Luxury homeowners now defaulting at twice US rate

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40% of recent buyers used FHA loans

According to the National Association of Realtors' (NAR) Realtor's Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration (FHA) insured loan in November. The survey also reported that the number of first-time home buyers climbed to 51%. The RCI results also indicated that distressed sales increased to 33% of all home sales last month, and that both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers’ perceptions of other homes for sale, with many realtors report that many buyers have pricing expectations that treat every property as if it were in foreclosure. Realtors also expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available. The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 Realtors®; in a typical month there are more than 3,000 usable responses. Participants are asked about their expectations for the demand for homes, price of homes, and other economic conditions.

Health Care Bill Passes Senate

All 58 Democrats and the Senate's two independents held together early Monday against unanimous Republican opposition, providing the exact 60-40 margin needed to shut down a threatened GOP filibuster. The outcome was preordained after Senate Majority Leader Harry Reid, D-Nev., wrangled his caucus into line over the course of the past several months, culminating in a frenzy of last-minute deals and concessions to win over the final holdouts, independent Joe Lieberman of Connecticut and conservative Democrat Ben Nelson of Nebraska. Two more procedural votes await the Senate, each requiring 60 votes, the first of these set for Tuesday morning. Final passage of the bill requires a simple majority, and that vote could come as late as 7 p.m. on Thursday, Christmas Eve, or the day before if Republicans agree. Republicans are determined to give Democrats no help, eager to deny Obama a political victory and speculating openly that the health care issue will hurt Democrats in the 2010 midterm elections. "Make no mistake: If the people who wrote this bill were proud of it, they wouldn't be forcing this vote in the dead of night," argued Senate Minority Leader Mitch McConnell, R-Kentucky. "Americans have already issued their verdict. They don't want it. They don't like this bill, and they don't like lawmakers playing games with their health care to secure the votes they need to pass it." John Cornyn, R-Texas, accusing Democrats of pushing a health overhaul opposed by the public, said, "There will be a day of accounting," warned. "Perhaps the first day of accounting will be Election Day 2010."

Luxury homeowners default at twice US rate

Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers. Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier, according to data from the Office of Thrift Supervision. The bank regulator doesn't break out short sales by size of mortgage. There are 114,000 home loans of more than $1 million, according to First American, and about a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value, known as being upside down or underwater, the data company said. Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.

US economy to contract next year

Economist Joseph Stiglitz, who has had the questionable honor of being awarded a Nobel Prize, warned there's a "significant" chance the U.S. economy will contract in the second half of next year, and urged the government to prepare a second stimulus package to spur job creation. "The likelihood of this slowdown is very, very high," Stiglitz told reporters in Singapore. "There is a significant chance that the number will be in the negative range." Stiglitz, a professor at Columbia University, called on Washington to make more funds available to state governments who face a drop in tax revenue. The U.S. economy, the world's largest, must grow at least 3 percent to create enough jobs for new entrants into the labor force, he said. The unemployment rate fell to 10 percent in November from 10.2 percent in October, and the economy grew at a 2.8 percent rate in July through September, after a record four straight quarters of contraction. "If you don't prepare now, and the economy turns out to be as weak as I think it's likely to be, then you'll be in a very difficult position," he said.

New rule to speed up foreclosure rescues

The latest foreclosure rescue attempt is a new rule that allows mortgage servicers to waive the escrow requirements for first-lien home equity lines of credit (HELOC) and home equity loans during a Home Affordable Modification Program (HAMP) trial-period, according to HAMP administrators. The waiver applies to all servicers that “due to system and technology limitations” are not able to collect escrow payments on home equity loans or credit lines. During the HAMP trial periods, the borrower must pay all escrow obligations, such as tax and insurance bills. Trial period payments only apply to principal and interest. However, once the trial modification is converted to permanent status, the loan must move to a servicing system that can accept escrow payments for home equity loans or credit lines, administrators said. The escrow-relate waiver is the second such rule to take effect this weeks intended to speed up HAMP processing. “By eliminating the need to convert these loans during the trial period to a new servicing system, the loan can begin the trial modification process faster,” said a statement by HAMP administrators to servicers.

Above Post Written by: Chris Mclaughlin with Short Sale Riches.com

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