Weekly Recap (05/23/11-05/28/11)by Tim Manni
Well, if you’re reading this you didn’t get raptured; in fact, no one did. Contemplating the end of the world is probably something we’ve all done at least once or twice, but I don’t think any of us have had the gusto to put an exact date on the world’s last day.
But as Bruce Watson of AOL’s Daily Finance, writes, “Ultimately, though, the way that [Harold Camping] calculated humanity’s expiration date is less important than the interest that his prediction generated.”
That said, it’s no wonder that the first thought from some of those in our industry would be, “What affect would the rapture have on home prices?“
The results of RealtyTrac’s “Q1 2011 U.S. Foreclosure Sales Report“ are taking up a lot of headlines across the web. The report, providing little encouraging news to a housing market desperate for a recovery, should however, open the eyes of some prospective homebuyers sitting on the sidelines.
In the first quarter of 2011, distressed real estate–foreclosed homes, short sales and bank-owned properties (REOs)–made up 28 percent of all the existing home sales, a slight increase from the previous quarter. Also, the discount at which foreclosed homes sold at remained unchanged from the previous quarter at 27 percent (the foreclosure discount was 26 percent in the first quarter of 2010).
There’s interesting news on the delinquency front: by some measures, delinquency rates are falling. If the trend continues, we should see fewer foreclosures in the future. But is there a trend here, or something else?
According to the Mortgage Bankers Association, at the end of the first quarter of 2011, the percentage of loans that were seriously delinquent was 8.10 percent, 50 basis points (half a percent) lower than the fourth quarter of 2010 and 144 basis points (1.44 percent) lower than a year ago. Compared with last quarter, the non-seasonally adjusted seriously delinquent rate decreased for all loan types.
On this blog, the comments from readers frustrated with their mortgage servicers never seem to stop rolling in. By now, most of you are likely familiar with the complaints we’ve been hearing for years.
Whether it’s HAMP trial payments that extend past the stated three months (often continuing for a year or even more), or an unexplained denial from one of the government’s housing-preservation efforts, the crux of most of our comments deal with a frustration over the lack of communication between borrower and servicer.
Well, there’s a way to enhance your communication with your servicer: write them a letter. A ”qualified written request” allows the borrower to initiate communication with their servicer on a variety of issues.
Despite continuing low mortgage rates, one prominent Detroit bankruptcy attorney says ARMs remain a looming danger and should be avoided.
“The problem is that a significant part of our housing is still mortgaged with ARMs,” said Michael A. Greiner, a bankruptcy specialist. “Interest rates have been at historic lows for years now. But we are already starting to see upward pressure on interest rates. Once interest rates start to rise again, ARM payments will start to rise again.”
Greiner explained that “The ARMs are what originally caused this crisis. People were unable to afford their mortgage payments when the rates adjusted…and that is what started the foreclosures. Since then, the foreclosure crisis has been driven by the larger economy, not by the ARMs adjusting. But when interest rates start rising again, we will see another wave of foreclosures due to the ARMs going up again.”
Last week was another one among many in which economic indicators lived up to their current, under-performing expectations. This gave way to mortgage rates falling even more, albeit not by much, setting new 2011 record lows.
30-year mortgage rates
According to the latest weekly figures from HSH.com, our weekly Fixed-Rate Mortgage Indicator (FRMI) found that the overall average rate for 30-year fixed-rate mortgages slipped back by just a single basis point, landing at an average of 4.90 percent, a new 2011 low.