By Les Christie, staff writerMarch 30, 2010: 9:53 AM ET

NEW YORK (CNNMoney.com) — The market seems to have pulled the rug out from under housing industry hopes for a sustained early recovery.

After a five-month run-up in home prices starting last spring, prices have now fallen for four consecutive months, according to the S&P/Case-Shiller Home Price Index of 20 cities, a gauge of market values, released Tuesday.

In January, prices were down 0.4%, compared with December and have fallen 0.7% from a year earlier.

“The rebound in housing prices seen last fall is fading,” said David Blitzer, chairman of the Index Committee at Standard & Poor’s. “Fewer cities experienced month-to-month gains in January.”

30 days and counting: Homebuyer tax credit expiring

Buoyed by the government’s program of tax credits for first-time buyers, home prices had come 5.4% off their low set last April. Since the impact of the credit crunch started to fade last fall, prices have flopped again, down about 1% since September.

“People rushed to beat the tax credit deadline,” said Richard DeKaser, a housing market analyst.

That exhausted the supply of bargain hunters. Even after the credit was extended, there were fewer potential buyers because so many had moved up their purchases.

Blitzer pointed to other housing data that also suggests weakness in the market.

“Housing starts continue at extremely low levels, recent reports of home sales suggest the market remains difficult, and concerns remain about further foreclosures and a large shadow inventory of unsold homes,” he said. “We can’t say we’re out of the woods yet.”

DeKaser said he believes that banks will start to ease their restrictions on mortgage lending over the next several months, which should boost markets. Underwriting standards are so tight right now that many people who would be buying homes cannot because they can’t obtain a mortgage.

The tax credit helped offset that market weakness but when it expires at this month – contracts have to be signed by the end of April and sales closed before July 1 – the lenders will have to step up.

“If lenders don’t return to the market, we could experience another letdown in the housing market,” he said.

Only two cities recorded home price gains in January: Los Angeles prices rose 0.9% and San Diego gained 0.4%.

Portland, Ore., reported the largest decrease, 1.8%. Other large losses were sustained by Chicago and Seattle, both down 1.7%, and Atlanta, off 1.5%.

The FHA’s move to raise upfront mortgage insurance premiums takes effect next week, soon to be followed by a reduction in allowable seller concessions toward a borrower’s closing costs.

Speaking to a Housing Financial Services subcommittee earlier in March, MBA President John Courson expressed concern that “this could be another policy change that would have an adverse effect on the population that traditionally has sought FHA’s assistance to purchase a home.” He added that the cut in seller concessions would largely affect low-to-moderate, first-time, and minority home buyers.

Source: Memphis Daily News, Eric Smith (03/30/10)

The value proposition lenders can’t afford to ignore.

By Charlie W. Elliott, JR., MAI, SRA

Lately Appraisal Management Companies (AMCs) have been in the news. In fact, few people had heard of AMCs until recently. Perhaps that is because they are business-to- business entities, usually not catering to the general public.

AMCs, by definition, are vendor management companies acting on behalf of appraisal users. AMCs are becoming more popular among lenders and not everyone is pleased. Why would anyone care whether a bank outsources its appraisals? Further, why would a bank want to farm out its appraisals?

Lenders outsource these services for three reasons. First, it helps reduce fraud between the lender’s salespeople and the appraiser, thus reducing losses while pleasing the regulators. Fannie Mae and Freddie Mac recently implemented new rules regarding this which some say favors outsourcing to AMCs. Secondly, it saves the bank money. Banks have high overhead and cannot compete with the efficiencies AMCs offer. Finally, some banks are subscribing to vender management because of federal RESPA laws. RESPA, in part, is designed to protect consumers from fee gouging. Banks must account for closing cost fees charged to customers. It is hard for them to define and recoup all of these costs. Collectively these issues cause banks to outsource their appraisals. It is easy to explain to regulators, it protects their bottom line and it frees management to do what they do best, make loans. (more…)

WASHINGTON, DC – U.S. house prices fell 0.6 percent on a seasonally adjusted basis from December to January, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 1.6 percent decline in December was revised downward to a 2.0 percent decline. For the 12 months ending in January, U.S. prices fell 3.3 percent. The U.S. index is 13.2 percent below its April 2007 peak.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from December to January ranged from –1.8 percent in the East North Central Division to + 2.0 percent in the Mountain Division.

Monthly index values and appreciation rate estimates for recent periods are provided in the table and graphs on the following pages. Click here for complete historical data.

For detailed information concerning the monthly HPI, please see the HPI Frequently Asked Questions (FAQ). The next release will be on April 22, 2010 and will include monthly data for February. The next release of FHFA’s quarterly HPI will be on May 25, 2010 and will include monthly data for March as well as data for the first quarter of 2010.

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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.

Nearly Half of Home Purchases Are Distressed Properties The share of home purchase transactions involving distressed properties surged to almost half in February, reported the Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions. The report said distressed properties–those involving homes acquired as part of a foreclosure or pre-foreclosure sale–accounted for 48.1 percent of home purchase transactions tracked, up from the 37.3 percent level recorded as recently as November. It was also the highest distressed property market share seen since July. Short sales now account for the number-one category of distressed property, said Thomas Popik, research director for Campbell Surveys. Losses on short sales are typically lower than for REO, and both lenders and the government are pushing programs to facilitate short sales. But as more and more people default or simply want to walk away from their properties, mortgage servicers are having trouble expeditiously processing these complicated transactions.

Jeff Schurman Executive Director TAVMA P.O. Box 1196 Wexford, PA 15090 www.tavma.org

In recent weeks the inventory if homes on the market in St. Paul has risen which is a good thing because in January and February it started getting hard to find the right home for some buyers.  As I looked at all of those new listings, we have about 400 more homes on the market here in St. Paul in March than we did in January I started to wonder if they were being absorbed by the buyers.   

Absorption rates are a  calculation of how long it will take for all the homes on the market to be sold, or absorbed, at the current rate of sales. I do love numbers, and these are in months, the data used came from the RMLS, (MLS) and is deemed reliable but not guaranteed.  Sadly there are no guarantees in life.

The absorption rate for the last thirty days for St Paul is:

5.58 Months

Sweet! That means that as the homes are going on the market and up for sale buyers are buying them. How long will this last?  Hard to say.  Applications for new mortgages were down in February and in some parts of the country home sales were down as well but not here.

There are more homes for buyers to choose from but the best deals are being scooped up quickly as buyers race to beat the clock on the first time home buyer tax credit which expires on April 30th.

Lots of people have been asking about when do you have to have a deal signed and then when does it has to close to be eligible for the $8000 tax credit.

I am not an attorney nor do I play one on TV.  This is what I have read and heard from my mortgage broker friends.

A buyer have a fully executed contract in hand by April 30, 2010 for the transaction to be considered eligible.  Then the deal must close by June 30, 2010 in order to take advantage of the first time home buyer tax credit.

The primary key here is that you need a “fully executed” contract.  The typical REO or retail sale that gets done signed by April 30 should have no problem skating across the finish line.  Conversely, I bet most short sales will not make it.

Many short sales will agree to your offer, sign it, send it to the bank for approval and then wait.  If you as the buyer do not receive a signed copy, you do NOT have a fully executed contract in the state of Minnesota.  The way to fix this is to demand that the seller sign the contract and give you a copy, but make it contingent upon bank approval.  The contract can still be “subject to bank approval” for it to be binding and fully executed.  That is simply a condition of the contract like an inspection contingency.

I know you don’t want to hear this, but I believe that it is already too late to make an offer on a property that is a short sale and get it through the bank’s short sale department before June 30.  Some agents may disagree, but every short sale I have been involved in takes at least 4-6 months to close.  You would have needed to get an accepted offer on one January 1 or earlier to feel good that it will probably close by June 30 (even then it is a crap shoot!).

With severe winter weather hampering the real estate market in much of the country, Fannie Mae revised its March 2010 Economic Outlook, according to a March 17 news release. The agency lowered its 2010 economic growth projection from 3.2 percent to 3 percent.

After the recent unexpected drop in sales of new and existing homes, the government-sponsored enterprise said the setback is temporary and anticipates activity to increase in the second quarter. That is later in 2010 and at a slower pace than previously projected.

“The recent growth in consumer spending is a positive sign for first quarter gains. However, anxiety over job and income prospects continues to weigh on consumer confidence which will likely lead to moderate spending growth in the coming quarters,” Doug Duncan, chief economist at Fannie Mae, said in the release. “Strengthening growth in the service sector and more favorable financial conditions overall keep us optimistic that we are moving forward with the recovery, albeit at a lower trajectory than previously forecast.”

Queens family indicted in $1.75 million fraud scheme

A Queens County grand jury in New York indicted a couple and their daughter for allegedly stealing more than $1.75 million through real estate and immigration fraud, according to a release by the Queens district attorney earlier this month.

Over a period of six years, Shane Ramsundar, 50, his wife, Gomatee Ramsundar, 46, and their daughter, Shantal Ramsundar, 23, allegedly portrayed Shane as a federal agent and allegedly promised 19 members of the borough’s West Indian community that he could help them buy cheap governmentally seized properties in Florida and Queens and/or help them achieve legal status in the United States.

“Our immigrant community here in Queens can be especially vulnerable to deception and fraud when someone promises to help them navigate the process of obtaining the necessary documents to work and remain in the United States or to get ahead by dealing in real estate,” said Richard A. Brown, the Queens district attorney.

“These victims are alleged to have put their faith and their finances in the hands of the defendants who, in turn, allegedly betrayed them by ripping them off and turning their American Dream into the American Nightmare.”

The three were charged wih 34 counts of first- and second-degree grand larceny, first- and second-degree money laundering, first-degree criminal impersonation, first-degree scheme to defraud, and unlawful sale or possession of an air pistol, the release said. Each faces a maximum of 25 years in prison if convicted. (more…)

NEW YORK (CNNMoney.com) — Short sales are the hottest thing going in the distressed-property market, and the trend is expected to get even hotter in coming weeks, when the government starts handing out cash to encourage lenders to close these deals.

“Banks have ramped up short sale approvals,” said Duane Legate of House Buyer Network, which connects short sellers with buyers. “They’re hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sales.”

These transactions, where lenders allow homeowners to sell their houses for less than they owe, accounted for 17% of all residential real estate sales in February, up from nearly 13% in November, according to a monthly real estate market survey by Campbell/Inside Mortgage Finance.

And Bank of America (BAC, Fortune 500), the country’s largest mortgage servicer, has more than doubled the number of short sales it processed in recent months. (more…)