January Housing Scorecard Released by HUD, Treasury

The
Departments of Housing and Urban Development (HUD) and Treasury issued the
administration’s January Housing Scorecard on Monday.  The report is essentially a summary of
data on housing and housing finance released by public and private sources over
the previous month and/or quarter.  Most
of the data such as new and existing home sales, permits and starts, mortgage
originations, and various house price evaluations have been previously covered
by MND. 

The scorecard incorporates by reference
the monthly report of the Making Home Affordable Program (MHA) through the end
of December.  This includes information
on the universe of MHA programs including the Home Affordable Modification
Program (HAMP), HOPE Now, and Second Lien Modifications and other initiatives. 

Since the
HAMP program began in April 2009 1,774,595 homeowners have entered into trial
loan modifications, 20,074 since the November HAMP report.  About half of these homeowners, 933,327, have
completed the trials and converted to permanent modifications; 23,374
conversions took place during the current report period.  Just over three-quarters of a million of the permanent
modifications are still active.

While the
HAMP program dates to April 2009, it underwent substantial revisions to its
policies and procedures in June 2010, and many of the measures of its
performance are benchmarked at that time. 
Eight-four percent of homeowners who entered a trial modification after
that date have received a permanent modification with an average trial period
of 3.5 months compared to 43 percent who entered a trial prior to the changes.  As of December, 21,002 of the active trials
had been underway for six months or more; in May 2010, the month before the
changes took place, 190,000 trials were six months old or more.  In December every servicer except Ocwen was
above an 80 percent conversion rate.

HAMP
modifications with the largest reduction in mortgage payments continue to
demonstrate the lowest redefault rates.  At
18 months after modification all loans have a 90+ day default rate of 23
percent.  However, loans with a 20
percent or smaller reduction in loan payment are defaulting at the rate of 36.4
percent while loans with a 50 percent payment decrease or greater have a
default rate of 13.3 percent. 

The Home
Affordable Foreclosure Alternatives program offers incentives to homeowners who
wish to exit home ownership through a short sale or deed-in-lieu of
foreclosure.  Thus far 43,368 homeowners
have been accepted into the program and 27,665 transactions have been
completed, the vast majority through a short sale.  More than half of the completed transactions
(18,350) were on loans owned by private investors; 7,711 were portfolio loans
and 1,604 were GSE loans.

There has
been an emphasis in some quarters on reducing the principal balance of
distressed loans since the last HAMP report. 
Some members of Congress have asked for justification from the GSEs as
to why they were not participating in principal reductions and the Treasury
Department recently urged them to do so as well while tripling the incentives
it is paying to other investors to reduce principal.  The HAMP Principal Reduction Alternative
(PRA) has started trial modifications for 63,203 home owners and permanent
modifications for 42,753 of which 40,374 are still active.  The median principal amount reduced in these
modifications is $67,196, a median of 31.1 percent of the principal balance.

Each month
HAMP reports on selected servicer performance metrics.   Servicers
are expected to make Right Party Contact (RPC) with eligible homeowners and
then evaluate their eligibility for HAMP.  HAMP evaluated servicer outreach to 60 days
delinquent homeowners over the previous 12 months (November 2010-December 2011)
and found most services have made RPC at least 85 percent of the time; however
there is a wide range of performance results in terms of completed the evaluations.
 

Servicers
are also expected to identify and solicit homeowners in early stages of
delinquency and, effective October 1, 2011, a higher compensation structure was
put into effect to reward servicers who complete evaluations and place
homeowners in a trial modification within 120 days of first delinquency.  The table below shows the status of major
servicers relative to their eligibility for maximum incentives.

…(read more)

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OBAMA ADMINISTRATION RELEASES DECEMBER HOUSING SCORECARD

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the December edition of the Obama Administration’s Housing Scorecard – a comprehensive report on the nation’s housing market. Data in the December Housing Scorecard show some subtle improvements in the market over the past year, but underscore fragility as the overall outlook remains mixed. For example, new and existing home sales rose compared to the prior month and remain higher than a year ago, and homes are more affordable than they have been since 1971. Median-income families today have nearly double the funds needed to cover the cost of the average home. However, home prices showed a slight dip from the prior month and remain below year ago levels. The full report is available online at www.hud.gov/scorecard.

Housing Market Recovery Next Year? Don’t Be Foolish. Plan For The Worst

I am generally amused at the market soothsayers who continually predict that the housing recovery is right around the corner. I suppose that all the years I have spent in the housing “ditch” have caused me to become oblivious to the information the experts use to make their predictions. I guess I could take a “let’s wait and see” attitude, but in the meantime consider the following. Let’s begin with housing starts, which are currently on an annualized run rate of approximately 550,000 new starts. This represents less than half of what is needed in a normal market. Existing home sales declined 2.2% in October and are currently tracking at an annual rate of 4.43 million. Then there are the foreclosures. According to RealtyTrac, 25% of home sales in the 3rd…(read more)

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Mortgage Rates Rise on Stronger Housing Reports

By Mia Lamar

Rates for fixed mortgages moved higher over the past week amid positive signals from the long-suffering U.S. housing market, according to Freddie Mac’s weekly survey of mortgage rates.

“Fixed mortgage rates ticked up this week as the housing market ended 2011 on a high note,” said Freddie Mac Chief Economist Frank Nothaft, noting encouraging data like a report that existing home sales rose 5% at the end of the year to 4.61 million houses, the largest amount since May 2010.

The 30-year fixed-rate mortgage averaged 3.98% for the week ended Thursday, up from 3.88% the previous week, though below 4.8% a year ago. Rates on 15-year fixed-rate mortgages averaged 3.24%, up from 3.17% last week and below 4.09% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARM, averaged 2.85%, up from 2.82% last week and below 3.7% a year ago. One-year Treasury-indexed ARM rates averaged 2.74%, matching the prior week and below 3.26% last year.

To obtain the rates, 30-year and 15-year fixed-rate mortgages required an average 0.7 percentage point and 0.8 percentage point payment, respectively. Five-year and one-year adjustable rate mortgages required an average 0.7 percentage point and 0.6 percentage point payment, respectively. A point is 1% of the mortgage amount, charged as prepaid interest.

Write to Mia Lamar at mia.lamar@dowjones.com

Pending Home Sales Decline in December, Remain Above a Year Ago

Pending home sales fell off of the
19-month high reached in November according to figures released on Wednesday by
the National Association of Realtors® (NAR), but were still higher than one
year ago.  NAR’s Pending Home Sales Index
(PHSI) dropped from 100.1 in November to 96.6 in December, a decline of 3.5 percent.  December pending home sales were still 5.6
percent above the December 2010 index of 91.5.

The PHSI is a measure of signed
sales contracts for home purchases where the transaction has not closed.  It is considered a forward indicator as the
sale is usually finalized within one or two months of contract signing.  An index
of 100 is equal to the average level of contract activity during 2001.

Lawrence Yun, NAR chief economist, said the trend line remains
positive.  “Even with a modest decline, the preceding two months of
contract activity are the highest in the past four years outside of the
homebuyer tax credit period,” he said.  “Contract failures remain an
issue, reported by one-third of Realtors® over the past few months,
but home buyers are not giving up.”

Yun said some
buyers successfully complete the sale after a contract delay, while others stay
in the market after a contract failure and make another offer.  “Housing
affordability conditions are too good to pass up,” he said.  “Our hope is
lending conditions will gradually improve with sustained increases in closed
existing-home sales.”

On a regional
basis results were mixed with three regions showing increases on a year to year
basis but only one increasing during the December.

Pending Home Sales by Region

Region

Index in

December

Chg Nov to
Dec.

(%)

Chg Dec.
2010 to

Dec. 2011
(%)

Northeast

74.7

-3.1

-0.8

Midwest

95.3

+4.0

+13.3

South

101.1

-2.6

+4.9

West

107.9

-11.0

+3.7

U.S.

96.6

-3.5

+5.6

NAR also issued an economic forecast which predicts a healthy growth in
both real and nominal GPD over the next two years with real GDP growing in a historically
normal range of around 3 percent and the unemployment rate falling under 8
percent by 2013. 

Housing starts are expected to improve to around 750,000 in 2012 and
reach a million the next year – both figures well below the historically
typical 1.5 million.  Housing sales, both
new and existing, will remain relatively flat with new home sales reaching a
half million by the end of 2013.  
Existing home sales are estimated to have totaled 4.26 million in 2011
and will rise gradually to 4.45 million and 4.62 million in 2012 and 2013
respectively. 

Inventories are not projected into the future, but the supply of existing
homes is trending down and is now around 2.25 million.  The inventory of new homes has declined to a
nearly negligible level, however given the pace of sales, both inventories
represent about a six month supply.

NAR expects
median prices of both new and existing homes to rise only slightly from current
levels of$223,400 and $166,100 during 2012 but will rise more rapidly during
2013 to a median level of $235,800 and $172,600 by year end.

…(read more)

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