Tuesday, January 29, 2013

Where is the Inventory?

Where is the inventory?  One of the factors for the decrease in December home sales was lack of inventory. The National Association of Realtors reported a 21.6 percent drop from one year earlier.  

A recent article by the Wall Street Journal highlighted several reasons behind the dropping inventories, including: 

• Sellers hesitant to sell: About 22 percent of homeowners with a mortgage remain underwater, owing more than their home is currently worth. These homeowners don’t tend to sell unless a life-changing event occurs because they don’t want to take a loss on the sale. CoreLogic data finds constrained inventories in areas with the highest number of underwater borrowers.

• Not enough equity to trade up: Homeowners often rely on equity from their current home to make a down payment on the next home. 10 million homeowners have less then 20% equity in their home. With fewer homeowners seeing equity, they may not have enough money to move into a pricier home – a constraint on the would-be “trade up” buyer.


• Investors continue to snatch up properties: Investors still snap up properties, but they’ve changed their strategy.  The original strategy was to purchase the home and flip it.  Now they are holding onto properties and turning them into rentals.  The result: fewer homes on the market.


• Banks slowing down foreclosures: Banks have new rules to meet with the foreclosure process, and it’s causing them to move at a slower pace. Banks also are showing a preference for short sales and loan modifications, which curbs the number of foreclosed homes on the market.


• Builders doing less building: Housing starts were at record lows from 2009 through 2011, so there’s less inventory added to the market. A rebound in the new-home market has only recently started to occur.


Source: “Six Reasons Housing Inventory Keeps Declining,” The Wall Street Journal (Jan. 22, 2013) 

To view the article, click here

NAR: Dec. pending home sales down but still uptrend

It's that time of the month to look at home sales trends.  A press release issued by the National Association of Realtors (NAR) this week reports pending home sales declined in December but have stayed above year-ago levels for 20 consecutive months.

NAR pointed to several factors involved in the decrease. One of the factors may be the supply - more buyers then sellers.  The study also pointed at current sales prices and the fact that first time buyers have fewer options available to them.

Still, Lawrence Yun, NAR chief economist, is forecasting existing-home sales to increase another 9 percent in 2013, following a 9 percent rise in 2012.

To read the press release, click here.


Friday, January 18, 2013

End of the Year Report - Florida leads in Foreclosure Filings

Today's RealtyTrac Foreclosure Market Report for 2012 was released.  According to RealtyTrac, Florida led the entire country in foreclosure filings started within the last twelve months.

The Release states:



  1. Foreclosure activity in 2012 increased from 2011 in Florida by 53%
  2. Florida’s foreclosure rate surpasses every other state in the country last year, as one in 32 homes in the State of Florida got a foreclosure filing during the year.
  3. In 2012, a total of 279,230 Florida properties had a foreclosure filing, a 53% percent increase from 2011 but still 42% lower than 2010′s historic total of 485,000 Florida properties in foreclosure.
  4. Florida had the biggest share of foreclosure inventory in the U.S., with 305,766 properties in some stage of foreclosure or bank owned (20 percent of the national total).
  5. The average time to foreclose in Florida ranks 3rd highest in the country at 853 days (or 2.3 years).
So what lies ahead for Florida in 2013?  According to Daren Blomquist, Vice President of RealtyTrac:

“2012 was the year of the judicial foreclosure, with foreclosure activity increasing from 2011 in 20 of the 26 states that primarily use the judicial process, and a judicial state — Florida — posting the nation’s highest state foreclosure rate for the first time since the housing crisis began,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile foreclosure activity continued to decline in 19 of the 24 states that use the more streamlined non-judicial foreclosure process, but there could be a backlog of delayed foreclosures building up in some of those states as well as the result of recent state legislation and court rulings that raise the bar for lenders to foreclose.
“That could mean that although we are comfortably past the peak of the foreclosure problem nationally, 2013 is likely to be book-ended by two discrete jumps in foreclosure activity,” Blomquist added.  “We expect to see continued increases in judicial foreclosure states near the beginning of the year as lenders finish catching up with the backlogs in those states, and another set of increases in some non-judicial states near the end of the year as lenders adjust to the new laws and process some deferred foreclosures in those states.”
The positive spin of the report - median home prices are on the rise.  To view the full report, click here. 

Monday, January 14, 2013

News of Another Big Settlement

The Federal Reserve and the Office of the Comptroller of the Currency issued a joint press release to announce news that 10 mortgage servicers around the country have entered into a settlement agreement with the federal government over allegations of bad acts in mortgage servicing and foreclosure activities.  The Settlement will release the 10 mortgage servicers from further federal prosecution in exchange for the payment of $8.5 billion in cash.  The Settlement money will be used to help those who have been hurt in the Foreclosure Crisis of the past few years

To view the press release, click here or read below:

Independent Foreclosure Review to Provide $3.3 Billion in Payments, $5.2 Billion in Mortgage Assistance

WASHINGTON--Ten mortgage servicing companies subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing have reached an agreement in principle with the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board to pay more than $8.5 billion in cash payments and other assistance to help borrowers.
      
The sum includes $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other assistance, such as loan modifications and forgiveness of deficiency judgments. The payments involve mortgage servicers operating under enforcement actions issued in April 2011 by the OCC, the Federal Reserve, and the Office of Thrift Supervision. The agreement ensures that more than 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 with the participating servicers will receive cash compensation in a timely manner.
      
Eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.
      
This agreement includes Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. For these participating servicers, fulfillment of the agreement would meet the requirements of the enforcement actions that mandated that the servicers retain independent consultants to conduct an Independent Foreclosure Review.

As a result of this agreement, the participating servicers would cease the Independent Foreclosure Review, which involved case-by-case reviews, and replace it with a broader framework allowing eligible borrowers to receive compensation significantly more quickly. The OCC and the Federal Reserve accepted this agreement because it provides the greatest benefit to consumers subject to unsafe and unsound mortgage servicing and foreclosure practices during the relevant period in a more timely manner than would have occurred under the review process. Eligible borrowers will receive compensation whether or not they filed a request for review form, and borrowers do not need to take further action to be eligible for compensation.

      
A payment agent will be appointed to administer payments to borrowers on behalf of the servicers. Eligible borrowers are expected to be contacted by the payment agent by the end of March with payment details. Borrowers will not be required to execute a waiver of any legal claims they may have against their servicer as a condition for receiving payment. In addition, the servicers' internal complaint process will remain available to borrowers.
      
The agencies continue to work to reach similar agreements in principle with other servicers that are not parties to the agreement announced today, but that are also subject to enforcement actions for deficient practices in mortgage loan servicing and foreclosure processing.
      
OCC and Federal Reserve examiners are continuing to closely monitor the servicers' implementation of plans required by the enforcement actions issued in April 2011 to correct the unsafe and unsound mortgage servicing and foreclosure practices.

Friday, January 4, 2013

Federal Estate & Gift Tax... Congress Answers



There has been much talk over the last few months on the "expiration date"  of exemptions pertaining to federal estate taxes, gift taxes and generation skipping transfer taxes created under Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act ("TRUIRJCA" or "TRA 2010" for short) that was enacted in December 2010. 

After much debate, the American Taxpayer Relief Act ("ATRA" for short) was signed into law by President Obama on January 2, 2013. This new law makes the changes made by TRA 2010 permanent with regard to federal estate taxes, gift taxes and generation skipping transfer taxes.

Below you will find a summary of the 2013 Changes:

1. New and more favorable exemptions on estate tax, gift tax and generation-skipping transfer taxes. ATRA set the lifetime gift and estate tax exemption at $5 million per person, with annual adjustments for inflation.  Married couples may combine their exemptions to allow for double that amount.  The 2012 federal estate tax exemption rate of $5.12 million increased to $5.25 million for 2013. 

2. Less favorable top tax rates. The Estate Tax Rate increased from 35% to 40% on taxable estates (estates valued over $5.25 million). 

3. Portability of the federal estate tax exemption between married couple now permanent. A married couple can pass on $10.5 million to their heirs free from federal estate taxes. Note, however, that even if the deceased spouse's estate will not be taxable (in other words, is valued less than $5.25 million), the surviving spouse will nonetheless be required to file IRS Form 706, United States United States Estate (and Generation-Skipping Transfer) Tax Return, in order to take advantage of the deceased spouse's unused estate tax exemption, otherwise the deceased spouse's exemption will be lost.