What do today’s buyers want in a home?

NEW YORK – Aug. 5, 2015 – What building materials are trending in new-home construction? The latest Annual Builder Practices Survey, conducted by Home Innovation, reveals what buyers can expect to see in the new-home market.

1. Garages: The garage door is getting more enhancements, including windows, insulated doors, and doors made of composite or plastic materials. In 2014, 32 percent of all new single-family homes had bays for three or more cars – the most ever recorded in this study’s history.

2. Flooring: Carpeting continues to be the most popular flooring option for new construction, included in about 83 percent of all new-home bedroom installations. However, only about 40 percent of living rooms now have carpet. Hardwood flooring – both solid and engineered– is the second most popular type of flooring included in 27 percent of all new-home installations. Ceramic tile (which appears in 72 percent of all bathroom floor installation) follows in third place, making up 20 percent of all new-home floor installations.

3. Countertops: For kitchen countertops, granite continues to reign in two out of three homes (64 percent of new-home installations). Quartz/engineered stone is gaining popularity while laminate, solid surfacing and ceramic tile are losing appeal.

4. Appliances: Cooktops and wall oven combinations are gaining in popularity and make up about 24 percent of the market, compared to freestanding ovens (45 percent). Freezer-on-bottom refrigerators are gaining in popularity at 19 percent, while side-by-side has fallen to 28 percent of the share.

5. Kitchen sinks: More buyers are paying attention to their kitchen sink, with the single basin kitchen sink making a comeback, growing from 5 percent to 20 percent of all new single-family homes in the past decade. Also growing in popularity are granite/stone kitchen sinks (at 8 percent). One-piece cultured marble lavatories are continuing to decline in demand.

Source: “Material World: The Hottest Trends From the 2015 Builder Practices Survey,” BUILDER Online (July 29, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

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4 Florida cities tops for seriously underwater homes

IRVINE, Calif. — July 30, 2015 — RealtyTrac released its second quarter (Q2) 2015 U.S. Home Equity & Underwater Report, which listed four Florida cities at the top of the list for homes seriously underwater – properties where the homeowners owe at least 25 percent more than the home’s current market worth.

Areas (population greater than 500,000) with the highest percentage of seriously underwater properties included Florida markets such as Lakeland (28.5 percent), Cleveland, Ohio (28.2 percent), Las Vegas (27.9 percent), Akron, Ohio (27.3 percent), Orlando (26.1 percent), Tampa (24.8 percent), Chicago (24.8 percent), Palm Bay(24.4 percent) and Toledo, Ohio (24.3 percent).

In addition, RealtyTrac looked at underwater homes that are also in the foreclosure process.

In the same Florida cities, over half of the homeowners going through foreclosure were seriously underwater:Lakeland (54.8 percent of foreclosures seriously underwater), Tampa (51.7 percent), Palm Bay (51.5 percent) and Orlando (51.2 percent).

Statewide, 23.6 percent Florida of homeowners with a mortgage were seriously underwater in the Q2 2015 – a drop from 23.8 percent in the first quarter and 30.3 percent year-to-year.

On the flipside, RealtyTrac found that 17.6 percent of Florida owners with a mortgage were “equity rich” with at least 50 percent equity. That’s a slight drop for the first quarter’s 17.8 percent but an increase from 15.9 percent year-to-year.

Looking only at homes in foreclosure, 62.8 percent in Florida were seriously underwater, while 18.6 percent, even though going through foreclosure, were equity rich.

“Strong South Florida price increases over the past few years have moved many homeowners from negative to positive equity. We would encourage the remaining distressed homeowners to ask for a Broker Price Opinion (BPO) regarding the value of their property – many may be surprised at their improving value,” says Mike Pappas, CEO and president of Keyes Company in South Florida.

National numbers

Nationwide, 13.3 percent of all properties with a mortgage were seriously underwater in Q2, an increase from 13.2 percent of all homes in the first quarter. However, they dropped from 17.2 percent year-to-year. At the peak of the foreclosure crisis in 2012, the percentage was 28.6 percent.

“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13 percent of all properties with a mortgage,” says Daren Blomquist, vice president at RealtyTrac.

“However, the share of homeowners with the double-whammy of seriously underwater properties also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012,” he adds.

© 2015 Florida Realtors®

Why you shouldn’t pay down your mortgage faster

NEW YORK – Aug. 31, 2012 – The impulse to pay off your mortgage more quickly than you need to is understandable, especially these days.

Interest rates are near historic lows, so it’s possible to replace a 30-year mortgage with a 15-year loan and still afford the monthly payments. Or, if you’ve already refinanced at a dirt-cheap rate, you can take those savings and pay down your principal faster.

But the allure is more emotional than financial. Mortgage debt provides great financial flexibility, and paying it down fast probably isn’t the best way to grow your nest egg.

“Generally speaking, there’s no advantage to paying down a mortgage earlier than you need to,” says Greg McBride, senior financial analyst at Bankrate.com

That’s because the interest on mortgages is low, it helps lower your taxes, and paying less every month gives you chance to reinvest the savings in more productive ways. Among the better options: paying down higher-interest credit cards, or saving for retirement.

Start with rates on 30-year mortgages. The average rate is 3.66 percent, close to the lowest level since the 1950s.

But in reality you pay an even lower rate when factoring in tax breaks. The federal government gives borrowers a break by allowing them to deduct mortgage interest from their income. And if instead of using the extra cash to pay down your mortgage you put it in a tax-advantaged retirement fund like a 401(k), your taxes are reduced even further.

Jim Sharvin, a certified public accountant with the firm McDowell Dillon & Hunter in Torrance, Calif. says if you are thinking of paying down the principal of a mortgage more quickly than necessary – either by switching to a shorter-term loan or sending extra principal payments to the bank – consider first doing the following:

• Pay down all high-interest debt, like a credit card. It’s the first priority because it’s very expensive debt, and it has no tax or other financial benefit.

• Build a cash cushion to cover unexpected expenses or loss of income.

• Bolster your retirement savings by putting the maximum amount allowed by law into a tax-sheltered plan such as a 401(k), a 403(b), or IRA. This also reduces your taxes.

• Fund a college savings program such as a 529 plan for your children, especially if you live in a state with an income tax. These programs shelter the money from state and local income taxes.

Once these priorities are taken care of, the next step is a matter of preference.

You could take the money you borrowed at 3 percent and try to reinvest it in a way that earns more than that. If you have time to ride out ups and downs of the market, 3 percent should be relatively easy to beat.

Or you could pay down your mortgage quickly. If you are just going to park your money in money market funds or certificates of deposit that yield less than 3 percent, it makes sense to pay down that mortgage debt. And it sure would be nice to have no mortgage when you retire.

There are other situations where it’s smart to pay down a mortgage early.

The first scenario is when you’re trying to eliminate the cost of private mortgage insurance, or PMI. That’s the insurance you must carry if you put down less than 20 percent on your home. It makes sense to speed up payments on your principal until you’re allowed to drop the insurance.

It’s also good to pay down your mortgage if you don’t have the discipline to reinvest extra money wisely. Handing the money to your mortgage company is one way to protect you from yourself.

Even if paying down a mortgage fast is the best choice, there are smarter ways than opting for a 15-year loan. That’s because the shorter term locks you into a higher payment, and that can become a burden if money gets tight.

A 30-year loan gives you options. If find yourself with extra money, then pay down the principal as aggressively as you like. But if you’re short, scale back to the regular monthly amount. That flexibility is probably worth the slightly higher interest rate on the 30-year loan these days, Sharvin says.

To compare a 15- and 30-year mortgage, consider this example: One homeowner with a $200,000 loan chooses a 3.75 percent 30-year mortgage, which costs $926 per month. Another chooses a 3 percent, 15-year mortgage, which costs $1,381 per month.

The homeowner with the 30-year loan ends each year with $5,460 in savings from lower payments and a tax break of about $770. He puts all that money into a 401(k), saving himself an additional $1,560 in taxes. That’s a total annual savings of about $7,800. If he earns a 5 percent return over 15 years, the homeowner will have accrued $170,000.

The homeowner with the 15-year loan will have no extra savings after 15 years. But then his mortgage payments will end. He’ll try to catch up, but he’s starting from so far behind that by the time 30 years are up – and both loans are paid off – the homeowner with the 30-year loan will have $124,000 more in savings.
Copyright © 2012 The Associated Press, Jonathan Fahey, AP business writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

REO inventory posts big drop from a year ago

WASHINGTON – Aug. 31, 2012 – The amount of foreclosed homes on banks’ books has dropped by 18 percent in the last year, the Federal Deposit Insurance Corp. reports. The FDIC also says that levels have been dropping since the third quarter of 2010.

As of June 30, banks held $41.7 billion in REO properties – that’s down from $51.2 billion one year prior.

But more foreclosures are likely on the way, a recent report by CoreLogic warns. About 1.3 million homes are in the foreclosure process. While that’s down from 1.5 million reported a year ago, the numbers are still elevated.

Still, while “levels of troubled assets and troubled institutions remain high … they are continuing to improve,” says Martin Gruenberg, FDIC acting chairman.

The improvements are leading more banks to post greater profits and even start to lend more. Lending rose 15 percent compared to last year, according to the FDIC report.

Source: “Bank REO Down 18% From One Year Ago,” HousingWire (Aug. 28, 2012)

© Copyright 2012 INFORMATION, INC. Bethesda, MD (301) 215-4688

Average on 30-year mortgage falls to 3.59%

WASHINGTON – Aug. 31, 2012 – Average U.S. rates on fixed mortgages fell this week and are just slightly above record lows reached earlier this year. The low rates have contributed to a modest housing recovery.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan declined to 3.59 percent, down from 3.66 percent last week. Five weeks ago, the rate fell to 3.49 percent, the lowest since long-term mortgages began in the 1950s.

The average on the 15-year fixed mortgage, a popular refinancing option, slipped to 2.86 percent. That’s down from 2.89 percent last week and closer to the record low of 2.80 percent five weeks ago.

Cheap mortgages are a key reason the housing market is finally started to rebound five years after the bubble burst.

Sales of newly built and previously occupied homes are well above last year’s levels. Prices have increased consistently, largely because the supply of homes has shrunk while sales have risen. And builder confidence is at its highest level in five years.

Still, the housing market has a long way back to full health. Some economists forecast that sales of previously occupied homes will rise 8 percent this year to about 4.6 million. That’s well below the 5.5 million annual sales considered healthy. Many people are still having difficulty qualifying for home loans or can’t afford larger downpayments required by banks.

Mortgage rates are low because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasurys increase, the yield falls.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.6 point, down from 0.7 point last week. The fee for 15-year loans also slipped to 0.6 point from 0.7.

The average rate on one-year adjustable rate mortgages fell to 2.63 percent from 2.66 percent last week. The fee for one-year adjustable rate loans was unchanged at 0.4 point.

The average rate on five-year adjustable rate mortgages declined to 2.78 percent from 2.80 percent. The fee held steady at 0.6 point.
Copyright © 2012 The Associated Press, Marcy Gordon, AP business writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Home loan late payments hit 3-year low in 2Q

LOS ANGELES – Aug. 8, 2012 – U.S. homeowners are getting better about keeping up with their mortgage payments, driving the percentage of borrowers who have fallen behind to a three-year low, according to a new report.

Still, the rate of decline remains slow, credit reporting agency TransUnion said Wednesday. The percentage of mortgages going unpaid is unlikely to return anytime soon to where it was before the housing market crashed.

Some 5.49 percent of the nation’s mortgage holders were behind on their payments by 60 days or more in the April-to-June period, the agency said. That’s the lowest level since the first quarter of 2009.

The second-quarter delinquency rate is down from 5.82 percent in the same period last year, and below the 5.78 percent rate for the first three months of 2012.

The positive second-quarter trend coincided with an improving outlook for the U.S. housing market.

A measure of national home prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings. Sales of new homes fell in June after reaching a two-year high in May. Sales of previously occupied homes also declined in June, but were higher than a year earlier.

Home refinancing surged in the second quarter, as interest rates sank to historic lows. And more borrowers with underwater mortgages – or home loans that exceed the value of the home – refinanced through the government’s Home Affordable Refinance Program than ever before.

“More people are making their payments, and that’s great,” said Tim Martin, group vice president of U.S. housing for TransUnion. “I expected a little bit better, but maybe we’ll see some more of that pick up in (the third quarter).”

Even as housing trends turned positive earlier this year, the U.S. economy began to show signs of faltering. The national unemployment rate remained stuck at 8.2 percent, and the pace of job growth slowed sharply, with employers adding an average of only 75,000 jobs in the April-June quarter. Hiring appeared to pick up in July, however, with employers adding 163,000 jobs.

TransUnion anticipates the mortgage delinquency rate will continue to decline. But it doesn’t see it falling below 5 percent this year.

The national delinquency rate remains well above its historical range, an indication many homeowners are still struggling five years after the housing downturn.

Before the housing bust, mortgage delinquencies were running at less than 2 percent nationally. It took about three years after the housing market crashed for the delinquency rate on mortgages to climb to a peak of nearly 7 percent in the fourth quarter of 2009. The rate has been trending down since then.

Home prices need to recover further for the delinquency rate to decline.

At the state level, Florida led the nation with the highest mortgage delinquency rate of any state at 13.48 percent, down from 13.91 percent a year earlier. It was followed by Nevada at 10.85 percent; New Jersey at 8.15 percent; and, Maryland at 6.79 percent.

The states with the lowest delinquency rate were North Dakota at 1.32 percent; South Dakota at 1.94 percent; Nebraska at 2.24 percent; and, Wyoming at 2.41 percent.

Foreclosure hotbeds Arizona and California each saw marked improvement during the second quarter.

California’s mortgage delinquency rate fell nearly 22 percent to 6.13 percent from a year earlier, while Arizona’s declined 21 percent to 6.14.

One reason for the sharp declines in mortgage delinquency rates in those states is that homes tend to move faster through the foreclosure process than in Florida, New York and other states where the courts play a role in the process. That leads to logjams of cases involving home loans that may have gone unpaid for two years or more.

“You have states that are taking a long time to work through the delinquencies that they have, which is keeping their numbers up,” Martin said.

TransUnion’s research is culled from its database of 27 million anonymous consumer records.
Copyright © 2012 The Associated Press, Alex Veiga, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Bank of America offers new loan modifications that reduce principal

MIAMI – May 9, 2012 – Bank of America is sending out letters to potentially thousands of struggling Florida homeowners to let them know they may be eligible for a reduction in their loan balance that may save them up to 30 percent in monthly payments, the lender announced Tuesday.

The letters will go out to more than 200,000 mortgage holders nationwide, with the first to arrive this week, the bank said. However, most of the letters will be mailed by the third quarter that starts July 1.

The latest loan modification offer is part of a $25 billion settlement involving Bank of America, four other major banks, 49 state attorneys general and federal officials.

Bank of America officials said they had no immediate number of how many South Florida mortgage holders would be sent the letters. “What I can tell you is that the heaviest concentration is in California and Florida, the largest of the hardest hit states,” said Jumana Bauwens, a spokeswoman for Bank of America Home Loans.

About 19,000 South Florida homeowners with Bank of America mortgages were at least 60 days late, Jessica Garcia, vice president for the bank’s national mortgage outreach, said last month.

To be eligible for the new loan modification, the Florida homeowners must have been at least 60 days behind on their payments on Jan. 31, 2012. They also must owe more on the mortgage than their home is worth today.

Their monthly payment – principal, interest, property taxes, insurance and any homeowner association fees – also has to total more than 25 percent of the family’s gross household income. “A key goal of mortgage modifications is to provide an affordable monthly payment, based on borrower’s ability to pay,” according to a Bank of America statement released Tuesday.

And to be eligible for the latest loan modification offer, homeowners should have loans owned and serviced by Bank of America – or serviced for another investor that has given the bank the authority to make the modifications.

Bank of America began reducing the principal on some home loans in March, first granting the reductions to homeowners already in a modification review process.

“So far under this early initiative, about 5,000 trial modification offers have been mailed, providing a potential total of more than $700 million in forgiven principal,” Bank of America officials said in a release.

The homeowners are required to make at least three payments on time before the modification can become permanent, the bank said.

“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors and communities,” said Ron Sturzenegger, a Bank of America Legacy Asset Servicing executive.

In South Florida, Bank of America has seen a declining number of delinquent mortgages – from about 30,000 last June to 19,000 now. That mirrors a national downward trend, according to a recent U.S. Department of Housing and Urban Development report.

For more information, customers may call Bank of America at 877-488-7814.

Copyright © 2012 the Sun Sentinel (Fort Lauderdale, Fla.), Donna Gehrke-White. Distributed by MCT Information Services.

Blame game begins when bank-owned homes decay

FORT LAUDERDALE, Fla. – May 3, 2012 – Thousands of vacant properties in South Florida’s hard-hit housing market have deteriorated into eyesores that violate health and safety laws, depress property values and spread blight. The owners of these homes: some of the world’s biggest banks.

In an extensive investigation of foreclosed homes, the Sun Sentinel found more than 10,300 property code violations lodged against banks in 10 South Florida cities since 2007.

Municipalities cited the banks because they had title to the homes. But some banks deny responsibility for neglected houses for reasons that ordinary homeowners could not, the Sun Sentinel found.

Banks shift the blame, saying maintenance isn’t their job but the responsibility of another bank or company, known as a “loan servicer.” And they delay or evade accountability simply because they are large institutions, usually based in other states, even other countries.

The Sun Sentinel, in its investigation, identified banks as owners only in cases in which they held title to the property. But the newspaper also found that years after launching foreclosure suits, some banks or their agents balk at completing the process and taking title to homes that are unlikely to sell for much. That practice fuels a separate legal “limbo” problem that traps thousands of vacated homes in years-long court cases, often as they tumble into ruin.

Banks pay little price for letting neighborhoods rot.

In South Florida, property code violations are civil matters, dealt with mostly by fines, which when left uncorrected can compound daily and grow to be ludicrously steep – as much as $4.7 million, for example, on a rundown Fort Lauderdale house owned by Germany’s Deutsche Bank.

Ultimately, banks negotiate with local officials to dramatically cut the fines so as not to hinder a home’s sale.

The results of these practices are on stark display on street after street, where vacant properties sit decaying and forlorn.

They are eyesores. Many have been looted. Some have caught fire. They attract vagrants and vandals, lead to increased crime and can depress the value of nearby homes, particularly if there is an abundance of them in a neighborhood.

Some vacant homes pose extreme danger.

In Miramar, Fla., in October 2009, a common worry of parents came true. While his family was busy unpacking boxes and moving into the house next door, a toddler wandered into the backyard of an unoccupied, bank-owned house and drowned in the pool.

The boy’s mother, Margarette Francis, told investigators the water was so dark and thick with “garbage” it was unrecognizable as a place to swim.

“It was, oh, disgusting and I don’t think the baby knew there was a pool,” she said. “The only thing I can tell you is the slide attracted him. … He probably thought he was walking into a playground and he walked right into the … water.”

The family has filed a wrongful death lawsuit in Miami against U.S. Bank, which had title to the house, and 16 other corporate entities that had some contractual relationship or responsibility for the home after foreclosure. A spokeswoman for U.S. Bank declined comment.

In a report released earlier this month, the National Fair Housing Alliance, a Washington advocacy group, charged that banks are violating the federal Fair Housing Act by neglecting the upkeep on homes in minority neighborhoods and steering real estate agents to the banks’ better-preserved homes elsewhere.

The organization has called on federal regulators and law enforcement to investigate the banks for housing discrimination practices.

Wells Fargo, one of the banks identified, denied the allegations. The bank “conducts all lending-related activities in a fair and consistent manner without regard to race; this includes maintenance and marketing standards for all foreclosed properties for which we are responsible,” said company spokeswoman Vickee Adams.

Since the real estate crash six years ago, dozens of South Florida municipalities have passed laws requiring that homes in foreclosure be registered by lenders or their agents once they become vacant. That has helped foster communication with the banks and led to quicker responses to local concerns.

“I’d say most banks want to do the right thing,” said Brian McKelligett, Fort Lauderdale code enforcement supervisor.

But banks can be bad neighbors. In the cities surveyed by the Sun Sentinel, four of 10 bank-owned properties on average were cited for violating municipal health, safety or appearance codes in 2011.

Copyright © 2012 the Sun Sentinel (Fort Lauderdale, Fla.), Megan O’Matz and John Maines. Distributed by McClatchy-Tribune News Service. Sun Sentinel staff researcher Barbara Hijek contributed to this report.

Florida foreclosure limbo

April 30, 2012 – Chris McLaughlin

Banks that made reckless home loans in south Florida have been tiptoeing away from foreclosures in a tactic designed to cut their losses. The result: Orphaned, dilapidated homes dot the landscape from Kendall to Lake Worth.  There are no owners willing to claim and care for them.  A months-long Sun Sentinel investigation of property code violations involving abandoned homes uncovered case after case in which banks launched foreclosure lawsuits but then stalled or avoided taking ownership. In effect, the banks legally sidestepped responsibility for the empty homes, causing great harm to neighborhoods.  The real estate industry calls such properties “bank walkaways.” They are no longer maintained by their legal owners, whether they were investors bailing out of unwise deals or families in financial ruin who decamped.  Nor are they being tended to by lenders, which have halted foreclosure proceedings because the remaining equity in the properties is deemed inadequate to cover the banks’ costs to reclaim title and maintain, refurbish and sell them.  The practice has contributed to South Florida’s foreclosure “limbo” problem in which thousands of vacant homes are stuck in unsettled court proceedings for years.

Bank of America invites 19,000 distressed homeowners to Miami Beach for help

South Florida Business Journal by Brian Bandell, Senior Reporter
Date: Wednesday, April 11, 2012, 12:55pm EDT

Brian BandellSenior Reporter – South Florida Business Journal

Bank of American has invited more than 19,000 homeowners in South Florida with late payments to the Miami Beach Convention Center to help them work out their mortgages.

The bank (NYSE: BAC) reserved 140 rooms for the event, taking place Thursday through Saturday. Jessica Garcia, a VP in national mortgage outreach for Bank of America , said it is bringing 50 customer specialists and 30 underwriters to work with homeowners. Most of them have loans that Bank of America is servicing for investors.

Bank of America has about 1 million mortgages under servicing in Florida, and about 22 percent of them are delinquent, she said.

Garcia said any customer who is 60 days or more late on their mortgage payment is encouraged to attend, but they should call ahead (855-201-7426) and have their financial records ready to present. That includes pay stubs, tax returns and bank statements.

Bank of America has many different ways to help homeowners, depending on their financial capabilities and what the investor in their loan will allow, Garcia said. The solutions could include a 90-day forbearance, adding missed payments to the end of the mortgage term or reducing the interest rate, she said. Generally, the goal is to make the mortgage payment no more than 31 percent of the borrower’s monthly income, she said.

“If we can do a loan modification and the customer wants to remain in the home, and they want to be with us a few hours, then we can do it right there,” Garcia said.

Bank of America also has sped up the process to approve short sales, Garcia said.

Florida Realtors issued a press release on Tuesday praising Bank of America’s decision to reduce its short sales approval process to 20 days.