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Recent Mortgage News
National Association of
Realtors lowers housing forecast for this year and next
Article Launched: 05/08/2007 09:36:40 AM
PDT
NEW YORK - A national trade
organization for real estate agents is lowering its expectations for the
housing market this year to reflect stricter lending standards and the
decline in mortgage originations to borrowers with poor credit.
The National Association of
Realtors said Tuesday it expects existing home sales of 6.29 million in
2007 and 6.49 million next year, lower than sales of 6.48 million in
2006. The median price for existing homes is also forecast to dip 1
percent to $219,800 this year, but to rebound 1.4 percent in 2008.
The group anticipates
new-home sales of 864,000 in 2007 and 936,000 next year, down from the
1.05 million last year. The median new home sales price is forecast to
remain unchanged at $246,400 in 2007 and then gain 2.2 percent next
year.
Housing starts will also
drop, the group predicts, to 1.46 million units this year and 1.52
million in 2008 from 1.80 million in 2007.
Lawrence Yun, NAR senior
economist, said speculative buyers, who pushed home prices up to record
highs in the past five years, have disappeared from the market, which is
a boon to traditional home buyers looking for lower prices.
"It's good that we're
getting beyond the tendency of some buyers to view housing as a
temporary asset to accumulate short-term wealth, which is not to be
expected in a normal market," Yun said.
The NAR predicts the
30-year fixed-rate mortgage should edge up to 6.5 percent by the fourth
quarter. Last
week, Freddie Mac reported the 30-year rate
was 6.16 percent.
The group didn't give
predictions on other more "exotic" mortgages like adjustable-rate loans
or interest-only mortgages, which gained in popularity during the
housing boom.
Despite its downward
adjustment, the NAR still believes the housing slowdown will be
moderate.
"If it weren't for a
favorable economic backdrop, housing would probably have a hard landing.
As it is, we see this as a soft landing with home sales rising gradually
in the second half of the year and prices recovering a bit later," Yun
said.
Mortgage Apps climb for third
straight week
Article Launched: 05/09/2007 10:30 AM
EDT
NEW YORK -- Mortgage
applications climbed for the third straight week, according to the
latest report by the Mortgage Bankers Association, helped by an increase
in both refinancing and purchasing activity.
The industry group's
seasonally adjusted index of mortgage applications rose for the second
straight week, climbing 3.6 percent to 680.7 in the week ended May 4,
from 657.2 one week earlier.
The four-week moving
average, which smoothes out volatility in the weekly figures, rose 1.3
percent.
The MBA's refinancing
applications index jumped 4.9 percent to 2115.2 from 2015.8 the previous
week. The seasonally adjusted purchase index, viewed as a key
measurement of U.S. home sales, rose 2.6 percent to 438.3.
Mortgage applications have
headed higher in recent weeks, despite the recent crisis in the subprime
mortgage sector, which has fueled concerns that lenders may clamp down
on loans to borrowers with weak credit.
The subprime fallout
weighed on the housing sector in March, as existing home sales tumbled
nearly 5 percent, the National Association of Realtors reported Tuesday.
Borrowing costs on 30-year
fixed-rate mortgages, excluding fees, averaged 6.1 percent, down from
6.14 the previous week.
Fixed 15-year mortgage
rates slipped to 5.82 percent from 5.83 the previous week. Rates on
one-year adjustable-rate mortgages (ARMs) fell to 5.71 percent from 5.79
percent.
The ARM share of activity
rose 18 percent of total applications from 17.9 percent the week before.
The MBA's survey covers
about 50 percent of all U.S. retail residential mortgage loans.
Respondents include mortgage bankers, commercial banks and thrifts.
The Ugly Face of Foreclosure
Article Launched: 05/07/2007 6:45 PM EDT
NEW YORK -- Foreclosures
are devastating communities across the United States, and the impact may
only worsen as more subprime adjustable mortgages reset during the next
few months.
Foreclosure filings are up
35 percent nationwide since a year ago, according to RealtyTrac.
Even in prosperous Sunbelt
places like Pima County, Ariz., which includes Tucson, foreclosures
climbed 51 percent in just two years.
Maryellen Hayden, executive
director of the Pittsburgh office of the Association of Community
Organizations for Reform Now (ACORN),
reports that foreclosures have skyrocketed in Allegheny County from
1,287 in 1996 to 4,944 in 2006.
In Slavic Village, a
working-class Cleveland neighborhood of about 11,000 homes, 600 of them
are vacant and boarded up, according to City Councilman Tony
Branchatelli.
"Foreclosures have helped
destabilize not only Cleveland neighborhoods but inner ring suburbs like
Shaker Heights and Euclid as well," said Jim Rokakis, treasurer of
Cuyahoga County, which includes Cleveland, one of the hardest-hit U.S.
cities.
And the worst may be yet to
come. Rokakis said Cuyahoga County is on track for 16,000 foreclosures
this year, up from about 3,500 annually in Cleveland during the
mid-1990s.
The impact can reach far
beyond the affected homeowners. Rokakis says streets lined with
foreclosures look like "mouths with teeth knocked out of them."
In places like Slavic
Village, according to Branchatelli, you can't go down a single street
without seeing at least one vacant house.
On some Pittsburgh streets,
reports Hayden, every fifth or sixth house is boarded up.
Dan Immergluck, associate
professor of city and regional planning at Georgia Tech, said that for
every foreclosure within an eighth of a mile of a house - two and a half
city blocks in every direction - the home's value drops by about 1
percent.
The vacancies look bad
enough, but it's what happens next that really hurts.
"The bad people in a
community find out right away when a house has been foreclosed on," said
Hayden. "They come in and steal the copper plumbing. I've even seen them
strip the aluminum siding off to sell. The houses become havens for drug
dealers."
Fighting those problems
off, stabilizing the community and redeveloping blighted areas are a
challenge for cash-starved municipalities.
And they have less money to
pay for it because foreclosures cause tax collections to suffer. Not
only do foreclosures, abandonment and demolition take properties off the
tax rolls; the remaining homeowners often want their assessments lowered
and taxes cut to reflect their plummeting property values.
"More than 64,000 people in
Cuyahoga County alone filed an objection to their assessments this year
because their property values have dropped," Rokakis said.
And the actual owners of
the foreclosed properties - the investors who own the loans - may stop
paying taxes as well. Said Branchatelli, "They may send someone around
to take a look at the place, who decides it's not worth even going
through the foreclosure process. They may just take a powder."
Because of unfiled
paperwork in many of those cases, houses may stay in limbo for months,
deteriorating further until they're completely unsalvageable.
Rokakis himself recently
experienced, secondhand, the pain of foreclosure by attending the
sheriff's auction of his boyhood home. The outstanding balance on the
mortgage was $85,000 but the house sold at auction for just $19,000.
As he walked through the
living room before the sale and thought about how his parents raised
seven kids there, he overheard buyers talking about what they would do
to the property: rent it, flip it, raze it.
"It was a bummer," said
Rokakis.
Contemplating the next few
months of increasing foreclosure activity leaves him no happier. "Our
subprime delinquency rate is 25 percent right now," he said, "and
rising. The day may soon come when it's 50 percent."
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