California short sale snafus worsen

Even more real estate agents than last year characterized closing short-sale transactions as a drawn-out process laden with communication snafus, lost documents and "dual tracking," according to the California Association of Realtors.

by Broderick Perkins
© 2011 DeadlineNews.Com

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Deadline Newsroom - The short sale system in California isn't just broken, it's getting worse.

Unfortunately, that means home owners who were looking for the short sale alternative to foreclosure could be out of luck and need to consider other cures for their mortgage distress.

This year, even more real estate agents than last year characterized closing short-sale transactions as a drawn-out process laden with communication snafus, lost documents and "dual tracking" -- lenders proceeding with foreclosures even when short sales are underway, according to the California Association of Realtors.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, typically, provided there's a qualified buyer in the wings. Home owners likely to seek short sales are often those floundering "underwater" with mortgage balances larger than the value of their home in a state of negative equity.

Negative equity can occur because of a decline in value, an increase in mortgage debt or both. Many home owners suffer both because they used their home equity like an ATM machine during the housing boom. When housing crashed, values tumbled exacerbating the effects of equity-tapping.

Short sales can be a better option than foreclosures for a consumer's credit history, depending upon how the lender reports the deal to credit bureaus. Instead of having the black mark of a foreclosure that can last seven years, short sellers may only take a credit score hit they can overcome in a few years.

Other options for struggling mortgage holders include refinancing to a new loan, but that's virtually impossible for home owners underwater. Another option is a mortgage modification, which retains the original mortgage, but lengthens the loan term, reduces the interest rate, or reduces the principle, or includes a combination of the three. Some lenders have additional options to foreclosures

The short sale option is long on promise but short on delivery for Californians.

CAR said 77 percent of California real estate agents reported closing short-sale transactions as "difficult" or "extremely difficult," up from 70 percent in December 2010 when CAR first gauged real estate agents' experience working with lenders in on short sale transactions.

"Despite promises by lenders to improve their short-sale processes, clearly, they are not doing enough," said CAR President Beth L. Peerce.

Kim DiBenedetto, a real estate agent with Coldwell Banker Del Monte Realty in Carmel says the problem stems from lenders kowtowing to bottom-line thinking investors, who may see a foreclosure as a better deal.

"I think the lenders are trying, but they have so many different investors and limited authority," DiBenedetto said.

"We have to stop thinking of Wells Fargo, Bank of America, CitiCorp, etc. as the 'lender.' They are the servicer for as many as 2,500 investor groups. How much authority the servicer has to negotiate with the home owner, depend upon which investor group owns a particular loan, which is why short sales are so hard to get processed," she added.

CAR said real estate agents' most frequent obstacles in the short-sale process were communication issues during the slow response time to package a short-sale (cited by 66 percent of agents); poor communication with lender representatives (55 percent); and repeated requests for documentation (51 percent).

More than 15 percent of the agents polled in June this year said the lender foreclosed on the home before the short-sale transaction could be completed.

Two-thirds (67 percent) of agents said it took more than 60 days for lenders or servicers to return a written response on the approval or disapproval of the short-sale agreement submitted; 43 percent of agents said it took the lender more than five days to return any form of communication and fewer than 20 percent of agents said lenders responded "within one business day" or less to agents' communication attempts.

Real estate agents' overall satisfaction with lenders in their most recent short-sale transaction remained extremely poor, with 75 percent saying they were "not satisfied" or "not at all satisfied," up from 67 percent in December.

Because of their dissatisfaction, 78 percent of real estate agents said they were "not likely" or "not at all likely" to refer buyers to the lender for future home purchases.

ForeclosureRadar.com's Short Sale Report offers a five-star rating system for lenders' short sale success or lack thereof and CAR offers ShortSalesCalifornia.org to rate lenders, but DiBenedetto says it's still a crap shoot. (http://www.foreclosureradar.com/short-sale-report)
(http://www.shortsalescalifornia.org/)

"This is what slicing and dicing home loans (bundling mortgages as securities sold to investors) on the secondary market has done to the process. You are no longer talking with the actual owner of the loan. You can have one short sale with a particular servicer that goes really well and another with the same servicer that doesn’t go well at all," she said.

The latter is the norm, according to CAR's survey.

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Expect fallout from a strategic default

Some homeowners are duped into strategic defaults by fraudulent services offering faulty advice. Crooked mortgage relief services often tell homeowners to stop making payments to get the lender's attention for mortgage assistance.

by Broderick Perkins
© 2011 DeadlineNews.Com

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Deadline Newsroom - When you decide to quit making mortgage payments and walk away from home ownership, you are taking a walk down a slippery path.

It's a path to a "strategic default," which occurs when a homeowner, who can afford to make mortgage payments, but proactively decides not to in order to induce foreclosure.

The questionable strategy is often used by homeowners who are "underwater" with a mortgage that's larger than the home's value. The approach is more likely if the homeowner believes the home will take too long to recover sufficient equity and the homeowner also can rent a home for less than the mortgage payment.

Other homeowners are duped into strategic defaults by fraudulent services offering faulty advice. Crooked mortgage relief services often tell homeowners to stop making payments to get the lender's attention for mortgage assistance, say a mortgage modification or other loan workout.

Experian says in the second quarter this year, on average, 17 percent of mortgages with payments 60 days more or past due where those held by calculating homeowners bent on a strategic default. For homeowners with loan origination balances of more than $1 million, 33 percent of those 60 days or more late were strategic defaulters, Experian says.

For whatever reason, a strategic default is a risky proposition.

"Not paying your mortgage will have a far-reaching, long-lasting impact on your ability to secure future credit, regardless of the reason for your default," said Charles Chung, Experian’s president of decision analytics.

If you strategically default on your mortgage, you'll certainly be rid of a big mortgage payment, but the burdens you'll carry for years may not be worth the savings.

• Only bankruptcy is more damaging to your credit than a foreclosure. Even if you continue to pay your other bills the foreclosure remains on your credit report for seven years. Bankruptcy's black mark remains for 10 years.

• After a foreclosure, your credit score can drop 150 points or more, according to the leading credit scoring system (FICO) architect Fair Isaac Corp.

A credit score is a numerical rendition of information on your credit report. The FICO score ranges from about 350 to 850 — the higher the number the better your credit score and the better shot you have a the best credit rates and terms.

• After a foreclosure, any credit and insurance available to you will cost more and you could find it tough to rent a home. Employers can't get your score, but they can have a look at your credit report, in some states, under certain circumstances, but always only with your written consent.

• You could experience a tax hit if the lender forgives the difference resulting from a foreclosure sale price that's less than the mortgage balance.

• You also could face legal costs if the lender comes after you for the difference.

• Finally, last year, Fannie Mae implemented a policy that prohibits strategic defaulters from getting a new Fannie Mae-backed mortgage for seven years from the date of foreclosure.

"Some may see strategic default as a way to get out of paying a bad debt," Chung says. "But its associated costs, like a lower credit score, higher interest rates and less ability to secure future credits, can wipe out the financial benefit of no longer having a mortgage payment," Chung said.

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Housing to take center stage in 2012 election

Even when told that getting rid of the mortgage interest deduction would help ease the federal budget deficit, 65 percent of voters opposed any proposal to abolish the tax provision, with 69 percent of Republicans, 69 percent of Independents and 59 percent of Democrats opposing eliminating the deduction even it would help the federal budget deficit.

by Broderick Perkins
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Deadline Newsroom - Housing-related tax breaks are as American as apple pie and politicians who want to cut the tax perks that come with housing may want to consider another line of work.

Nearly three out of four voters -- 73 percent of both owners and renters -- believe Uncle Sam ought to provide tax benefits to promote homeownership.

The sentiment cut across party lines with 79 percent of Democrats, 71 percent of Republicans and 68 percent of Independents supporting tax perks that come with homeownership.

Even when told that getting rid of the mortgage interest deduction would help ease the federal budget deficit, 65 percent of voters opposed any proposal to abolish the tax provision, with 69 percent of Republicans, 69 percent of Independents and 59 percent of Democrats opposing eliminating the deduction even it would help the federal budget deficit.

Legislators who vote to eliminate the mortgage interest deduction are more likely to be voted out of office than those who support the deduction, according to a recent National Association of Home Builders (NAHB) poll by Lake Research Partners and Public Opinion Strategies.

Fifty-eight percent of voters residing in House GOP freshmen districts, 58 percent in the House swing districts, 56 percent in Senate toss-up race districts and 54 percent of voters living in presidential swing states said that they would be less likely to vote for a candidate for Congress who proposed to eliminate the mortgage interest deduction.

"Despite the current housing downturn, Americans still see homeownership as a core value and a key building block of being in the middle class and creating strong jobs in their communities," said Celinda Lake, president of Lake Research Partners.

"The bottom line: The bipartisan consensus outside the Beltway is that owning a home remains an essential part of the American Dream and voters would strongly oppose any efforts by lawmakers to increase barriers to homeownership," Lake said.

Pollsters surveyed 2,000 likely 2012 voters from May 3 through May 9 to assess the public's attitude following he Great Recession and efforts to scuttle the mortgage interest deduction and create "Qualified Residential Mortgage" standards that could price even excellent-credit consumers out of the housing market.

The NAHB also found:

• Seventy-six percent of respondents in key U. S. Senate races, 75 percent of voters in swing U.S. House of Representative districts, 75 percent among presidential swing states and 71 percent of voters residing in GOP House freshmen districts support federal government tax incentives to encourage homeownership.

• Seventy-one percent of voters oppose proposals to eliminate the mortgage interest deduction, and 63 percent oppose efforts to reduce it. A majority are also against eliminating the deduction for interest paid on home equity loans, ending the deduction for interest paid on a second home, limiting the deduction for those earning more than $250,000 per year or capping the deduction for home owners with mortgages over $500,000.

• By a more than two-to-one margin (57 percent to 26 percent), voters said they would be less likely to vote for a candidate who supports eliminating the mortgage interest deduction, including 63 percent of Republicans, 56 percent of Independents, 55 percent of Democrats and 61 percent of Tea Party supporters saying they would be less likely to support a candidate who favored killing the deduction.

• Among voters who are aware of proposals under consideration by Washington policymakers to raise the down payment requirements for a home loan, 92 percent believe it will make it more difficult to buy a home.

• Six federal agencies are proposing a national standard to require a minimum 20 percent down payment, which would be opposed by households most likely to be affected – mortgage holders and renters ages 18 to 54. Among voters in these age groups, 59 percent of renters and 58 percent of those holding a mortgage oppose adding that obstacle to buying a home.

"The polling found that there is a significant disconnect between Washington policy makers and the nation's electorate when it comes to the mortgage interest deduction, the importance of homeownership and the need to keep housing a national priority," said Neil Newhouse, a partner and co-founder of Public Opinion Strategies.


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'Qualified Residential Mortgage' creating underwriting quandary

Lobbyists have encouraged a majority of legislators on Capital Hill to vote to ease the toughest standards for the proposed "Qualified Residential Mortgage," but even if regulators soften their stand, consumers will still face the hard fact that underwriting standards for today's mortgages already contain tough, QRM-like underwriting rules.

by Broderick Perkins
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Deadline Newsroom - Overwhelming bipartisan support could loosen the shackles of mandatory regulatory change coming for mortgages, but probably not enough to allow consumers to escape the mortgage money squeeze they already face.

Pounded by powerful lobbying efforts from consumer advocates and minority, housing and real estate industry groups, 280 Representatives from the 433-member U.S. House of Representatives and 44 U.S. Senators from the 100-member U.S. Senate have signed up to oppose the most stringent "Qualified Residential Mortgage" or QRM, according to Christopher J. Bognanno, spokesman for the Washington, D.C. office of Rep. John Campbell (R-CA).

QRMs are low default-risk home loans required under the Mortgage Reform and Anti-Predatory Lending Act provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Dodd-Frank requires banks and other firms that issue mortgage-backed securities to keep 5 percent of the loans that they bundle and sell as securities. The idea is for banks to retain some of their mortgage based risks.

Perhaps, if banks previously had been required to hold onto some of their securities, Wall Street wouldn't have crashed under the weight of toxic mortgage-based investments the lenders sold

In any event, anything that regulators deem a QRM would be exempt from the 5 percent rule.

Because of the low risk, borrowers who qualify for a QRM will pay less than those who use home loans not designated as a QRM. Some analysts estimate that mortgage rates on non-QRMs could cost as much as three percentage points more than QRM rates, but a QRM won't be easy to land.

According to the proposed definition, QRM borrowers would have to:

• Put at least 20 percent down to buy a home, have at least 25 percent in equity to refinance, have at least 30 percent in equity for a cash-out refinance.

• Have house payments that don't exceed 28 percent of before-tax income, and total monthly debt payments (house, credit cards, auto, student loans) couldn't exceed 36 percent of before-tax income.

• Not have been 60 days delinquent on any debt payments in the last two years.

Rep. Campbell, along with U.S. Rep. Brad Sherman (D-CA), drafted the heavily supported letter that says the current version of the QRM would price creditworthy first-time and minority buyers out of the market.

According to the National Association of Realtors (NAR), 60 percent of recent home buyers made less than a 20 percent down payment. CoreLogic says 39 percent of home buyers in 2010 made a down payment of less than 20 percent. Other studies but the number somewhere in between.

In any event, many of those loans would not have passed muster under QRM rules.

The Center for Responsible Lending says, based on average home prices, it would take 14 years for the typical American family to save enough money for a 20 percent down payment, longer for high cost areas like California.

Blocking so many potential mortgages would stall the already anemic economic recovery, QRM opponents say.

Housing, including shelter owned and rented, fuels, utilities, energy use, insurance, water, sewage, trash collecting, furnishings, upgrades, maintenance and upkeep accounts for more than 40 percent of the Consumer Price Index, according to the U.S. Department of Labor.

The index is a measure of consumer expenditures. Consumer spending is the fuel that keeps the economy cranking.

Given many of the under 20-percent-down mortgages in 2010 were financed with the assistance of private mortgage insurance, legislators say QRMs should be available for less than 20 percent down with a private mortgage insurance requirement. The insurance reduces risk by covering certain losses in case of a default.

"Mortgage insurers have well-established procedures that have been shown to mitigate and cure loan deficiencies," the legislators' letter says.

But even if the QRM down payment was lowered to 10 percent, as some suggest, one in four homebuyers could still be priced out of the market based on the nearly 25 percent of home buyers in 2010 who paid less than 10 percent down, according to CoreLogic.

It may be all moot.

Credit rating agency DBRS says underwriting standards today already simulate QRMs.

According to DBRS, today's prime borrowers often must have an 80 percent loan-to-value ratio, a credit score of 680 to 720, two years worth of W-2 forms and re-verification of employment within 10 days of closing the loan.

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Married couples ready to take another plunge

Eighty-six percent of married couples who rent plan to purchase their first home within the next five years and 62 percent of them say they will buy within the next three years.

by Broderick Perkins
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Deadline Newsroom - This time they aren't putting the moves on each other.

Eighty-six percent of married couples who rent plan to purchase their first home within the next five years and 62 percent of them say they will buy within the next three years.

From TheNest.com, the study is good news for a housing market desperately looking to hook up with buyers.

Macroeconomist Brendan Lowney recently told DSNews.com it will take 6.5 million new households to absorb the excess inventory of homes.

Lowney estimates there is an excess inventory of about 2.5 million homes, nearly the same number Lender Processing Services reports are in the process of foreclosure. Another 3.9 homeowners are delinquent, Lender Processing reports.

But love is blind.

A whopping 98 percent said they weren't waiting for the economy to recover, but are instead saving for a down payment (36 percent) and waiting to buy when they know where their family will settle for the long term (32 percent).

TheNest.com, a lifestyle site from TheKnot.com, surveyed more than 1,400 women on TheNest.com who bought or rented their current home with their partner. Forty-nine percent of the couples surveyed rent, 51 percent own.

Saving is a good reason for renters to wait. Too little down gets some buyers rejected these days and a larger down payment makes for smaller monthly payments and some equity to nest away.

Ask owners. Eighty-three percent of them said staying on budget was a key factor in the buy. Among 28 percent of couples who argued during their home search, one in three argued primarily about their budget and finances.

Not surprisingly, the two had to come together and compromise to seal the deal. More than half (58 percent) of owning couples compromised on the place they ended up choosing. For some couples (42 percent), they were small compromises, and all their major wants and needs were met. For others (14 percent) it was large compromises, such as choosing a "starter home" and waiting for the next move to get a real dream home.

Costs often forced the compromising. Among homeowners the most surprising factor in the home-buying ordeal was the bottom line -- 37 percent said they were surprised by the actual cost when they tallied all the fees and costs.

Home buying stress was the most surprising factor for about 25 percent of the couples.

Like marriage (they hope), couples are in it for the long haul. While one in three couples no longer consider owning a home a slice of the "American Dream" pie, 92 percent of them are sold on the home as a solid investment.

Time, over the long haul, will tell.

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Short sales not short nor easy

A National Association of Exclusive Buyer Agents (NAEBA) short sale survey underscores short sale buyers' need for both experienced professional representation and some level of familiarity with the deals.

by Broderick Perkins
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Deadline Newsroom - A short sale can be a bargain buy, but first you'll have to navigate a minefield of UEDs (unimprovised explosive devices) that can kill the deal.

A National Association of Exclusive Buyer Agents (NAEBA) short sale survey underscores short sale buyers' need for both experienced professional representation and some level of familiarity with the deals.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, typically, provided there's a qualified buyer in the wings.

Such homes are often held by home owners struggling with "underwater" mortgages -- mortgages with balances larger than the value of the home -- and want out without the more dire prospects of a foreclosure.

CoreLogic reports that 10.8 million, or 22.5 percent of all residential properties with mortgages were in negative equity positions at the end of the third quarter of 2010.

Short sales surged in 2010, thanks to financial incentives for sellers, servicers and lenders from the Obama Administration's Home Affordable Foreclosure Alternatives (HAFA).

NAEBA's survey of its members reveals the risks, potential deal-killing policy changes and costs associated with short sale acquisitions.

"Many consumers who are seeking a home buying bargain enter the short sale process without enough information about what can go wrong, and what that will cost them in both time and money," says Mike Crowley, 2011 President of NAEBA.

Some of the obstacles buyers face include:

• Time drain. Short sales can take four to six months or longer. Numerous conditions and factors are outside the buyer's control.

Even after a solid approval, the lender could require the buyer to close in a very short period, leaving little time to complete due diligence or beat back a foreclosure.

• Lender rejections. Even after the seller accepts your short sale offer, the lender can reject it in favor of a higher offer.

Sometimes that's because the seller wants to get rid of the house and may agree to any offer even if the bank won't approve it.

The rejection could also come because buyers, sellers and their agents never talked to someone with the authority to approve the sale.

What's more, the lender is not bound by a real estate contract between a short sale seller and buyer.

There may be more than one lender who needs to approve the sale. Even mortgage insurance companies and investors may get into the act.

• Cost factors. You can spend money on home inspections, improvements, title searches and legal aid only to end up empty handed, especially if the seller comes up with a loan modification or other deal.

Other costs can include back homeowner association, utility and tax payments. Buyers can lose earnest money deposits if the short sale goes to foreclosure.

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Underwater homeowners taking on more water

Click on my big head!

Banks are selling more than three times as many distressed homes as builders are selling new ones, and half as many homes as the resale market. With as much as 39 percent slashed off what a similar resale home would cost, the distressed home sector is a real drag on home prices.

by Broderick Perkins
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Deadline Newsroom - Here's one more nasty little statistic that will make underwater homeowners wheeze for air.

Banks are selling more homes than builders. In fact they are selling more than three times as many distressed homes as builders are selling new ones, according to a recent Hanley Wood Housing Intelligence (HWHI) report.

What's more, the banks' REO (for "real estate owned") homes are selling at deep, deep discounts, with as much as 39 percent slashed off what a similar resale home would cost, according to RadarLogic's latest housing market report.

That's good news for buyers, investors and others who have the cash or can somehow wrench a loan from tight fisted lenders.

Unfortunately, the price plunge is sending homeowners further underwater if they already owe more than their home is worth.

Some economists say the deep discounts on the large volume of distressed properties sent home prices double-dipping this year, at a pace greater then the home price crash of the Great Recession.

HWHI broke down the home sale share for the first quarter 2010 with existing homes comprising 61 percent of the market, REOs accounted for 29 percent of the market and new homes only 10 percent.

For the first quarter this year, REO sales swiped a greater share, apparently getting more resale and new home buyers to join the REO buying crowd -- existing home sales' share dropped to 60 percent, REOs increased to 32 percent and the sale of new home sales also dropped to only 9 percent.

The share of new home sales has been reduced by half since peak times, and the resale share decline by about one-fourth, thanks to the incursion by REOs, according to HWHI.

"Defaults are expected to reach new record highs this year which have buyers holding out for better deals and traditional home sellers battling lowball offers from banks," HWHI reports.

RadarLogic says homeowners suffering negative equity are stuck. Most can't or won't pay lenders the difference between their current mortgage balance and the price for another home, given the new home is likely to lose value.

Other than FHA loans, lenders are tighter than ever, requiring larger down payments and higher credit scores. First-time buyers don't have the stomach for handing over hard-earned money as equity "in an environment where home prices are widely expected to fall over the next 12 to 24 months," RadarLogic reported.

Investors with cash are more willing to take the risk, especially at the bargain basement prices they can get from the REO sector.

"The aggressive pricing on distressed properties is undercutting individual home sellers and new home builders alike, and wreaking havoc on local housing markets," HWHI grimly reported.

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Investors muscling in on first-time homebuyers' turf

Start your shopping-around engines
Prices rising on used gas-sippers

Move.com found 65.5 percent of investors surveyed said they expect first-time homebuyers' problems to work in their favor -- 18.5 percent say they'll be cash-only buyers, and 80.5 percent expect to wrest cash discounts from sellers.

by Broderick Perkins
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Deadline Newsroom - Investors have the moxie, the moola, and the mindset to muscle in on first time homebuyers and they make no bones about their plans to do so, making a killing in the process.

A new Move.com Investor Survey released today, says by three-to-one, investors will be more active in local markets compared to typical homebuyers in the next two years.

The national survey says investors are bullish about vigorously competing with traditional first-time homebuyers because they know the time is right and they know they've got the edge.

(Also see: "Foreign buyers cashing in on U.S. housing closeout sale")

Move found 65.5 percent of investors surveyed said they expect first-time homebuyer problems to work in their favor -- 18.5 percent say they'll be cash-only buyers, and 80.5 percent expect to wrest cash discounts from sellers.

As revealed in another study, these investors are more like saints than sinners and are coming to market to stick around, rather than flip out.

Picking up the slack left by first-time and rank-and-file buyers, investor action, building now for years, should benefit the sluggish housing market by shrinking the over-supply of distressed and other homes that has pushed prices down to levels not seen in more than a decade.

New investors wear halos

Move says, contrary to the speculative flippers of an era gone by, 50 percent of today's real estate investors plan to hold onto properties for five years or more. Only 11 percent expect to sell within 12 months of purchase. Two-thirds (67.5 percent) say they're investing for the long term.

Fifty-nine percent told Move they're new to the investing game, with 33.5 percent considering their first investment purchase and 8.5 percent in the process of buying and selling their first investment property.

Another 17 percent said they just completed their first transaction and plan to make more. Only 36.5 percent have experience in more than one property transaction.

Newbies, maybe, but they appear to know bottom when they see it.

A recent Pew study found that 81 percent of adults agree that buying a home is the best long-term investment a person can make.

None of this is lost on foreign investors, as the U.S. remained a top destination for foreign buyers for the year ending in March 2011, according to the National Association of Realtors (NAR).

NAR's 2011 Profile of International Home Buying Activity said total residential international sales in the U.S. for the past year ending March 2011 equaled $82 billion, up from $66 billion in 2010.

Total international sales were split evenly between non-resident foreigners and recent immigrants, while combined total domestic and international existing-home sales in the U.S. were $1.07 trillion.

"This data suggests today's climate is hot for investing and is attracting a lot of new people that don't fit the stereotypical deal-driven flippers that buy and sell properties quickly," said Move, Inc. CEO, Steve Berkowitz.

"They're mostly entrepreneurial individuals that will make vital contributions to local communities by investing their own money and sweat equity to improve and maintain properties. These personal sacrifices made over the long run will help improve housing stocks, home values, property tax bases, and thousands of local communities," Berkowitz said.

Investors expect decent returns

Forty-eight percent expect a profit of 20 percent or more from their property investments, a 4 percent annual rate of return over five years -- a rate of return that hasn't been seen for years. Another 40 percent expect a profit of 10 percent, and only 6.5 percent expecting a five percent or less return on investment.

While investors appear poised to outnumber traditional homebuyers, 27 percent will buy a primary residence/investment as a first-time buyer. Forty-nine percent expect to live in their investment property until it's sold or turned into a rental property.

More than half (56.5 percent) will put their investments to work right away as rental properties, and 28 percent plan to purchase vacation property that they'll eventually sell.

"The number of renter households has swelled significantly during the recession as homeowners facing job loss and foreclosure have been pushed into the rental market.  The demand for rental units is forecast to rise by 12 percent by the end of the decade, making low- to moderately-priced rental units appear to be a good investment on both a valuation and a cash flow basis," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

The Move Investor survey also found 30 percent of real estate investors are interested in buying retirement property as an investment.

"While today's market is tough for some, it's also motivating millions to take an unconventional approach and creatively search for new ways of entering the housing market," Berkowitz said.

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© 2010 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Predicted home price 'double dip' arrives, price bottom delayed until 2012

Read: Batman busted, beatdown, body slammed

And it comes with the lowest interest rates of the year, but tight credit and slow employment gains aren't allowing buyers to cash in on renewed affordability.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The long anticipated double-dip in home prices has arrived.

Also see: Less filling 'double-dip' doom looms

And it comes with the lowest interest rates of the year, but tight credit and slow employment gains aren't allowing buyers to cash in on renewed affordability.

U.S. home values fell 3 percent from the last quarter 2010 to the first quarter this year, posting the largest quarter-over-quarter decline since the fourth quarter of 2008, when many thought the housing market had bottomed, according to the Zillow Home Value Index.

Now, says Zillow, a new home price bottom isn't likely until 2012, according to Zillow's revised forecast.

US Zillow Home Value Index

US Home Values - Interactive chart

Zillow said the first quarter home value decline matches the worst of the housing recession thus far. Negative equity reached a new high -- 28.4 percent of all single-family homeowners suffer mortgages that are underwater (the mortgage is greater than they home is worth), up from 27 percent in fourth quarter of 2010.

Zillow said home values are down 8.2 percent since the first quarter last year and down 29.5 percent since they peaked in June 2006.

The report is similar to Clear Capital's findings which found home prices dropped 4.9 percent quarter-to-quarter, slid 5 percent year-over-year and now stand at 42 percent below the market peak in mid-2006.

Clear Capital also reported home prices are 0.7 percent below the prior low set in March 2009.

A growing number of distressed properties flooding the market are contributing to the double dip in home prices.

Zillow said foreclosures rose throughout the first quarter as banks unfroze moratoriums and allowed foreclosures to resume. Foreclosures had fallen in late 2010, due to the slew of moratoriums brought about by the "robo-signing" controversy.

RealtyTrac reported foreclosure filings on 239,795 U.S. properties in March this year, a 7 percent increase from the previous month. The figure was down from 367,056 a year ago March, RealtyTrac's highest monthly foreclosure total since 2005.

Contributing to affordability that comes with lower home prices, interest rates last week fell to an average 4.71 percent for 30-year, conforming, fixed-rate mortgages (FRMs), matching the year's lowest rate originally set back on Jan. 13, according to Freddie Mac's weekly Primary Mortgage Market Survey.

Unfortunately, credit remains tight and employment unstable. Unemployment rose to 9 percent in April, after falling from 9.4 percent in December 2010 to 8.8 percent in March this year.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011," said Zillow Chief Economist Dr. Stan Humphries.

"We did expect substantial payback from the homebuyer tax credits, which buoyed the housing market last year, but underlying demand post-tax credit, as well as rising foreclosures and high negative equity rates, make it almost certain that we won't see a bottom in home values until 2012 or later," Humphries said.

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© 2010 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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Could you qualify for a 'Qualified Residential Mortgage?'

Payday loans' debt treadmill

Borrowers who qualify for a "Qualified Residential Mortgage will pay less than for a mortgage that is not designated as a QRM (Some analysts estimate that mortgage rates on non-QRMs could rise by as much as three percentage points.), but it won't be easy.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If you think mortgage money is tight right now, get a load of what could be coming.

On Capital Hill legislators, lobbyists, real estate industry experts and others are wrangling over Mortgage Reform and Anti-Predatory Lending Act provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Among the most discussed provisions is one that would create a Qualified Residential Mortgage (QRM), one that will be viewed as a loan offering a lower risk of default.

Dodd-Frank requires banks and other firms that issue mortgage-backed securities to keep 5 percent of the loans that they bundle and sell as securities. The idea is for banks to retain some of their mortgage based risks.

Perhaps, if banks previously had been required to hold onto some of their securities, Wall Street wouldn't have crashed under the weight of the toxic investments.

In any event, anything that regulators deem a QRM would be exempt from the 5 percent rule.

Because of the low risk, borrowers who qualify for a QRM will pay less than for a mortgage that is not designated as a QRM (Some analysts estimate that mortgage rates on non-QRMs could rise by as much as three percentage points.), but it won't be easy to land the loan.

According to the proposed definition borrowers would have to:

• Put at least 20 percent down to buy a home.

• Have at least 25 percent in equity to refinance.

• Have at least 30 percent equity to do a cash-out refinance.

• Have house payments that don't exceed 28 percent of before-tax income, and total monthly debt payments (house, credit cards, auto, student loans) couldn't exceed 36 percent of before-tax income.

• Not have been 60 days delinquent on any debt payments in the last two years.

There's some confusion about how much the QRM issue will impact the housing finance market.

Mortgage giants Fannie Mae and Freddie Mac back more than nine in 10 of new loans and those loans are already exempted from current risk-retention requirements and will likely satisfy further risk retention requirements.

However, the National Association of Realtors says high down payment requirements will burden home buyers and, as such, impede the economic and housing recovery.

"We need to strike a balance between reducing investor risk and providing affordable mortgage credit. Better underwriting and credit quality standards have greatly reduced risk," said NAR President Ron Phipps.

"Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home," said Phipps, also broker-president of Phipps Realty in Warwick, RI.

NAR, along with the Center for Responsible Lending (CRL), National Association of Homebuilders (NAHB), and the Consumer Federation of America (CFA) sent a joint letter to federal regulators, urging them to avoid arbitrary high down payment requirements on mortgage loans.

"Instead, regulators should adopt standards for core underwriting factors to lower the risk of default. These include strong loan documentation, assessing a borrower's ability to repay, reasonable debt levels, and prohibitions on high-risk loan features," CRL says.

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© 2010 DeadlineNews.Com

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You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

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Site to See: Federal Reserve's 'Credit Reports and Credit Scores'

GaGa breast ice cream

A new source of current credit score and credit report information doesn't try to sell you related services or provide content to generate ad revenues.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom -
There's a new source of current credit score and credit report information in town and it doesn't try to sell you related services or provide content to generate ad revenues.

While the federal government would like to sell you on the idea that it's on your side -- and convincing you your government is working for you often does take a bit of a hard sell these days -- the Federal Reserve's new credit score and credit report web site is worth the taxpayer dollars that finance it.

The Federal Reserve's new "Consumer's Guide to Credit Reports and Credit Scores is a compendium of advertisement-free credit report and credit score reporting that earns the Feds a high score.

Among independent sources of like information, perhaps only Consumer Reports and AARP offer similarly robust, independent information without a sales pitch.

Along with practical answers to questions about credit reports, credit scores, and the importance of protecting your credit history, the Fed's free online guide explains the contents of your credit report, tells you how and when a credit score is used, and discusses the role of credit bureaus in collecting and sharing your credit history.

You need this information because it can make or break you when it comes time to get a mortgage, personal loan, insurance, a job, or whenever some entity needs to determine if you are worthy, based on your credit standing,

If you are approved, your report and score also determine home much it's going to cost you to obtain credit and other financial services.

The Fed's web site reveals how you can improve your credit score (and lower credit costs) and it offers step-by-step instructions to help you correct an error on your credit report -- not an uncommon job for credit-active consumers.

What's more, the site couldn't have gone live at a better time.

Lenders are squeezing consumers for the best credit and credit scores ever and the Feds are rolling out two related landmark regulatory overhauls designed to provide the greatest consumer protections ever and to institute long overdue finance industry scrutiny.

Your credit standing is at stake.

One is the "Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010" (known as "Wall Street Reform"), which is heavy in mortgage lending rules.

Good credit scores are crucial to landing a mortgage, getting your mortgage refinance and getting a home equity line of credit or second mortgage.

The other regulatory newbie is the "Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009" and the site is embedded with related information: "New Credit Card Rules Effective Aug. 22, 2010" and "New Credit Card Rules Effective Feb. 22, 2011" to keep you apprised.

The new credit card rules heap on new and extensive disclosures credit card issuers must reveal to you and they limit the fees, interest rates and other charges credit card issuers can levy.

But it's still up to you to do the right credit thing and the site offers some pointers.

For example, to improve your credit score:

• Get copies of your credit report -- then make sure information is correct. The site tells you how.

• Pay your bills on time.

• Understand how your credit score is determined. The new site tells you.

• Learn the legal steps to take to improve your credit report. Again, the information is online.

• Beware of credit-repair scams. The web site keeps you up to date.

Also to get the most out of your credit card, the site advises:

• Again, pay on time. Don't be a deadbeat.

• Stay below your credit limit. How much below? Visit the site.

• Avoid unnecessary fees. You'll learn online which ones to avoid and how to avoid them.

• Pay more than the minimum payment. The more the better.

• Keep tabs and watch for changes in your credit card terms. Credit card companies continue to look for loopholes so they can take you to the cleaners -- for a fee.

The site is new and fresh with the latest government regulations dovetailing into your responsibilities, indicating it's not just up to the law to make sure creditors do the right thing.

You pay taxes for this kinda information. Pay attention.

Bookmark it.

"Site To See" is a DeadlineNews Group series of reviews of content-heavy websites deemed unique, consumer-friendly, informative and easy to use.

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© 2010 DeadlineNews.Com

Advertise on DeadlineNews.Com | Shop DeadlineNews.Com

Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.

You are reading a sample of "News that really hits home!" now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Real Estate Examiner
• National Consumer News Examiner
• National Offbeat News Examiner

Other DeadlineNews Group Feeds are available from DeadlineNews.Com.

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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