REAL Trends Comment: July shows levelling in home sales

According to an informal survey of leading brokerage firms, the level of July 2010 written contracts is about equal to the declines posted for May and June 2010. In some cases the results for July 2010 show an improvement over the declines in May and June 2010. If so it is good news. The fall of written business after expiration of the tax credit was substantial in most markets in May and June 2010. At the least July shows that this decline is not accelerating and in more than a few markets is starting a small bounce upward.

June new home sales beat analyst expectations

Sales of new single-family houses in June 2010 rose to a seasonally adjusted annual rate of 330,000, up from historic lows in May, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. The growth beat analyst expectations of 310,000 units in June after the rate plummeted to 300,000 in May. The June rate fell toward the larger end of economists' consensus range of 280,000 to 350,000 units.

Since the May report, the Census Bureau and HUD revised that rate further to 267,000. The June rate of new home sales grew 23.6% over the revised May rate, but is 16.7% below the year-ago levels. The median sales price of new houses sold in June was $213,400, while the average sales price was $242,900, according to the June report (download here).

The seasonally adjusted estimate of 210,000 new homes for sale at the end of June marks 7.6 months of supply at the current sales rate. The uptick in the sales rate shaved the months of supply from 8.5 months in May. The rate is still several months above 5.8 in April.

Source: Housingwire.com, Diana Golobay. (07/26/2010)

HUD creates monthly RESPA update

The Department of Housing and Urban Development has created a new monthly feature called "RESPA Roundup" that will cover the latest on the implementation of the new rule and other happenings such as enforcement actions, guidance, and answers to frequently asked questions. The roundup can be accessed here.

FHA delinquencies fall for fifth consecutive month

The strides made by the Federal Housing Administration (FHA) in lowering delinquency numbers are turning into a long-distance marathon run. The federal mortgage insurer's delinquency rate dropped again in June, marking the fifth straight month of declines.

According to FHA's latest operations report, as of June 30, 532,757 of the mortgages it guarantees had spent at least 90 days in a delinquent status, which equates to a seriously delinquent rate of 8.3 percent. That's down from 8.4 percent in May, and a significant slide from the 9.4 percent serious delinquency rate recorded during the first month of this year. FHA says so far this fiscal year, it has paid 207,715 claims, of which 124,191 were for loss mitigation and 83,524 were for property conveyances.

New financial reform legislation transforms appraisals

The financial regulatory reform bill signed into law recently could result in more accurate home valuations, higher appraisal costs, faster closings, more completed transactions and maybe even higher prices, according to critics of a controversial quasi-governmental regulation that the legislation eliminated.

Enacted a year ago last May, Fannie Mae and Freddie Mac enacted the Home Valuation Code of Conduct (HVCC), meant to reduce mortgage fraud and collusion. However, instead the HVCC generally caused chaos, increased costs and delays in the closing process.

The bill eliminated the HVCC and creates a new Bureau of Consumer Financial Protection that takes over from the HVCC and that is charged with carrying out the first modernization of real estate appraisal regulations in more than 20 years.

Critics of the HVCC said the regulation-forced lenders to use appraisal management companies that charged less and lacked the manpower to provide timely appraisals, often using appraisers from outside the local marketplace who were unfamiliar with market conditions.

A study by the National Association of Realtors released a year ago found that more than three quarters of Realtors reported the time to get an appraisal increased after the HVCC took effect increased by more than eight days. More than a third said they lost sales as a result.

Many also have charged the HVCC with encouraging appraisers to issue valuations on the conservative side. Low appraisals aren't necessarily good news for buyers. When appraisals come in under the purchase price, buyers must come up with the cash to make up the difference or lose the home. Today many buyers already are stretching to make down payments and closing costs, which must be paid out of pocket.

Ironically, during its short life, the HVCC did not reduce appraisal fraud.Incidents of mortgage fraud and misrepresentation increased by 7 percent from 2008 to 2009, according to the Mortgage Asset Research Institute.

Source: RealEstateEconomyWatch.com, Steve Cook, (07/24/2010)

Campbell: Home prices tumble in most categories during June

A drop in homebuyer activity helped trigger a noticeable decline in home prices between May and June, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The survey found that home prices fell in three out of four property categories last month. Average prices tumbled by 6.8% for move-in ready foreclosed properties, 6.3% for short sales, and 4.6% for non-distressed properties. In contrast, prices for damaged foreclosed properties increased by 5.9%, on average in June.

The first-time homebuyer share of home purchase transactions was 42% in June, well below the 48% level seen in March. Survey results suggest that home prices are likely to continue their decline in the months of July and August. Real estate agents were asked in the June survey, "With the end of the homebuyer tax credit, do you notice prices for contracts signed in June going up, down, or staying flat?" Agents responding "down" outnumbered those responding "up" by a ratio of 10 to 1.

The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions surveys more than 3,000 real estate agents nationwide.

HUD/VA launch program to keep vets in homes

In an effort to prevent homelessness among veterans, primarily those returning from the wars in Afghanistan and Iraq, the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Veterans Affairs (VA) announced that both agencies will invest a combined $15 million in five selected communities near military installations. The HUD and VA grant funding is intended to provide housing assistance and supportive services to veterans who might otherwise be living in homeless shelters or on the streets.

Dodd-Frank legislation extends protecting tenants at foreclosure act

The Dodd-Frank Wall Street Reform and Consumer Protections Act will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014. PFTA provides renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease.

Under PTFA, housing choice voucher holders are offered similar protections. The Dodd-Frank bill also clarifies that any lease or tenancy created prior to the change of title as a result of foreclosure is protected by PTFA. The Dodd-Frank Reform Act also includes a provision that requires the HUD secretary to develop a program to refinance troubled multifamily mortgages.

Source: DSNews.com, Carrie Bay, (07/22/2010)