REAL Trends comment: Is the lack of direction about future tax credits or other housing stimulus hurting the market?

In meetings and discussions with top sales professionals and brokerage leadership over the past two weeks I have heard more than once that there is a sense that some of the decline in sales is due to buyers waiting to see whether there will be additional tax credits or stimulus coming from the Federal government. And, as of this writing, while there is no evidence that such financial stimulus measures are in the offing, it is also likely that at least some buyers may be waiting for just that.

I have also heard from these same leaders that one other challenge is that with interest rates still declining, buyers are waiting to see whether they will drop even more or that credit terms will loosen. This we have seen in the past as more than once the market increased when rates started to rise - and buyers jumped in when they feared that rates would go up quickly.

Whether buyers considering the purchase of a home are thinking this way or not, it is at least possible that we are losing some sales due to these factors. It may be time for policy makers to declare whether any new tax credits or other targeted housing stimulus is in the offing and if not declare that as well. Further while no one wants rates to increase in the near term it could well be that the threat of increasing rates in the future may stimulate some housing sales.

MBA: Delinquencies and foreclosure starts decrease

The delinquency rate for mortgage loans on one-to-four-unit residential properties dropped to a seasonally adjusted rate of 9.85% of all loans outstanding as of the end of the second quarter of 2010, a decrease of 21 basis points from the first quarter of 2010, and an increase of 61 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased two basis points to 9.40% this quarter from 9.38% last quarter.

The percentage of loans on which foreclosure actions were started during the second quarter was 1.11%. The percentage of loans in the foreclosure process at the end of the second quarter was 4.57%, a decrease from the first quarter of 2010.

The combined percentage of loans in foreclosure or at least one payment past due was 13.97% on a non-seasonally adjusted basis, a decline from 14.01% last quarter. The seriously delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.11%, a decrease from last quarter.

Banks modify more than Government

Remember how everyone complained that banks weren't doing enough to help troubled borrowers? Well ... Banks have realized that foreclosing on home after home after home may not be in anyone's best interest -- least of all their own. So they've ramped up the number of loan modifications they're handing out to their delinquent clients. Banks are doing nearly twice as many modifications under their own foreclosure prevention initiatives than under the Obama administration's signature Home Affordable Modification Program, known as HAMP.

Source: CNNMoney.com, Tami Luhby, (08/30/2010)

GSEs to prohibit 'appraisal cutting'

Starting next week Fannie will prohibit lenders that sell loans to it from changing appraisers' valuations--a practice known as appraisal cutting. An underwriter who has an issue with an appraised value must contact the appraiser to resolve any disagreements about the valuation, Fannie told lenders in June.

If it is not possible to resolve an opinion-of-value dispute, then the only option available to the lender is to order a second appraisal. The lender can't just cut the value of the appraisal, which had become a common practice, and the lender cannot shop around for the best (lowest) appraisal either.

A lender can still be conservative about loan-to-value while accepting the appraiser's opinion.

Source: www.nationalmortgagenews.com

Radar Logic: Downturn in home prices, weak demand

Precipitous declines in RPX transaction counts from May to June and declines in new- and existing-home sales from June to July evince weakness in housing demand at a time of year when sales typically increase in a healthy market, according to the June 2010 RPX Monthly Housing Market Report by Radar Logic Incorporated.

The supply of homes for sale increased rapidly in June and July as demand weakened. In dollar terms, the RPX Composite price increased less from May to June than during the same period in any other year since the beginning of Radar Logic's data history in 2000, save for the freefall in home prices during 2008. Over half of the 25 metropolitan statistical areas (MSAs) tracked by Radar Logic posted month-over-month price declines, compared to just two markets last year. On a year-over-year basis, only seven MSAs posted price gains, and some of these markets might not be as healthy as they first appear. Price gains in the most-improved markets were primarily due to a shift in the mix of sales away from heavily discounted foreclosed homes rather than an increase in the value of most homes.