Housing Alert: Short Sales May Be in Big Trouble

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October 1, 2012, 6:30 AM PST

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Housing Alert: Short Sales May Be in Big Trouble By: Diana Olick
     As lenders plow through a backlog of over five million delinquent mortgages, short sales are becoming an ever more popular escape route. A short sale is when the bank allows a home to be sold for less than the value of the mortgage. The bank takes the loss, but that loss is generally less than a more costly foreclosure.
     The government has been pushing more short sales at Fannie Mae and Freddie Mac through financial incentives, and banks are streamlining the process. Short sales have been gaining so much steam, they actually surpassed sales of foreclosed properties last spring, according to LPS Applied Analytics' Home Price Index. But all the progress that has been made could end abruptly. >>CNBC
Mortgage Rates Move Higher For The First Time In Two Weeks
by Matthew Graham 
Mortgage rates finally broke their unprecedented winning streak on Thursday as rates moved higher for the first time since the Fed announced it's third round of quantitative easing on September 14th.  The 10 straight sessions of improving rates crossed into new all-time low territory earlier this week, and even after today's weakness, it's still the 3rd best day in the history of mortgage rates.  Best execution levels continue hovering firmly at 3.25% for 30yr Fixed Conventional Loans >>Mortgage News Daily


First-Time Home Buyers: 31 Percent of Residential Buyers
by Scholastica (Gay) Cororaton, Approximately 31 percent of REALTORS® who responded to the latest REALTORS® Confidence Index survey reported making a sale to first-time home buyers. Normally first-time buyers are in the neighborhood of 40 percent of total residential sales, according to NAR's Profile of Home Buyers and Sellers. The proportion of first-time home buyers hit a peak of approximately 50 percent in 2009. Most first-time buyers obtain a mortgage: About 8.7 percent of REALTORS® who made a first-time home buyer sale reported a cash sale (compared to 10.8 percent in July). National Association of Realors


Already At All-Time Lows, Mortgage Rates Continue Lower At Unprecedented
Mortgage rates begin the week at new all-time lows yet again after falling significantly from last week's series of previous all-time lows.  Markets have been quite calm during domestic hours, but interest rates moved slightly lower overnight before domestic trading hours.  With bond markets holding steady to slightly improved since then, mortgage lenders continue to pass on those improvements in the form of more aggressive rate sheets. >>Mortgage News Daily


The time to close loans increased in August
The time it took to close a loan was 49 days in August, up just one day from July's closing time.
Refinance closings took a little longer than purchase closings in August, same as July. It took 51 days to close a refinance loan in August, up fom 48 days in July.>> MReport


Exclusive: U.S. mortgage task force to act soon
By Karen Freifeld
NEW YORK (Reuters) - The mortgage task force formed by President Barack Obama to probe misconduct that contributed to the financial crisis will soon take legal action, New York Attorney General Eric Schneiderman said on Thursday. >>Reuters


Existing home sales increase 9.3% in August By Justin T. Hilley
Existing home sales rose 9.3% to a seasonally adjusted annual rate of 4.82 million in August from the 4.41 million seen a year earlier, according to the National Association of Realtors. The figure is 7.8% above July's 4.47 million.>> HousingWire


Mortgage Applications Steady as Average Rates Reach Historic Lows by Jann Swanson
Applications for mortgages during the week ended September 14 were virtually unchanged from the previous week according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.  The Market Composite Index, a measure of loan application volume, increased 0.2 percent on a seasonally adjusted basis during the week which was shortened by the Labor Day holiday.  On an unadjusted basis it rose 24 percent. >>Mortgage News Daily


Fannie Mae moving REO management in-house  By Jacob Gaffney
The use of third parties to help Fannie Mae sell its REO properties is coming to an end.
Fannie Mae notified remaining vendors that the government-sponsored enterprise will transition all REO sales work completely to Fannie Mae's in-house teams over the course of the next several months. >>Housingwire
New Fannie Mae Guidelines Allow Verification of Assets in Lieu of Income
by Jann Swanson Late Friday Fannie Mae gave borrowers and lenders an alternative to documenting income for Refi Plus loans where payment increases will be under 20 percent.  Rather than requiring that at least one of the borrowers has a documented source of income, Fannie Mae will now accept verification of liquid financial reserves equal to at least 12 months of the new mortgage payment (PITIA). >> Mortgage News Daily

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short sales may be in big trouble

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Andrew Capelli
Hill Elementary - Troy, MI

Bill: Great information- Thanks for sharing.  With regard to short sales, they won't go away if the act is not extended, but they're going to be a lot less attractive option for most people in a hardship situation.  So, there will almost certainly be a reduction in short sale volume, as people either just default outright or stick it out in their homes until values go up.

Sep 30, 2012 11:49 PM #1
Dan Hopper
Keller Williams Realty Downtown LLC - Denver, CO
Denver Realtor / Author / Advocate/Short Sale

Thanks for the postings, Bill.  The Mortgage Debt Relief Act is necessary to continue assisting distressed HomeOwners from the tax liability of the forgiveness of the debt.  This has been a big incentive for folks to work a short sale rather than walking away from a property and letting it go into foreclosure.  We have to put pressure on Congress to extend this bill, now!!

Sep 30, 2012 11:50 PM #2
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