TEAM EMPOWERMENT MORTGAGE CHATTER: July 12; News & Headlines; The Devil Is In The Details; Some HOAs Foreclosing on Residents; 10-Best Performing Housing Markets

“As we increasingly master our perceptions, beliefs, and thought/feeling patterns, we magnetically attract that which we most desire.” 

-Luanne Oakes: Was a holistic doctor, author and composer




A report in the Wall Street Journal said two Representatives plan to introduce legislation to merge Freddie & Fannie and restructure the company into a government-held corporation. Most doubt that anything will happen until after the 2012 elections. It is one idea out of many competing plans for housing finance, and there is certainly no consensus on whether or not the government should offer a guarantee. But the plan has some genetics that we may see in future proposals. “Frannie” would be a utility-like entity and phase out government-controlled Fannie Mae and Freddie Mac, would purchase mortgages and repackage them as government-backed securities, and have no shareholder investors.

Fannie Mae released news for servicers. Specifically, it addressed HUD’s Emergency Homeowners’ Loan Program (the EHLP is designed to provide mortgage payment relief to eligible borrowers experiencing a reduction in income resulting from involuntary unemployment or underemployment due to adverse economic conditions or a medical emergency.) For details go to FannieEHLP.

This morning we start off with the 10-yr note yield at 2.90% after closing around 2.92% Monday. MBS prices improved by roughly .250 on current coupon products. Rates are being helped by uncertainty over the European debt crisis, what the US will do with its debt ceiling (does it really matter, and isn’t this debt ceiling jabbering taking our eyes off the real problem – the debt?), when Congress will get down to the business of really cutting the budget and what will be cut, and how we will grow our economy moving forward. Most believe that eventually rates will go up because of inflation, or in order to attract investment dollars, but for now we have the “flight to safety” bid.

Today starts yet another Treasury auction with $32 billion 3yrs, $21 billion 10yrs, and $13 billion 30yrs. We’ve already had the International Trade numbers for May – usually not a big market mover, and the deficit went up to $50.2 billion – and later we’ll see the minutes from the last FOMC meeting at 2PM EST. The yield on the 10-yr is down to 2.90% and MBS prices are a shade better.





Info on Shadow Information: CoreLogic

Info on inventory/sales ratio: LPS

Info on discounts on short sales and foreclosures: RealtyTrac



While banks are usually the ones who go after delinquent home owners, more homeowners’ associations (HOAs) around the country are deciding to take on that power too in fighting against home owners who have stopped paying their HOA fees.

For communities governed by a homeowners’ association, which one in five communities are, more HOAs are discovering they have a power they have ever rarely acted upon until now – the right to foreclose on residents who stop paying fees.

For example, a condo complex in Fort Pierce, Fla., for 55-and-older residents was once a desirable area with condos once fetching nearly $80,000 four years ago but now sell for as little as $3,000. The HOA levied $6,000 assessments on its residents for much-needed repairs in the complex and when some residents didn’t pay, the HOA foreclosed on them, even if they didn’t owe the bank anything.

“The treacherous part is that homeowners’ associations are acting like a local government without restraints, and they have this extraordinary power,” Marjorie Murray, a lawyer and founder of the Center for California Homeowner Association Law, told the Associated Press.

If HOAs need to do major repairs, the board can levy a “special assessment” on top of its regular dues. When a home owner fails to pay, all of the home owners then have to step up to pick the costs.

“What many people didn’t realize when they bought their homes was that the fine print gave the association the right to foreclose – even over a few hundred dollars in unpaid dues,” according to an article by the Associated Press. “All the association board has to do is alert its attorney to place a lien on the property to start the process. The home can then be auctioned by the board until the bank eventually takes ownership. Home owners typically have no right to a hearing.”

About 65 percent of HOAs have reported delinquency rates higher than 5 percent, according to a September survey by the Community Association Institute.



Ten of the highest performing major market metros are expected to improve their performance over the first half of the year, with five of the top 10 even expected to see modest gains, reports Clear Capital in its latest monthly Home Data Index.

While housing prices in the first half of the year were mostly negative among the metro areas, Clear Capital says the market is showing signs of stabilizing.

Top Performers

The following are the highest performing major markets based on first half 2011 data (January through June) and second half forecast, according to Clear Capital.

1. Washington, D.C.-Arlington, Va.

2. New York-Long Island, N.Y.-No. New Jersey, N.J.

3. Orlando

4. Dallas-Fort Worth-Arlington, Texas

5. San Francisco-Oakland-Fremont, Calif.

6. Boston-Cambridge-Quincy, Mass.

7. Honolulu

8. San Diego-Carlsbad-San Marcos, Calif.

9. Rochester, N.Y.

10. Memphis, Tenn.

Yet, only five of these markets are expected to boast home price gains in the second half of 2011: Washington, D.C., New York, Orlando, Dallas, and San Francisco, according to Clear Capital.

Worst-Performing Markets

Meanwhile, the lowest performing markets were Virginia Beach-Norfolk-Newport News, Va.; Cleveland-Elyria-Mentor, Ohio; and Minneapolis-St. Paul-Bloomington, Minn., according to Clear Capital.

“While most individual markets are also projected to post losses for the year, it is clear prices have begun to level off and are not exhibiting as much volatility as we’ve seen since the downturn began,” says Alex Villacorta, director of research and analytics at Clear Capital.


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