California AG Requests "Good-Faith Pause" on GSE Foreclosures

By: Krista Franks Brock

Insistent that principal reductions are the best line of defense in loss mitigation, California Attorney General Kamala Harris is calling on Fannie Mae and Freddie Mac to halt foreclosures in her state while the Federal Housing Finance Agency (FHFA) considers whether principal reductions are an appropriate strategy for the GSEs.

In a recent letter to FHFA Acting Director Edward DeMarco, Harris requested a “good-faith pause on foreclosure sales in California” while the FHFA continues to investigate the pros and cons of principal reductions.

California has been particularly hard hit by the housing crisis. About a half million homes in California have been foreclosed, and another half million are either in foreclosure or on the brink of foreclosure, according to Harris.

While the recent national settlement secured $12 billion for principal reductions and short sales, this will not help the 60 percent of California homeowners whose mortgages are owned by Fannie Mae or Freddie Mac.
DeMarco has expressed hesitation toward principal reductions and consistently insisted that he does not have the power to demand the GSEs employ the strategy.

However, he did recently share FHFA’s analysis of the method, which did not determine that “principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure.” DeMarco maintained that forbearance ensures better returns for investors.

Harris urges DeMarco to pursue further analysis and in the meantime to suspend foreclosures in California so GSE borrowers “will have an opportunity to reduce the principal on their homes should your analysis find – as I believe it must – that principal reductions by those enterprises are in the best interest of homeowners and taxpayers,” according to her letter.

DS News says...January Home Sales Up Again--LOW INVENTORY---GOOD TIME TO SELL!!!

January Home Sales Up Again

Existing-home sales rose in January for the third time in the past four months, according to a release from the National Association of Realtors (NAR), and inventory also fell the same month. Total existing-home sales increased 4.3 percent compared to the previous month of December and 0.7 percent compared a year ago in January 2011. Total housing inventory at the end of January fell 0.4 percent compared to the previous month and 20.6 percent compared to a year ago.

Housing crisis could play key role in election

Voters are passionate about housing, surveys find

By Lew Sichelman

Realty Q&A is a weekly column in which Lew Sichelman, a nationally syndicated columnist who has been covering the housing market for more than 40 years, responds to readers’ questions on real estate. However, in this edition, rather than a Q&A, he reviews a series of new surveys on housing and the election.

WASHINGTON (MarketWatch) — At no time in memory has housing been a major issue in a presidential election. Sometimes, the topic has hardly garnered more than a passing mention by either political party.

But if the findings of several recent polls are any gauge, the eventual candidates and their political parties would be well served to address the nation’s housing crisis head on.  

Read: Mortgage delinquencies, foreclosures fall.

Read: Mortgage rates hold at record low. 

Right now, housing is not yet a front-and-center issue for President Obama or any of the Republican presidential hopefuls. But no less than five national surveys indicate that the issue is a top-of-mind topic among voters. Granted, the polls were undertaken by real-estate-centric organizations — Realtor.com, the National Association of Home Builders, HouseLogic, Yahoo Real Estate and Trulia. But the unanimity of their findings underscores just how worried current and future owners are about their homes.

“We were very surprised just how passionate people are” about housing issues, said Julia Reynolds of Move Inc., which operates Realtor.com, the official website of the National Association of Realtors.

Young voters key in on housing 

 

Housing is a particularly strong voting issue for nearly three out of every four Millennials. Also sometimes known as the Internet generation, Millennials were born after 1982, meaning the oldest of them will be at prime home-buying age when November 2012 rolls around. 

Millennials were key to President Obama’s victory in 2008, and they should play an even greater role in the coming election. Four years ago, when only 40% of Millennials were old enough to vote, their two-to-one support of Obama over John McCain accounted for 80% of his margin of victory. This year, well over half of the Millennials can vote.

  

In the Realtor.com survey, Millennials made it absolutely clear that a candidate’s position on housing will influence their votes. On a nearly three-to-one basis, they told pollsters that what the candidates had to say about housing will be either very or somewhat important to their voting decision. 

In the poll by HouseLogic, the consumer website operated by the National Association of Realtors, housing came in a distant second to jobs as the issue that will have the greatest impact on respondents’ votes in November. But it was way above national security, health care, energy and the environment, the subjects Republicans tend to harp on the most. 

That’s not to denigrate the GOP candidates. Housing isn’t often up there on the President’s list of talking points, either. Yet just over half the participants in the Yahoo study want Uncle Sam do more to save at-risk homeowners in danger of losing their homes. At the same time, a little over one in four said the federal government has gone as far as it should to help struggling owners, and the rest had no opinion on the matter one way or the other. 

“Across party lines, people recognize that the importance of dealing with the mortgage and foreclosure crisis is the key to stabilizing the economy,” said Jonathan Voss of Lake Research Partners, the polling firm which surveyed 1,500 likely voters in early January on behalf of the builders association. 

And on that score, more than half the respondents said neither party is doing a particularly good job. Thus, said Voss, “the playing field is wide open for either party” to saddle up the housing issue and ride it to the finish line. 

Like the HouseLogic survey, the Trulia poll found that fixing the sagging economy comes first in the minds of voters. But nearly three out of four respondents agreed that government policies and programs should encourage ownership. 

Asked about specific policies, respondents who identified themselves as Democrats or Republicans had a strong, bipartisan predilection toward helping people remain in their homes. Specifically, 78% think it should be easier for underwater borrowers to refinance, and 67% want policymakers to encourage lenders to reduce borrowers’ mortgage balances in an effort to save their homes. 

In the Realtor.com survey, an overwhelming 82% consider housing to be critical to the national economic recovery. And they say helping current owners avoid foreclosure should be a top priority during the next president’s first 100 days in office. At the same time, though, views vary widely about what the government’s piece of the housing pie should be. 

One in five want an increased role, 31% want it to remain the same, and 42% said its function should be curtailed. While Millennials want government to prioritize housing and support its recovery, the Realtor.com survey showed that only 25% of that key demographic — and the next generation of home buyers — think an increased government presence is the answer. 

With 10 months to go before ballots are cast, anything can happen to sway voters. But right now, a majority on both sides of the aisle think housing could be President Obama’s Achilles’ heel come Nov. 6, according to the Trulia study. 

Currently, 57% of Democrats and 73% of Republicans think housing will hurt Obama’s chances for re-election. At the same time, 31% of Democrats and 87% of Republicans think he can right the housing ship by the next election. 

The president doesn’t fare too well in yet another recent survey, this one by HomeGain, another real-estate website. While he received enough homeowners’ votes to defeat any of the GOP candidates, real-estate agents favored Mitt Romney over Obama, 34% to 32%. 

Nationally syndicated columnist Lew Sichelman has been covering the housing market for more than 40 years. MarketWatch readers are encouraged to send their real estate questions to him at lsichelman@aol.com . Answers will be presented in this column every Friday. However, because of the volume of e-mail he receives, he cannot answer every reader’s query.

Real Estate Outlook: New Home Sales and Prices Decline

by Carla Hill

Pending existing-home sales may be up across the nation, but new home sales fell for the first the first time in three months in December. These latest figures come from the U.S. Commerce Department.

"December's small decline in new-home sales follows three consecutive months of gains and means the fourth quarter was still stronger than the third," noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. "The bottom line is that, while 2011 was the worst year for new-home sales on record, signs of gradual improvement began to emerge near the end of the year across a growing number of markets. This nascent recovery should continue to gain strength in the year ahead as more buyers take advantage of the very good deals that out there for newly built homes."

The NAHB remains extremely optimistic about the forecast for new homes in the coming year. They predict a rise of 18 percent in the number of new-home sales for 2012. This comes after a 7.3 percent dip seen in 2011 and the 2.2 percent dip seen December.

The December dip is being blamed largely on the large 10.1 percent decline seen in the South. Both the West and Northeast saw substantial new home sale gains for the month.

Mortgage applications were also down 2.9 percent from last week as well. The refinance share of activity declined slightly to 80.0 percent of the market, while adjustable rate mortgages rose to 5.6 percent of total applications.

"The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low-levels until the end of 2014. Longer-term treasury rates dropped in response, and mortgage rates for the week were down slightly as a result," said Michael Fratantoni, MBA's Vice President of Research and Economics.

While new homes sales and mortgage applications might be down, some of those would-be buyers are instead putting money back into their own homes. Remodeling activity, according to the NAHB, has risen again, now for the fifth straight month.

Remodeling sentiment is now at the highest level in five years, sitting at a 46.6 on the RMI scale.

NAHB Remodelers Chairman Bob Peterson reported, "As more consumers remain in their homes rather than move in this economy, remodelers benefited from a gradual increase in home improvement activity, taking us to a five-year high. 2011 ended on a strong note for the remodeling industry."

The RMI reported higher market activity in two important categories: major additions 52.3 (from 45.2) and minor additions 50.1 (from 45.7). These remodeling homeowners may be waiting out a better time to sell when prices rebound.

The latest release from the S&P/Case-Shiller Home Price Index indicates that home values are still on the decline. Prices fell 1.3 percent for both the 10- and 20-City Composites in November from the previous month.

"Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices continue to fall. Weakness was seen as 19 of 20 cities saw average home prices decline in November over October," says David M. Blitzer, Chairman of the Index Committee at S&P Indices. "The only positive for the month was Phoenix, one of the hardest hit in recent years. Nationally, home prices are lower than a year ago."
 
As of November 2011, average home prices across the United States are back to the levels where they were in mid-2003.

Published: February 6, 2012