Survey: Most Banks Tighten Lending Standards

About 75 percent of banks tightened their underwriting standards in the year ending March 31, and 20 percent discontinued, or marked for elimination, at least one kind of unconventional mortgage, according to an annual survey by the U.S. Office of the Comptroller of the Currency.
The survey looked at the lending practices of the 59 largest national banks. For the second year in a row, no banks reported easing standards, although 27 percent left them unchanged.
Banks told the government that they were requiring larger downpayments, tightening payment regulations, and increasing loan fees, according to the OCC report.
Source: Inman News (07/22/2009)

Now Is a Perfect Time to Buy

Just a reminder of something that is obvious to real estate professionals: Now is the time to buy, but that opportunity may be slipping away.
For people who have a job and money, a dream house is within reach, writes Marc Roth, founder of Home Warranty of America and a columnist for BusinessWeek.
He points out that mortgage rates remain low, prices are still at historic lows, and the government is offering incentives for first-time homebuyers.
He also adds that the inventory of homes to buy is still large, but it is shrinking. According to the NATIONAL ASSOCIATION OF REALTORS®, the housing inventory peaked in November 2008 at an 11-month supply. At the end of May 2009, it had fallen to a 9.6-month supply.
Roth says anyone who dallies will miss a good opportunity to buy a first home at a terrific price or go shopping for a move-up property that is a great buy.
Source: BusinessWeek.com, Marc Roth

California Home Prices Rise in June

California’s median home prices rose 7 percent in June compared to May, according to MDA DataQuick, a real estate research firm. The statewide median price increased to $246,000 from $230,000, triggered by an increase in sales of higher-priced homes.
"We're just now seeing the beginnings of more normal mortgage lending patterns," DataQuick President John Walsh says. "There's still a long way to go, but it looks like the worst of the grind is over.
"DataQuick also pointed out that foreclosures accounted for 46 percent of sales, the first month since August 2008 that foreclosure sales were less than 50 percent of the total.
Source: The Associated Press, Jacob Adelman (07/16/2009)

First-Time Buyers: Hurry for $8,000 Tax Credit

It’s time to remind first-time home buyers that in order to qualify for the government’s $8,000 gift in the form of a tax credit, the deal must close by Dec. 1.
Buyers should have a purchase contract signed by early October, so they have 45 to 60 days to arrange financing and safely close the deal.
"There's not as much sand in the hourglass as we may think," said Jim Merrion, regional director at RE/MAX Northern Illinois.
Source: Chicago Tribune, Mary Ellen Podmolik (07/11/2009)

Troubled Jumbo Loans Hurt Broader Market

Houses that cost more than $730,000 – the cap for conforming jumbo loans – can be extremely tough to buy, sell, or refinance these days, freezing the high-end market and holding down activity in lower-priced markets, real estate practitioners say.

The slowdown results from lenders’ reluctance to offer mortgages above the amount Fannie Mae and Freddie Mac will insure.

"What you're seeing are those properties sitting on the market for a lot longer because people can't get loans," says David Kerr, an associate with ZipRealty in Marin County, Calif. " All of what we're showing is in the $200,000 to $300,000 price range."

States that are most affected are those where jumbos account for more than 10 percent of all mortgages, including Hawaii, California and New York, as well as Washington, D.C., New Jersey, Maryland, Massachusetts, Virginia, Connecticut, Washington, Nevada, and Florida.

The Obama administration program to refinance underwater mortgages doesn’t offer help to holders of jumbo mortgages, so borrowers who can’t refinance are defaulting in increasing numbers. According to First American CoreLogic, jumbos that are 90 days or more delinquent reached 4.83 percent in March 2009, up from 1.68 percent in March 2008.

"We need to have a market recovery in all segments," says Lawrence Yun, chief economist for the National Association of REALTORS®. "If the high-end market weakens, those in the middle have to reduce prices . . . All of Middle America is undoubtedly impacted."

Source: USAToday, Stephanie Armour (09/15/2009)

Lennar Defends Itself Against Drywall Suits

Homebuilder Lennar Corp. says it has identified faulty Chinese drywall in 400 homes in Florida, but none outside the state. The company says it has set aside about $40 million in insurance reserves to repair homes that have defective drywall.

The drywall is alleged to contain ingredients that corrode metal, emit an odor, and make people sick.

Lennar says it has been named in 41 Florida state court lawsuits and two federal class action suits. It says it has counter sued its entire supply chain, including the manufacturers of the product.

The U.S. Department of Justice has filed lawsuits on behalf of hundreds of homeowners from Louisiana, Florida, Ohio, and other states, and the court has assigned the cases to a U.S. district judge in New Orleans.

Source: The Associated Press, Brian Skoloff (07/13/2009)

Fewer People Form New Households

The recession has more than halved the formation of new households.
Between March 2007 and March 2008, the number of new households grew by 772,000, compared with an increase of 1.63 million a year earlier, according to the U.S. Census Bureau.
New households results in fewer home sales and rentals, less furniture sold, and less work for electricians, carpenters, painters—and real estate professionals. Harvard University's Joint Center for Housing Studies estimates that the glut of 1.5 million new homes created during the housing boom would be gone now if households had been forming at historical levels.The downturn also has pushed down immigration levels. Even inflows of illegal immigrants have stopped rising since 2008, according to the Pew Hispanic Center.
Source: The Miami Herald, Annys Shin (07/11/2009)