Monthly Archives: April 2012

Waccabuc NY Real Estate | Lenders Hang Tough as Sales Season Opens

Lenders haven’t budged an inch on tough origination standards as the 2012 spring sales season opened last month and conventional purchase and FHA loans gained greater market share.
Median FICO scores for denied loans remained close to 700 and for the average loan, lenders required more than 15 percent in equity or a down payment. On average, there was an 8-point spread between back-end DTI ratios for approved-versus-denied loans last month, according to the Ellie Mae Origination Insight Report.
“In March, as we moved into the Spring selling season, underwriting standards for both purchase and refinance loans continued to be highly conservative,” said Jonathan Corr, chief operating officer of Ellie Mae. “On average, there was an 8-point spread between back-end DTI ratios for approved-versus-denied loans last month. The average denials for conventional refinances and purchases continued to have significantly higher FICOs, lower LTVs and more restrictive DTIs than the overall averages.”
Ellie Mae found that nearly 47 percent of all applications closed, with a higher percentage of purchase mortgages closing (56.4 percent). However, February purchase loan closings were 60.1 percent, suggesting the quality of applications declined slightly with the beginning of the buying season.
“The numbers showed a significant pick up in the percentage of purchase loans to 39% in March versus 33% in February, and a corresponding increase in FHA share: 28 percent of closed loans versus 25% in February,” said Corr. “The increase in FHA share was not surprising given FHA originations tend to skew more heavily towards purchase.
The timeline from application to closing for the average loan was 42 days in March, two days shorter than February, which suggests that the industry was working through the surge in refinance applications that came in at the end of last year. “With rates at historically low levels, the percentage of borrowers opting for adjustable rate mortgages (ARMs) in March was at the lowest point in the past six months and roughly half of where it was at the end of last summer,” Corr said.
In 2011, the total volume of mortgages that ran through Ellie Mae’s Encompass360 mortgage management software was approximately two million loan applications, or 20 percent of all U.S. mortgage originations. The Origination Insight Report mines its application data from a robust sampling of approximately 33 percent of all mortgage applications that were initiated on the Encompass origination platform. Given the size of this sample and Ellie Mae’s market share, the company believes the Origination Insight Report is a strong proxy of the underwriting standards that are being employed by lenders across the country.

via realestateeconomywatch.com

South Salem NY Homes | Foreclosure Discounts Shrink in 2012

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The rates that foreclosures and short sales are discounted from full-price properties have declined significantly in 2012, especially discounts for higher priced properties and in some of the markets hit hardest by foreclosures in the past.
The latest Realtor Confidence Survey by the National Association of Realtors found that the foreclosure discount has fallen from approximately 22 percent in February to 18.8 percent in March. The discount for short sales has shrunk from18 percent in January fell to 15.8 percent in March. Results were based upon a survey of Realtors.
Separately, using data on sales of foreclosed and REO properties through February, the FNC Residential Price Index found that foreclosure discounts declined to below pre-crisis levels for higher value properties (over $250,000), but remained elevated for lower-priced homes. FNC also found that in the fourth quarter of last year, foreclosure discount s declined in a number of the hardest hit markets, including Phoenix, Tampa, Miami, Las Vegas and Atlanta, driven by sharp declines in foreclosure sales.
Discounts reported by RealtyTrac were far higher in the fourth quarter of last year. The average sales price of a bank-owned foreclosure in the fourth quarter was 36 percent below the average sales price of a non-foreclosure home, while the average discount on bank-owned homes for all of 2011 was 40 percent, according to RealtyTrac’s Fourth Quarter and Year-End 2011 U.S. Foreclosure Sales Report.
RealtyTrac also published its top ten list of REO markets, based on fourth quarter data and ranked by average discount size. Milwaukee (57.9 percent discount) ranked first, Philadelphia (52.52 percent) second, Boston (50.92 percent) third, Chicago (49.71 percent) fourth and Atlanta (48.12 percent) fifth. None of the top ten discount markets were located in the four “sand states,” the traditional center for most foreclosure activity.
Shrinking discounts now are thought to be a sign of market stabilization just as increasing discounts reflect instability and put downward pressure on property values. “The size of the difference-name the foreclosure price discount-underscores the impact of market distress and foreclosure activities on property values,” said FNC in a news release.

via realestateeconomywatch.com

Katonah NY Homes | Foreclosure Drought and Declining Discounts Depress Investor Sales

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The market share of foreclosures and short sales has fallen 27 percent from a year ago, pulling down March overall existing home sales 2.6 percent as inventories of foreclosures and short sales suddenly declined last month.
Foreclosures and short sales accounted for only 29 percent of March sales (18 percent were foreclosures and 11 percent were short sales), compared with 34 percent in February and 40 percent in March 2011, according to the National Association of Realtors. Distressed sales have hovered in the 30 to 35 percent range for a number of years, with heavy sales concentrations in a few states.
ForeclosureRadar, which covers five Western States, reports a similar dramatic drop in the number of properties sold at foreclosure auctions. Foreclosure sales in California are down 16.7 percent from February to March 2012 and down 53.1 percent from March a year ago. A total of 86,487 sales were scheduled to occur in California, but of those 80.0 percent postponed, and 10.6 percent were cancelled, leaving just 8,392 that were actually sold. Third parties, typically investors, purchased a record 38.6 percent of the properties that did sell in California.
Markets around the nation also report a decline in distressed sales. Colorado January 2012 foreclosure sales were down compared to January 2011 with a decrease of 23.3 percent from 1,499 to 1,150. The number of home sales in the Baltimore metro area that are not distress deals – neither foreclosures nor short sales – jumped about 25 percent in March from a year earlier, according to numbers released by the Metropolitan Regional Information Systems.
Investors purchased only 21 percent of all homes sold in March, down from 23 percent in February and 22 percent in March 2011. First-time buyers accounted for 33 percent of transactions in March; they were 32 percent in February and 33 percent in March 2011. All-cash sales, a measure of investor actifity, slipped to 32 percent of transactions in March from 33 percent in February; they were 35 percent in March 2011.
NAR said fewer numbers of foreclosures and short sales accounted for the decline in sales, but falling discounts may have also dampened investor interest. Foreclosures typically sold for an average 19 percent below market price in March, while short sales were discounted 16 percent, according to the National Association of Realtors. The average sales price of a bank-owned foreclosure in the fourth quarter was 36 percent below the average sales price of a non-foreclosure home, while the average discount on bank-owned homes for all of 2011 was 40 percent, according to RealtyTrac’s Fourth Quarter and Year-End 2011 U.S. Foreclosure Sales Report (see Foreclosure Discounts Shrink in 2012).

via realestateeconomywatch.com