A mericas continued housing troubles are plaguing new home builders as they announce their worst year ever.

WASHINGTON (AP) — Fewer Americans bought new homes in December. The decline made 2011 the worst year for new-home sales on records dating back nearly half a century.

The Commerce Department said Thursday new-home sales fell 2.2 percent last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy.

About 302,000 new homes were sold last year. That’s less than the 323,000 sold in 2010, making last year’s sales the worst on records dating back to 1963. And it coincides with a report last week that said 2011 was the weakest year for single-family home construction on record.

The median sales prices for new homes dropped in December to $210,300. Builders continued to slash price to stay competitive in the depressed market.

Still, sales of new homes rose in the final quarter of 2011, supporting other signs of a slow turnaround that began at the end of the year.

Sales of previously occupied homes rose in December for a third straight month. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might consider buying this year. And home construction picked up in the final quarter of last year.

“Although this decline was unexpected, it does not change the story that housing has likely bottomed,” said Jennifer H. Lee, senior economist at BMO Capital Markets.

Ian Shepherdson, chief economist at High Frequency Economics, said easier lending requirements, historically low mortgage rates and improved hiring all point to consistent, albeit slow, rises in sales in the coming months.

“A sustained rise in new home sales is imminent,” he said. “Homebuilders say so too, and they should know.”

Hiring is critical to a housing rebound. The unemployment rate fell in December to its lowest level in nearly three years after the sixth straight month of solid job growth.

Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it’s been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales — when lenders accept less for a house than what is owed on the mortgage

Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.

This government program Home Affordable Foreclosure Alternative  initiated in April 2010 was set in motion and expectations were high.

Every Real Estate Agent and Broker experienced in the Short Sale Process or lack there of, had a “spring in their step” expecting the lengthy short sale process to be expedited and streamlined; as it was so eloquently promised in it’s November 2009 introduction by the US Treasury.

OK, so we all agree that BofA sucks at HAFA…so what about the other banks…

The Scorecard according to HousingWire.com:

JPMorgan Chase  is the programs leading performer, completing nearly 3,600 through the program, including nearly 1,000 in June alone.

Wells Fargo  was second, completing more than 3,100 since the program launched and roughly 700 in June.

Bank of America  completed 1,873 HAFA transactions, an increase of roughly 200 in the month.

Let’s hope for increased efforts by BofA in the future months, considering that BofA “handles” over 40% of America’s mortgages.

Till next time,

Kris

More news on Failed Loan mods…

The 3.3 million borrowers estimated to be eligible for a Home Affordable Modification Program workout in December 2009 was reduced to 1.4 million by the end of 2010, according to the latest Treasury Departmentestimates.

And not all have made it to a permanent modification.

Since HAMP launched in March 2009, it has run into roadblocks. The Obama administration set an early goal of reaching between 3 million and 4 million homeowners, butthrough December 2010, servicers have started just more than 579,000 permanent modifications. And with the program set to expire at the end of 2012, the Congressional Oversight Panel estimates servicers will end up reaching 800,000 permanent modifications on the high end.

Of the initial 3.3 million estimated to be eligible for the program, servicers have offered 1.7 million trial modifications. But they have so far canceled more than 734,000 trials and rejected another 1 million homeowners from entering one. Trials are canceled and homeowners are rejected because of insufficient documentation or because they’re deemed ineligible.

As of December, there are just more than 152,000 active trial modifications, according to the Treasury.

More than 26% of those, or 39,800 loans, have been stuck in the trial stage for more than six months.

Bank of America (BAC: 13.73 +0.96%) holds most of them. In fact, BofA holds 12,700 trials that were initiated at least six months ago. The second most belongs to the combined portfolios of the other Fannie Mae and Freddie Mac independent servicers. They hold roughly 8,300 aged trials. The next highest bank is CitiMortgage, the servicing arm of Citigroup (C: 4.82 +2.12%). It holds 3,600 aged trials.

Looking at the individual portfolios of participating servicers, the amount of estimated HAMP-eligible loans at BofA has shrunk from more than 1 million at the end of 2009 to slightly more than 400,000 by December 2010. BofA currently holds 90,200 active permanent HAMP modifications.

There has been drastic reductions at other major lenders as well. JPMorgan Chase (JPM: 44.94 +0.90%) has seen its amount of HAMP-eligible loans fall from to roughly 195,000 from 424,000 over the same amount of time. Citi(C: 4.82 +2.12%) HAMP-eligible loans dropped to 97,000 from 241,000, and Wells Fargo (WFC: 32.42 +1.82%) saw its number reduce down to 166,000 from 350,000 the year before.

Combined, the big-four lenders hold more than 269,000 active permanent HAMP modifications, according to Treasury numbers.

The underwhelming figures have spurred concern among COP and the Special Inspector General for the Troubled Asset Relief Program. Some Republicans have even introduced a bill that would repeal HAMP, severing all contracts between the Treasury and the participating servicers.

The banks seem to be preferring their own programs over HAMP, despite the subsidy from the Treasury. The Hope Now alliance of private lenders modified more than 1.17 million loans through its own programs in 2010 as of November, nearly  triple the 482,000 done through HAMP over the same time period.

Critics such as the members of COP and SIGTARP have stopped short of calling for an elimination of HAMP, but have argued Treasury needs to revamp the program to welcome more borrowers into it and away from the proprietary programs SIGTARP said could hold more ominous terms and conditions and less transparency.

Treasury recently announced changes to its Home Affordable Foreclosure Alternatives program that go into effect Feb. 1. HAFA was built as a component to HAMP that provided incentives to servicers, homeowners and investors for granting short sales and deeds-in-lieu of foreclosure.

While Treasury officials have not confirmed any new changes being considered, voices are growing for more meaningful retooling to a program under siege.

“Treasury’s central foreclosure prevention effort designed to address that goal — the Home Affordable Modification Program— has been beset by problems from the outset and, despite frequent retooling, continues to fall dramatically short of any meaningful standard of success,” SIGTARP said.

Write to Jon Prior.

Thanks Housing Wire.com

http://www.contracostatimes.com/california/ci_16695640?nclick_check=1

Joe Nelson, Staff Writer Posted: While California home sales showed a statewide decline in October, from both the previous month and previous year, some cities in San Bernardino County showed a sharp increase in median home prices, according to data released Tuesday.In October, home resale activity statewide declined 3.5 percent to a seasonally adjusted rate of 450,360 homes, down from September’s revised pace of 466,930 homes. The pace was down 19.6 percent from the sales pace recorded in October of last year, according to data compiled by the California Realtors Association from more than 90 local realtor associations across the state.

The decline reflects a seasonal decline in home sales typically occurring around this time of year, combined with prevailing worries among potential homebuyers over the economy and job security, said Beth L. Peerce, president of the California Realtors Association, or CAR.

“The significant year-over-year sales decline also reflects particularly strong sales in October and November 2009, as buyers rushed to beat the then-anticipated federal tax credit expiration at the end of November 2009,” Peerce said in a statement Tuesday.

But while October showed a statewide decline in home sales, median home prices in some cities or towns across the county and Inland Empire showed some pretty substantial increases.

Among the communities showing increased median home prices in October over the previous year include Yucca Valley, San Bernardino, Highland, Colton, Pomona and Montclair. Yucca Valley showed a more than 40 percent increase in median home prices compared to October 2009, San Bernardino showed a 29 percent increase, Highland a 28 percent increase, Colton an 18 percent increase, Pomona a 21 percent increase and Montclair a 17.3 percent increase, the data shows.

CAR attributes the increases to a principle law of economics: supply and demand. Affordability of homes in these areas is at their lowest in years, more so than other areas, and many investors and first-time homebuyers are taking advantage of the opportunity, said Leslie Appleton-Young, CAR’s chief economist.

“It reflects a strong demand on the part of first-time homebuyers and investors,” said Appleton-Young. “There’s very good value in those communities because prices are down significantly, and so you have a lot of competition for the properties that are available.”

In San Bernardino and Riverside counties, the median home price, as of October, was $189,910 – 0.6-percent less than the previous month but 10.7 percent more than October 2009. In the High Desert, the median home price in October was $125,060, up 0.1 percent over the previous month and 5.5 percent over October 2009, according to CAR’s data.

One local real estate agent says the data is flawed because it does not show the year-over-year data of the quantity of homes sold in each city.

“While the home prices may be up in some areas, we may have only sold two homes in Yucca Valley this year versus 100 homes last year. So that would skew the pricing tremendously,” said Ontario-based real estate agent Kris Darney. “We have to be able to compare the number of homes sold in one area over a time period to the number of homes sold over another time period.”

The median home price of an existing, single-family detached home in California in October was $304,220, down 1.8 percent from September’s $309,720. October’s median price was up 2.3 percent from the $297,500 median home price in October 2009, according to CAR’s data.

It’s reflective of different housing markets – one at the lower-end driven by first-time homebuyers and investors, which is keeping prices stable, and one with nostalgic sellers who set unrealistic asking prices, Appleton-Young said.

“Sellers need to consider current market conditions when pricing their home in order to facilitate a shorter time on the market,” she said.

But Darney doesn’t attribute the problem to sellers as much as the lenders. He said banks have tightened their lending practices, especially the Federal Housing Administration, making it harder for people to get loans.

“We’re seeing a tremendous downslide in buyer activity, and that, with an increase in the number of homes that are on the market, is why we’ve seen a drop in home prices,” Darney said. “We have a number of homes that are priced very competitively that are literally not seeing any activity in the Inland Empire and San Bernardino market. That being said, it’s becoming more and more difficult for buyers to get approvals from the major lenders.” ]]> http://shortsalesellit.com/the-darneys-are-interviewed-in-the-contra-costa-times-c-a-r-reports-sharply-increased-home-prices/feed/ 0 http://shortsalesellit.com/treasurys-hafa-program-falls-short-at-end-of-3rd-quarter/ http://shortsalesellit.com/treasurys-hafa-program-falls-short-at-end-of-3rd-quarter/#comments Mon, 25 Oct 2010 23:38:19 +0000 Admin http://shortsalesellit.com/?p=1995 Breaking news!

Today it was reported to congress, at end of 3rd quarter 2010, Home Affordable Foreclosure Alternative (HAFA) successfully completed 342 Short Sales or Deed’s in Lieu…report.

The HAFA program was introduced April 5, 2010…with Freddie Mac and Fannie Mae following up in August 2010 with their versions of HAFA.

OK…I’ll say it…thats just pathetic!

Why?

When you realize that in September 2010 U.S. banks foreclosed on 100,000+ homes…a record number of foreclosures, the 342 successful HAFA Short Sales and/or deed in lieus were processed…well, to say that HAFA is anything less than a failure would be kind hearted.

More to come…

• Foreclosure starts increased by 12% to nearly 275,100
• Completed Foreclosures increased 15% to 112
• Decrease in Loan Mod Failures i.e. going 60 days late after loan mod granted…less than 10%

Fannie Mae & Freddie Mac Short Sale and Loan Mods have increased dramatically in their efforts to stop foreclosure activity.

Here’s a link to today’s release http://www.fhfa.gov/webfiles/16691/2q2010ForeclosurePrevention91010PRF.pdf

and a link to the quarterly report  http://www.fhfa.gov/webfiles/16687/2q10fprfinal.pdf

Read on!

Kris

Bea Garwood has been bracing for foreclosure since May, but she says she’s been told three times to expect a sheriff’s sale in the next month and it still hasn’t happened.

“We really at this point do not know where we are in the process,” said Garwood, who lives in Pinckney, Mich. with her husband. “We have no clue. We haven’t even heard from Chase bank in three weeks.”

The Garwoods may have had a lucky spin in the game that industry analyst Sean O’Toole calls “Foreclosure Roulette.”

Banks don’t want to recognize losses by having to put homes on the market at foreclosure-sale prices, but they don’t want to encourage borrowers to quit making payments either, so, O’Toole believes, they randomly foreclose on some people to prevent widespread “moral hazard.” The rest are left hanging with the help of the government’s “extend and pretend” approach to the collapse of the housing bubble.

“We just don’t have the political appetite to bail homeowners out,” said O’Toole, CEO of ForeclosureRadar.com. “On the other hand, we don’t have the political appetite to kick them out.”

Last year the Garwoods tried to modify the mortgage on their Pinckney, Mich. home under the Obama administration’s Home Affordable Modification Program, which is supposed to put eligible borrowers into a three-month trial period before making the modification “permanent” for five years. The Garwoods’ trial period dragged on for nine months before they received a letter of rejection in March. They’ve been waiting anxiously since then for the day they will finally lose their house.

It may be a while. The average foreclosure now takes 469 days, according to Lender Processing Services, whereas it took 319 days at the beginning of 2009. Many industry analysts say that is due to the Troubled Asset Relief Program, HAMP, and federal accounting-rule changes.

“We weakened accounting standards to allow banks to keep non-paying mortgages in their books at full value,” wrote economist Dean Baker, co-director of the progressive Center for Economic and Policy Research. “Banks also know that they are looking at glutted markets right now, so they have little incentive to take possession of a home and then try to sell it. And, the HAMP and other programs mostly delay foreclosures and hand money to banks, instead of keeping people in their homes.”

American Banker reported last week that the procrastination on foreclosures could backfire: “With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data. It also may increase the likelihood of more strategic defaults.”

Of the 1.5 million trial offers made by servicers participating in HAMP, 616,839 have resulted in cancellations, while only 434,716 have resulted in permanent modifications, according to government data released in August. But Treasury officials have said even if a person isn’t able to stay in his or her home, HAMP is a success if assists that person in “transitioning with dignity to more suitable housing.”

Borrowers rejected from HAMP are sometimes confused, as the Garwoods are, about the reason for their rejection. (Chase has declined to comment on the Garwoods’ situation.)

“There’s still a lot of uncertainty about why certain homeowners are receiving help in HAMP and others are not,” said Diane Standaert, legislative counsel with the Center for Responsible Lending. Standaert said policymakers should consider allowing bankruptcy judges to write down mortgage principal (a process sometimes known as “cramdown”). “I think this new game of casino that lenders and servicers are playing with homeowners…is not going to cut it.”

An acronym soup of programs followed, which were promoted as providing help for America’s homeowners: HAMP, HAFA, HARP, 2MP and more. But the reality is that, to date, these programs have resulted in little more than delays.

The government and lenders say that these failures are due to complexities of implementation, difficulty reaching homeowners, and a sundry other things. But what if these programs were never intended to succeed?

What if they were simply intended to create delays, provide false hope, and maybe get the banks a bit more cash out of homeowners in the form of trial loan-modification payments?

I spoke last week at a real estate investment club and shared with the audience my belief that foreclosures will trickle out over a very long time rather than come as a wave of foreclosures as others continue to inaccurately predict.

I do, however, understand the nature of those predictions. Given the number of households that aren’t paying their mortgage (delinquencies), we should be seeing a massive wave of foreclosure notices and ultimately foreclosure sales. It’s a logical conclusion.

But this has become a political problem in a world of financial fantasy, so I don’t believe that simple logic applies.

The reality is that through financial engineering (interest-only, subprime, swaps, option adjustable-rate mortgages, negative equity, stated-income loans, etc.) we created trillions in excess mortgage debt that has left millions of homeowners underwater, financial institutions on the brink of collapse, and the Federal Deposit Insurance Corp. nearly insolvent.

Back in September 2008 it became clear that financial collapse was imminent, and the federal government did what it does best: bailed out those who caused the crisis while leaving taxpayers holding the bag for the losses.

Pulling this hat trick off required one simple ruse — getting everyone to believe that those losses ultimately wouldn’t be very big.

To do this, the government changed the rules. The FDIC, which previously forced banks to get bad assets off their books, became a leading proponent of saving homeowners with loan modifications that likely just delay the inevitable.

With a little government pressure, the supposedly independent Federal Accounting Standards Board allowed banks to account for loans at theoretical values that were based on computer models rather than current market value.

An acronym soup of programs followed, which were promoted as providing help for America’s homeowners: HAMP, HAFA, HARP, 2MP and more. But the reality is that, to date, these programs have resulted in little more than delays.

The government and lenders say that these failures are due to complexities of implementation, difficulty reaching homeowners, and a sundry other things. But what if these programs were never intended to succeed?

What if they were simply intended to create delays, provide false hope, and maybe get the banks a bit more cash out of homeowners in the form of trial loan-modification payments?

Sounds like a crazy conspiracy theory, I know, but hear me out.

The problem faced by both lenders and the government is that they can neither afford to kick homeowners out nor bail them out.

For lenders, either scenario forces losses to be recognized, while — thanks to mark-to-model accounting rules, and little or no pressure to foreclose from the FDIC — they can instead leave nonpaying homeowners in place and push those losses into the future.

Many believe that most major corporations manage earnings — what could be more perfect than getting to choose when, and if, they recognize mortgage-related losses?

For the U.S. government, either scenario is political death. Politicians have no appetite for allowing banks to put families on the street en masse through foreclosure, or for forcing banks to deal with the problem through bankruptcy “cramdowns” or other means.

At the same time, they realize their constituents who do pay their mortgage (or rent) simply won’t stand for a taxpayer-funded bailout of their upside-down neighbor. Instead, it seems they believe bailouts should be saved for the truly deserving, like the executives and corporate shareholders of banks, AIG, GM, etc.

If we aren’t willing to either kick nonpaying homeowners out of their homes, or bail them out, what other option is there? The answer is clear. It’s the same thing we’ve done with national deficits for years. Trade tomorrow for today, with a policy of “extend and pretend.”

I have no doubt this is the present policy, and that this will be the policy for years to come as we work through wiping out the trillions in excess negative equity that was created during the bubble.

A member of the audience during my talk asked if this policy was really possible. After all, we can’t just let nonpaying homeowners stay in their homes forever. If paying homeowners figured that out, everyone would stop paying, and then our financial system would crumble.

I agree, and it’s clear the banks realize this, too. But it is a problem that is easily solved by the diabolical game of Russian roulette.

So long as lenders continue to foreclose on at least a handful of homeowners each month, in what from all appearances is a completely random game of chance, they’ll keep those willing and able to pay their mortgage doing so.

Those who decide not to pay their mortgage will find themselves playing today’s update on the Russian game — Foreclosure roulette — wondering each month whether they’ll get another free month in their prison of debt, or finally be shot down and forced to move.

Only 36,695 homeowners received permanently lowered mortgage payments in July through the much-criticized Home Affordable Modification Program, the smallest increase since December, administration officials said Friday.

And the number of people dropping out of the program continued to soar. Overall, nearly half the homeowners who entered the program since it launched in March of last year have dropped out.
Many had hoped the $75-billion program would be a silver bullet to the foreclosure problem, but it’s turned out to be a dud, said independent banking analyst Bert Ely. That’s not surprising, he said, given the depth of the housing market crash and recession, combined with a slow recovery.

“Even with a substantial reduction in mortgage payment and even some reduction in principal, you still have people who are over their head financially because of their reduced financial circumstances,” Ely said. “Isn’t it time to just rethink this whole business of modification … and let the market clear through foreclosures and short sales?”

The Los Angeles-Orange County area continued to have the most active trial and permanent modifications under the program, with 44,617 total modifications in July, or 6.6% of the national total. But that was down from 48,846 total modifications in June.

The Inland Empire was third nationwide, with 35,169 total modifications in July, or 5.2% of the total.

So far, 434,716 homeowners nationwide have received permanent modifications since the program began last year. The pace had picked up significantly starting in December after administration officials began pressuring mortgage servicers to convert more three-month trials under the program into permanent modifications.

The number of permanent modifications nearly tripled from January to May. Even in June, the administration reported that more than 50,000 new permanently modified mortgages were added.

July’s slowdown in the program’s growth comes amid a struggling real estate market.

During the second quarter of the year, there were a record 269,952 home foreclosures, up 38% from the same period a year earlier, according to Irvine research firm RealtyTrac. Last month, Southern California home sales plunged 21.4% compared with a year earlier, according to research firm MDA DataQuick of San Diego.

“While there has been some stabilization in the housing market, it remains clear that we have more work ahead,” said Raphael Bostic, an assistant secretary at the Department of Housing and Urban Development.

The Obama administration program provides cash incentives to servicers to modify mortgages. Homeowners who qualify first get a three-month trial modification with lower payments. If they make those payments, the modification can be made permanent. Only at that point does the servicer get the incentive payment.

The administration’s stated goal was to modify 3 million to 4 million mortgages through 2012.

The pace of new, temporary mortgage modifications under the program slowed in July, increasing just 1.3% to 1.3 million. Overall, about 47% of trial modifications started since the program began have been canceled. In addition, 12,912 permanent modifications have been canceled, mostly because the homeowner missed at least three straight payments.

Increasing numbers of cancellations were the latest problem for the administration’s modification program, which has been plagued by complaints from homeowners of bureaucratic runarounds by servicers, including lost paperwork and unreturned phone calls.

Herbert M. Allison Jr., the Treasury Department’s assistant secretary for financial stability, said the administration expected cancellations to continue as mortgage servicers work through earlier modifications that were made without documentation. Those stated-income modifications were needed last year because so many people were in need of quick foreclosure assistance, he said.

Many of the homeowners who got those early modifications under the program were removed because it turned out they “did not meet the qualifications for various reasons, such as income levels or the fact that they were not in the home itself,” Allison said.

But many of those who were canceled out of the program have been helped by modifications made outside of the Obama administration program.

For the eight largest mortgage servicers, including Bank of America, CitiMortgage and Wells Fargo Bank, 45% of homeowners whose trial modifications were cancelled received an alternative modification. Wells Fargo reported Friday that 87% of the 520,399 active modifications it had done from Jan. 1 to July 31 were through its own programs.

Administration officials said the housing market had stabilized significantly since Obama took office in January 2009, and stressed that homeowners with permanent modifications had a median payment reduction of 36%, or more than $500 a month.

But Bostic said administration officials are not “in happy land” and that the market was not yet “out of the woods.”

Ely said one flaw with the administration’s modification program is that it does not adequately take into account all the other debts faced by homeowners.

“There’s been this hype that you could wave a magic wand, change a few things [with the mortgage payment] and everything would be hunky-dory,” Ely said. “It’s not playing out this way.”

By Jim Puzzanghera