TEAM EMPOWERMENT MORTGAGE CHATTER: May 9; News & Headlines; Shadow Inventory; Half-Century of Decline Ends; In Time For Buying Season, Rates Hit Yearly Lows; C.A.R. Inroad into Short Sale Improvements; Gov’t Looks To Reduce Real Estate Inventory

“There is no scarcity of opportunity to make a living at what you love to do, there is only scarcity of resolve to make it happen.” – Wayne Dyer


It is not often that lenders have the potential of less paperwork. Small lenders noted that HUD recently waived the requirement that they submit annual audited financial statements to HUD. The requirement states that supervised lenders seeking FHA lender approval or renewal must electronically submit audited financial statements to FHA within 90 days of their fiscal year end. The waiver which goes through next April and which NCSHA sought in comments to HUD, suspends the requirement for a calendar year only for supervised lenders that possess less than $500 million in assets. Supervised lenders that qualify for this waiver must complete all other approval and renewal requirements, including submitting the online certification and paying the renewal fee. In addition, the waiver does not apply to the requirement that supervised lenders submit an independent auditor’s opinion of internal control and compliance with HUD programs. FHAFinancials

Fannie Mae also announced that effective June 1 servicers are no longer required to submit Form 571 requesting payment of incentive fees for eligible pre-foreclosure sales and deeds-in-lieu of foreclosures closed in HSSN. Instead, servicers will receive payment of approved incentive fees once per month during the month following the pre-foreclosure sale or deed-in-lieu of foreclosure. Fannie Mae also announced that it is modifying the Servicing Guide to account for an extension of the expiration of stay of foreclosure proceedings and other legal proceedings pursuant to the Helping Heroes Keep Their Homes Act of 2010. Until December 31, 2012, foreclosure and other legal proceedings on eligible mortgage loans must be stayed for nine months following the termination of a service member’s active duty. Here is the announcement: Form571 

Fannie Mae also announced that it will seek $8.5 billion in Treasury Department aid to balance its books after reporting a $6.5 billion loss in the first quarter. Fannie Mae is requesting the money to eliminate a net worth deficit of $8.4 billion for the three-month period that ended March 31. The first-quarter loss was partly attributable to a $2.2 billion dividend payment to the Treasury, along with credit losses and expenses for bad loans totaling $11 billion.

On to the markets and interest rates! For market-moving scheduled economic news this week, today we will have zip, tomorrow are import & export prices, Wednesday are some trade figures, Thursday things pick up with the Producer Price Index, Retail Sales, and Jobless Claims, and on Friday the 13th is the Consumer Price Index. That all being said, eyes appear to be more on volatility in commodity prices, especially after the killing of Osama bin Laden which helped trigger the commodity selloff. Commodity prices were already poised to fall, reflecting recent interest rate hikes in China and India, designed to cool those economies off, as well as higher margin requirements on certain metals trading, most notably silver.

Friday’s Non-Farm Payrolls was a surprise with 244k jobs (268K in the private sector) but the unemployment rate did tick up by .2%. Recently 10-yr Treasury notes hit their lowest yields of 2011 (3.13%) and agency MBS prices are indeed good. But this week is a new week, with the economic news listed above along the refunding supply starting tomorrow with $32 billion in 3-yrs, $24 billion 10’s, and $16 billion 30s. The 10-yr is at 3.17%.


Last week, we posted a blog titled: The Impact of Distressed Properties on Neighboring Values. In the article, we said there would be more distressed properties coming to market in the next six months and that these properties would put added downward pressure on prices of other homes in the area. Some questioned our assumption that foreclosures were about to increase and others questioned our assertion that they would have a negative impact on values. We want to qualify both of our statements today.

Distressed properties are about to increase

We have been in the ‘eye of the storm’ regarding the shadow inventory of foreclosure properties for the last several months. Foreclosures have been delayed by court systems mandating that the banks have their paperwork in order. Just last week, Fannie Mae addressed this issue in a report:

“Our foreclosure rates remain high. However, foreclosure levels were lower than what they otherwise would have been in the first quarter of 2011 due to the delays caused by servicer foreclosure process deficiencies and the resulting foreclosure pause.”

In theirFirst Quarter 2011 Financial Results Supplement, Freddie Mac, also addressed this issue last week:

“We expect the pace of our REO acquisitions to increase in the remainder of 2011, in part due to the resumption of foreclosure activity by servicers, as well as the transition of many seriously delinquent loans to REO.”

More foreclosures will be coming to the market throughout 2011.

Distressed properties impact prices of surrounding properties

Clear Capital discussed this point in their May 2011 Market Report. In the report they used two graphs to emphasize the connection. In the first graph, they charted the national saturation rate of foreclosures (REOs) from 2008 until the present.

In the second graph they charted national home prices during the same time period.

We can see that as the saturation rate of foreclosures increase, prices decrease.

Bottom Line

More foreclosures will be coming to market and they will have an impact on values. How will your neighborhood be affected? Sit down with a local real estate expert to find out.


Based on 2010 Census data on 12 states and the District of Columbia, the average household size is creeping up after falling for the past 50 years.

In Florida, the average household size rose to 2.48 persons per household from 2.46 a decade ago. The Sunshine State, along with Tennessee, also recorded the biggest increase in average household size among renters.

Experts attribute household expansion to the economic downturn, with young adults who are unable to find jobs living with their parents and people who lost their homes to foreclosure moving in with family or friends. Ohio State University sociology professor Zhenchao Qian reports a jump in young adults between the ages of 19 and 29 who live with their parents to 34 percent in recent years from 25 percent in 1980.

Brookings Institution demographer William Frey says immigrants living with in-laws and other relatives also has contributed to the larger household size.


The 30-year fixed-rate mortgage, a popular choice among buyers, sank even lower this week, matching its yearly low of 4.71 percent from January, reports Freddie Mac in its weekly mortgage market survey. Last year at this time, the 30-year fixed-rate mortgage averaged 5 percent.

Meanwhile, the 15-year fixed-rate hit a new yearly low of 3.89 percent this week. Last week, the 15-year fixed-rate mortgage averaged 3.97 percent. The 15-year rate averaged 4.36 percent last year at this time. It reached its lowest level on record in November when it averaged 3.57 percent.

The one-year adjustable-rate mortgage averaged 3.14 percent, down from last week’s 3.15 percent. Last year at this time, it averaged 4.07 percent.

“Weaker economic data reports reduced Treasury bond yields and allowed mortgage rates to drift lower for the third consecutive week,” says Frank Nothaft, Freddie Mac’s chief economist.


C.A.R.’s efforts to address the issues related to the difficulties of the short sale process are starting to gain traction.

Late last week, the Federal Housing Finance Agency (FHFA) announced it has directed Fannie Mae and Freddie Mac to establish consistent policies and processes for the servicing of delinquent loans. The alignment will help servicers do a better job of resolving delinquencies in a more consistent and expeditious manner, keep more consumers in their homes whenever possible and minimize losses to companies and taxpayers.

The directive will streamline and expedite borrower outreach, align mortgage modification terms and requirements, and establish a consistent schedule of performance-based incentive payments and penalties.

The updated guidelines also prevent servicers from seeking foreclosure at the same time a borrower is being considered for a loan modification.

FHFA, Fannie Mae, and Freddie Mac said these directives are in response to concerns about servicer performance raised throughout the industry and government.

C.A.R. has been meeting regularly with industry regulators, lenders, and servicers to press for improvements to the short sale process and will continue to do so until significant improvements are made.

More info:


The Obama administration is looking to get rid of 14,000 surplus properties that the federal government owns around the country and is costing taxpayers money to maintain.

The surplus properties include everything from unused roads and empty lots to warehouses and office buildings.

“The government can no longer foot the bill for vacant buildings,” says Rep. Jason Chaffetz, R-Utah, who also has authored a bill to quickly dispose of the government’s surplus property, but without using a special commission as the Obama administration has proposed.

The federal government spent about $134 million to maintain surplus buildings in 2009. The Obama administration says that improving the government’s management of surplus properties stands to save taxpayers $15 billion over several years.

The Obama administration is proposing a special commission be used to handle the surplus property in order to try to sidestep problems that have hindered the sale of these properties in the past. The presidentially-appointed, seven-member Civilian Property Realignment Board would evaluate surplus federal properties and make recommendations to “significantly reduce” the government’s real estate inventory, which ultimately would be voted upon by Congress.

The government believes there are some 12,000 surplus federal properties within the U.S. and about 2,000 overseas. The commission would not deal with military, national security sites, national parks, or wildlife refuges.

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