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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Bill seeks to stop second-lien holders from killing short sales

WASHINGTON – July 27, 2012 – Second-lien holders are being blamed for derailing many short sale transactions. But a bill working its way through Congress – the Fast Help for Homeowners Act – would, if approved, require second mortgage lenders on federal mortgages to report their final decision on a short sale agreement within 45 days. If the second-lien holder doesn’t do that, the deal would automatically be approved on the 46th day. U.S. Rep. Jerry McNerney, D-Calif., proposed the legislation.

Greg Galli, a broker with Suburban Realty in Palmdale, Calif., supports the bill after seeing some of his recent short sale transactions fall through because second-lien holders refused to negotiate. He recalled one incident in which the second-lien holder refused a $6,000 payment from the first-lien holder in order for a short sale to move forward. Instead, the second-lien holder demanded $1,400 more, amounting to a total of $7,400, and all from the homeowner.

“(Second lien-holders) can really delay the deal if they don’t want to respond, or if they just don’t want to do anything,” Galli told HousingWire. “It doesn’t make sense. If they let it go to foreclosure, the second lien is going to lose out completely. It would make sense for us to work through the process, and then they can negotiate.”

Some in the housing industry aren’t in favor of legislation that might push a second-lien holder to make a faster decision on a short sale. Critics argue that first-lien holders need to be more willing to work with second-lien holders on an agreement that favors both parties.

“I am always hesitant to force second-lien holders or any lender to do something that they didn’t contractually agree to upfront, because ultimately that will add to the cost of future credit and reduce its availability,” Mark Zandi, Moody’s Analytic’s chief economist said.

Source: “Evasive Second-Lien Holders Thwarting Short Sales,” HousingWire (July 25, 2012)

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

Buyers frustrated by lack of inventory

SEATTLE – Aug. 31, 2012 – Redfin released a quarterly survey of homebuyer attitudes, with opinions less than two weeks old. According to the company, data was collected from active home shoppers – people who expressed an interest in buying within the next twelve months. The survey included 829 home shoppers in 19 cities.

Key findings

• 46 percent believe now is a good time to buy, down two quarters in a row; and 32 percent believe now is a good time to sell, up two quarters in a row

• 61 percent believe prices will increase, up two quarters in a row

• 62 percent “very interested” in conventional sales, up from 57 percent in the second quarter and 48 percent in the first quarter

• 31 percent would step back from competing against other buyers for a home, compared to 28 percent in the second quarter

• 27 percent of respondents cited general economic weakness as a concern about buying this year, up from 24 percent in the second quarter and 20 percent in the first quarter

“Even as prices have begun to rise, the overwhelming issue for most of today’s buyers is the selection of homes for sale, not what they cost,” says Redfin CEO Glenn Kelman. “The value-driven investors scooping up foreclosures for pennies on the dollar have largely been replaced by first-timers seeking to buy a pretty house now when mortgage rates are below 4 percent. With so few houses for sale, many will come up empty. The only homeowners willing to sell now mostly are the ones who have to – for a job in a new city or for a new baby.”

© 2012 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

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.

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.

What you should not do when listing your home….

Study: Bank of America, Wells Fargo, JPMorgan lead Florida in complaints

Senior Reporter – South Florida Business Journal

Bank of America, Wells Fargo Bank   and JPMorgan Chase Bank    are the institutions Florida consumers complained about to regulators the most in 2011, according to a study by Miami-based bank analyst and economist Kenneth H. Thomas.

Working through his company K.H. Thomas Associates, Thomas obtained records of complaints filed against financial institutions to the Florida Office of Financial Regulation’s    Division of Financial Institutions, the state’s chief bank regulatory agency.

Florida consumers lodged 1,231 complaints against banks in 2011, down from 1,379 in 2010. However, that’s still significantly higher than the 992 complaints from 2008 – when the financial meltdown was just starting to take hold.

The trend in hard-hit South Florida wasn’t so positive. Complaints from Monroe, Miami-Dade, Broward and Palm Beach counties increased to 180 in 2011 from 149 the year before. Thomas said it’s because the housing problems are worse in South Florida.

“Even though the economy has improved in the state, we are still the epicenter for the housing crisis,” he said. “People stilling trying to do workouts and modifications, and they aren’t getting the help they are looking for from these banks.”

Filing a complaint against a bank is a serious matter, Thomas noted, as it involves filling out a five-page form and attesting that the information is true. He recommends that people try to work out issues with their bank before contacting the OFR.

“To get to that point, you have to be really upset,” he said.

The OFR complaint page is here.

The most common complaint in 2011 was account balance disclosures, at 28 percent of all filings, according to Thomas. That includes disputes about overdraft fees – the subject of many lawsuits against banks – and other automatic fees.

The second most frequent complaint was mortgage problems, at 23 percent. Other common issues were general loan complaints and credit card disputes.

Thomas’ records show that most complaints the OFR received in 2011 were referred to federal regulators to follow up on. Only 7 percent of complaints were found to have no violation, and 4 percent were resolved by the OFR.

On the bright side, Thomas noted several banks didn’t receive any complaints. That includes Miami-based City National Bank    of Florida and Northern Trust    .

City National Bank President and CEO Jorge Gonzalez said his institution excels in customer service because it has a 65-year history in the state and it makes sure its bankers don’t have too many clients to service.

“If a banker has 20 relationships, they can probability deliver a high level of service to everybody, but if they have 100 relationships, they can probably only deliver a high level of service to a few of them,” Gonzalez said. “It’s a slightly more expensive model, but you need that for best-in-class service.”

Last year, City National hired Steven Clark as its service director. Clark has experience with customer service in both banking and hotels, such as the Ritz-Carlton. He said his goal is to create a concierge-level customer experience.

Gonzalez said it’s worth it to spend on customer service because that reduces client turnover, which is expensive. He said it’s important to treat all customers the same – no matter how much money they have. Some institutions offer higher levels of service to wealthy clients.

Many banks, especially those struggling with losses, have cut back on staffing levels in recent years. That includes top complaint-getter Bank of America    (NYSE: BAC). Officials with BofA didn’t respond to a request for comment.

Space Coast Credit Union had the most complaints of Florida-based institutions and was in fifth overall. Thomas noted that SCCU had a 0.6 percent deposit market share in Florida in 2011, but attracted 6.5 percent of all complaints.

SCCU spokeswoman Meredith Gibson said the credit union changed its Member Rewards relationship pricing program in 2011 for all 370,000 members, and that resulted in some people moving to different types of checking accounts. She said former members of Eastern Financial Florida Credit Union    , which SCCU merged with in 2009 to enter South Florida, have complained at a higher rate than historical SCCU members.

“They experienced many charges as a result of the merger, and they continue to be unhappy with SCCU’s practices in some areas,” she said. “A particular market condition that caused complaints in 2011 is dissatisfaction with the disposition of requests for mortgage loan modifications. While SCCU has been actively working with members who are experiencing hardships, there are cases where we cannot provide a solution that is satisfactory to the borrower.”

Gibson said SCCU has an internal system for tracking and responding to customer complaints, and these entries are regularly reviewed by senior management.

“To date, the OFR has not found that SCCU is in violation of any regulation and has closed all cases,” she said.

Considering that BofA holds a 19.1 percent deposit market share in Florida, Thomas said its 13.6 percent share of all complaints isn’t that bad. Wells Fargo (NYSE: WFC), SunTrust (NYSE: STI), Regions Bank    (NYSE: RF) and BB&T    (NYSE: BBT) also had a lower ratio of complaints compared to their deposit market share.

However, both JPMorgan Chase Bank (NYSE: JPM) and Citibank    (NYSE: C) had a high share of the complaints compared to their place in the Florida deposit market, Thomas’ study found.

The most banks that received the most complaints in Florida in 2011 were:

  • Bank of America and affiliates: 172
  • Wells Fargo Bank and affiliates: 115
  • JPMorgan Chase Bank and affiliates: 99
  • Citibank and affiliates: 53
  • Space Coast Credit Union: 48
  • SunTrust Bank and affiliates; 48
  • Regions Bank: 25
  • BB&T: 24
  • HSBC Bank and affiliates: 19
  • BankAtlantic (NYSE: BBX); 18
  • Capital One (NYSE: COF): 18