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Is L.A. in another real estate bubble?
Posted: Monday, September 21, 2015
As home prices rise ever higher in Los Angeles, some are beginning to wonder if the region is in another housing bubble, one that's ready to burst. Real estate blogs add to the hysteria by pointing to the most ridiculous listings, the million-dollar bungalows in need of a complete renovation, the $3-million teardowns. But the data suggest that the market is not, in fact, on the brink of collapse. Using the all-transactions house price index from the Federal Housing Finance Agency, I examined price history in Los Angeles County, adjusted for inflation, from 1975 to the present — 1975 being the first year data were available. Along with some short-term fluctuations, we can see four major housing price cycles in Los Angeles since 1975: (1) Bull market (first quarter of 1975 through the third quarter of 1980): real home price increased by 69% over 23 quarters. Bear market (1980 Q4 to 1984 Q2): real price decreased by 9% for 15 quarters. (2) Bull market (1984 Q3-1989 Q4): up 67% for 22 quarters. Bear market (1990 Q1-1997 Q2): down 37% for 30 quarters. (3) Bull market (1997 Q3-2006 Q4): up 166% for 38 quarters. Bear market (2007 Q1-2012 Q2): down 43% for 22 quarters. (4) Bull market (2012 Q3-2015 Q1): so far the price is up 27% for 11 quarters. Can these past cycles help us predict the future? To some degree, yes. Unlike the stock market, real estate dynamics tend to hold over time, in part because transaction costs keep prices from bouncing around wildly in response to external events. If history is any guide, the L.A. housing price cycle seems to last about 12 years on average, of which seven years is spent in the bull market with at least 65% real price appreciation, and five years is spent in the bear market. We are three years into the housing recovery that started in 2012, with 27% appreciation so far. On average, there will be four more years or 38% more price growth before we reach the turning point. Of course, it's possible the bear market could come earlier or later than four years, but that is quite unlikely to happen in the very near future. The data suggest that the market is not, in fact, on the brink of collapse.- How can I be so sure? Often, during a bubble-making period, we see an accelerating rate of home price appreciation, as in 1988-89 and 2004-06. In the last two years, we haven't seen that kind of rapid appreciation in Los Angeles. Another way to understand housing price cycles is by looking at building permit numbers. Speaking roughly, if developers are investing in new properties, that's a good sign that demand, and prices, are rising or keeping steady. If developers are holding back, that suggests demand, and prices, will soon fall. L.A. housing permit units peaked in 1977, 1988 (50,500 units) and 2004 (26,900 units), one to three years ahead of the real housing price peaks in 1980, 1989 and 2006. Permits bottomed in 1982, 1993 (7,300 units) and 2009 (5,700 units), a few years before the housing price troughs in 1984, 1997 and 2012. Over the last three years, we have seen L.A. building permits increase from 11,200 units in 2012 to 18,200 units in 2014. The 2015 number will most likely be higher than 2014. Therefore, we can predict the next home price peak is at least two years away. Get your free weekly take on the most pertinent, discussed topics of the day >> Yet another measure of rational housing value is a simple price-to-rent ratio. The ratio is calculated by taking the median home price over the annual median rent in L.A. If the ratio is high — meaning that home prices are beyond their fundamental value based on expected rental revenues — that points to a bubble. Again, let's look at history. Two previous peaks were in December 1989, with a ratio of 14.8 to 1, and in February 2006, with a ratio of 24.4. According to Zillow, the current price-to-rent ratio in L.A. was 17.1 in May, which is far below the 2006 bubble level but still higher than any time before 2003. That doesn't worry me, though. A high ratio doesn't spell danger for Los Angeles because, similar to New York (ratio: Manhattan 25, Brooklyn 23) and San Francisco (ratio: 21), it's now a "superstar" city. L.A.'s size, amenities, weather and geography make its houses an investment target for the global elite. Wealthy individuals from all over the world don't care that it might make more financial sense to rent, because they're not simply buying Los Angeles houses to live in them, they're also trying to diversify their financial portfolios. Even though Los Angeles is one of the least affordable cities in the U.S., all factors indicate that it is not in a housing bubble. Of course the bull market will end eventually, but that doesn't mean we're heading for a devastating crash, like in 1990 or 2007. Whether you should put up a million bucks for that bungalow is another story. (From Los Angeles Times,by William Yu)

International Sales: $ 68.2 Billion in 12 Months Ending March 2013
Posted: Thursday, May 15, 2014
The dollar volume of purchases by residents and non-residents is estimated at $ 68.2 billion for the 12 months ended March 2013. This accounts for about 6.3 percent of total existing home sales of about $ 1 trillion over the same period. Possible reasons for the decline in sales from the previous year are (1) the slowdown in economic growth of countries of origin of international clients, (2) weak economic recovery and job growth in the U.S., (3) changing trends in U.S. prices and (4) unfavorable changes in exchange rates. Canada, China, India, Mexico and the United Kingdom remain as the major sources of purchasers. However, it is not unusual to find potential buyers from a wide variety of countries. Florida, California, Arizona, Texas, and New York are the top preferred locations based on the number of reported purchases, with many other states receiving at least some degree of interest from foreign buyers throughout the U.S. The bulk of in ternational purchases are single-family homes for residential purposes. Location appears to be the primary factor affecting residential home purchases, depending on the buyer’s employment, vacation preferences , family, educational, and investment objectives. Personal contacts and referrals are the sources for the majority of business opportunities obtained by REALTORS. In this regard, cultural affinity, language skills, and the need by the purchaser to understand U.S. customs and practices as related to real estate are important factors in bringing about a successful transaction. On the buyer side, the market seems to require specific REALTOR skills and experience in dealing with international buyers. On the seller side, REALTORS who handle relatively few international transactions can obtain information that may be helpful. NAR’s Commercial & Global Services Group can help REALTORS enhance their skills in navigating the challenges of dealing with international clients; extensive information is available at the website. Approximately 53 percent of reported purchases by Chinese buyers were in California. About 92 percent of reported purchases were in the urban and suburban areas. According to information from realtor.com as of March 2013, the five markets of greatest interest to potential Chinese buyers are Detroit, Los Angeles, Irvine, Las Vegas, and Orlando. Based on data from the survey, international clients from China purchased approximately an even mix of detached single-family and multifamily housing . The median price was $ 425,000 with about 69 percent of purchases reported as all-cash purchases

Study: Immigrants Fared Better than Native Homeowners in Recession
Posted: Tuesday, November 12, 2013
A new study from the University of Southern California Lusk Center for Real Estate reveals that immigrant Asian and Latino homeowners were more successful at holding onto their homes during the Great Recession than native-born homeowners. Gary Painter, research director for the USC Lusk Center for Real Estate who co-authored the report with associate professor Zhou Yu, noted that while most homeowners took an economic hit during the recession, the decline in homeownership and headship rates was much slower for immigrants. In fact, in some metro areas, there was no decline at all among the immigrant population. “In 2007-2009, we had this shock in both housing and jobs and expected the more vulnerable population of immigrants to suffer the most. This wasn’t the case,” Painter said. “Immigrants came through the recession in a much better position than their native-born counterparts.” Painter, who has spent 15 years studying the ever-growing importance of the immigrant population on the U.S. economy, says the study primarily looked at the data itself and not the factors behind immigrant populations’ successful navigation of the recession. However, a number of demographic trends occurring at the time surely played a role. “When the recession hit, there were fewer immigrants coming into the country,” Painter said. “That meant the immigration population here was more mature and settled, while any newcomers would have most likely rented.” He continued, “A second reason is that immigrants have always been more geographically mobile and may have been able to move away more quickly to find jobs in areas that weren’t hit as hard by the recession.” Painter also noted that recent immigrants were unlikely to be exposed to the most egregious abuses of subprime mortgage lending. Painter expects research into immigration and its effects on the economy to continue gaining in importance since current population trends predict the majority of population growth in the United States—over 100 million people in the next 40 years—will come from immigration. The Lusk Center study was funded by the Russell Sage Foundation and used data from the U.S. Census Bureau’s American Community Survey. The authors reviewed the top 20 U.S. cities in terms of immigrant population and an additional 60 cities that represent a cross section of smaller metropolitan areas across the country. The authors also reviewed records on home foreclosures from the Federal Reserve and unemployment data. (From DSNEWS.COM)

Real Estate Tourism: Who's Really Buying America's Homes?
Posted: Saturday, March 16, 2013
Since the housing bust, foreign buyers have flooded the U.S. housing market, taking advantage of favorable exchange rates, weaker prices and, in some cases, record-low mortgage rates. Foreign nationals accounted for $82.5 billion, or 8.9%, of the $928 billion spent on U.S. residential real estate from April 2011 through March 2012, according a June survey from the National Association of Realtors. That was up 24% from $66.4 billion the previous year. More than 50% of sales over the past year occurred in just five states: Florida, California, Texas, Arizona and New York. Chinese are also shopping in the U.S. in growing numbers. Buyers from mainland China and Hong Kong account for over $7 billion in sales annually, or 11% of international sales activity in the year to March, according to NAR, making them the second-largest foreign buyers of U.S. homes. The influx of newly minted millionaires has inspired developers to reserve units on floors with the number ‘eight’ in new condo projects — like Manhattan’s One57 — for Chinese buyers (Chinese consider eight to be a lucky number), and real estate brokers are embarking on overseas marketing trips that have resulted in big-ticket purchases like Beverly Hills’ $34.5 million Wehba Mansion. If the Chinese are the second-largest foreign buyers of U.S. homes, who’s No. 1? Our neighbors to the north in Canada. Canadians accounted for 24% of sales to foreigners in the year to March, according to NAR. And it’s not likely to let up: Realtor.com says Canadians account for the most international search activity on the listing site every month in nearly all of major U.S. metro areas. Canadians have been a dominant purchasing force in hard-hit Sunbelt states like Arizona and Florida. A relatively weak greenback coupled with low home prices represents an opportunity to scoop up a home that could be used for vacations now and retirement later. Canadians have also been buying in the Midwest, including Chicago. “Close proximity to Canada makes it an easy place for Canadians to invest money,” says Bob Krawitz of RE/MAX Signature in Chicago. He says interest runs along all price points, from distressed properties that can be fixed up and rented out to seven-figure mansions along Lakeshore Drive. (From forbes.com)

2012 a Banner Year for Housing Affordability
Posted: Thursday, January 10, 2013
Last year was probably one of the most affordable years ever to buy a house as prices bottomed and mortgage interest rates hit record lows. The National Assn. of Realtors reported that 2012 will probably go down as a record year for housing affordability, according to its affordability index. That measure, which is calculated based on the median home price, family income and the average mortgage interest rate, stood at 198.2 in November. The higher the index number, the more purchasing power available to consumers. A reading of 100 is the point at which a family with a median income can afford a median-priced home presuming a 20% down payment. For the entire year of 2012, the group projects the index will hit an average of 194, the highest it has been since recordkeeping began in 1970. While homes may be affordable and mortgage interest rates low, 2012 was also marked by low inventory, steep competition for homes and tight mortgage lending standards. These conditions shut out many families still struggling from the recession. Many of the most successful buyers were firms and investors paying cash for properties. (from Los Angeles Times)

Home Prices Will Gain 4% a Year Over Next Five Years
Posted: Wednesday, May 30, 2012
-- Ten hard-hit housing markets will record double-digit price increases through 2013, according to a report Wednesday. And with mortgage rates low, many house hunters have already started to pounce on bargains, said David Stiff, chief economist at Fiserv, a financial analytics company that prepared the forecast. "Some markets may have overshot to the downside, and people are jumping in to try to catch the bottom," Stiff said. Nationwide, home prices will start rebounding late this year and gain an average of 4% a year over the next five years, Fiserv projects. In a separate report released Wednesday by the National Association of Realtors, the national median home price declined by just 0.4% in the three months ended March 31 compared with the same period in 2011. About half of the 146 metro-area markets surveyed by NAR showed a price increase, as buyers make inroads into the supply of homes for sale all across the country. National inventory has dropped by 22% compared to a year earlier. "Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future," said Lawrence Yun, NAR's chief economist. Home prices will also be driven higher as banks opt for short sales instead of repossessions. Repossessed homes sell for between 25% and 50% less than comparable homes sold by conventional sellers, according to Daren Blomquist, a spokesman for RealtyTrac, which markets foreclosed properties. Bank repossessions often go through lengthy foreclosure processes and long periods of vacancy, during which they may deteriorate and lose value. Fiserv's Stiff forecasts that Madera, Calif., will produce the largest home price gain over the next two years. This market bubbled during the housing boom, with the median home price jumping above $300,000, according to the National Association of Home Builders. Prices have since tumbled 53% off their peak, to about $125,000. Fiserv is projecting a price jump of 21.5% by the end of 2013 with 16.5% of that increase coming next year. (CNNMoney)

Homeownership More Affordable Than Renting
Posted: Sunday, April 8, 2012
After years of home price declines and tightening rental markets, homeownership is now more affordable than renting in all but two of the 100 largest metros – even in expensive real estate markets such as New York, Los Angeles and Boston, according to Trulia. Only in Honolulu and San Francisco is renting often a better deal than buying. However, buying a home in these markets might make sense for people who plan to stay in their next home for at least five years and can benefit from the mortgage-interest tax deduction. Trulia’s Winter 2012 Rent vs. Buy Index, which tracks whether it is more affordable to rent or buy a home in America’s 100 largest metropolitan areas, is based on asking prices for rental units and for-sale homes on Trulia.com between December 1, 2011, and February 29, 2012. The index reveals the relative cost of renting versus buying for similar homes in similar neighborhoods. In the San Francisco Bay Area, homeownership is most expensive relative to renting in San Francisco, the Peninsula (San Mateo County) and in the South Bay (Santa Clara County). In the East Bay (Alameda County and Contra Costa County), where vacancies are higher and foreclosures more common, buying looks even better relative to renting than in the rest of the Bay Area. But the region overall has become more affordable, especially in San Francisco and San Mateo counties, where the price-to-rent ratio dropped more than three points between Winter 2011 and Winter 2012. Even in real estate markets where buying is generally cheaper than renting a home, renting might actually be a better deal on a larger house. In most major metros, the price-to-rent ratio is lower for smaller homes, so buying seems even more affordable relative to renting for a one-bedroom or studio home than for a home with three or more bedrooms. In fact, renting a home with more than two bedrooms can be less expensive than buying in New York, NY-NJ and San Francisco. Size, however, factors less into the rent versus buy decision in Chicago and Miami. (By Trulia)

Emotional Mistakes Homeowners Make
Posted: Friday, March 2, 2012
The greatest hindrance to the sale of a home can be a seller who is seized by emotion. Home sellers who allow emotions and sentimental attachments to overtake them during the sales process run the risk of making hasty, sometimes poor decisions. One is to overprice the property. Getting top dollar is the dream of every home seller. But getting a buyer to pay a premium for features that are valuable only to you? That's closer to fantasy, according to Tracie Hamersley, associate broker at Citi Habitats in New York City. "Overpricing often occurs because of emotional reasons," Hamersley says. "So many sellers make the mistake of thinking that their home is special and that a special buyer will pay more because they also fell in love with the property." The truth is prices have nothing to do with the seller's emotional affinity for the property, and according to Hamersley, it's important sellers understand that as early as possible. Sellers who bought at the top of the market likely won't see that same price from today's buyers. "It's a different market," Hamersley explains. "If a seller bought their home during the market's peak, they may have to face the unappealing prospect of losing money on the sale in today's market." Another common home-seller error is going to a showing. There are a lot of legitimate reasons why a seller might want to be present for the home's showing. But having a seller there tends to sour the experience for most buyers. (from Mercury News)

Housing Activity Will Improve Slightly in 2012
Posted: Thursday, December 29, 2011
Mortgage rates are expected to remain very low at least through mid-2012, while housing activity improves slightly, according to Freddie Mac’s economic and housing outlook released Wednesday. The outlook also projects fewer single-family home-loan originations but more multifamily lending in 2012. The rental market is likely to lead growth in the lending industry, though parts of the country will also benefit from increased activity in the single-family home market. High unemployment and a glut of foreclosed properties have depressed the housing market in recent years, despite extremely low interest rates that have made borrowing more attractive. “While the headwinds remain strong going into 2012, there are indications the economy and the housing market are gaining ground, albeit slowly,” said Frank Nothaft, Freddie Mac’s chief economist. “All told, next year will be another bumpy ride.” Job growth must accelerate beyond the average monthly payroll gains of 130,000 seen this year through November for the unemployment to decrease significantly. Even then, the mortgage company predicted the unemployment rate will remain above 8% in 2012. Freddie Mac predicts the U.S. economy will grow by about 2.5% next year. (The Wall Street Journal)

Lawmakers to restore higher FHA loan limits
Posted: Saturday, November 26, 2011
Congress has restored higher limits on loans – from $625,500 to $729,750 – backed by the Federal Housing Administration in higher-cost areas. FHA estimates that only a fraction of borrowers living in the nation’s pricier areas will be affected, but lawmakers realize that the ailing housing market cannot afford any impediment toward recovery. President Obama signed the measure into law reinstating the loan limit that expired on Oct. 1. It had been lifted to $729,750 temporarily three years ago at the height of the financial crisis. The current standard, or “floor” loan limit, for areas where housing costs are relatively low remains unchanged at $271,050 for single-family homes. FHA loan limits vary based on an area’s median home price, but all fall within the range of $271,050 and $729,750 for single-family homes. The FHA provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. The agency has also come under increased scrutiny since it said in a report to Congress that it could require a taxpayer bailout. Loans that can be backed by mortgage financing giants Fannie Mae and Freddie Mac, which have drawn more than $170 billion in bailouts, were not included in today’s reinstatement of loan limits.

Buy House, Get a Visa
Posted: Monday, October 31, 2011
The news in the Wall Street Journal under the header “Foreigners' Sweetener: Buy House, Get a Visa,” came as something of a surprise. The body of the piece said two senators, New York’s Charles Schumer (D) and Utah’s Mike Lee (R), were preparing to introduce a bill that would grant foreigners who spend $500,000 or more on a residential property a visa effective for as long as you own such property. These lucky people would be allowed to bring along spouses and any children under the age of 18. There would be no cap on the number of visas granted.

Home Size in 2015
Posted: Wednesday, October 12, 2011
What do builders anticipate the new home size would be by 2015? According to the results of the study, surveyed home builders expect new single-family homes to check in at an average of 2,150 square feet. Current single family homes measure around 2,400 square feet, which is already a decrease from the peak home size in 2007 of 2,521. While the decrease in home size has a lot to do with the recession, many believe that the real estate changes will stick around even after the economy and home values get back on solid ground. Although affordability is driving these decisions, smaller homes are a positive for builders. It allows for more creative design, more amenities, better flow. It’s an opportunity to deliver a better home. (By Zillow)

Vincent Was Recently Interviewed by LA 18
Posted: Sunday, September 25, 2011
As an experienced Realtor, Vincent Ruan was recently interviewed by LA 18, the award-winning television station. The piece has been aired. Please click the link to see the program. http://youtu.be/KTxROitSaU0

Top 10 Walkable Cities
Posted: Wednesday, August 3, 2011
Walk Score ranked the 50 largest U.S. cities by how easily residents can walk to amenities like shops, restaurants and parks, on a scale of 1 to 100. The following are top 10 walkable cities in the US: **1. New York (85.3) **2. San Francisco (84.9) **3. Boston (79.2) **4. Chicago (74.3) **5. Philadelphia (74.1) **6. Seattle (73.7) **7. Washington, D.C. (73.2) **8. Miami (72.5) **9. Minneapolis (69.3) **10. Oakland (68.2) ###(Source: Walk Score)

How to Tell if Housing Market Has Hit Bottom
Posted: Friday, June 24, 2011
According to a statistical analysis performed for the Wall Street Journal by the online real-estate information and search firm Zillow, home values in a handful of communities are where they were just before the most frenzied days of the real-estate bubble. How to tell if housing market has hit b ottom? Here are three big factors to look for. If your community shares any of these traits, you may already be on the rebound. ****(1) Employment. Clearly, the No. 1 factor in determining whether a community has passed through the worst of the housing debacle is its current state of employment. There has always been a connection between the local jobs picture and the local real-estate market, but it's even greater today. The official U.S. unemployment rate was still a very high 9.2% as the prime home-shopping season began in March. ****(2) Rents. Local rents are very strong indicators of real-estate values. Home prices in most communities that have best weathered the downturn tend toward the low-rent end. That is, they have lower price-to-rent multiples, and house hunters will often find it cheaper to buy properties than to rent them. Look at a typical "rent vs. buy" calculator available on many real-estate or personal-finance websites. Most calculators figure that if prices are more than 15 times annual rents, then a market favors renters; under 15 times, buyers. ****(3) Foreclosures. Healthier communities have fewer foreclosed properties pulling down values of other homes. Just as jobs fuel the local housing engine, foreclosures put on the brakes. Even in good times, one foreclosed property in a neighborhood can bring down the values of every other house around it. And, in bad times, entire metropolitan areas can be swamped by abandoned, foreclosed houses. In 2010, the worst year so far, about 2.23% of all the homes received a foreclosure filing, according to RealtyTrac, an Irvine, Calif., firm that monitors foreclosed properties. In Las Vegas, the poster child of the Sun Belt's real-estate bust, the foreclosure rate was 12%, more than 80% of homes are worth less than their mortgages and values are down more than 50% from their peak.

Short Sale Study on Suspicious Sale
Posted: Sunday, June 5, 2011
CoreLogic recently announced the release of its 2011 Short Sale Research Study, “CoreLogic Analysis on Short Sale Trends, Risks, and Opportunities.” “This study reveals that short sales that show another sale transaction closing on the same day account for 16 percent of all suspicious short sales in the industry. These same-day resales are on average $50,000 greater than the lender agreed upon short sale price,” said Tim Grace, senior vice president of Product Management and Analytics at CoreLogic. “The study also validates an industry perception related to Limited Liability Company buyers in short-sale transactions: while they comprise only two percent of all buyers, they comprise more than 25 percent of buyers in suspicious short-sale transactions.” “Suspicious” short-sale transactions are those where a lender may have incurred unnecessary losses due to the short sale transaction quickly followed by a resale transaction for a substantially higher price where that higher price is not supported by an underlying increase in property value. The focus of the study was to quantify the potential losses associated with these suspicious short-sale transactions. Key findings from the study include: **It is estimated that lenders, servicers, and investors may incur potential losses in excess of $375 million in 2011 due to suspicious short sale transactions. This is up more than 20 percent from $310 million in estimated losses for 2010. **Rates of suspicious transactions are on the rise. In the first half of 2010, approximately one in every 52 (1.9 percent) short sale transactions appears to be suspicious, wherein the lender may have incurred unnecessary loss. **Some of the states with the largest short sale volume (California, Arizona, Colorado, and Florida) are now the same states with the highest rates of suspicious short-sale transactions. This convergence results in maximum negative impact on the industry.

Buying More Affordable Than Renting
Posted: Monday, May 16, 2011
Buying more affordable than renting in 80 percent of largest U.S. cities The latest Rent vs. Buy Index by Trulia shows that buying a two-bedroom apartment, condominium, or townhouse is more affordable than renting in 80 percent of the 50 largest cities in the U.S. Only in New York, Fort Worth, and Kansas City was renting a less costly option compared with buying. Key findings include: **Current market conditions consisting of steadily rising rents, falling home prices and low mortgage rates have tipped the rent versus buy scale in favor of homeownership. **Price:Rent ratios in Fresno, Omaha, and San Jose experienced the largest quarter-over-quarter movement in favor of homeownership. **Aspiring homeowners in Los Angeles, Seattle, Boston, San Francisco, Portland, and Oakland face a bigger challenge when it comes to deciding between renting and buying a home. The cost of homeownership in these coastal cities continues to be more expensive than renting; however, it may make more financial sense to buy depending on the situation.

Mass Joinder Lawsuits
Posted: Tuesday, April 19, 2011
The DRE recently issued a consumer alert warning consumers about marketing companies, unlicensed entities, lawyers, and so-called attorney-backed, attorney-affiliated, and lawyer referral entities that offer and sell false hope and request the payment of upfront fees for so-called “mass joinder” or class litigation that will supposedly result in extraordinary home mortgage relief. The California Department of Real Estate (“DRE” or “Department”) previously issued a consumer alert and fraud warning on loan modification and foreclosure rescue scams in California. That alert was followed by warnings and alerts regarding forensic loan audit fraud, scams in connection with short sale transactions, false and misleading designations and claims of special expertise, certifications and credentials in connection with home loan relief services, and other real estate and home loan relief scams. The Department continues to administratively prosecute those who engage in such fraud and to work in collaboration with the California State Bar, the Federal Trade Commission, and federal, State and local criminal law enforcement authorities to bring such frauds to justice.

Short Sales Foreclosures Impact on FICO Scores
Posted: Tuesday, April 19, 2011
FICO recently released research findings that explore the impact short sales and foreclosures have on FICO scores. The study simulated various types of mortgage delinquencies on three representative credit bureau profiles of consumers scoring 680, 720, and 780, respectively. The profiles focused on consumers whose credit characteristics – utilization, delinquency history, age of file – were typical of the three score points considered. All consumers had an active currently-paid-as-agreed mortgage on file. Key findings from the study include: The magnitude of FICO® Score impact is highly dependent on the starting score. There's no significant difference in score impact between short sale/deed-in-lieu/settlement, and foreclosure. While a score may begin to improve sooner, it could take up to 7-10 years to fully recover, assuming all other obligations are paid as agreed. In general, the higher starting score, the longer it takes for the score to fully recover.

Posted: Monday, April 18, 2011

Posted: Monday, April 18, 2011

Posted: Monday, April 18, 2011

Common Foreclosure Myths
Posted: Wednesday, March 30, 2011
Myth 1: If my house is foreclosed, I can never buy a house again -- the foreclosure will stay on my record forever. Truth 1: Foreclosure can have a devastating effect on your finances and you personally, but you can recover. Use the time after foreclosure to prepare yourself for successful homeownership the second time around by creating a spending and savings plan and rebuilding your credit. Myth 2: I should stop paying my mortgage so I can get assistance with my mortgage payments. Truth 2: Stopping payment on your mortgage only hurts your situation and can expose you to foreclosure and credit difficulties that could require years to rebuild. Myth 3: If I'm late on my monthly payments, I'll lose my house. Truth 3: If you have a financial hardship and fall behind, it's possible to keep your house and get back on track if you contact your lender as soon as possible to discuss your options. You can also contact a HUD-approved housing counselor by calling the Homeowner's HOPE Hotline at 888-995-HOPE (4673). Myth 4: I am getting many offers for help from a variety of people. They are probably all scams. Truth 4: Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their home. It's important to always open and respond to communications from your lender, particularly if you've already missed a mortgage payment. In addition, if you are in a financial crisis or facing foreclosure, make sure you work with your lender or a HUD-approved counseling agency to avoid common scams. Myth 5: My lender is not responding to my inquiries, so I should just give up and face foreclosure. Truth 5: Whatever you do, don't walk away, and don't give up. It may take several attempts to reach your lender because their call volume can be very high. -- Freddie Mac

Homeownership more affordable than renting in 72 percent of major U.S. cities
Posted: Sunday, February 6, 2011
It is more affordable to buy than to rent a two-bedroom home in 72 percent of America’s 50 largest cities, according to Trulia.com’s latest Rent vs. Buy Index. Meanwhile, a nation of renters has emerged as more Americans rent by choice or due to unforeseen financial difficulties. In contrast to this nationwide trend, renting is only less expensive than buying in four of the cities included in this study – namely New York, Seattle, Kansas City, and San Francisco. The remaining 10 cities are locations where buying still may be a financially sound long-term decision, despite the relative affordability of renting.

Reverse Mortgages Guidance
Posted: Friday, April 22, 2011
The Federal Housing Administration (FHA) has released guidance to homeowners and lenders that use the reverse mortgage or Home Equity Conversion Mortgage (HECM) program and are dealing with outstanding property taxes and unpaid hazard insurance premiums. FHA’s guidance is intended to assist elderly borrowers who have neglected to pay these expenses and may face foreclosure. HUD regulations allow lenders to make tax and insurance payments on behalf of their elderly clients from the borrower’s available mortgage funds. However, once those resources are exhausted, the lender must advance funds to protect FHA’s interest and obtain reimbursement from the borrower. Over time, however, these unpaid debts and lender advances have resulted in an untenable situation that could put the FHA Insurance Fund at risk and result in foreclosure proceedings against delinquent seniors. While the guidance issued today is intended to help elderly homeowners avoid foreclosure, lenders may have no choice if these defaults are not cured. FHA’s Mortgagee Letter applies to all HECM loans where the lender/servicer advanced corporate funds to satisfy an unpaid property charge on behalf of the borrower. It reminds lenders that foreclosure is to be a last resort when dealing with their elderly clients. It also includes sample letters that lenders may use to make certain borrowers understand that property tax and hazard insurance are required expenses that must be paid even though the homeowner owes nothing on their mortgage loan.

Study Analyzes Recession
Posted: Sunday, March 13, 2011
The Great Recession of 2007 to 2009 created new declining cities, and posed further difficulties for cities already in decline. Some cities may not re-attain home price peaks for many years, and could see some neighborhoods cease to be viable economically, according to a study released from the Mortgage Bankers Association (MBA). The study analyzes the recession's impact on real estate markets in cities in the midst of a severe and persistent economic decline. The study includes detailed statistical analysis of trends in U.S. metro areas over the past 40 years, paying particular attention to seven large metro areas since 2000, and a comprehensive review of existing academic research on this topic.