local governments try to hold big banks accountable for losses in tax revenue based on what they claim are discriminatory or predatory lending practices.

Similar lawsuits resulted in settlements this year worth millions of dollars for communities in Maryland and Tennessee.

Fulton, DeKalb and Cobb counties say in their lawsuit, filed in October, that the housing foreclosure crisis was the "foreseeable and inevitable result" of big banks, such as HSBC and its U.S. subsidiaries, aggressively pushing loans that were destined to fail. The counties say the crisis has caused them tremendous damage.

The lawsuit says predatory lending practices include: targeting vulnerable borrowers for mortgage loans with unfavorable terms; directing credit-worthy borrowers to more costly loans; putting unreasonable terms, excessive fees or pre-payment penalties into mortgage loans; basing loan values on inflated or fraudulent appraisals; and refinancing a loan without benefit to the borrower.

The counties are asking the court to order the bank to stop its behavior and to take steps to prevent similar predatory lending in the future. They are also seeking financial compensation for the damages they've suffered and punitive damages to punish the bank for its "willful, wanton and reckless conduct." The counties say the financial injury they've suffered is in the hundreds of millions of dollars.

A lawyer for HSBC and its subsidiaries, said he couldn't comment on the case. A federal judge has given the bank until Jan. 25 to respond to the counties' complaint.

According to DeKalb County Commissioner, it's not only the personal damage that was done to people in our communities. That has a ripple effect on our tax digest and the demand for public services in these areas.

The city of Atlanta straddles Fulton and DeKalb counties; Cobb County is northwest of the city.

The lawsuit says the banks violated the Fair Housing Act, which provides protections against housing or renting policies or practices, including lending, that discriminate on the basis race, color, national origin, religion, sex, family status or handicap.

The counties say their tax digests — which represent the value of all property subject to tax — have declined from a high point in 2009.

Fulton's tax digest has dropped about 12%, from $32.7 billion to $28.7 billion; DeKalb's has dropped about 20%, from $22 billion to $17.5 billion; and Cobb's has dropped about 15%, from $25.5 billion to $21.3 billion, the lawsuit says. That reduces their ability to provide critical services in their communities, the counties say.

In addition to decreased tax income, vacant or abandoned homes that are in or near foreclosure create additional costs for the counties, the lawsuit says.

Their housing code and legal departments have to investigate and respond to code violations, including having to board up, tear down or make structural repairs to unsafe homes. They have to deal with public health concerns, such as pest infestations, ruptured water pipes, accumulated garbage and unkempt yards. And fire and police departments have to respond to health and safety threats.

Lawyers for the counties declined interviews on the case, but one of them, said in an e-mailed statement that they are continuing to investigate other banks and could file additional complaints.

Similar suits were filed against Wells Fargo by the city of Memphis and surrounding Shelby County in Tennessee in 2009 and by the city of Baltimore in 2008. Those suits were settled earlier this year.

Both settlements included $3 million to the local governments for economic development or housing programs and $4.5 million in down payment assistance to homeowners, as well as a lending goal of $425 million for residents over the subsequent five years, according to media accounts.

As in those cases, the lawsuit filed by the Georgia counties says the bank, in this case HSBC, targeted communities with high percentages of Fair Housing Act-protected minority residents, particularly blacks and Hispanics.

Communities with high concentrations of such potential borrowers, and the potential borrowers themselves, were targeted because of the traditional lack of access to competitive credit choices in these communities and the resulting willingness of FHA protected minority borrowers to accept credit on uncompetitive rates, the lawsuit says.

The lawsuit says minority borrowers were disproportionately targeted with high-cost loans between 2004 and 2007.

Before the beginning of the subprime lending boom in 2003, annual foreclosure rates in metro Atlanta less than 1%, but U.S. Department of Housing and Urban Development data show the estimated foreclosure rates for each of the three counties now average more than 9% and are as high as 18% in communities with the highest percentages of minority borrowers, the lawsuit says.

It is the alleged targeting of minority communities that entitles the counties to seek action against HSBC for loss of tax income and other expenses, the lawsuit says.

If you can show that you yourself have suffered harm by an illegal act under the Fair Housing Act, even if you are not the target, even if you are not the intended victim, you can still sue to stop the behavior and to recover any damages that you can prove you suffered because of the violation of the Fair Housing Act, according to a lawyer whose firm was involved in the Memphis and Baltimore lawsuits.

The costs incurred by counties because of high rates of foreclosure are reflected in court records and related fees for each home, and police and fire departments can calculate the costs of responding to a given address, the lawyer said. He said it takes a lot of time and effort to gather the necessary records to prove the harm.

Another discouraging factor could be a lack of political will, according to a vice president of the National Fair Housing Alliance.

Politicians may not want to go up against the banks she said, adding that there will likely be other local governments that give this a try but she doubts the number will be high.

But an assistant law professor at the University of Georgia, says she thinks more cases are likely, at least in the short term as municipal governments continue to feel the squeeze of a tight economy and seek ways to refill their coffers.

They may try to test federal courts in different parts of the country, she said. Successes in multiple jurisdictions could lead to more attempts, but if courts start knocking the suits down that would likely discourage them, she said.

14 December 2012

Mortgage delinquencies to remain high

originally appeared in USA Today:

Here's some good news on home loan delinquencies.

If not for all the homeowners who haven't paid their mortgages in more than a year, the nation's home loan delinquency rate would be only slightly higher than normal, shows new research from credit monitor TransUnion.

The delinquency rate would fall to about 2.5%, down from more than 5%, if those borrowers were excluded, says a TransUnion vice president.

Before the foreclosure crisis and housing bust, the normal mortgage delinquency rate was about 1.5% to 2%, TransUnion says.

The company expects the mortgage delinquency rate -- which looks at borrowers 60 or more days past due -- to finish this year at 5.32% and to drop only slightly to 5.06% by the end of next year.

The nation's higher-than-normal mortgage loan delinquency rate is not driven by new loans. It's a lot of folks ... who have been delinquent for a really long time, their vice president says.

Before the recession, it was unusual for a borrower to go more than 180 days without either being able to fix their situation or go through the foreclosure process, TransUnion says.

At the end of October, homes that went through a foreclosure sale were delinquent an average of 728 days, mortgage tracker Lender Processing Services says. That was up from 497 days two years earlier.

If the pace of improvement in curing delinquent loans doesn't pick up, national home loan delinquency rates will take another four years to get back to normal, TransUnion says.

More than 80% of the nation's currently delinquent home loans were originated before 2008, TransUnion's data show. The pre-2008 loans make up 54% of all mortgages, it says.

TransUnion predicts the biggest declines in mortgage delinquency rates next year will occur in several states that were hit hardest by foreclosures. Nevada will see a 19% drop. California and Arizona will post 12% declines.

In all of those states, foreclosures don't go through the courts so they can occur more rapidly than they typically do in states where foreclosures do go through the courts.

Thirteen states will see mortgage delinquency rates rise next year, TransUnion says.

They are largely states that have lower delinquency rates now compared with the national average, TransUnion says, and include North Dakota, South Dakota and Nebraska.

Despite likely increases next year, those three states will end 2013 with the lowest mortgage delinquency rates in the nation, TransUnion predicts.

North Dakota, which is experiencing an energy boom, will be at 1.5% of home loans being 60 or more days late. Nebraska and South Dakota will come in at about 2.3%.

Florida will have the highest delinquency rate at almost 12%, followed by Nevada at just over 8%.

The national mortgage delinquency rate peaked in the fourth quarter of 2009 at 6.89% after rising 12 consecutive quarters from its 1.9% mark in the fourth quarter of 2006, TransUnion says.

26 November 2012

Florida - Action Destination

Story first appeared smh.com.
From zooming on airboats to blasting with a jetpack or diving on wrecks — there's nothing dull about Florida.
When thinking of adventure destinations, Florida isn't exactly the first place to come to mind. The typical combination of families with children, sunseekers and retirees hardly screams adrenalin, while the Sunshine State's devotion to the needlessly large car doesn't encourage exercise in the great outdoors. But hunt beyond the headline attractions and Florida has a surprising amount to offer for active types.

Canoeing and kayaking

For many, the Florida Everglades are an excuse to get on an airboat - one of those ridiculous-looking craft powered by an industrial-size fan at the back. But airboat excursions tend to be mass-market affairs, whizzing you around the edge of the Everglades National Park for a cursory 30 minutes or so.
The Everglades - the soggy, swampy, slow-moving river that takes up much of the southern portion of the state - is much better explored by canoe. Providing you don't turn the thing over (unwise given the number of alligators hanging around), canoes are a much better option.
They allow you to take things at the requisite slow pace, discover the nooks and crannies that are too small for bigger craft, spot birdlife in silence and paddle under natural mangrove arches.
North American Canoe Tours offers both day-long and overnight Everglades canoeing adventures.
The Florida Keys archipelago is another obvious spot for canoes and kayaks. There's even a Florida Keys Overseas Paddling Trail, which stretches 176 kilometres from Key West to Key Largo, if you've nine or 10 days to spare and arms of steel. Florida Bay Outfitters in Key Largo can kit you out for the island-hopping stretch, or take you out on three-hour and day-long tours for a taster run.
Other good spots for a paddle include the Wekiwa Springs State Park near Orlando and the waterways around Cocoa Beach.

Diving and snorkelling

The Florida Keys is the best part of the state (and arguably the US) for getting under the water. A barrier reef - the largest in the US, and one of the most impressive in the world - runs parallel to the islands.
Added to this is the large number of shipwrecks - wreck salvage was once Key West's main industry and made it the richest city per head in the US - that life has now grown around. The reef isn't accessible from the shore, so divers will need an open-water certificate. Most dive shops in the area run four-day courses that will get you up to speed or snorkelling is an option for anyone who's happy to stay near the surface. Good diving and snorkelling spots are dotted along the Keys, but if you can pick only one, then it should probably be the John Pennekamp Coral Reef Park. It's packed with nearly 600 species of fish and 40 species of coral, while the headline act is the Christ of the Deep - a huge bronze sunken statue of Jesus with his arms reaching up to the skies.


It's not quite getting back to nature, but balancing on wobbly wooden bridges then whizzing from tree to tree in a flying fox is hardly sedentary. Zipwiring seems to have become the standard adventure activity across the world for people who don't usually do adventure - soon every cruise-ship port will have a zipwiring course nearby - but it's undoubtedly good fun.
The Central Florida Zoo is a good place to clip on, tread gingerly across swaying walkways and fly across the woods.
There are two fairly substantial and testing courses that take about three hours to get around. Some of the wooden planks are brutes to get across, but there's a sense of achievement in doing so.

Flying with jetpacks

The man-made excitement continues in Key West, where space-age dreams of getting around by jetpack have become a reality.
Well, sort of, anyway. With JetPack Adventures, you can strap yourself into a harness that is attached by a tube to a floating superpump in the water.
Press the triggers and the water is expelled from your "jetpack" with such force that you're launched forwards and upwards. Getting the hang of it is rather tricky, but get it right and you can fly above the sea sci-fi style.


To really feel like you've developed superhuman powers, however, you can always set yourself the task of taming the Florida National Scenic Trail. As hiking routes go, it's a giant, stretching from the seashore at the end of the Florida Panhandle to the Everglades.
If you want to take on the 2240-kilometre trail, some careful planning and some awfully good boots will be required.
However, there are plenty of less severe day or weekend hike options that are within easy reaching distance of the big cities.
The bottom stretches through the Big Cypress National Preserve are about 45 minutes' drive west of Miami or Fort Lauderdale. More importantly, these chunks are among the best on the whole trail for wildlife spotting and variety of scenery - think swamp, prairie and forest.


California is usually seen as the US surfing capital, but the most famous surfer of them all comes from Cocoa Beach on Florida's east coast. The island town - connected to the mainland by bridge - hogs the waves on which 11-time world champion Kelly Slater learnt his trade.
Cocoa Beach has now morphed into something of a well-to-do surf town - as you can immediately tell from its gigantic surf shops. The Ron Jon Surf Shop sprawls over almost two complete blocks and it also runs a surf school. A variety of lesson programs are available, while they've also started branching out into stand-up paddle-boarding for novices who want to discover another way of tumbling into the water.

Trip notes

Getting there
Orlando and Miami are the main entry points to Florida. United and Qantas are among the airlines that can get you to both from Sydney, transiting in Los Angeles. Return ticket prices cost from about $2000.

09 October 2012

Should you fund your retirement with property?

Story first appeared on usatoday.com.

Q: I'm 59 years old. My retirement savings includes a vacation rental property worth $500,000 without a mortgage. It takes in $20,000 a year. I also have three mortgages that total $350,000. One is my primary residence, and two others take in monthly rent of $1,500, which is equal to the monthly mortgage. Should I sell the $500,000 property to pay off the mortgages? Or should I take out a loan on that property to pay off the mortgages? Any reason not to rely on property for my retirement future?

A: Congratulations in building a portfolio of properties that appears to be generating a nice positive cash flow. As the latest real estate downturn has proved, relying upon any one asset class is quite risky, and you hopefully have other assets besides Social Security to support you in retirement.
You do not mention the interest rates on the mortgages. Most likely your existing mortgages are a lot higher than the current national average of below 4%, which would suggest refinancing. Assuming you have a high enough credit score, refinancing the package of investment properties so that you only have one property with a mortgage would be ideal. Moreover, the current cheap money environment would most likely lower the total costs in any case.
Although it's not clear how long you have owned the vacation rental property, it is generally not an ideal time to sell. Prices have gone down significantly in many parts of the country and you may not get a good return on your investment. Cheap money vs. low selling prices supports the refinancing approach.
Your properties would then be generating income to pay off the new mortgage. Your annual rental income of $38,000 ($20,000 plus $18,000) should pay off all mortgages within 15 years. Obviously the details of your loans, such as your interest rates, length of mortgages, prepayment penalties and loan-to-value ratio, will determine the exact payoff time and the amount you can use to fund your retirement living.
As you know, there will always be down time for rental property when it is vacant as well as unexpected costs for repairs and upkeep. So minimizing the fixed mortgage expense works in your favor as you approach retirement. Assuming you are managing the properties, rental property can provide a nice income as well as a hedge against inflation as most properties are at a low value today.
If you have not done so, you might also consider putting the properties inside of a legal entity (such as a limited liability company, or LLC) to protect yourself in the event of problems. Providing a legal envelope protects your other assets in the event a tenant or others sue you for a fall or other claim. An umbrella insurance policy will help pay for the attorney to defend you.
There are many unknown factors, such as your income, expenses and other issues to consider, so consulting a knowledgeable financial adviser would be helpful in evaluating your decisions.

07 August 2012

Michigan Millionaire Purchases Auction Homes for $4.2 Million

Story first reported from Yahoo.com

A Michigan businessman has bought up every piece of property--fully 650 separate properties--for sale at a Macomb County tax auction for a cool $4.8 million. He was the only bidder. And not everyone was happy with that outcome, especially those who had hoped to bid on single homes.

So what does Bill McMachen plan to do with all of that windfall real estate? Sell it, of course (and he has many would-be buyers). According to Fox News, McMachen expects to make about $2 million back on his investment, with many of the properties to be donated to needy families.

Watch the Bill McMachen interview by Fox News Detroit here:

For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News  blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.

02 August 2012

Third California City Files for Bankruptcy

Story first reported from CNN.com

A California city filed for bankruptcy Wednesday, the third in the Golden State to do so in recent weeks, stoking experts' concerns that other cities could follow suit.

The city of San Bernardino, with more than 200,000 residents on the eastern tip of greater Los Angeles, "filed an emergency petition for Chapter 9 Bankruptcy" with a regional U.S. bankruptcy court, according to a news release from the city's interim manager.

The other two to file recently were Stockton, with around 300,000 residents, according to 2010 U.S. census data, and Mammoth Lakes, a resort town, where visitors and seasonal residents outnumber the just over 8,000 permanent inhabitants.

Many municipalities in the Golden State and around the nation are struggling to cover their costs as the economic malaise continues to hurt tax revenue streams, experts said. This will lead to more municipal bankruptcies, which have been rare until now.

"This is not the end. This is the beginning," Peter Navarro, business professor at University of California, Irvine, told CNN recently. "As cities see it can be done and is being done, it will give them the idea to do it."

Eric Hoffman, an analyst at Moody's Investor Service agreed, saying more city bankruptcies are likely in California and throughout the nation.

Cities have also struggled from budget changes made on the state level. Because of massive budget shortfalls, Gov. Jerry Brown and the state legislature made changes to vehicle tax money and redevelopment agencies that stripped locales of hundreds of millions in state funding.

San Bernardino said it will continue to provide services during the bankruptcy phase.

"There will be no immediate service reductions or changes in service to the community as a result of the filing," interim city manager Andrea Travis-Miller said Wednesday. But "reductions may occur" in the future.

In a prior statement Travis-Miller hinted the city may continue to "negotiate in good faith with its creditors."

In early July, Miller and finance director Jason Simpson issued a report stating that the city was facing insolvency and its expenditures were projected to exceed revenues by $45 million. The city's general fund reserves had been as high as $19 million in 2001 but are now depleted, the report said.
"The city has reached a breaking point," the report said.

Some $10 million to $16 million in annual revenue has evaporated in recent years as taxable sales dried up and property values plummeted in the city, the report said.

Mammoth Lakes sought protection July 2 after a property developer won a $43 million court judgment against the resort town. Experts say this filing should not be lumped in with the other two California municipal bankruptcies since it was an unusual circumstance.

Stockton, however, filed for bankruptcy in late June after three months of mediation when creditors failed to close a $26 million budget shortfall. The city had already addressed $90 million in deficits over the past three years, mainly through reducing services and employee compensation.

Both Stockton's and San Bernardino's fiscal troubles are due in large part to the massive housing downturn and recession that swept across California. Both towns were hit particularly hard by the foreclosure crisis, which left numerous abandoned homes and reduced property values in its wake. That led to lower property tax revenues, critical to supporting public services.

While some areas of the Golden State are starting to recover, the regions containing those two towns are not, said Chris McKenna, executive director of the League of California Cities.

By filing for bankruptcy, cities will be able to keep police and firefighters on the street and possibly keep some parks and libraries open while they work out their finances, he said.

For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News  blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

26 July 2012

30-Year Mortgage at Record Low

Story first reported from USA Today

The average rate on 30-year fixed mortgages fell again, dropping below 3.5% for the first time on records that date back 60 years.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan dropped to 3.49% from 3.53% last week. The loans are the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage, a popular refinancing option, dipped to 2.80%. That's below last week's previous record of 2.83%.

The rate on the 30-year loan has fallen to or matched record lows 13 of the past 14 weeks.

Cheaper mortgages have helped drive a modest but uneven housing recovery.

For example, another report Thursday said buyers signed fewer contracts to purchase previously occupied homes last month.

The National Association of Realtors says its index of pending sales agreements fell 1.4% in June to 99.3. May's reading was revised down to 100.7.

A reading of 100 is considered healthy. The index is 9.5% higher than it was a year ago. The index bottomed at 75.88 in June 2010 after a homebuyers' tax credit expired.

Contract signings typically indicate where the housing market is headed. There's generally a one- to two-month lag between a signed contract and a completed deal.

Sales of new and previously occupied homes fell in June but were higher than the same month last year. Home prices have started to stabilize in many large markets. And builders are more confident and are putting
up more houses than they have in nearly four years.

Low mortgage rates could also provide some help to the economy if more people refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend. Many homeowners use the savings on renovations, such as bath remodels and bathroom remodels, furniture, appliances and other improvements, which help drive growth.

Still, the pace of home sales remains well below healthy levels. Many people are still having difficulty qualifying for home loans or can't afford larger down payments required by banks.

The sluggish job market could deter some from making a purchase this year.

Mortgage rates have been dropping because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for 30-year loans was 0.7 point, unchanged from last week. The fee for 15-year loans rose to 0.7 point from 0.6 the previous week.

The average rate on one-year adjustable rate mortgages rose to 2.71% from 2.69%. The fee for one-year adjustable rate loans edged up to 0.5 point from 0.4 point.

The average rate on five-year adjustable rate mortgages jumped to 2.74% from 2.69% last week. The fee was unchanged at 0.6 point.

For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

19 July 2012

Consumer Financial Protection Bureau Clarifying Mortgage Lending

Story first reported from USA Today

The federal Consumer Financial Protection Bureau has proposed simplified forms to shed light on the costs of a mortgage. But consumer testing and further review are needed, and some speculate that lenders might not use such forms until 2014.

Richard Cordray, the director of the CFPB, explained how to avoid getting taken for a ride if you're shopping for a mortgage this summer when rates are at historic lows but long before mortgage forms officially change.

Cordray, who met with me this week before a town hall meeting in Detroit, says consumers need to do their homework and carefully understand offers.

The CFPB continues to be one of the hot-button features of the Dodd-Frank financial overhaul law passed by Congress in 2010.

The bureau is traveling outside the Washington beltway and heard from consumer groups and others about financial mishaps. It also has held town halls in Durham, N.C.; Philadelphia; Minneapolis; Cleveland; Birmingham, Ala.; New York; and Sioux Falls, S.D.

At the town hall Monday in Detroit, the CFPB announced that it would be monitoring credit-reporting agencies and conduct on-site exams.

The agency is seeking to bring more clarity to complex financial services and products. Here's a look at some areas:

Consumers would see on the first page their interest rate, monthly payment, loan amount and closing costs. They'd see how rates or payments might change, if that is part of the package, too.

Cordray says some disclosures on current mortgage forms are already improving as lenders prepare for changes.

Housing counselors think that additional simplification of mortgage forms will help. But they say consumers could take advantage now of some free HUD-approved counseling to review their budget and study existing forms. People don’t know how to use the Good Faith Estimate, says Kathy Conley, housing specialist for GreenPath Debt Solutions, a nationwide, HUD-approved housing counseling agency. New York residents also need to ensure they have the proper New York Home Insurance.

One key part of that form, she says, is a line that tells consumers the date and timetable for how long the interest rate will be available. One can compare the Good Faith Estimate form with other loan offers, too.
Public comment is being sought on the new "Loan Estimate" form and "Closing Disclosure" forms. See www.consumerfinance.gov.

•Student loans. Right now, some grads have no idea what they'll pay each month for college debt.
The student loan market resembles some of the bad features of the mortgage market from five years ago, Cordray says, and loans being made without real attention to the ability to repay.
The CFPB is now working on a new version of a student debt calculator that will be posted on its Web site.

•Credit-reporting companies. The watchdog now will oversee them. Before, no single federal agency could get a complete picture of the activity inside the companies. Oversight also would extend to lesser-known reporting companies that focus on payday loans or checking accounts.

The CFPB starts directly supervising companies, such as Equifax, TransUnion and Experian, on Sept. 30 and wants to make sure information is reliable and accurate.  Experian and others have stressed that credit-reporting agencies are not strangers to regulation. The Fair Credit Reporting Act was enacted in 1970.

Chi Chi Wu, staff attorney for the National Consumer Law Center, says it's important to address complaints, such as mixed-up files where information from people with similar names and similar Social Security numbers ends up in the wrong credit report. Wu says consumers can face a tough time disputing errors, too.

What to do if you have trouble with a financial service:
• Consumers can file complaints and get tips on various issues at the website for the Consumer Financial Protection Bureau at www.consumerfinance.gov. They also can tell their credit report woes at https://help.consumerfinance.gov/app/tellyourstory.

• Long before shopping for a mortgage or any loan, make sure to get a free copy of your credit report at www.annualcreditreport.com. Make sure there are no mistakes on your report. You do not get a free credit score here. Also, make sure you have proper New Jersey Home Insurance.

Mistakes on a credit report can make getting a loan more costly.
The Consumer Financial Protection Bureau notes that to dispute an error on a credit report, you must explain what is wrong and why. Enclose a copy of the relevant portion of your credit report.
Include copies of documents that support your position. Never send original documents. Keep copies of dispute letters and enclosures.

• Go to www.ftc.gov/ if you suspect identity theft on a credit report. An Identity Theft Report can help you get fraudulent information removed from your credit report. You can file a complaint at the FTC website or call the FTC's identity theft hotline at 877-438-4338.

For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

22 June 2012

Sales Show Housing Market on the Mend

Story first appeared in The Wall Street Journal.
Sales of previously owned homes in May posted sharp gains compared with a year ago, but were down from April, underscoring the fragility of the housing market's recovery.

The National Association of Realtors reported Thursday that sales of existing, or previously owned, homes sold at a seasonally adjusted annual rate of 4.55 million units in May.

While that was down 1.5% from 4.62 million in April, it represented an increase of 9.6% compared with a year earlier and represented the 11th consecutive month of year-over-year increases in sales.

The data reflect completed sales transaction of single-family homes, townhouses and condominiums.

The monthly drop reflected tight inventory rather than softening demand. The normal seasonal upturn in inventory did not occur this spring, and the result is a shortage of properties for sale.

That is partly because some potential sellers are keeping their homes off the market in hopes of higher prices in the future. At the end of May, there was a 6.6-month supply of homes for sale, slightly higher than April but 20% below levels of a year ago, according to the report.

Banks have contributed to the tight inventory by limiting the number of foreclosed properties they put up for sale. Distressed properties—which includes foreclosures—accounted for a quarter of all sales in May, down from 31% in the same month a year ago.

Sellers held off selling because they thought they'd have to price their properties really low, and buyers held off because they thought the prices would keep coming down and down and down.

Meanwhile, prices are edging higher. The national median price of an existing home in May was $182,600, up 7.9% from a year ago and the third consecutive month of year-to-year price gains.

In Winnetka, Ill., a dermatologist just sold his $1.04 million home to move into a larger six-bedroom nearby. He wanted a bigger backyard and more space for his family. The house he bought for $1.87 million had been on the market for more than 400 days. Meanwhile, the old house received multiple offers and went into contract within five days.

The family was motivated to buy and sell quickly because they wanted to take advantage of low interest rates. A Freddie Mac survey this week showed 30-year fixed-rate mortgages fell to 3.66%, a record low.

Despite the recent improvements in the housing market, concern that conditions could change has made some people anxious.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

29 May 2012

Housing Market Recovering

Story first appeared in The Wall Street Journal.

Sales of previously owned homes rose at a robust clip in April—and prices jumped—the latest indications that the hard-hit housing market is recovering.

Existing-home sales were up 3.4% from March to a seasonally adjusted annual rate of 4.62 million, the National Association of Realtors trade group said Tuesday. If the pace holds, 2012 could be the strongest year for home sales since 2007, just after the housing boom. The median home price, meanwhile, increased 10.1% from a year earlier to $177,400, the strongest year-to-year gain since January 2006.

Economists said the higher median price reflects rising values and a shift toward fewer sales of foreclosed homes.

The higher sales are further confirmation that the industry is experiencing the best spring selling season since 2010, when home-buyer tax credits boosted demand. Sales improved partly thanks to strong demand from investors, who have been active buyers of distressed properties which they hope to sell at a profit. But they were also helped by traditional buyers who are feeling more confident about the economy and are ready to take advantage of low interest rates and bargain prices.

While prices are starting to rise, they remain significantly lower than a few years ago. Last week, Freddie Mac said average rates on 30-year fixed-rate mortgages dropped to 3.79% for the week ending May 16. In 2005, at the height of the housing boom, some 30-year rates topped 6%.

Tuesday's report held signs that conditions in the housing market are inching closer to normal: Foreclosures and other distressed properties, which sell at steep discounts and have dragged down prices in recent years, accounted for 28% of April's sales—down slightly from March and a steep drop from 37% a year earlier. First-time buyers, who have struggled with tightened lending standards in recent months, made up 35% of April's purchasers, up from 33% in March and down slightly from a year earlier.

Inventories remain lean, though they are expanding. The inventory of homes for sale increased 9.5% from March to 2.54 million at the end of April, indicating more sellers feel comfortable enough to list their homes. That represented a 6.6-month supply, a level considered healthy by economists.

But it appears to be getting harder to find big bargains. Sales of homes under $100,000 fell more than 25% from a year earlier in the foreclosure-heavy West. Nationwide, homes priced between $250,000 and $500,000 were up 21.2% from a year earlier.

Still, real-estate agents say the housing recovery could easily stall if inventory swells—for instance as banks seek to unload more foreclosed properties—if interest rates rise, or if the economy stumbles.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.

16 May 2012

Homebuilding Goes Up

Story first appeared in the Los Angeles Times.

U.S. builders began work on more homes last month, evidence that the battered housing market is slowly healing.

The Commerce Department said Wednesday that builders broke ground at a seasonally adjusted annual pace of 717,000 homes in April from March. That's 2.6 percent more than March's total, which was revised higher. Construction rose for both single-family homes and apartments.

Building permits, a gauge of future construction, fell last month from a 3 1 / 2 year high to a seasonally adjusted annual rate of 715,000. But that was because of a 23 percent drop in the volatile apartment category. Permits for single-family homes rose almost 2 percent.

Even with the gains, the rate of construction and the level of permits requested remain roughly half the pace considered healthy. But the increase, along with rising builder confidence and stronger job growth, is a hopeful sign that the home market may finally be starting to recover nearly five years after the housing bubble burst.

Builders have grown more confident since last fall, in part because more people have expressed interest in buying a home. In May, builder optimism rose to the highest level in five years, according to the National Association of Home Builders/Wells Fargo builder sentiment index.

Construction Project Management teams for homebuilders have reported improving sales and higher traffic from prospective buyers, the survey showed. A gauge measuring confidence in sales over the next six months also rose to 34 from 31.

Recent job gains have likely made it easier for more Americans to purchase a home. Employers have added 1 million jobs in the past five months. And unemployment has dropped a full percentage point since August, from 9.1 percent to 8.1 percent in April.

Mortgage rates, meanwhile, have fallen to record lows, making home-buying more affordable. Still, many would-be buyers are having difficulty qualifying for home loans or can't afford larger down payments required by banks.

Though new homes represent just 20 percent of the overall home market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

There are some hurdles to a smooth recovery: Builders are struggling to compete with deeply discounted foreclosures and short sales — when lenders allow homes to be sold for less than what's owed on the mortgage.

Another reason sales have fallen is that previously occupied homes have become a better deal than new homes. The median price of a new home is about 30 percent higher than the median price for a re-sale. That's nearly twice the markup typical in a healthy housing market.

Another report found that U.S. factory output increased in April, helped by a gain in auto production. Busier factories have driven stronger hiring this year and helped the economy grow.

The Federal Reserve says factory production rose 0.6 percent in April, erasing a 0.5 percent decline in March.

Half of the April increase reflected a 3.9 percent jump in the production of motor vehicles and parts. That's the fifth consecutive gain at auto plants and the biggest rise since January.

Overall industrial production increased 1.1 percent in April. In addition to the big gain at factories, output at mines and utilities both showed strong gains in April.

Factory output has risen 18.3 percent since it hit a low in June 2009, the month the recession ended.

For more Real Estate News, visit the Commercial and Residential Real Estate blog.
For more national and worldwide Business News, visit the Peak News Room blog.
For more local and state of Michigan Business News, visit the Michigan Business News blog.
For more Health News, visit the Healthcare and Medical News blog.
For more Electronics News, visit the Electronics America blog.
For more Law News, visit the Nation of Law blog.
For more Advertising News, visit the Advertising, Marketing and Media blog.
For more Environmental News, visit the Environmental Responsibility News blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right blog.