Fannie Mae Now Accepting Online Offers for REOs

Carrie Bay    2/7/2012

Fannie Mae announced Tuesday that it has expanded its online system to accept purchase offers for all its REOs listed for sale.

Real estate agents will now submit offers online on behalf of clients, receive receipt confirmation, and track the status of submitted offers through the HomePath.com website. HomePath is the GSE’s REO disposition operation.

In November 2010, Fannie Mae launched the HomePath Online Offers pilot in Orlando, Florida; San Diego, California; and Detroit, Michigan. Active Data Technologies, Inc., the developer of the offer platform, commented just five months after the launch that the technology was seeing positive results in these three test markets.

Now, the Online Offers feature is available for all Fannie Mae-owned properties across the nation through HomePath.com.

“Collecting offers online through HomePath.com will provide greater transparency for homebuyers and their agents,” said Jay Ryan, VP for REO at Fannie Mae. “Our online platform will make it easier to sell properties to owner occupants, which is a major factor in helping to stabilize communities across the nation.”

George Philbeck, a real estate professional with Keller Williams Advantage II Realty in Orlando, has been using Online Offers since the pilot launched in 2010.

“As an agent, I believe Online Offers is efficient, informative and user-friendly,” Philbeck said. “With Online Offers, my clients’ offers are guaranteed to make it to the right person at Fannie Mae for review. It has worked very well for me and for my clients.”

Real estate professionals representing buyers are able to connect directly with Fannie Mae’s listing agents through the HomePath website. The buyer’s agent can also find information on the site regarding financing and incentive options offered through HomePath.

The HomePath site offers a wide selection of properties, including single-family homes, condominiums, and town houses.

Brad Geisen, president and CEO of Active Data Technologies, called HomePath Online Offers a “step in the right direction” by automating the transaction process to move inventory quicker and get the housing market on the road to recovery faster.

Carrie Bay DSNews  1/24/2012

At the national level, the inventory of for-sale single-family homes, condominiums, townhouses, and co-ops dropped by 22.29 percent over the last year, according to new statistics released by Realtor.com.

The site concludes that at the close of 2011, there were 1.89 million single-family homes on the market, down 6 percent from just one month prior.

The median age of the inventory in December increased by 7.02 percent from November, but Realtor.com says the

bump is largely seasonal reflecting the end of the homebuying season.

The median age of existing inventory during December was 122 days, which is down nearly 4 percent when compared to a year ago.

Realtor.com notes that median list prices, which have remained essentially unchanged since June, are up by 5.03 percent nationally on a year-over-year basis.

Each of these developments can be viewed as “a positive sign that the housing market is holding its own at the national level,” according to Realtor.com.

Patterns differed across the 146 metropolitan statistical areas (MSAs) monitored by Realtor.com. Over the past several months, the site reports an increasing number of markets have registered year-over-year increases in median list prices while fewer markets have experienced year-over-year declines.

Still, markets remain fragile, according to Realtor.com, particularly in light of the large number of potential foreclosures and the recent uptick in delinquency rates in November.

 The number of short sale transactions in November 2011 jumped 39.38 percent compared to November 2010, and the median price of short sales improved by 7.07 percent, from $99,000 to $106,000, according to the local Realtor group.

“The increase in completed short-sales transactions is heartening,” said Mike McGraw, ORRA chairman.

According to McGraw, short sales currently make up 73 percent of homes under contract and pending closing.

“The very tight current lending conditions plus under-value appraisals are still causing both enormous slowdowns and outright contract cancellations among short sales,” McGraw commented. “The sooner these short sales are processed through the system, the better it will be for the normal home market.”

Regardless, McGraw says “an improved median sales price in any category is good for homeowners and home sellers, but it also means that buyers are going to encounter proportionally higher asking prices.”

Since January of this year, Orlando’s overall median price has increased by 21.18 percent.

The median price of non-distressed homes closing in November was $148,000, a decrease of 7.50 percent from November 2010, according to ORRA. The trade group says non-distressed home sales accounted for 40 percent of all transactions during the month.

The median price for REOs sold during the same period was $81,999, up 4.12 percent from a year earlier. Bank-owned properties made up 23 percent of all sales.

ORRA reports that homes of all types spent an average of 99 days on the market before coming under contract in November 2011, and the average home sold for 94.74 percent of its listing price. In November 2010 those numbers were 96 days and 94.13 percent.

Overall inventory is down 33.28 percent compared to November 2010. ORRA says at the current pace of sales, there is a 5.20-month supply of homes in Orlando’s inventory.

 Last year’s tally of nearly 1.9 million properties with a foreclosure filing seems staggering, but it’s actually the lowest reported since 2007. It’s 34 percent below 2010, 33 percent below 2009, and 19 percent below the 2008 total.

RealtyTrac’s newly appointed CEO Brandon Moore describes foreclosure activity last year as being in “full delay mode.”

“The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages – particularly in states with a judicial foreclosure process,” Moore said.

These delays, however, may be coming to an end. Moore says there were strong signs in the second half of 2011 that indicate lenders are finally beginning to push stalled foreclosures through in select local markets.

“We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010,” Moore said.

Despite signs that some markets are experiencing a pickup in foreclosures, RealtyTrac’s analysis shows that processing timelines continued to increase.

On the national stage, properties foreclosed in the fourth quarter took an average of 348 days to complete the process, up from 336 days in the third quarter and up from 305 days in the fourth quarter of 2010.

RealtyTrac says the length of the average foreclosure process has increased 24 percent from the third quarter of 2010, when lenders began to re-evaluate foreclosure procedures as a result of documentation and affidavit errors.

New York holds the title of ‘longest foreclosure process in the nation’ – an average of 1,019 days.

New Jersey documented the nation’s second longest end-to-end foreclosure process, at 964 days. Florida has the third longest at 806 days. Foreclosure activity in both these states dropped more than 60 percent from 2010 to 2011.

All three states with the longest foreclosure timelines employ the judicial foreclosure process.

Texas continues to register the shortest average foreclosure process of any state, at 90 days, but that still represents an increase from 86 days in the third quarter and 81 days in the fourth quarter of 2010.

At 106 days, Delaware has the second shortest foreclosure timeline in the nation, and Kentucky lays claim to the third shortest, at 108 days.

More than 6 percent of Nevada housing units (one in 16) had at least one foreclosure filing in 2011, giving it the nation’s highest state foreclosure rate for the fifth consecutive year. That’s despite a 31 percent decrease in foreclosure activity from 2010.

Arizona registered the nation’s second highest foreclosure rate for the third year in a row, with 4.14 percent of its homes (one in 24) receiving at least one filing in 2011.

California registered the nation’s third highest foreclosure rate for all of 2011, with 3.19 percent (one in every 31 homes).

Other states with 2011 foreclosure rates ranking among the nation’s 10 highest include: Georgia (2.71 percent), Utah (2.32 percent), Michigan (2.21 percent), Florida (2.06 percent), Illinois (1.95 percent), Colorado (1.78 percent), and Idaho (1.77 percent).

Pending Sales Increase May Point to Budding Market Recovery  

Krista Franks DSNews           11/30/2011

The National Association of Realtors’ (NAR) pending home sales index reported strong positive movement over the month of October, rising 10.4 percent from September.

The index, which measures sales contracts but not closings, is also 9.2 percent above its rate a year ago.

In recent months, comparing year-over-year pending home sales was difficult because the homebuyer tax credit in 2010 skewed the results. NAR’s chief economist, Lawrence Yun, says October’s data allows for an “apples to apples” comparison in year-over-year data.

Thus, the monthly and year-over-year increase in sales contracts in October is a positive indication for the market.

However, actual closings might not match contract signings, Yun warns. Historically, he says, contract signings have aligned closely with contract closings, but in the past couple of years friction in the market has widened the gap.

Nonetheless, “I’m actually encouraged by these numbers,” Yun says. This could be the first sign of sustained recovery in the market, he says.

Pending home sales rose in three of four regions in October, falling only in the West, which experienced a 0.3 percent decline to 105.5. The rate, however, is 8.1 percent higher than last year.

The Midwest experienced the greatest increase in contract signings in October, rising 24.1 percent to 88.7. The region’s pending home sales are 13.2 percent above their rate last year.

Pending home sales in the Northeast rose 17.7 percent to 71.3 for the month. The rate is up 3.4 percent from last year.

The South experienced an 8.6 percent increase in October arriving at 99.5 for the month, which is 9.7 percent above the rate recorded in October 2010.

Yun says one factor that may drive purchases is rent rates, which are not only rising but accelerating.

In the past when rental rates rose, home prices rose with them. However, Yun says homes are currently undervalued while rents continue to rise, making home buying an attractive option for some.

“Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years,” Yun says. “We hope this is indicates more buyers are taking advantage of the excellent affordability conditions.”

Are We an Industry Afraid of Our Shadows?  

Carrie Bay                        11/14/2011

Estimates of the industry’s shadow inventory vary widely, but one thing analysts do agree on is that the overhang is massive and will likely weigh on market dynamics for years to come.

Measurements of soon-to-be repossessed and foreclosed homes that have yet to hit the market range from 1.6 million by CoreLogic’s assessment to as high as 8.2 million from Amherst Securities. Much of the discrepancy stems from the different calculations used by the various companies and how they determine which loans will inevitably default and sink into the shadows.

The analysts at Capital Economics factor into their equation the number of permanently vacant homes that are held off the market as reported by the Census Bureau, but only those over and above the “normal” level. They also add in homes that are already going through the foreclosure process and those where the borrower is at least 90 days delinquent on their payments, allowing for what the analysts say is a “relatively generous” cure rate of 25 percent.

Capital Economics’ assessment falls in the middle of the estimate range, and the company’s analysts say “if anything, by erring on the side of caution our measure is probably an underestimate.”

They put the industry’s shadow inventory at 4.3 million homes as of the end of the second quarter of this year. That’s down from the company’s peak reading of 4.7 million in the first quarter of 2010.

With more than four million homes waiting in the wings to eventually be added to the supply of properties for sale, any normalization in the visible housing inventory is several years out, which will limit meaningful price gains for the foreseeable future, according to Capital Economics.

The company says even by its cautious measure, it is quite clear that a very large number of homes will be joining the visible inventory at some point – a visible inventory that already currently holds an excess of about 1 million properties for sale.

At current rates of sale, it would take more than 18 months to clear both the visible and shadow inventory, according to Capital Economics.

Jed Smith, managing director of quantitative research with the National Association of Realtors (NAR), says he’s seen a leveling off of distressed properties at the multiple listing service (MLS) level in recent months.

Approximately three years’ worth of data indicates that distressed sales have settled in the 30 to 35 percent range, according to Smith.

“This suggests that financial institutions are feeding the properties into the market on a relatively constant basis, and given current economic conditions no great surge of shadow inventories has appeared,” Smith said in a recent blog post.

While a deliberate and calculated release of the shadow inventory limits the likelihood of a detrimental price shock to an already weak market, Smith says the bad news is that the problem appears likely to be with us for the next two to three years, suggesting future price appreciation may be slow.

Capital Economics adds that policymakers have started to think about ways to reduce the shadow inventory in an orderly manner, namely officials within the administration have been consulting with industry stakeholders and inventors on plans to convert the government-owned REO stock to rental properties.

But, Capital Economics analysts say given the sheer number of homes in the shadow inventory, reducing the excess by 500,000 or so will do little more than make a dent in the supply overhang.

Bank of America Launches 'Test-and-Learn' Short Sale Program in Florida

 By: Carrie Bay  10/12/2011

Bank of America has begun a pilot program in Florida offering extra incentive payouts to distressed homeowners who agree to and successfully close on a short sale.

Incentive payments for relocation assistance range between $5,000 and $20,000. The program is being offered on a limited basis for investor-approved, pre-offer short sales.

Bank of America is calling it a pilot “test-and-learn” program.

A spokesperson for the bank explained that Florida is experiencing higher foreclosure rates than other parts of the country, and is therefore seen as a “viable market to gauge incremental short sale response and completion rates when presenting homeowners with relocation assistance at closing.”

If successful in Florida, Bank of America says the “test-and-learn” could be expanded to other states.

The short sale must be initiated between September 26 and November 30, 2011 and close by August 31, 2012.

Florida homeowners who qualify for the “test-and-learn” program will receive a solicitation mailer directly from Bank of America, or may learn about the program if they are working with a real estate agent who handles pre-approved short sales for BofA.

The bank has a dedicated team of short sale specialists standing by to help agents determine if their homeowner client qualifies for the short sale relocation assistance at: 877.459.2852.

Bank of America has already been offering short sale payouts in the state of Florida, albeit for smaller amounts.

Susie Kirkland with RE/MAX Southern Realty in Destin says she’s closed five transactions within the past couple of months through what BofA calls its Cooperative Short Sale Program. The bank awarded Kirkland’s short sellers $2,500 upon closing.

BofA is even extending short sale incentives to some investors. Steve Kravitz of Bankers Realty Services, Inc. in Fort Lauderdale just completed a short sale transaction last week on an investment property. BofA offered the non-occupant owner/seller $3,600.

Kravitz says his client had been late on a few payments, but there was no foreclosure filing on the property. BofA and other lenders are looking to short sales earlier on in the process, and getting ahead of the foreclosure crisis in areas where the system is already bogged down with distressed properties.

“We’ve had cases here where we’ve gotten short sales through where there haven’t even been any late payments at all,” Kravitz said.

Kravitz says short sales just make sense for a market as hard-hit as Florida. Not only can a short sale be more cost efficient when lenders are facing a foreclosure timeline of nearly two years, but it “gets more product and better product out to buyers,” he says.

He explained that oftentimes, a foreclosure property can sit vacant for more than a year, whereas with a short sale, the home is typically occupied up until a week or a few days prior to changing hands, which translates to a better quality home in better shape.

Kravitz says banks are becoming “more cooperative” and approving short sales more quickly. The investment property short sale Kravitz closed last week took just 45 days.

Other lenders are also extending incentive payouts to short sellers in Florida and some other hard-hit states such as California.

In July, DSNews.com reported that Wells Fargo, JPMorgan Chase, and Citi were all offering extra relocation assistance to borrowers opting for a short sale in certain markets.

Robert Valenzuela with Century 21 Schwartz Realty in Key Largo, Florida, says he’s completed six short sale transactions in which the seller was given money to help with relocation, the largest of which was a $45,000 payment from Chase Bank.