According to CoreLogic, the number of underwater mortgages fell from 12.1 million (25.2 percent) at the end of 2011 to 11.4 million (23.7 percent) – by the end of the first quarter of this year. However, that number is a national average, so the figure varies by state. This is a list of the seven states with the highest number of homeowners with negative equity, according to the Wall Street Journal:
Nevada: 61.2%
Florida: 45.1%
Arizona: 43.4%
Georgia: 37.2%
Michigan: 35.6%
California: 30.5%
Illinois: 28%
Tuesday, August 21, 2012
Chase Reducing Principal Balances, Interest Rates
As part of a settlement with the government after the robo-signing scandal, Chase has begun sending letters to is borrowers offering them either a principal balance reduction, an interest rate reduction, or, for some borowers, both. For homeowners who are delinquent on payments, Chase will make them an offer to reduce the principal balances or interest rates (or both). For those who are not delinquent but have negative equity, Chase will automatically reduce the interest rates, amounting to an average savings of $300 per month.
Interest Rates
Interest rates increased slightly for the third week in a row, though they continue to hover around their historic lows. According to Freddie Mac, the average rate for a 30-year fixed mortgage rose to 3.62 percent from 3.59 percent. The average rate for a 15-year fixed mortgage increased from 2.84 percent to 2.88 percent.
Citizens Reviewing Policy Changes
Citizens Property Insurance Corp. is modifying its home reinspection program that began in 2010 after consumers vociferously complained about the $137 million increase in premiums. Some of Citizens' customers saw their insurance rates increase after they lost premium discounts upon the reinspections. In some cases the discounts were lost simply because the inspectors were unable to get into the attics because boxes were in their way and they refused to wait while the homeowners moved them.
The changes include creating new ways for the customers to dispute the first inspection report and allowing a second, free inspection. It has not yet been determined whether these changes will be retroactive, but the 175,000 property owners whose premiums have risen by an average of $810 will undoubtedly push for the changes to apply to them as well.
Last year 200,000 properties were inspected and another 90,000 are scheduled for inspections this year. Approximately 75 percent of those inspections resulted in property owners losing their discounts, which lead to an average 30 percent increase in their rates.
The changes include creating new ways for the customers to dispute the first inspection report and allowing a second, free inspection. It has not yet been determined whether these changes will be retroactive, but the 175,000 property owners whose premiums have risen by an average of $810 will undoubtedly push for the changes to apply to them as well.
Last year 200,000 properties were inspected and another 90,000 are scheduled for inspections this year. Approximately 75 percent of those inspections resulted in property owners losing their discounts, which lead to an average 30 percent increase in their rates.
Thursday, August 16, 2012
Average Closing Costs Falling
Last week Bankrate.com issued a report that said that the average closing costs, including the mortgage origination fees (which fell 1 percent), decreased 7 percent nationally between 2011 and 2012. The report's data was gathered in June from a survey of up to 10 lenders from all 50 states and Washington D.C. and was based on a $200,000 mortgage. This is great news for propsective homebuyers because the price they pay for the home they buy is only a percentage of the total cost they are going to pay once they consider their interest payments and closing costs. Combined with the historically low interest rates, this adds incentive for would-be buyers to finally buy.
Florida ranked as the fourth most expensive state, with an average mortgage origination fee of $1,623 and title and closing costs of $2,772 for a total of $4,395. Based on a $200,000 mortgage, closing costs are 2.2 percent (remember that they'll be higher when factoring in the actual sale price, not just the mortgage). New York is the most expensive state with a $5,435 total. The least expensive state is Missouri at $3,006. The national average is $3,754.
The educate yourself further on closing costs, read the below article from the New York Times and the Bankrate.com report. The more educated you are, the smarter your home purchase will be.
NYT Closing Costs
Bankrate.com Report
Florida ranked as the fourth most expensive state, with an average mortgage origination fee of $1,623 and title and closing costs of $2,772 for a total of $4,395. Based on a $200,000 mortgage, closing costs are 2.2 percent (remember that they'll be higher when factoring in the actual sale price, not just the mortgage). New York is the most expensive state with a $5,435 total. The least expensive state is Missouri at $3,006. The national average is $3,754.
The educate yourself further on closing costs, read the below article from the New York Times and the Bankrate.com report. The more educated you are, the smarter your home purchase will be.
NYT Closing Costs
Bankrate.com Report
Even Rich People Lose Homes to Foreclosure
It is easy to follow the news about all of the dilapidated foreclosed homes that are for sale. But what about getting your hands on a custom home with 9,000 sf and a fabulous pool? What if it had the added interesting sidenote of being owned by a celebrity? Forbes just wrote an interesting article on this very topic. Who knows? Maybe you could sleep in the same bedroom as your favorite celebrity.
Monday, August 6, 2012
Warren Buffett and the Housing Recovery
Even Warren Buffett is getting in on the housing recovery. Smart investors know that the best time to buy is when the market is down. Click on the link to the video below.
Wall Street Journal
Wall Street Journal
Why Didn't Your Short Sale Get Approved?
If you have been involved with a short sale that did not go through, blame could lie with the second lien holder. In many cases the seller and the first lient holder are in agreement on a sale but the second lien holder prevents that deal from closing. In order to stop that from happening as much, a bill called the Fast Help for Homeowners Act is in Congress. If it wins approval, second mortgage holders on federal mortgages would be required to make a decision on a proposed short sale within 45 days. If they do not, the short sale will automatically be approved on the 46th day.
Home Price in Major Cities Increased in May
The Stand & Poor's/Case-Shiller home price index, released last Tuesday, said that there were price increases in all of the 20 cities the index tracks and that nationally the prices rose 2.2 percent from April to May. This was its second increase after seven months of flat or lowered prices. The biggest price changes occurred in Chicago, Atlanta, and San Francisco. The index has decreased 0.7 percent since May of last year, which is the smallest decline since September 2010. As a point of comparison, the April 2012 year-over-year comparison showed a 1.8 percent decline.
Interest Rates
According to Freddie Mac, the average rate on a 30-year fixed mortgage increased to 3.55 percent last week after hitting record lows in the last four consecutive weeks. The average 15-year fixed mortgage was bumped up to 2.82 percent, up from 2.80 percent two weeks ago.
Wednesday, August 1, 2012
Citizens To Raise Rates 8.8 Percent
The Citizens Property Insurance Corp. has approved an average 8.8 percent rate increase for 2013 for most of its homeowner policyholders. The increase will be higher in areas at risk for sinkholes, such as Tampa. Citizens must now submit the rate increase to the state's Office of Insurance Regulation for approval, which must be given within 45 days.
The rate increase is meant to help the state-owned Citizens be able to fund its policies should a hurricane strike and to encourage homeowners to seek alternate insurance. Citizens is meant to be the insurer of last resort in Florida.
The rate increase is meant to help the state-owned Citizens be able to fund its policies should a hurricane strike and to encourage homeowners to seek alternate insurance. Citizens is meant to be the insurer of last resort in Florida.
Fannie Mae and Freddie Mac Not Allowed to Reduce Principal
The Federal Housing Finance Authority (FHFA), which is independent of the Obama administration, announced on Tuesday that Fannie Mae and Freddie Mac will not be allowed to reduce the principal balance on home loans for borrowers at risk of default. According to Edward DeMarco, the FHFA's acting director, the risks of strategic defaults outweighed the benefits. The FHFA's anlysis showed that 11 million homeowners have negative equity. Of that number, between 74,000 and 280,000 borrowers would have been eligible for principal reduction.
This is significant for the real estate industry because the homeowners who could have stayed in their homes might now have to consider short sales or could fall into foreclosure. In other words, many of those homes are now going to end up for sale at some point. That is good news for potential buyers and likely bad news for sellers who are going to face continued competition from distressed sales. This decision won't help our recovery but it will prevent people from taking unfair advantage of government assistance.
This is significant for the real estate industry because the homeowners who could have stayed in their homes might now have to consider short sales or could fall into foreclosure. In other words, many of those homes are now going to end up for sale at some point. That is good news for potential buyers and likely bad news for sellers who are going to face continued competition from distressed sales. This decision won't help our recovery but it will prevent people from taking unfair advantage of government assistance.
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