Tag Archives: Real estate pricing

New York Regional NRMLA Conference Offers Useful Information – Part THREE – The Technical Default Process

25 Mar

Day Two of the NRMLA conference provided a useful session by Lorraine Geraci on the art of communication with seniors, with a discussion on the physical aspects of aging and a caution to avoid stereotyping older people.

The second workshop of the day gave a detailed look at technical default presented by representatives of HUD, RMS reverse mortgage servicers, and CredAbility reverse mortgage counseling agency.

Taxes and insurance payments made by reverse mortgage borrowers are tracked by the servicer through a third party.  If they are in arrears, the borrower is contacted within 30 days to discuss cure options:  the overdrawn amount can be paid back on a payment plan, the entire loan can be repaid, or the borrower can execute a deed-in-lieu of foreclosure.

HUD has a program to provide default counseling.  Upon review of the borrower’s budget, a deficit is usually found which the counselor attempts to help rectify.  Borrowers are referred to agencies which provide benefits and are encouraged to apply for available help such as SNAP (food stamps), free cell phones, and home sharing options.  The borrower can usually find $200 in savings in this way.

Many seniors pride themselves in their self sufficiency and are reluctant to participate in public assistance until long after the point at which they qualified.  It often takes three or more sessions with a counselor to achieve maximum improvement.  If money cannot be found through savings in the budget, counselors then discuss asking children or grandchildren for help in meeting budget deficits or in moving to alternative housing.

Loan originators are encouraged to provide information at the time of the initial application about tax reductions, etc, that may be available to the senior borrower.

Of the approximately 1400 default counseling sessions done last year, half were able to successfully get into a repayment plan.

Case Study:

A pilot program in the Philadelphia area has been instituted to help guard against the danger of HECM foreclosure. They began with date they had:  borrowers whose loans were already “due and payable”.  Contact was attempted, first with a telephone call, then a letter, and finally a visit to the property.  A counselor assists with enrollment in benefits programs and all efforts are made to keep the borrower in their home.

The help of HECM servicers was enlisted to obtain data on defaulted borrowers not yet due and payable.  These seniors are enrolled in benefit programs, new less-expensive homeowners’ insurance is put in place, live-in family members are asked to commit money to pay a part of expenses, TV services are bundled into more economical packages.  Perhaps most importantly, the repayment plans can be extended from one to two years, offering flexibility to meet goals more successfully.

Mark Helm from RMS servicing said that 6.7% of their HECM portfolio is currently in tax and insurance default.  75% of these borrowers began with a “constructive default”: they had been in arrears on their taxes and had let insurance lapse before the beginning of the loan.  The majority are insurance defaults.  34% of borrowers in default are on a payment plan now, and if they fail to keep up repayments for 120 days, they are given a second chance.  Of the borrowers on a payment plan, 77% succeed in bringing their account up-to-date.

Of all the defaulted borrowers that are contacted, a number are non-responsive to letters and calls, but an inspection visit can often lead a borrower to begin repayment.  Sometimes an inspection may find the property vacant, in which case a short sale is attempted before foreclosure.  Multiple extensions may be granted.  The usual time frame from “due and payable” to foreclosure is 6 months, with 90-day extensions granted.

The recent rise in home values may offer a chance for borrowers to do a HECM-to-HECM refinance to boost loan proceeds.  Although national home values are reported to be up 10%, HECM REO values are only up 3% due to maintenance issues, making this potential option less viable for some.



New York Regional NRMLA Conference Offers Useful Information – Part TWO – Industry/HUD/FHA Updates

21 Mar

NRMLA President Peter Bell offered welcoming remarks at the General Session Tuesday March 19, 2013.   Guest speakers remarked that 8000 Americans turn 65 every day, and eleven million retirees will not be able to afford household expenses.  Again it was stressed how important a reverse mortgage can be in a wealth management portfolio.  Americans have 50 – 66% of their assets tied up in home equity, while only 2% of those eligible have taken advantage of the HECM product.

Director of HUD Single Family Program Development Karen Hill spoke about FHA policy.  She mentioned the predicted effects of the current sequestration: Staff impacts will include furloughs, a hiring freeze, and limited travel and training.  There will likely be delays in mortgage insurance applications, claims and answers to inquiries.  Counseling grants could also be impacted.

The mission of the FHA is to provide access to credit for under-served borrowers.  They must preserve the health of the MMI fund and manage/mitigate loss.  Steps taken this year were to raise the MMP in forward loans and to consolidate the fixed HECM products, eliminating the Fixed Standard on April 1 of this year.  Ms. Hill predicted that slightly fewer HECMs would be endorsed this year.

Currently, she reported, 73% of HECMs are fixed rate while only 23% are adjustable rate products.  Issues that will be addressed this year are the cap on HECM endorsements, the non-borrowing spouse scenario, and the funding and availability of HECM counseling.  Policy changes being considered may set limits on loan draws, mandate escrows for taxes and insurance, and implement a financial assessment for borrowers.  Policy will be published August 1st for implementation in October.

John Olmstead from the HUD Office of Housing Counseling remarked on their intentions to improve monitoring, communications and metrics for reporting the data collected by reverse mortgage counselors.  There are currently 2400 approved counseling agencies, 129 of which are approved for HECM counseling.  There are 629 active, approved HECM counselors today.

Recent guidance which has been promulgated to reverse mortgage providers includes warning against steering, loan officer participation in counseling, and cases where a loan officer has provided answers to possible counseling quiz answers.

HUD staff reported that $895 million has been disbursed from the insurance fund for 8591 claims processed.  61% of claims resulted from foreclosure and deed-in-lieu, 23 from assignments of mortgage, and a further 9% from mortgagors’ sale.

The Conference then moved to a panel discussion on the state of the reverse mortgage industry.  The goal of empowering the FHA with authority over the HECM product was discussed.  Broadening the marketplace, however, was the theme that everyone agreed is top priority.  Communication with the general public is key.  There have been fewer HECM loans written in the recent past, but the product remains a valuable one.  It is possible that sales strategies changed when the fixed rate product came to the market in 2009 and they need to be changed again to illustrate to seniors the advantages of a reverse mortgage.

The mission of the HECM program is to facilitate aging in place, and many factors in the current market favor its success.  Aging Baby Boomers, appreciation of home values, and the money being spent on TV advertising all bode well for the future of the HECM program.

In NRMLA’s future, we see more professional education and more involvement of state legislators/regulators.


27 Feb

A good indicator in the economic recovery and housing market:

Figures released yesterday in a joint press release from the US Census Bureau and the US Department of Housing and Urban Development show an increase in January from the previous month to the highest level since July 2008.

Read the press release at this link:



Home Sales, Prices Up

30 Nov

October’s 2.1 increase of existing home sales represents a seasonally adjusted annual rate of 4.79 million as reported by the National Association of Realtors (NAR)., putting October at a 10.9% year-over increase from the 4.32 million-unit figure in October 2011.

“Home sales continue to trend up and most October transactions were completed by the time the storm [Sandy] hit, but the growing demand with limited inventory is pressuring home prices in much of the country, said Lawrence Yun, NAR chief economist. “We expect an impact on Northeastern home sales in the coming months from a pause and delays in storm-impacted regions.”

NAR notes the national median existing-home price for all housing types was $178,600 in October, an 11.1% rise from last year, marking eight consecutive monthly year-over-year increases.

“Rising home prices have already resulted in a $760 billion growth in home equity during the past year,” said Yun. “Given that percentage point of price appreciation translates into an additional $190 billion in home equity, we could see close to a $1 trillion gain next year.”

Median Home Prices Up

29 Oct

The new home market is a greater source of strength for the economy in that new home sales jumped 5.7% in September.This is the
largest increase since the stimulus efforts of 2010.   Although prices for new
homes slid back just by 3.2%, we are still seeing that median home prices are
11.7% higher from a year ago.

The National Association of Realtors is optimistic that low interest rates will continue to influence home sales, despite an only 0.3 increase in September home sales.

National Association of Home Builders os optimistic in its economic outlook as well.  The NAHB is predicting a 21 percent increase in single-family starts this year to 528,000 units and a further 26 percent rise to 665,000 units in 2013. As for multi-family units, the NAHB expects a 26 percent increase this year to 224,000 units and a 6 percent climb in 2013 to 328,000 units.


S&P Case-Shiller Index Shows Increase in Home Prices

1 Aug

In Tuesday’s Case-Shiller Home Price Index, prices in the 20 cities surveyed rose 2.2 percent month-month.

The 10-city index also improved 2.2 percent in May, the year-year decline in prices dropping to 1.0 percent in May from 2.2 percent in April.

Prices improved month-month in all of the 20 cities tracked by Case-Shiller, led by a 4.5 percent jump in Chicago and a 4.0 percent increase in Atlanta.

Year-year, the median price of an existing single family home was up 7.9 percent in May, according to NAR and the median price of a new home rose 6.8 percent according to the Census-HUD report.

The National Association of Realtors reported an increase in the median price of a single-family home by 3.8 percent in May, while HUD reported an increase of 1.5%.  Whoever you ask, prices are on the rise, which bodes well for anyone in the mortgage business.

Home prices, home sales increasing

18 Jul
A percent sign.

A percent sign. (Photo credit: Wikipedia)

Inventory of homes for sale is low… this makes sense if you think about a home with negative equity: homeowners cannot list their property for sale.  This lower inventory is having a positive effect on home prices, supply is low, demand is high.  There is interest especially in lower-value properties for investment.

CoreLogic reports that  lower-priced homes are appreciating most quickly.  Since last year, homes priced 125 percent or more higher than the national average improved by 1.8 percent, with homes priced at 75% of the national average appreciating 5.7%.

Lender Processing Services (LPS) home price index shows a 2.5% increase this year, the greatest increase since 2005.


22 Jun

Home values rose in May month-over-month and quarter-over-quarter, but fell on a yearly basis, according to Zillow’s Real Estate Market Reports.   The upside to the yearly decline is it’s the smallest year-over-year drop since October 2007.

In the New York Metro area, the monthly gain was 0.3%, quarterly gain was 0.5%, but the year-over-year values were down 3.3 %.

Sale prices rose in the NY area as well, up 1.2% month-over-month, 2.3% for the quarter although for the year there was a drop of 4.7%.

The number of foreclosures dropped in May, with 6.3 out of every 10,000 homes being foreclosed nationwide compared to 7.2 out of every 10,000 in April.

With such a slight increase in the picture, other analysts say we should not get too optimistic.

S & P Indices Press Release New York,May 29, 2012

29 May

 Pace of Decline in Home Prices Moderates as the First Quarter of 2012 Ends, According to the S&P/Case-Shiller Home Price Indices

– Data through March 2012, released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0% in the first quarter of 2012 and was down 1.9% versus the first quarter of 2011. The 10- and 20-City Composites posted respective annual returns of -2.8% and -2.6% in March 2012. Month-over-month, their changes were minimal; average home prices in the 10-City Composite fell by 0.1% compared to February and the 20-City remained basically unchanged in March over February. However, with these latest data, all three composites still posted their lowest levels since the housing crisis began in mid-2006.

In addition to the three composites, five cities – Atlanta, Chicago, Las Vegas, New York and Portland – also saw average home prices hit new lows. This is an improvement over the nine cities reported last month. The S&P/Case-Shiller U.S. National Home Price Index, which covers all nine U.S. census divisions, posted a 1.9% decline in the first quarter of 2012 over the first quarter of 2011. In March 2012, the 10- and 20-City Composites recorded annual rates of decline of 2.8% and 2.6%, respectively.

see the full report at http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245334287526&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

S&P Case-Shiller Index of Home Values Drops, Home Sales Rise

5 Mar

According to numbers released last week for 2011 year-end home prices, U.S. home prices fell in December from a month earlier, ending 2011 at the lowest levels since the housing crisis began in mid-2006.

The report is the most widely-cited, private-sector metric for the housing market. The index aims to measures change in home prices from month-to-month, and from year-to-year, in select U.S. cities and nationwide.

During the fourth quarter, home prices reached new lows, falling 3.8% sequentially and 4% year-to-year. Prices are down 33.8% from their peak in the second quarter of 2006.

“While we thought we saw some signs of stabilization in the middle of 2011, it appears that neither the economy nor consumer confidence was strong enough to move the market in a positive direction as the year ended,” said David Blitzer, chairman of S&P’s index committee. “After a prior three years of accelerated decline, the past two years has been a story of a housing market that is bottoming out but has not yet stabilized.”

The housing market remains sluggish despite soft prices and interest rates that have been hovering around historic lows. A weak job market, abundant foreclosures and tighter mortgage requirements have continued to weigh on the market.

Of the 20 major U.S. metropolitan markets, 18 reported prices were lower than during November. Only Miami and Phoenix moved higher, up a scant 0.2% and 0.8%, respectively. Year-to-year, only Detroit saw improvement, up 0.5%.

The Case-Shiller index of 10 major metropolitan areas and the 20-city index were down 1.1% in December from a month earlier.

Year-to-year, unadjusted December prices declined 3.9% for the 10 major markets while the 20-city index dropped 4%.

On a brighter note, The National Association of Realtors last week reported that sales of previously owned homes in the U.S. rose in January to the highest level in nearly two years and the inventory of unsold homes contracted to a level considered healthy by economists. Existing-home sales increased 4.3% in January from December.