Consumer Confidence Index climbs in Jan. Florida Real Estate

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Americans’ confidence in the economy improved modestly in January for the third straight month, as they begin to feel slightly better about business conditions and the job picture, according to a survey released Tuesday.

The Conference Board’s Consumer Confidence Index increased to 55.9 – the highest in more than a year but still relatively gloomy. That compares with 53.6 in December.

January’s index was better than the expected 53.5 forecast by economists.

Economists watch confidence numbers closely because consumer spending accounts for about 70 percent of U.S. economic activity. It takes a reading of 90 to indicate an economy on solid footing and 100 or more to indicate growth.

The new figures still don’t point to an end to the nation’s economic woes any time soon.

“Consumers’ short-term outlook, while moderately more positive, does not suggest any significant pickup in activity in the coming months,” Lynn Franco, director of The Conference Board’s Consumer Research Center, said in a statement.

Tuesday’s figures are based on a survey of 5,000 households by the private research group.

Capital Economics analyst Paul Dales said Americans’ sentiments are well below the Index’s historic average of 95.

“In other words, despite the fact the economy probably grew at an annualized rate in excess of 5 percent in the fourth quarter, the labor market appears to be on the cusp of generating net employment gains, interest rates are at record lows and the rally in equities remains largely intact, confidence remains incredibly depressed,” Dales wrote in a research note. “This all suggests the legacy of the recession will live long in the mindset of consumers.”

While consumers were less dire about their income prospects, “(the number of) pessimists continues to outnumber the optimists,” Franco said.

Job security is a vital part of how Americans view the economy. Those who feel better about their jobs feel more comfortable spending money, which in turn fuels the nation’s economy. That means without a meaningful and steady increase in Americans’ faith that their paychecks will keep coming, and in turn a pickup in spending, there’s unlikely to be any strong revival in the economy.

“Without a sustained acceleration in consumption growth, the overall economic recovery is doomed to disappoint,” Dales wrote.

The unemployment rate held steady in December at 10 percent, down slightly from a 26-year high of 10.2 percent in October. Some analysts worry it will start climbing again in coming months, and could even rise as high as 10.5 percent next summer.

The Consumer Confidence index hit a historic low of 25.3 in February after registering 37.4 last January and enjoyed a three-month climb from March through May, fueled by signs that the economy might be stabilizing.

Since June, it has bounced along anemically between 47 and 55 as rising unemployment has taken a toll.

Also Tuesday, a report showed that The Standard & Poor’s/Case-Shiller home price index rose for in November – its sixth straight month of increases. And 14 of 20 metro areas posted improvements from the month before.

That index is now up 3.4 percent from its bottom in May, but still 30 percent below its peak in May 2006.

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Only 8,405 in Fla. get mortgage modification.

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TALLAHASSEE, Fla. – Jan. 18, 2010 – Fewer than 3,000 South Floridians have a permanent loan modification under President Obama’s nearly year-old program to stem home foreclosures.

In the Treasure Coast, just 111 troubled borrowers have seen permanent relief from the $75 billion plan announced in February.

The dismal performance of the program marketed as a helping hand for the nation’s more than 3.3 million delinquent home loans was released Friday in a Treasury Department progress report.

Throughout Florida, which by every measure is one of the states hardest hit by the real estate crash, there are 8,405 permanent modifications. In Palm Beach, Broward and Miami-Dade counties combined there are 2,987 permanent modifications.

Another 96,703 Florida loans are on trial modifications.

The Making Homes Affordable program gives incentives to banks to modify loans in three basic ways; reducing interest rates to as low as 2 percent, increasing the life of the loan, and reducing the principal owed on the loan.

“You keep hearing about this wonderful program the government is doing but it’s not working,” said Joel Bienvenu, who owns a home west of Boca Raton and has been trying to get a loan modification through Wells Fargo since August. “I keep getting excuses that they are just overwhelmed.”

Nationwide, 66,465 permanent modifications have been approved, less than 2 percent of the total loans that are 60 or more days delinquent. Another 46,056 permanent modifications have been approved by the lender, but not yet by the borrower.

The median monthly decrease to mortgages that received permanent modifications was $516, according to the Treasury Department.

From the beginning of the program, homeowners have complained about having to send lenders the same paperwork multiple times, while banks say borrowers provide the wrong documents or fail to meet the requirements for the permanent modification.

Anthony DiMarco, executive vice president of government affairs for the Florida Bankers Association, said Friday that lenders have been on a learning curve, but are improving.

“I think the industry is working hard,” he said. “You can’t ramp up a program like this overnight.”

Fort Lauderdale real estate attorney and foreclosure mediator Shari Olefson said the more than 1.1 million trial modifications offered to borrowers nationwide shows lenders are making an effort.

The fact that just 66,465 have become permanent points to a fundamental problem with the program, she said.

“The program itself is a failure,” said Olefson, author of Foreclosure Nation, Mortgaging the American Dream. “It’s trying to put a square peg in a round hole.”

To qualify for a modification, a person’s monthly housing expenses must be more than 31 percent of gross monthly income. But you also must prove that you can pay for the modification.

Olefson believes high unemployment and a steep loss in housing equity is keeping the plan from working.

“The whole program was crafted before we correctly identified the problem,” she said.

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Reports show economy mending. Miami Florida Real Estate 800-819-5466

Miami Florida - Economic indicators keep saying what investors have known for months: Things are getting better.

The latest government report to reinforce a more positive view of the economy’s health was the Federal Reserve’s “beige book,” released Wednesday, which indicated many parts of the nation are seeing economic stability. Earlier in the day, President Obama told spectators at a town hall meeting in Raleigh, N.C., “We may be seeing the beginning of the end of the recession.”

And the July update of the USA TODAY/IHS Global Insight Economic Outlook Index predicts the economy will grow October through December, the first increase since September 2008.

“The evidence (of recovery) is building every day,” says Jim Paulsen of Wells Capital Management. “It’s settling and gives people more faith in what they’ve seen” from stock and bond markets.

The reports echo what stock prices have been predicting since March. The Standard & Poor’s 500 index has soared 44 percent from its March 9 low, despite falling 0.5 percent Wednesday.

While the latest pieces of economic data provide some comfort, they by no means signal a return to the boom times. Economic experts say they still are on the watch for information about:

• Clues on when a meaningful recovery is firmly underway. The beige book indicated the economy is still far from robust, because five of the Fed’s 12 regions – Boston, Philadelphia, Richmond, Atlanta and Dallas – were “subdued” or “weak” and Minneapolis was faltering.

“There may be a bottom, but where’s the bounce?” says Doug Roberts of Channel Capital Research. “There’s still a significant level of weakness in the economy.”

• Signs of health in the commercial real estate market. The beige book sounded concerns about the demand for office buildings, retail space and manufacturing facilities, says John Canally of LPL Financial. The fact commercial real estate remains soft could be a sign that employment, too, will be weak until early 2010, he says.

• Evidence of the federal stimulus kicking in. Much of the future hinges on how stimulus spending steers the economy, Roberts says, which won’t be known until next year. Some additional clues, though, will be released this week with reports on jobless claims today and GDP on Friday.

“There’s a lot of information that supports the idea we’ve turned a corner,” Paulsen says. “But there’s still a lot of doubt.”

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South Florida home sales spike in February. Miami Real Estate

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Prices are down as bargain-hunters, cash buyers snap up deals.

South Florida's existing home sales skyrocketed in February as irresistible prices and low mortgage rates continued to win out over the deepening economic gloom.

Broward County sales rose 39 percent last month, to 500 from 360 a year ago, the Florida Association of Realtors said Monday. The median price fell 30 percent, to $214,400 from $307,700, meaning houses now cost what they did in 2003.

The region's housing slump lingers in its fourth year, and mounting foreclosures and short sales are expected to depress prices through 2009 and most likely into 2010. While today's sellers grimace at the plummeting prices, more affordable homes ultimately will help the market rebound sometime next year, analysts say.

Despite rising unemployment and tight credit, year-over-year home sales in Broward have increased for eight consecutive months as investors and first-time buyers scoop up distressed properties. But weak job security has many potential buyers still sitting on the sidelines hoping prices keep falling and the overall economy improves.

The average 30-year fixed mortgage rate nationwide was 5.13 percent last month, down from 5.92 percent a year ago, according to mortgage giant Freddie Mac. Last week, average mortgage rates dropped below 5 percent and are expected to stay there.

"There's still a pool of people who have the financial wherewithal to buy a home, and now they're saying this is the right time," said Brad Hunter, a housing analyst based in West Palm Beach.

Broward's existing condominium sales also were brisk in February, rising 27 percent from a year ago. The median condo price was down 39 percent to $85,800.

The increased sales activity for homes and condos is making a dent in South Florida's bloated inventory of properties for sale.

Broward County has 31,921 available homes, townhouses and condos, down 14 percent from the end of November, according to a report Monday from Condo Vultures, a Bal Harbour-based real estate consulting firm.

"All-cash buyers are spooked by the stock market, and a lot of people are looking for peace of mind, and that's in bricks and mortar," said Peter Zalewski, principal at Condo Vultures.

Terry Story, a real estate agent for Coldwell Banker in South Florida, said she's running out of homes to sell. On a recent weekend, she had 27 showings, nearly triple her normal amount.

"If you're a serious seller, and you price it right, the home will sell," Story said.

But many sellers who bought recently say they can't price their properties to make a profit or break even because they paid peak prices themselves during the housing boom of 2000 to 2005.

While there are plenty of homes to choose from, some people don't want to buy now because of the declining job market and the belief that prices will fall even more in the months ahead, said Liliane Weinstein of Lang Realty in Broward and Palm Beach counties.

"Buyers are still very hesitant," she said.

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Cathy Kusuma and her husband are like many potential buyers: eager to find a home but not able to take the plunge until they sell their existing property.

The Kusumas have a sales contract on their Margate townhouse and expect to close in May. Last week, they put in an offer on a four-bedroom Parkland house, but it's a short sale and they don't know whether the bank will accept their bid.

"Circumstances have to line up just right," said Kusuma, 31.

Homeowners who have to sell before they can buy again often are left in limbo for months or even years.

A few weeks ago, Scott Kerr, 55, made an offer on a Deerfield Beach townhouse, but it was contingent on being able to sell his Delray Beach house.

He eventually had to pull out of the deal because he couldn't find a buyer. "I'm stuck," Kerr said.

In Palm Beach County, existing home sales rose 33 percent in February, while the median dropped 34 percent, to $228,100. Across Florida, sales rose 20 percent, and the median price fell 29 percent to $141,900. National new home sales figures will be released on Wednesday. Builders are reeling, with more than 100 nationwide, including the legendary Levitt and Sons of Fort Lauderdale, having folded in recent years.

Hollywood-based TOUSA Inc., which filed for bankruptcy protection early last year, said Monday it's suspending efforts to generate new sales and will focus on completing homes under construction, selling its remaining inventory of speculative homes and liquidating its land assets over time.

"The existing homes are being priced so aggressively that it's undercutting the builders quite a bit," said Mike Larson of Weiss Research in Jupiter.

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Fannie Mae allows investors to mortgage more properties.

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Fannie Mae modified a policy that allowed real estate investors to have only four financed properties. The number can now be five to 10, depending on whether certain eligibility, underwriting and delivery requirements are met. Florida Association of Realtors® (FAR) President Cynthia Shelton raised the investment issue with Fannie Mae officials last week.

“Many of our members have voiced concerns about Fannie Mae limiting investors to four properties,” says FAR Vice President of Public Policy John Sebree. “This comes as good news.”

The change is noted in a just-released update of Fannie Mae’s “Multiple Mortgages to the Same Borrower Policy.” The change is effective March 1. To qualify, borrowers must meet Fannie Mae’s criteria. They cannot, for example, have a history of recent bankruptcy, or a delinquency payment over the past 12 months.

Fannie Mae offers more information about its new policy in Announcement 09-02, released on Friday. To download the policy guidance (PDF format) and get more information on qualifying and underwriting, go to: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0902.pdf

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NAR: Pending home sales surged 7.4% in August

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WASHINGTON – Pending home sales activity surged as buyers took advantage of low home prices and affordable interest rates, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed in August, jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July, and is 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4.

Lawrence Yun, NAR chief economist, said home buyers were responding to improved affordability.

“What we’re seeing is the momentum of people taking advantage of low home prices, with pending home sales up strongly in California, Nevada, Arizona, Florida, Rhode Island and the Washington, D.C., region,” Yun says. “It’s unclear how much contract activity may be impacted by the credit disruptions on Wall Street, but we’re hopeful most of the increase will translate into closed existing-home sales.”

The PHSI in the West surged 18.4 percent to 109.5 in August and remains 37.8 percent above a year ago. In the Northeast the index jumped 8.4 percent to 79.8 and is 2.0 percent higher than August 2007. The index in the Midwest rose 3.6 percent to 84.5 in August and is 6.6 percent above a year ago. In the South, the index increased 2.3 percent to 96.0 but is 2.1 percent below August 2007.

Yun notes the unusual timing of contract activity in August. “Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie,” he says. “August shows some unleashing of pent-up demand before the credit crisis accelerated in September.”

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He cautioned that the sampling size for pending home sales is smaller than the track on existing-home sales, so there is more volatility in the forward-looking series. “We need to see just how much of this gain holds up,” Yun says.

NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., says despite all the turmoil in world financial markets, home mortgages are available. “Mortgages have been harder to find, and availability and terms vary depending on credit score and location, but Realtors can help buyers find reputable lenders while helping them navigate the transaction process,” he says. “The recently enacted economic stimulus package should help housing by gradually freeing the flow of credit.”

Yun now expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.

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Looking at middle-ground assumptions, existing-home sales are forecast at 5.04 million this year and 5.41 million in 2009. Following national declines of 5 to 8 percent in 2008, home prices are projected to increase 2 to 3 percent next year.

New-home sales should total around 503,000 this year and 471,000 in 2009. Housing starts, including multifamily units, are likely to fall 28.2 percent to 973,000 units this year, and come in around 843,000 in 2009 as builders continue to clear the accumulation in inventory.

The 30-year fixed-rate mortgage will probably average 6.1 percent in the fourth quarter and rise gradually to 6.6 percent by the end of 2009. NAR’s housing affordability index is expected to average 18 percentage points higher this year than in 2007.

The unemployment rate is projected to average 6.4 percent in the fourth quarter and then average 6.6 percent in 2009. Inflation, as measured by the Consumer Price Index, is estimated at 4.0 percent for 2008 and 2.0 percent next year. Inflation-adjusted disposable personal income is forecast to grow 1.7 percent this year and 1.0percent in 2009.

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New program allows subprime mortgages to become a fixed-rate FHA. Miami Real Estate 305-936-2489

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WASHINGTON – Oct. 2, 2008 – A new program rolled out by HUD yesterday could help more homeowners avoid foreclosure. Under the program, the lender of an existing subprime mortgage forgives part of the debt as if it’s a short sale, and the balance of the mortgage is rolled into a fixed-rate FHA mortgage. Unlike earlier programs, however, the HOPE for Homeowners program is aimed more at lenders than homeowners.

“For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford,” says HUD Secretary Steve Preston. “FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners’ ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them.”

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The Economic and Housing Recovery Act of 2008 authorized the HOPE for Homeowners program. The HOPE for Homeowners Board of Directors was charged with establishing underwriting standards to ensure borrowers, after any write-down in principal, have a reasonable ability to repay their new FHA-insured mortgage.

The program began yesterday and ends Sept. 30, 2011. It’s available only to owner- occupants. In many cases, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.

Borrower eligibility

Borrowers should contact their lender to determine eligibility. General requirements include:

• The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
• Their existing mortgage was originated on or before Jan. 1, 2008, and they have made at least six payments.
• They are not able to pay their existing mortgage without help.
• As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
• They certify they have not been convicted of fraud in the past 10 years, intentionally defaulted on debts, and did not knowingly or willingly provide material false information to obtain their existing mortgage(s).

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How the program works

The Board expects homeowners will participate in the program primarily through their current lender. HOPE for Homeowners includes the following provisions:

• The loan amount may not exceed a maximum of $550,440.
• The new mortgage will be no more than 90 percent of the new appraised value including any financed upfront mortgage insurance premium.
• The upfront mortgage insurance premium is 3 percent and the annual mortgage insurance premium is 1.5 percent.
• The holders of existing mortgage liens must waive all prepayment penalties and late payment fees.
• The existing first mortgage must accept the proceeds of the HOPE for Homeowners loan as full settlement of all outstanding indebtedness.
• Existing subordinate lenders must release their outstanding mortgage liens.
• Standard FHA policy regarding closing costs applies.
• The borrower must agree to share with FHA both the equity created at the beginning of this new mortgage and any future appreciation in the value of the home.
• The borrower cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years.

The lien holder that previously held the highest priority will receive payment up to a proportion of its original interest, not to exceed the amount of available appreciation. This type of delayed payoff will take place until all prior lien holders are satisfied or the amount of available appreciation is exhausted. All remaining appreciation is remitted to FHA.

Read more about HOPE for Homeowners at Hope For Home Owners

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