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Housing Crisis to End in 2012 as Banks Loosen Credit Standards !!!

 

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.

Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.

Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”

In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.

While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.

Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

DSNews.com by : Krista Franks Brock  01/24/12

Home Prices to Increase Modestly by Year-End: Clear Capital

 

The valuation firm Clear Capital released the results of its home price forecasting models Thursday. The company expects residential property values at the national level to show slight increases over the next three months, ending the year with a growth rate of 1.2 percent.

Diagrams illustrating the trajectory of home prices from 2006 to now and Clear Capital’s projections heading into 2013 depict the valley shape with current prices at the bottom and a subtle upward trend from March through December of 2012.

The strongest of the country’s four regions throughout much of 2011, the Northeast, is expected to see a modest gain of 0.3 percent over the next three months but pick up momentum and grow prices by 1.3 percent to wrap up the year.

The South is expected to perform the strongest in the short term with prices projected to increase 0.5 percent over the next three months, and end the year up 1.6 percent.

Clear Capital’s forecast indicates the Western region could be turning a corner. The three-month numbers show the region gaining 0.2 percent, and pushing that to a positive 1.0 percent by year-end.

The Midwest remains the weakest region of the country in terms of home prices. There, Clear Capital is expecting a drop of 0.6 percent over the next three months, but then movement into positive territory with a 0.7 percent gain by December.

The 50 metropolitan statistical areas (MSAs) tracked by Clear Capital are forecast to show mixed gains and losses, with 30 markets expected to see gains and 20 markets projected to post losses through the end of 2012.

Over half of the metros in the company’s study should see prices move less than 2 percent in either direction. No

double-digit declines are expected however, Phoenix, Arizona, and Tampa, Florida, are expected to see double-digit gains.

Clear Capital sees positive price trends on the horizon for most of the country, despite the fact that currently home prices are continuing to slip. Data through March 2012 shows national home prices fell 0.2 percent in Clear Capital’s rolling quarter-over-quarter analysis.

The West, South, and Northeast posted quarterly gains of less than 1 percent, and the Midwest lost a significant 2.4 percent.

The year-over-year numbers showed even weaker performance for the nation and all its regions, indicating short-term appreciation has yet to be enough to turn the long-term tide.

According to Clear Capital’s assessment, the nation lost 1.4 percent in home values from March 2011 through March 2012, which is slightly better than February’s year-over-year decline of 1.9 percent.

REO saturation, which traditionally pushes down prices, continued to climb last month, Clear Capital reported. It was the second month in a row that distressed property sales as a percentage of total sales increased for the nation and all regions.

Clear Capital says its findings confirm speculation that finalization of the attorneys general settlement has led servicers to become more aggressive in moving their REO backlog onto the housing market.

In March, the national REO rate went up 1.2 points from the previous month’s reading to hit 27 percent, pointing to an acceleration of REO sales. The Midwest contributed the most to the increase, jumping 3.8 points to 34.3 percent, with the other regions all seeing softer increases.

Of particular interest this month, according to Clear Capital, is how the changes in REO saturation are affecting prices. In the past, there has been a consistent inverse relationship between changes in REO saturation and prices, but not in March’s study. Although their REO rates increased, the West, Northeast, and South regions also saw home prices increase.

These geographies are exhibiting a pricing resilience to REO saturation that has not been seen in previous analyses, Clear Capital says. The company says it could be explained by improvement in jobs numbers recently, rapidly increasing investor activity in certain regions, and a general increase in consumer confidence.

DSNews by : Carrie Bay 04/04/12

Number of Completed Foreclosures Down for February

 

Completed foreclosures per thousand active loans for judicial vs. non-judicial states

The number of completed foreclosures in February 2012 was down on a monthly basis and slightly on a year-over-year comparison, but overall, foreclosure inventory has decreased compared to a year ago, according to CoreLogic’s National Foreclosure report for February.

Completed foreclosures are counted as properties that get auctioned off and purchased by a third party, such as an investor or lender.

For February 2012, 65,000 completed foreclosures were reported, compared to 66,000 in February 2011, and 71,000 in January 2012. The number of completed foreclosures over 12 months ending in February was 862,000. From the start of the financial crisis in September 2008, CoreLogic estimates 3.4 million completed foreclosures.

“Even though the pace of completed foreclosures has slowed, the overall foreclosure inventory is decreasing because REO sales were up in February,” said Mark Fleming, chief economist for CoreLogic. “With the spring buying season upon us, the inventory may decline further as the pace of distressed-asset sales rises along with the rest of the housing market.”

Approximately 1.4 million homes with a mortgage, or 3.4 percent, were in the foreclosure inventory as of February 2012. Nationally, the number of borrowers in the foreclosure inventory decreased by 115,000, a decline of 7.6 percent compared to February 2011. For the prior month of January 2012, no change was reported.

The share of borrowers nationally that were 90 or more days late on their mortgage payment fell to 7.3 percent in February 2012 from 7.8 percent in February 2011, but up slightly from the 7.2 percent in January 2012.

The distressed clearing ratio for February 2012 moved up to 0.73 from 0.66 in January 2012. The distressed clearing ratio is calculated by dividing the number of REO sales by the number of completed foreclosures. A higher ratio means a faster pace of REO sales compared to the pace of completed foreclosures.

“In February, more than 60 major markets saw a decrease in their foreclosure rates compared to a year ago,” said Anand Nallathambi, president and CEO of CoreLogic. “This combined with faster REO-clearing rates, better employment news, and continued historically low interest rates are all positive signs of improvement in the housing economy.”

Of the top 100 markets measured by Core Based Statistical Areas (CBSAs) population, 33 showed an increase in the year-over-year change in the number of foreclosures in February 2012.

Five states with the largest number of completed foreclosures:

1. California (154,000)
2. Florida (87,000)
3. Michigan (64,000)
4. Arizona (63,000)
5. Texas (58,000)

These five states account for 49.4 percent of all completed foreclosures.

Five states with the highest foreclosure rates:

1. Florida (12.0 percent)
2. New Jersey (6.6 percent)
3. Illinois (5.4 percent)
4. Nevada (5.0 percent)
5. New York (4.9 percent)

Five states with the lowest foreclosure rates:

1. Wyoming (0.7 percent)
2. Alaska (0.8 percent)
3. North Dakota (0.8 percent)
4. Nebraska (1.0 percent)
5. Montana (1.4 percent)

 

By DSNews , by Esther Cho 03/29/12