NEW YORK (CNNMoney.com) -- More bad news on the housing bust front: Nearly 25% of all mortgage borrowers were underwater, meaning they more on their loans than their homes are worth.
First American CoreLogic, the research firm that monitors housing equity, reported Tuesday that 11.3 million homeowners -- or 24% of all homes with mortgages -- were underwater as of the end of 2009. That's up from 23% and 10.7 million borrowers three month earlier.
Nevada was the state with the worst record at 70% of all mortgaged properties underwater. That was followed by Arizona (51%), Florida (48%), Michigan (39%) and California (35%).
For many homeowners, being underwater, also know as negative equity, has few consequences. If they're not planning to sell and can afford their monthly bills, they can wait out the downturn.
Foreclosures: Where does your state rank?
For others, however, plunging underwater can spell disaster. If they become unemployed or have a financial emergency, they have no equity to tap. Or, if they need to downsize or sell their home to relocate for a job, they can't.
"Negative equity is a significant drag on both the housing market and on economic growth,"said Mark Fleming, chief economist with First American CoreLogic. "It is driving foreclosures and decreasing mobility for millions of homeowners."
Traditionally, being underwater was one of two main factors in determining a borrower's likelihood of foreclosure. The other is having sufficient income to pay bills. But, there's an increasingly important exception: strategic default. As equity gets more and more negative, some homeowners are choosing to quit paying and give the keys to the bank.
As long as negative equity remains a big problem, it will be difficult to stem the tide of foreclosures that continue to plague many local real estate markets around the nation.
"Since we expect home prices to slightly increase during 2010, negative equity will remain the dominant issue in the housing and mortgage markets for some time to come,"
Tuesday, February 23, 2010
Why Are There No More Stated Income Loans?
It wasn’t all that long ago that there was the “perfect” loan for people who were small business owners and had very little income according to their tax returns.
They had all different kinds of names – most of them sounded pretty cool at the time. NINJA, NINA, STATED, NO DOC, LOW DOC and I am sure quite a few other names — just to name a few. There wasn’t a week that went by where some lender somewhere didn’t come out with a new loan for some market segment that up to that point was unable to obtain financing.
Had bad credit?
No problem – there was a loan program available for you.
Didn’t have any income?
Again, no problem — there was a loan program for you too.
Just filed bankruptcy?
Yep, there was a loan program for you — as long as you were at least one day out of bankruptcy.
And then it all changed.
Almost as quickly as they came, the various loan programs with cool sounding names went away.
And although there are many factors as to them going away, perhaps no factor was as big in the elimination of stated income loans as the 4506T.
The 4506T is a document that allows the lender to go and pull your tax returns with the IRS for the last few years. Prior to only a couple of years ago, virtually no lender required that you signed the 4506T when applying for a loan. Now, I am not aware of a lender who will give you a loan without a signed 4506T on file.
And although that isn’t the only reason that stated income loans went away — it is one of the biggest. Now, rather than just making you provide your income documentation prior to underwriting your loan application, most lenders now require that you also sign the 4506T so that they can actually verify that your income is correct.
And I think it was one of the wise-old-Presidents who once said:
Trust but verify.
They had all different kinds of names – most of them sounded pretty cool at the time. NINJA, NINA, STATED, NO DOC, LOW DOC and I am sure quite a few other names — just to name a few. There wasn’t a week that went by where some lender somewhere didn’t come out with a new loan for some market segment that up to that point was unable to obtain financing.
Had bad credit?
No problem – there was a loan program available for you.
Didn’t have any income?
Again, no problem — there was a loan program for you too.
Just filed bankruptcy?
Yep, there was a loan program for you — as long as you were at least one day out of bankruptcy.
And then it all changed.
Almost as quickly as they came, the various loan programs with cool sounding names went away.
And although there are many factors as to them going away, perhaps no factor was as big in the elimination of stated income loans as the 4506T.
The 4506T is a document that allows the lender to go and pull your tax returns with the IRS for the last few years. Prior to only a couple of years ago, virtually no lender required that you signed the 4506T when applying for a loan. Now, I am not aware of a lender who will give you a loan without a signed 4506T on file.
And although that isn’t the only reason that stated income loans went away — it is one of the biggest. Now, rather than just making you provide your income documentation prior to underwriting your loan application, most lenders now require that you also sign the 4506T so that they can actually verify that your income is correct.
And I think it was one of the wise-old-Presidents who once said:
Trust but verify.
Thursday, February 18, 2010
Fed Just Raised Discount Rate For First Time In 3 Years
The Fed raised the discount rate which won't bode well for interest rates. If you're thinking of refinancing or purchasing a home right now, I would recommend acting fast as this is probably just the beginning of rates on the rise. Below is an article....
Feb. 18 (Bloomberg) -- The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs.
“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”
The dollar jumped and Treasuries extended losses as the Fed took another step in a gradual retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression. The Fed has provided hundreds of billions of dollars in backstop credit to banks, bond dealers, commercial paper borrowers and troubled financial institutions such as American International Group Inc.
The U.S. currency rose to $1.3541 per euro at 4:40 p.m. from $1.3616 before the announcement, while the yield on two- year Treasuries increased to 0.93 percent from 0.87 percent.
The discount rate increase is effective on Feb. 19. The Board also said that effective March 18 “the typical maximum maturity for primary credit loans will be shortened to overnight.”
January Statement
The Fed Board said the outlook for policy remains “about as it was at the January meeting of the Federal Open Market Committee.” The central bank also cited last month’s statement, which said economic conditions are likely to warrant “exceptionally low” levels of the federal funds rate “for an extended period.”
It was the first increase in the discount rate in more than three years.
Feb. 18 (Bloomberg) -- The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs.
“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.”
The dollar jumped and Treasuries extended losses as the Fed took another step in a gradual retreat from its unprecedented actions to halt the deepest financial crisis since the Great Depression. The Fed has provided hundreds of billions of dollars in backstop credit to banks, bond dealers, commercial paper borrowers and troubled financial institutions such as American International Group Inc.
The U.S. currency rose to $1.3541 per euro at 4:40 p.m. from $1.3616 before the announcement, while the yield on two- year Treasuries increased to 0.93 percent from 0.87 percent.
The discount rate increase is effective on Feb. 19. The Board also said that effective March 18 “the typical maximum maturity for primary credit loans will be shortened to overnight.”
January Statement
The Fed Board said the outlook for policy remains “about as it was at the January meeting of the Federal Open Market Committee.” The central bank also cited last month’s statement, which said economic conditions are likely to warrant “exceptionally low” levels of the federal funds rate “for an extended period.”
It was the first increase in the discount rate in more than three years.
Zip Realty offers "augmented reality"
Pretty cool!
ZipRealty has added augmented reality capabilities to its iPhone application, allowing users to determine whether a home is for sale -- or has recently sold -- simply by pointing their phone's camera at it.
As users point their phone's camera in different directions, the "HomeScan" feature of ZipRealty's iPhone app displays the address and distance to any properties that are for sale or have recently sold as they come into view.
A "radar" embedded in the app suggests which direction to point the phone to see more homes for sale or recently sold properties -- including those that are behind the user.
Clicking on a listing shows all details, including prices, interior photos, square footage and value estimates from Cyberhomes and eppraisal.
The ZipRealty iPhone app shows homes for sale in more than 4,000 cities and neighborhoods where the brokerage operates, and recently sold homes nationwide. Although the HomeScan augmented reality capabilities are available only on 3GS iPhones, users can search for and access all MLS-listed homes for sale from any iPhone or iPod touch. ZipRealty clients can connect with their agents directly though the application.
Augmented reality is software for mobile devices that uses the device's location-sensing capabilities to overlay Web data on images of the physical world where the device is located, Joseph Ferrara explained in a recent Inman News column.
"The physical world, in effect, becomes the user interface to digital information. It's a sort of middle ground for reality and virtual reality," Ferrara said.
The technology has "big implications for all kinds of local search tools, but particularly in real estate," said real estate technology consultant Joel Burslem in a guest perspective about Layar, a European company that helps software developers build and customize data overlays.
Trulia announced in December that it had integrated the Layar Mobile Augmented Reality Browser into the company's iPhone app, allowing listings data to be overlaid in the mobile phone's camera view.
ZipRealty has added augmented reality capabilities to its iPhone application, allowing users to determine whether a home is for sale -- or has recently sold -- simply by pointing their phone's camera at it.
As users point their phone's camera in different directions, the "HomeScan" feature of ZipRealty's iPhone app displays the address and distance to any properties that are for sale or have recently sold as they come into view.
A "radar" embedded in the app suggests which direction to point the phone to see more homes for sale or recently sold properties -- including those that are behind the user.
Clicking on a listing shows all details, including prices, interior photos, square footage and value estimates from Cyberhomes and eppraisal.
The ZipRealty iPhone app shows homes for sale in more than 4,000 cities and neighborhoods where the brokerage operates, and recently sold homes nationwide. Although the HomeScan augmented reality capabilities are available only on 3GS iPhones, users can search for and access all MLS-listed homes for sale from any iPhone or iPod touch. ZipRealty clients can connect with their agents directly though the application.
Augmented reality is software for mobile devices that uses the device's location-sensing capabilities to overlay Web data on images of the physical world where the device is located, Joseph Ferrara explained in a recent Inman News column.
"The physical world, in effect, becomes the user interface to digital information. It's a sort of middle ground for reality and virtual reality," Ferrara said.
The technology has "big implications for all kinds of local search tools, but particularly in real estate," said real estate technology consultant Joel Burslem in a guest perspective about Layar, a European company that helps software developers build and customize data overlays.
Trulia announced in December that it had integrated the Layar Mobile Augmented Reality Browser into the company's iPhone app, allowing listings data to be overlaid in the mobile phone's camera view.
Wednesday, February 10, 2010
Fed Chairman Bernanke outlines plan for pulling in stimulus aid
This article is another indication that rates will be on the rise at some point in the near future. Fed Chairman Bernanke hints at raising interest rates.
http://http://seattletimes.nwsource.com/html/businesstechnology/2011032563_apusbernankeexitstrategy.html
If you are thinking of refinancing your current home loan or purchasing a new home, now is a better time than any to act on it or at least get a quick mortgage analysis done. History shows that interest rates will be on the rise soon. Call or email me if you have any questions or concerns.
http://http://seattletimes.nwsource.com/html/businesstechnology/2011032563_apusbernankeexitstrategy.html
If you are thinking of refinancing your current home loan or purchasing a new home, now is a better time than any to act on it or at least get a quick mortgage analysis done. History shows that interest rates will be on the rise soon. Call or email me if you have any questions or concerns.
Wednesday, February 3, 2010
Foreclosures and Short Sales
Thought this was a good informative article regarding foreclosures and short sales that all homeowners need to know about.
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
If you have any questions please don't hesitate to reach out.
http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0
If you have any questions please don't hesitate to reach out.
Will Mortgage Rates Really Soar Back Up When the Fed Exits the Market?
http://seattletimes.nwsource.com/html/businesstechnology/2010965369_apustreasuryborrowing.html
That is the million dollar question and I wish I had a crystal ball. Most everybody (including me) expects mortgage rates to rise once the Fed concludes their $1.25 trillion mortgage shopping spree on March 31st or at some point in the near future.
Estimates vary, but most expect rates to vary by .25% - .75% when the Fed is done purchasing mortgage backed securities and treasuries to keep these rates low. But there is a more optimistic take which speculates that mortgage rates will stay low even without the Fed's direct intervention.
The more optimistic view definitely hinges on the government still playing a huge roll in the mortgage market. If this view is right, then the end to the Fed purchases/spending won't even cause a ripple in interest rates. That would be ideal obviously with homeowner's still trying to lower their interest rate via refinance to go along with first time home buyers trying to take advantage of this tax credit and low interest rates. According to the article in Seattle Times, the Fed is looking to increase their ceiling amount to spend on mortgage backed securities to keep these rates low - we'll see if that gets approved.
All in all, it sounds like the Fed is trying to come up with a way to keep these mortgage rates low (for now). I beleive that the economy will have to be clearly improving before we see to much in the way of higher mortgage rates. I will keep you updated on this subject though.
If you're thinking about refinancing or purchasing a home, now is definitely the time as who knows when these low rates will start the upward trend. Please contact me with any questions. Take care ~
That is the million dollar question and I wish I had a crystal ball. Most everybody (including me) expects mortgage rates to rise once the Fed concludes their $1.25 trillion mortgage shopping spree on March 31st or at some point in the near future.
Estimates vary, but most expect rates to vary by .25% - .75% when the Fed is done purchasing mortgage backed securities and treasuries to keep these rates low. But there is a more optimistic take which speculates that mortgage rates will stay low even without the Fed's direct intervention.
The more optimistic view definitely hinges on the government still playing a huge roll in the mortgage market. If this view is right, then the end to the Fed purchases/spending won't even cause a ripple in interest rates. That would be ideal obviously with homeowner's still trying to lower their interest rate via refinance to go along with first time home buyers trying to take advantage of this tax credit and low interest rates. According to the article in Seattle Times, the Fed is looking to increase their ceiling amount to spend on mortgage backed securities to keep these rates low - we'll see if that gets approved.
All in all, it sounds like the Fed is trying to come up with a way to keep these mortgage rates low (for now). I beleive that the economy will have to be clearly improving before we see to much in the way of higher mortgage rates. I will keep you updated on this subject though.
If you're thinking about refinancing or purchasing a home, now is definitely the time as who knows when these low rates will start the upward trend. Please contact me with any questions. Take care ~
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