The housing market is showing "signs of improvement" with help
from luxury home sales, Toll Brothers Chief Executive Douglas
Yearley said yesterday. "There are some signs luxury is leading
us out of this a little bit," he said. "We're clearly off the
bottom." But while Toll is a builder of those luxury homes, the
CEO expects sales the rest of the year to be relatively flat.
That's despite 60% of Toll sales coming from the northeast
corridor of Boston to Washington, D.C., which was not hit with
the same housing problems as Las Vegas and Florida, among others.
"I think in pockets we’ll see some success," Yearley said.
"The good news is pricing has definitely stabilized. We’re not
seeing price reductions. In some isolated cases, we have some
pricing power, we’re able to raise prices." He added that
after five or six years of waiting, buyers want "to move on with
their lives and I think they’re done trying to time the perfect
point to get in the market. They’re taking advantage of great
interest rates. Affordability’s at an all-time high…It’s
helping us but we have a long ways to go."
Showing posts with label tagged investor appraisal guidelines. Show all posts
Showing posts with label tagged investor appraisal guidelines. Show all posts
Monday, June 13, 2011
Thursday, March 24, 2011
Fed’s Fisher Opposes Extension of QE2
U.S. Federal Reserve Bank of Dallas President Richard Fisher said he opposes any extension of the Fed’s asset purchase program after June, saying inflationary pressures are building “world-wide.” “No further accommodation is needed after June. We can no longer press on the monetary pedal,” Fisher said in a speech at Goethe University in Frankfurt. Fisher has been skeptical of the program, dubbed QE2, saying two weeks ago, that it should prove “demonstrably counterproductive,” and it would be better to discontinue it. Last week, the Fed voted to maintain its key lending target near zero and maintain its planned $600 billion in Treasury purchases through June. As the Fed’s rate-setting board voted to continue the program, he warned of speculative excesses that may be contributing to the rise in oil prices. “We are seeing the signs of all the intoxication” that arises from cheap and available capital, Fisher said.
Friday, February 25, 2011
Obama tries to force mortgage deal
WSJ - Obama tries to force mortgage deal
The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won't be borne by investors who purchased mortgage-backed securities, these people said. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said. But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation's largest mortgage ser
vicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.
So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan. Several federal agencies have been scrutinizing the nation's largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.
A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff. "Nothing has been finalized among the states, and it's our understanding that the federal agencies we are in discussions with have not finalized their positions," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.
The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won't be borne by investors who purchased mortgage-backed securities, these people said. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said. But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation's largest mortgage ser
vicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.
So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan. Several federal agencies have been scrutinizing the nation's largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.
A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff. "Nothing has been finalized among the states, and it's our understanding that the federal agencies we are in discussions with have not finalized their positions," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.
Tuesday, February 22, 2011
FHFA presents new compensation model
The Federal Housing Finance Agency (FHFA) has issued a 28-page document that presents several alternatives it plans to consider for how Fannie Mae and Freddie Mac compensate mortgage servicers. The report is part of joint initiative announced by FHFA and HUD in January to revise the compensation model for mortgage servicing. The new payment models are also being considered for companies that service Federal Housing Administration (FHA) loans on behalf of Ginnie Mae. Currently, the typical compensation structure pays the loan servicer from a strip of the interest on each mortgage, an “IO” strip, regardless of loan status, FHFA explained.
The agency says the IO strip is a difficult asset to manage and results in a servicer receiving more than enough income to cover the expenses of servicing performing loans, but not enough when a portfolio includes a significant number of nonperforming loans. FHFA says this arrangement decreases the flexibility needed to ensure optimal servicing of nonperforming loans during times of high defaults like the industry is currently experiencing. The document outlines various alternatives to the current pay model, including a fee-for-service compensation structure for nonperforming loans and reducing or eliminating the minimum mortgage servicing fee for performing loans. FHFA provides extensive analysis of the alternative scenarios that encompasses illustrations of cash flows and accounting, capital calculations and requirements, and mortgage rate setting. FHFA says the ideas, models, and alternatives included in the presentation should be used as starting points “to generate
thinking and to explain concerns with the current compensation system.”
The agency said it is coordinating the efforts of the initiative to gather feedback from the industry, consumer groups, investors, and other regulators and government agencies. FHFA has established a dedicated Web link to post information related to the servicing compensation initiative, including background materials and issues that should be considered as development moves forward. When the administration released its plan for winding down Fannie Mae and Freddie Mac earlier this month, officials stressed that one of the near-term reforms on the agenda is reforming servicing compensation. FHFA said in January that implementation of a new servicing compensation structure is not expected to occur before the summer of 2012.
The agency says the IO strip is a difficult asset to manage and results in a servicer receiving more than enough income to cover the expenses of servicing performing loans, but not enough when a portfolio includes a significant number of nonperforming loans. FHFA says this arrangement decreases the flexibility needed to ensure optimal servicing of nonperforming loans during times of high defaults like the industry is currently experiencing. The document outlines various alternatives to the current pay model, including a fee-for-service compensation structure for nonperforming loans and reducing or eliminating the minimum mortgage servicing fee for performing loans. FHFA provides extensive analysis of the alternative scenarios that encompasses illustrations of cash flows and accounting, capital calculations and requirements, and mortgage rate setting. FHFA says the ideas, models, and alternatives included in the presentation should be used as starting points “to generate
thinking and to explain concerns with the current compensation system.”
The agency said it is coordinating the efforts of the initiative to gather feedback from the industry, consumer groups, investors, and other regulators and government agencies. FHFA has established a dedicated Web link to post information related to the servicing compensation initiative, including background materials and issues that should be considered as development moves forward. When the administration released its plan for winding down Fannie Mae and Freddie Mac earlier this month, officials stressed that one of the near-term reforms on the agenda is reforming servicing compensation. FHFA said in January that implementation of a new servicing compensation structure is not expected to occur before the summer of 2012.
Sunday, January 30, 2011
Revised appraisal guidelines haunt investors
Revised appraisal guidelines haunt investors
Posted on January 28, 2011
Just in case you haven’t run into it yet, our wise government – particularly the agencies that oversee mortgages – instituted more new guidelines in December that are just now starting to affect real estate investors. Effective Dec. 2010, in order to continue policing the mortgage industry, the Federal Reserve System engaged new policies for Automated Valuation Models on appraisals. (See http://www.federalreserve.gov/newsevents/press/bcreg/20101202a.htm) The newest guidelines require “interagency cooperation” in inputting data into the huge property database. These agencies include the Office of the Comptroller of the Currency (OCC), FDIC, Office of Thrift Supervision, Federal Reserve System, and the National Credit Union Administration. Further, the guideline goes one step further requiring actual visits to the property for a property condition report. Certainly, this inspection is needed in many circumstances. However, it does slow the process down by several more days and, on REO and foreclosure properties oft times, this can be the kiss of death.
How does this affect you? If you are a real estate investor that uses mortgage financing on potential rentals or flips, you may run into a new set of appraisal problems. Most affected are non-owner occupied loans, second mortgages, and lines of credit. If you’re one of those rare birds that still has a line of credit in place, it means when the bank is reviewing their collateral for the line, your ability to borrow may be reduced – sometimes drastically.
For potential new homebuyers, this doesn’t change things much. If it is an owner occupied property for a traditional or FHA first mortgage, lending institutions policies on appraisals are fairly close to the same as they were prior to December 2010. Some, however, have gone to the “two appraisal” rule. This means, to be safe, they are requiring two independent appraisals on each property. Whether they select one appraisal to go with, choose the lower of the two, or average the two varies with each institution.
Bottom line: In the near future, if you have been dependent on mortgages to purchase investment properties, you may want to adjust your business model. Several investors I know have already been shocked by hugely reduced values lenders are willing to do on investment properties. This is no fun when you’re expecting to have a closing. So, to be safe, do one of two things: (1) Use property you already own to collateralize lines of credit. Realize there must be plenty of equity available to do this smoothly; or (2) Even if you do fewer transactions, simply pay cash. Whether this is your own funds or those of an angel investor doesn’t matter. Paying cash is and has always been the path of least resistance. All others to the back of the line.
Posted on January 28, 2011
Just in case you haven’t run into it yet, our wise government – particularly the agencies that oversee mortgages – instituted more new guidelines in December that are just now starting to affect real estate investors. Effective Dec. 2010, in order to continue policing the mortgage industry, the Federal Reserve System engaged new policies for Automated Valuation Models on appraisals. (See http://www.federalreserve.gov/newsevents/press/bcreg/20101202a.htm) The newest guidelines require “interagency cooperation” in inputting data into the huge property database. These agencies include the Office of the Comptroller of the Currency (OCC), FDIC, Office of Thrift Supervision, Federal Reserve System, and the National Credit Union Administration. Further, the guideline goes one step further requiring actual visits to the property for a property condition report. Certainly, this inspection is needed in many circumstances. However, it does slow the process down by several more days and, on REO and foreclosure properties oft times, this can be the kiss of death.
How does this affect you? If you are a real estate investor that uses mortgage financing on potential rentals or flips, you may run into a new set of appraisal problems. Most affected are non-owner occupied loans, second mortgages, and lines of credit. If you’re one of those rare birds that still has a line of credit in place, it means when the bank is reviewing their collateral for the line, your ability to borrow may be reduced – sometimes drastically.
For potential new homebuyers, this doesn’t change things much. If it is an owner occupied property for a traditional or FHA first mortgage, lending institutions policies on appraisals are fairly close to the same as they were prior to December 2010. Some, however, have gone to the “two appraisal” rule. This means, to be safe, they are requiring two independent appraisals on each property. Whether they select one appraisal to go with, choose the lower of the two, or average the two varies with each institution.
Bottom line: In the near future, if you have been dependent on mortgages to purchase investment properties, you may want to adjust your business model. Several investors I know have already been shocked by hugely reduced values lenders are willing to do on investment properties. This is no fun when you’re expecting to have a closing. So, to be safe, do one of two things: (1) Use property you already own to collateralize lines of credit. Realize there must be plenty of equity available to do this smoothly; or (2) Even if you do fewer transactions, simply pay cash. Whether this is your own funds or those of an angel investor doesn’t matter. Paying cash is and has always been the path of least resistance. All others to the back of the line.
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