Mortgage Rates – 30 year fixed Source: Federal Reserve 6/25/2009 2/25/2010 Source: KCM 3/2010 Federal Reserve
Interest Rate Support Source: KCM 3/2010 TARP Report to Congress 1/30/2010 “ The Government has done more than simply support the mortgage market, in many ways it has become the mortgage market .”
Source: KCM 3/2010 Source SIFMA Private Share Government Share
"There is no question rates have been kept artificially low by the Fed's heavy buying. My opinion is that rates will go up a full percentage point initially, meaning that 30-year fixed conforming loans, now hovering around 5 percent, would hit 6 percent.” Source: KCM 3/2010 Source: San Francisco Chronicle 2/15/2010
Guy Cecala, publisher of
Inside Mortgage Finance
Source: KCM 3/2010 Source: San Francisco Chronicle 2/15/2010
principal at Beacon Economics
"Clearly, when they stop printing all that money, it's going to be a shock to the system. I have to assume that when they pull back on it, it will cause a 100- to 200-basis-points rise to rates of 6 percent or 7 percent. When they start selling off the stuff they purchased, which by my guess would come early next year, that would cause another 100- to 150-basis-points rise." Interest Rates
"Housing has been on government life support, and without it the crash would have been much more severe. This spring and summer as those policy efforts unwind, we most likely will see mortgage rates move higher and more house-price declines." Source: KCM 3/2010 Source: San Francisco Chronicle 2/15/2010 - Mark Zandi, chief economist with Moody's Economy.com Interest Rates
Percentage with a Price Reduction Source: KCM 3/2010 Source: Trulia 2/2010
“ The remaining correction in home values we'll see in the first half of this year is a function of market fundamentals, such as the increasing flow of foreclosures, high levels of inventory in the market and a probable decrease in demand as the impact of the tax credit wanes and mortgage rates rise. While the next few months are likely to bring further home value declines in most markets, we do expect to see a national bottom in home prices by the middle of this year. Thereafter, home values are likely to bounce along the bottom with real appreciation remaining negligible for some time." - Zillow Chief Economist Stan Humphries Prices Source: KCM 3/2010 Source: Zillow 2/2010
We believe that the recent improvement in house prices is a temporary reprieve … Prices will decline an additional 8% from the fourth quarter of last year to the bottom in the fourth quarter of this year. - Moody‘s Source: KCM 3/2010 Source: Moody’s ResiLandscape 2/11/2010 Prices
"We have a boatload of homes that ultimately will find their way to a foreclosure sale, and that will put pressure on house prices. The more that distressed home sales rise, the more home prices get pushed down." Source: KCM 3/2010 Source: San Francisco Chronicle 2/15/2010 Mark Zandi, Chief Economist with Moody's Economy.com Prices
Source: Chicago Mercantile Exchange 03/01/10 May ‘11 Today’s Price Nov ‘13 Source: KCM 3/2010 Projected Bottom
“ But I still think the risk of continued weakening in house prices nationally is considerable…The potential for another wave of distressed property coming to market remains very high. While the government’s mortgage modification program may have slowed the number of foreclosed properties coming to market, its near complete failure is likely to result in a whole new wave of distressed activity down the road.” Source: KCM 3/2010 Source: Housing Wire 2/09/2010 - Dave McCarthy, President and CEO Integrated Asset Services Prices
Source: First American CoreLogic 2009 4thQ Negative Equity Data Source: KCM 3/2010 Negative Equity by State Data available for Louisiana, Maine, Mississippi, South Dakota, Vermont, West Virginia and Wyoming
Walking Away The New York Times : “ Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment — surrender of the property… The borrower isn’t escaping the consequences; he is suffering them .” The Wall Street Journal: “ Give serious thought to walking away from the debt …No, you shouldn’t feel bad about it, and you shouldn’t feel guilty… You need to be ruthless about your cash flow…The economy is fundamentally amoral…Whether we like it or not, walking away from debts is as American as apple pie.”
“ If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in- lieu of foreclosure alternatives works.” Source: KCM 3/2010 Source: Housing Wire 2/10/2010
CEO of RealtyTrac
Return to the Market: One benefit of a short sale is that consumers usually can buy another home in two to three years, rather than five to seven as is the case with a foreclosure. Deficiency Judgment: Most of the time, the lender will release the seller from any further obligation to repay the debt. Source: New York Times 2/22/2010 Source: KCM 3/2010 ‘ Short Sales’
HAFA creates financial incentives for borrowers, servicers, and investors to avoid a foreclosure by utilizing a short sale or a deed-in-lieu of foreclosure. According to Treasury, these options generally provide borrowers, investors, and communities with a better outcome than a typical foreclosure sale. Source: KCM 3/2010 TARP Report to Congress 1/30/2010 ‘ Short Sales’
Source: KCM 3/2010 HAFA Guidelines ‘ Short Sales’
Mortgage servicers have 10 days to accept or deny a short sale request. After a sale is completed, the borrower could be completely released from debt.
Borrowers are eligible to receive a $1,500 moving allowance, if they sell their home through a short sale.
Mortgage servicers will receive $1,000 for each completed short sale.
Investors who hold first mortgages can get as much as $1,000 for allowing second lienholders to release their liens.
Second lienholders can get only as much as $3,000 in proceeds from short sale to release their liens.
The property must be the homeowner’s principal residence.
The homeowner is delinquent on the mortgage or default looks likely.
The loan was made before Jan. 1 this year and is less than $729,750
The borrowers’ total monthly mortgage payment exceeds 31 percent of their before-tax income.
Federal Housing Finance Agency 1/29/10 Completed Short Sales Source: KCM 3/2010
Source: KCM 3/2010 Source: Campbell Surveys 2/2010 Percentage of Distressed Sales Investor REOs Move-in REOs Short Sales
“ This will be the year of the short sale.” - Calculated Risk 2/15 Source: KCM 3/2010
“ Everyone is touting 2010 as the year of the short sale. I would agree that it seems to be heading in that direction. There are going to be hundreds of thousands of short sales.” - Cary Sternberg is the president of Excellen REO. Source: Housing Wire 2/12/2010 Source: KCM 3/2010
“ Treasury suggests servicers consider such factors as severity of the loss, local market conditions , timing of the pending foreclosure, and borrower motivation and cooperation.” Source: KCM 3/2010 TARP Report to Congress 1/30/2010 ‘ Short Sales’