A surprisingly strong rebound in California's real estate market helped lift a key home price index for the eighth month in a row.

That's good news for people who plan to sell their homes this spring. Prices are now up almost 4 percent from the bottom in May 2009, but still almost 30 percent below the May 2006 peak.

Prices rose 0.3 percent from December to January on a seasonally adjusted basis, according to the Standard & Poor's/Case-Shiller 20-city home price index released Tuesday. Prices increased in 12 cities in the index.

The biggest monthly gain was in Los Angeles, where prices rose 1.8 percent from December. And real estate agents say there's a distinct sense the worst of the downturn is over.

Buyers are "seeing that prices are creeping up," said Tony Middleton, a real estate agent with ZIP Realty who concentrates on the San Fernando Valley. "They're losing bids on homes and they have to bid again."

Prices in San Diego, meanwhile, rose by almost 0.9 percent. Phoenix had the third-largest gain at 0.8 percent.

Compared with the same month last year, the 20-city index was off just 0.7 percent from last year at a reading of 146.32. That was the smallest decline in almost three years and in line with analysts' expectations, according to Thomson Reuters.

Rising home prices also could boost consumer optimism. For most Americans, their home is their largest asset, so as values climb from the depths of the housing bust, homeowners feel wealthier and more comfortable spending. And, for homeowners who owe more on their mortgages than their properties are worth, rising prices rebuild equity.

Consumer confidence rebounded in March after a February plunge, according to a survey released Tuesday. The Conference Board's Consumer Confidence Index rose to 52.5 in March, recovering about half of the nearly 11 points it lost in February.

Still, shoppers remain cautious and there are signs that last year's housing rebound won't last. Home sales sank during the winter, and government incentives that have propped up the market are ending.

Another reason for the positive news is simply that the Case-Shiller index measures a three-month average of home prices. So January's report included November's strong home sales.

However, bargain-hunting homebuyers continue to pack open houses in California, often facing off with investors for foreclosed homes.

"We're seeing multiple offers in most of the markets here in the San Francisco Bay area," said David Kerr, an agent with ZipRealty in Oakland, Calif. "People are getting off the fence."

In February, bank-owned properties made up 44 percent of all resales in the state, according to MDA DataQuick. In Southern California, they accounted for more than half of resales.

With such high demand, supply is dwindling, driving prices higher.

Meanwhile, the state's unemployment rate has flat-lined of late, and that's made buyers more comfortable about purchasing a home than they were just six months ago, said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.

California home sales will likely get a boost in coming months thanks to a new serving of government stimulus.

Last week, state lawmakers enacted a tax credit of up to $10,000 for homebuyers that kicks in May 1. The state allotted $100 million for first-time buyers and another $100 million to anyone who buys a newly built home. California had a round of tax credits last year that proved to be popular; that program ended in July.

The latest incentive picks up where a federal first-time homebuyer tax credit of up to $8,000 is scheduled to leave off when it expires at the end of April. Should the Obama administration extend the federal tax break, that could give homebuyers in California even more reasons to buy.

Still, there remain pockets of weakness. Sales of homes priced above $500,000 are sluggish. And despite rising prices, more than one-third of all homeowners with a mortgage still owe more on their loans than their homes are worth, according to First American CoreLogic.

Among the cities showing monthly price declines in January, the biggest drop was in Portland, Ore., where prices fell 1.8 percent from December. Chicago and Seattle saw declines of 1.7 percent, while prices in Atlanta fell 1.5 percent.

LOS ANGELES — Courtesy of Huffingtonpost.com, 3-30-2010 - ALAN ZIBEL AND ALEX VEIGA

 

Standard & Poors released its Case-Shiller Index Wednesday. The report shows that, on a seasonally-adjusted basis, between December and January, home prices rose in more than half of the index's tracked markets.

The strength of this month's Case-Shiller report, however, should be put in context.

For one, the report is on a 2-month delay; it's showing data from January, before the start of the Spring Buying Season and before the rush to beat the tax credit. Anecdotally, buyer interest has been strong since, leading to the types of multiple offer situations that drive home prices northward.

In other words, home values may be even higher than what's reflected in the January Case-Shiller data above.

Furthermore, the Case-Shiller Index measures home values in just 20 cities nationwide and they're not even the 20 biggest cities. Houston, Philadelphia, San Antonio and San Jose are specifically excluded from the report and each ranks among the country's 10 most populous areas.

Despite its flaws, though, the Case-Shiller Index remains important. Much like the government's Home Price Index, the private-sector report helps to finger broad housing trends and housing is still considered a keystone in the U.S. economic recovery.

Even if it IS two months slow.

I'll have the Orange County version of this report in a few minutes.....please stay tuned.

 

Economists at IHS Global Insight and PNC Financial conclude that Orange County homes were priced 5.6% too low in 2009’s fourth quarter.

Comparing local house-sale prices to historical real estate and economic trends, IHS-PNC estimates that Orange County homes were undervalued for the 7th consecutive quarter after being overvalued for the previous 20 quarters.

The latest 5.6% undervaluation — on par with the likes of Louisville, Ky.; Jefferson City, Mo.; Fairbanks and Abeline, Texas — was a roughly equal to the previous 5.5% in Q3. The current wave of Orange County undervaluation peaked at 11.4% in Q4 of 2008.

Also  in the IHS report …

• For historical memory sake, Orange County overvaluation peaked at 33% in 2006’s Q2.
• Atlantic City, N.J., was the most overvalued nationally (33% too high) in Q4 2009.
• One reason the undervaluation is shrinking locally is the rising price of homes sold. By IHS-PNC math, O.C. home pricing was up 6.4% in a year as 2009 ended — 3rd biggest gain among the 330 regions tracked nationwide.
• The D.C. region had the largest Q4 price gain (+10.5%) while Las Vegas had the biggest loss (-19.4%).
• The report concludes: “Two years of relentless house price depreciation finally ended in the summer of 2009. The second half of 2009 saw minimal changes in home prices, signaling stabilization at long last, if not yet recovery. … We ended 2009 with no extremely overvalued metros, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued.”

March 22nd, 2010, originally posted by Jon Lansner in the O.C. Register

 

The Administration's Making Home Affordable Program has put a couple of great tools on their website that can help answer your questions about a possible Loan Modification. ( Part of HAMP - the Home Affordable Modification Program.)

There is an Evaluator Tool and a Questionnaire.

If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.  To see if you may be Eligible fill out a brief questionnaire.  For the evaluator tool go here.

If you are having difficulty - you are not alone - check out some of these resources, for some solutions - and good luck!

 

There is an interesting wrinkle with the new bill just signed by Governor Schwarzenegger, regarding tax credits for California home buyers - state bill AB 183.

Here is some language from that bill: "Requires buyers to close escrow between May 1 and Dec. 31 to qualify." ( For an up to $10,000. tax credit.)

The interesting part of that is this: The Federal first time homebuyer tax credit of up to $8000. clearly states that "The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010." ( From the Government's Making Home Affordable website: http://www.federalhousingtaxcredit.com/glance.php )

So, if I read that correctly - and remember, I am NOT a qualified tax preparer, or attorney - that seems to suggest that if you are IN escrow before May 1st, 2010, and close escrow prior to July 1st, 2010, you might qualify to receive BOTH tax credits.

If you happen to be one of those fortunate California home buyers, and you seem to qualify, you should definitely look into this potential windfall.

 For the 22 business days ending March 8 – DataQuick’s latest homebuying report — Orange County saw …

For the 22 business days ending March 8 Slice Price Yr. ago Sales Yr. ago Houses $500,000 +13.6% 1,559 -4.1% Condos $288,750 +11.5% 812 +15.7% New $523,500 +6.5% 101 +26.3% All O.C. $420,000 +10.5% 2,472 +2.7%

• $420,000 median selling price that is +10.5% vs. a year ago and -35% below June 2007’s peak of $645,000.
• The most recent median is 14% above the cyclical low hit in January 2009 at $370,000 — a current bottom that was -43% below the peak.
• Prices fell on a year-over-year basis from Sept. 2007 through August. (Worst at -31.5% in August 2008.)
• Single-family homes resell for 32% less than their peak pricing (June ‘07) while condos sell 39% below their peak in March 2006. Builder prices for new homes are 39% below their February ‘05 top.
• Single-family homes were 73% more expensive than condos in this period vs. 70% a year ago. From 1990-2008, the average house/condo gap was 57%.
• In this most recent period, O.C. shoppers bought 2,472 residences — that is +2.7% vs. year-ago buying activity. (From 1997-2006, monthly sales averaged 4,304 per month.)
• Builder’s new homes sales were 4% of all residences sold in the period vs. 3% a year ago. From 1990-2008, builders did 15% of the selling.

How did your neighborhood fare? Check our ZIP-by-ZIP data HERE!

March 26th, 2010 · from Jon Lansner, of the O.C. Register

 

Home values fell again in January, according to the Federal Home Finance Agency's Home Price Index. Values were reported down 0.6 percent, on average.

We say "on average" because the Home Price Index is a national report. It doesn't capture the essence of a local market , or even a city market.

The most granular that the monthly Home Price Index gets is regional and January's report shows that:

• Values in the Mountain states rose 2.0%
• Values in the Pacific states were flat
• Values in the East North Central states fell 1.8%

It's hardly helpful for home buyers entering the market, or home sellers trying to properly price a home.  Furthermore, because the Home Price Index reports on a 2-month delay, its data fails to reflect the current market conditions.

Versus January -- the period from which HPI data is collected -- mortgage rates are lower, buyer activity is up, and the federal home buyer tax credit is closer to expiring.  These each can have an impact on housing.

Ultimately, national real estate data like the Home Price Index is best suited for lenders and policy-makers.  National data helps to identify trends that shape formal policy, but it doesn't help you, specifically. 

Since peaking in April 2007, the Home Price Index is off 13.2 percent.

Gov. Schwarzenegger  signs new homebuyer tax credit

Gov. Arnold Schwarzenegger has signed a new bill providing up to $10,000 in tax credits for both new-home buyers and for first-time buyers of existing homes.

An earlier round of state tax credits offered last year, were for new-home purchases only. That program was so popular that homebuyers depleted the full $100 million eight months before the deadline.

Under the latest plan, the state doubled the amount of credits to $200 million.

Standing before a Fresno housing project, Schwarzenegger said the tax credits will help meet his administration’s goal of creating “jobs, jobs, jobs.” He added:

“We are the eighth largest economy in the world. It would be absolutely insane for us to sit back and wait for the economy to come back.”

The state tax credit will become effective May 1, shortly after a federal tax credit expires.

Some readers criticized the proposal when Schwarzenegger unveiled it in January for artificially propping up home prices, already unaffordable for many families. But building industry officials maintain the tax credit is needed to boost home construction and the state economy.

John Young, chairman of the California Building Industry Association, said during the news conference that the tax credit “will get buyers off the fence, and into our models and buying homes, and that will put people back to work.”

Orange County BIA CEO Kristine Thalman issued a statement saying:

“The reality is new construction creates jobs – up to three new jobs for every single home built. Renewing the homebuyer tax credit is a critical step in creating jobs and generating positive economic activity for the state.”

Assemblywoman Anna Caballero, D-Salinas, the bill’s co-author, also spoke at the governor’s news conference, saying that an added benefit will be to get families living in vacant homes that create blight in neighborhoods. She added:

“We recognized that it was really important to get the current inventory of homes sold so we can get them back on the tax rolls and get families in them.”

The final version of the bill differs from the provisions initially outlined in January by the governor’s staff. The governor’s staff believed at first that Schwarzenegger initially wanted to limit the credits to first-time buyers only.

Under the provisions, the bill:

• Provides a 5% tax credit, up to a $10,000 limit, to all buyers of new, never-occupied homes.
• Provides a 5% tax credit, up to a $10,000 limit, to first-time buyers of existing homes.
• Sets aside $100 million for each program, for a total of $200 million.
• Requires buyers to close escrow between May 1 and Dec. 31 to qualify. New-home buyers have until Dec. 31 to sign a purchase contract, then must close escrow by Aug. 16, 2011.
• Requires buyers to live in the home for at least two years.
• Provides for the tax credit to be paid in thirds over a three-year period.
• Sets no income limitations on buyers.
• Requires buyers to repay the tax if they fail to live in the home for two years or fail to close escrow on a new home by Aug. 16, 2011.

March 25th, 2010 · by Jeff Collins, The Orange County Register

April 15 is Tax Day and the IRS estimates that the average U.S. household will receive a $2,800 tax refund this year.  If you're among the Americans expecting a refund,

this 4-minute piece

from NBC's The Today Show may be helpful. It's a talk about how to receive a refund and what to do with it.

Some of the key points discussed in the above linked video include:

1. Why state-issued tax refunds may be delayed this year
2. How wage-earning people can claim their "Making Work Pay" tax credit of up to $800
3. How to direct a tax refund to a 529 college savings plan for an even bigger tax refund

There's also some sensible pointers on using tax refunds to pay down credit card debt, and to fund retirement plans, among other purposes.

If you haven't started your tax planning yet, try to avoid leaving it for the last weekend.  Not only will your tax preparer have more time for you now, but you'll leave yourself more time to track down important statements and receipts that can boost your federal and state tax deductions.

Taxes are due in 21 days.

 

O.C. housing more affordable than you think

Although Orange County’s housing is less affordable than the Inland Empire’s, the gap isn’t as great when you take transportation costs into account, a new study released Wednesday shows.

The study, by the Chicago-based Center for Neighborhood Technology, says that the “drive until you qualify” mentality doesn’t taken into account the added transportation costs of living in far-flung areas, where commutes are longer.

For example:

• Based on housing costs alone, 59% of O.C. neighborhoods are affordable. But when transportation costs are taken into account, just 48% of local neighborhoods are affordable — a 21% difference.
• In the Inland Empire counties of Riverside and San Bernardino, the gap is much bigger. There, 62% of the neighborhoods are affordable based on housing costs alone. But when transportation costs are included, just 22% are — a 40% difference.
• Nationwide, 69% of neighborhoods in 337 U.S. metro areas are considered affordable based on housing costs. This shrinks to 39% when housing and transportation costs are combined — a 30% difference.

According to the report’s authors, housing affordability in the United States is being drastically overestimated.

“There are a lot of things (to consider) besides the posted price of a house,” said Scott Bernstein, Center for Neighborhood Technology president. “It makes no sense to advertise the cost of a home without taking into account the cost of transportation.”
<!--[if !supportLineBreakNewLine]-->
<!--[endif]-->

housing & transportation (H&T)

Category

#Neigh’s

#Affordable

Pct.

O.C. Housing

1,823

1,074

58.9%

O.C. H&T

1,823

868

47.6%

I.E. Housing

1,886

1,166

61.8%

I.E. H&T

1,886

411

21.8%

Under the traditional method of calculating affordability, an area is considered affordable if the average housing costs are 30% or less of the area’s median household income. In the center’s study, an area is considered affordable if the cost of housing and transportation combined are 45% of an area’s median income.

Both Orange County and the Inland Empire have 1,800 to 1,900 census block groups, or neighborhoods measured by the U.S. Census. Both have a similar number of households — just over 930,000 in Orange County and just over a million in the Inland Empire.

But O.C.’s transportation costs are lower:

• The average commute to work is 27 minutes in Orange County, compared to 31 minutes in the Inland Empire.
• Orange County residents drive an average of just under 16,000 miles a year, while Inland Empire residents drive an average of nearly 20,000 miles per year.
• Orange County households spend an average of $3,611 on gasoline each year, compared to yearly average of $4,445 in the Inland Empire.
• In Orange County, gasoline costs consume an average of 21.3% of a household’s income, compared to 31.2% in the Inland Empire.

There is one other key difference, however. Since the median income used in the study for Orange County ($58,820 a year) is much higher than the median for the Inland Empire ($42,404 a year), an Inland Empire home must be much cheaper to be considered affordable.

In other words, housing and transportation must cost $2,206 a month or less in O.C. to be affordable. To be affordable in the Inland Empire, housing and transportation must cost $1,590 a month or less.

For more on the study, and results by metro area, visit htaindex.org.

This article was published today in the Orange County Register, written by Jeff Collins.

 

 

The California legislature on Monday passed AB 183, providing $200 million for home buyer tax credits. The Governor is expected to sign the bill into law this week. C.A.R. supported this important legislation since its inception.  Part of a package of four bills passed at the request of the Governor, AB 183 is designed to help stimulate the economy and create jobs.  It allocates $100 million for qualified first-time home buyers who purchase existing homes and $100 million for purchasers of new, or previously unoccupied, homes.

 The eligible taxpayer who closes escrow on a qualified principal residence between May 1, 2010 and December, 31, 2010, or who closes escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

 This credit is equal to the lesser of 5 percent of the purchase price or $10,000, taken in equal installments over three consecutive years. Under AB 183 purchasers will be required to live in the home as their principal residence for at least two years or forfeit the credit (i.e. repay it to the state).

 $10,000 represents 5% of a $200,000 purchase price, so that means just about any property purchased in Orange County. Like the “Cash for clunkers” program, however, the $200 million will probably get used up pretty fast.

 

 

Orange County Market Report – Demand Springs Forward.

Here is the latest market report from my friend Steven Thomas, of Altera Real Estate:

Orange County is taking “Spring Forward” to a whole new level with an increase in demand for the first time in six weeks.

Demand, the number of new pending sales over the prior month, increased by 216 homes over the prior two weeks and now totals 3,270, the highest level thus far in 2010. Demand is 600 pending sales stronger than last year at this time and 1,187 stronger than two years ago. After looking at developing trends, I had been wondering whether or not demand was going to surge or if it would ignore cyclical market fundamentals. It would not have been the first time that this downturn ignored the conventional Southern California housing cycle.

Call it a coincidence, but now that the cool temperatures, clouds and rain have subsided, the Orange County housing market is revving its engine. There are a ton of buyers in the marketplace right now according to REALTORS® in the trenches.

The current problem is surprisingly a LACK OF INVENTORY. The expected market time for all homes priced below $1 million is 2.23 months, a deep seller’s market with a very low inventory. These homes represent 78% of the active inventory and 94% of demand. But, for homes priced above $1 million, there is NOT a lack of inventory. Collectively, this range represents 22% of the active inventory but only 6% of demand. The expected market time is 8.99 months, a buyer’s market.

The inventory has dropped significantly in every range. With the exception of homes priced below $250,000, demand is much stronger in every range. There just are not enough homes on the market in the lower ranges where demand is so incredibly hot. For the lowest range, less than $250,000, the inventory is down 43%, but demand is only off by 10%. It is no wonder that there are multiple offers and homes selling for above their asking prices in the lower ranges. More inventory would actually be welcomed with open arms by both buyers and their REALTORS®.

The “jumbo” market between $750,000 and $4 million has actually improved tremendously. Their expected market time has dropped significantly as well. For example, homes priced between $1 million and $1.5 million dropped from an expected market time last year of 16.21 months to 6.55 months today. 6.55 months may be a buyer’s market, but it is not frozen. Anytime the expected market time is above 10 months, double digits, there is just too much inventory and very little demand.

Currently, only homes above $2 million have expected market times that are double digits. They represent 10% of the current active inventory, but only 2% of demand. The current market is much different than just one year ago. Just ask all of the buyers who are having trouble purchasing because of a lack in inventory.

How do the rest of the numbers look? The active inventory increased over the past two weeks by 330 homes, or 4%, to 8,776. The active inventory last year was at 11,606, 2,830 additional homes compared to today. Two years ago it was at 15,617, 6,841 additional homes. The overall expected market time for all of Orange County dropped from 2.77 two weeks ago to 2.68 months today. The total pending count, which includes homes that have been pending for months, increased from 6,869 two weeks ago to 7,049 today. That is the highest level since I started tracking total pending sales back in September of 2006.

This is primarily due to the mind-boggling number of short sales that are waiting for lender approval (short sales are homes where the outstanding loans exceed the market value of the home and are subject to the lender[s] agreeing to take less in order to close the sale). 4,250 of the 7,049 total pending sales are short sales, 60%. Yet, only 40% of current demand is made up of short sales. On average, short sales just do not close as fast. Instead, they clog the system and buyers are left on the edge of their seats wondering when they will ever be able to move into their new home.

The number of active distressed homes on the market, all short sales and foreclosures combined, increased by 26 homes to 2,795 and now represent 31.8% of the inventory. Last year at this time, there were 4,673 distressed homes on the market, representing 40.3% of the active inventory.

The number of foreclosures within the active listing inventory dropped by two homes in the past two weeks, from 396 to 394. The expected market time for foreclosures is an astonishing 1.05 months, a deep seller’s market. Foreclosures are flying off of the market. The number of short sales within the active listing inventory increased by 28, and now total 2,401. The expected market time for short sales is 1.86 months, also a deep seller’s market.

With the return of Southern California sunshine and temperatures in the 70’s, Orange County demand is back on the rise.

End of Steven’s report.

Today, Bank of America announced that it will introduce “principal forgiveness” which will look to reduce loan balances of qualifying distressed homeowners with adjustable rate mortgages or subprime loans in an effort to make their payments more affordable.While smaller banks have already began taking this position, B of A is one of the first large banks to attempt this highly criticized loan modification option.

The Obama administration has been pushing to improve their Home Affordability Modification Program, but rather than push for principal reduction, HAMP was simply extended.  This program has been gaining momentum in the past 4 months.

With more homeowners becoming distressed and considering their limited options, banks currently offer a lengthened term or a change in interest rates, but this move to reduce principal is quite bold. Given B of A’s recent performance, we have to wonder if this is a PR move or if this might actually impact B of A loan holders?

With HAFA ( Improving short sales.) going into effect in less than 2 weeks, it seems that B of A is gearing up to be one of the better banks to work with, instead of one of the worst – which they have been, up to now.

Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars—and a collection agency is coming after them to get it.

That’s because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in some states have years to make a claim. If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.

“The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.

The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen economic recovery.

“I think there will be a lot of unhappy people when it hits,” said CoBen. “We saw this in the ’90s. This is not really new. Just when you think you’re back on your feet, you’re making money and the economy’s good, they hit you with this.”

Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don’t get the advice necessary to prevent future fallout, say nonprofit loan counselors.

“You’ve got tens of thousands of people in California who have this hanging over their heads who don’t even know it,” said Scott Thompson, principal at for-profit Mortgage Resolution Services in Carmichael, Calif. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.

“So many of these are people with 750 or 800 credit scores who made a bad decision,” said Thompson. “Or they’re people who suffered income cuts. These are people, in terms of the economy, whom we need to participate.”

But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said. “It’s a big business and investors are coming out of the woodwork. It’s a very lucrative business,” she said. Real estate insiders and financial players know it as “scratch and dent.”

Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead—generally, those who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.

In California, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer.

But banks also made thousands of “second-lien” loans, including those used to finance 20% down payments during the housing boom. A separate category of “seconds” includes home equity loans and home equity lines of credit. Nationally, about 3.4% of those loans are currently delinquent, according to Foresight.

Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt. In many short sales, experienced real estate agents or attorneys can negotiate away debt obligations for the second-lien loan. But many inexperienced borrowers don’t know that, and sign final-hour agreements giving lenders the right to pursue them later.

“Seek advice,” counseled Doug Robinson, spokesman for national nonprofit mortgage counselor NeighborWorks America. He said nonprofit counselors can help. “Often when you work with a real estate agent, they’re not really equipped to handle the repercussions. They’re set up to make the sale,” he said.

Government forces are already moving to limit potential damage to millions now struggling with home loans. A new Obama administration short sale program aims to prevent banks that hold second-lien loans from pursuing collections from homeowners after the short sale. It goes into effect April 5, 2010 and works this way: Sellers will receive notice that their servicer has steered part of the sales proceeds to secondary lien holders “in exchange for release and full satisfaction of their liens.” This release would apply only to short sales done through the administration’s Home Affordable Foreclosure Alternatives program.

In California, Democratic state Sen. Ellen Corbett recently introduced SB 1178, which would expand California’s protections for some people who refinance and take on a second mortgage.

People who refinance, but use the funds to improve their homes or to stay in their homes with a better interest rate, would be protected. Lenders could not seek court judgments to collect from these borrowers in the event of foreclosure or short sales.

“If you refinance a property and aren’t using the money for personal reasons, you shouldn’t lose your personal protections,” said California Association of Realtors lobbyist Alex Creel. He said the idea has been around for years but has become more urgent as thousands lose income and fall into mortgage trouble. The bill would apply to all foreclosures or short sales that occur after it becomes law. It doesn’t matter when the loan was made, Creel said. SB 1178 is still in the early stages of consideration. It must clear both houses of the Legislature and be signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.

(c) 2010, The Sacramento Bee (Sacramento, Calif.). Hat tip to Valerie Fitzgerald.

CNNMoney.com recently published its 2010 forecast and projections for home prices in the country's largest metro markets. 

Listed as "Top 25" and also comprehensively by state, CNNMoney.com's home price forecasts puts Santa Rosa, California at the top of 2010's home appreciation list and Hanford, California at its bottom.

The 10 cities projected for highest home appreciation in 2010 are:

1. Santa Rosa, CA : +6.0%
2. Cheyenne, WY : +4.7%
3. Kennewick, WA : +4.6%
4. Merced, CA : +4.4%
5. Bremerton, WA : +4.2%
6. Fairbanks, AK : +4.2%
7. Corvallis, OR : +4.1%
8. Tacoma, WA : +3.9%
9. Anchorage, AK : +3.8%
10. Bend, OR : +3.3%

The Pacific Northwest is the region most heavily-represented among price gainers. The Southeast and Middle Atlantic are most represented on the under-perform list.

However, just because a city's homes are expected to appreciate (or depreciate) in 2010, that doesn't mean that every home within its limits will follow suit.  Real estate cannot be grouped on a city level like CNNMoney.com tries to. There will always be areas in demand within city limits in which prices rise, just as there will be out-of-demand areas in which prices fall.

Real estate data can't be grouped by city or even by ZIP code, really.

Real estate is more local than that.

When we say "real estate is local",  it means that every street in every town has a distinct set of traits that drives its home values. Homes that are one block closer to the train; or, homes that are facing north; or, homes that are made of brick. Each of these characteristics can affect a home's desirability which, in turn, can affects its sales price.

National surveys can't capture "essence" like this. They only report on the aggregate.

For local real estate data, look to established, publicly available websites and to active, local real estate agents.  Both will have data and insight that can help you.  National surveys often make for good headlines, but do little to help homebuyers find good value.

Mortgage markets closed unchanged last week, but that's not say mortgage rates were calm. Monday through Wednesday, rates improved steadily before a swift, late-week sell-off unwound the gains.

Mortgage rates have been very low for a very long time -- against the expectations of most market experts.  The speed of the Thursday-Friday reversal may signal that markets are preparing for change.

One key story from last week was the Federal Open Market Committee's scheduled Tuesday meeting. Upon adjournment, the Fed voted 9-1 to hold the Fed Funds rate in its current target range near 0.000% and reiterated its plan to keep rates low for "an extended period of time". 

Kansas Fed President Thomas Hoenig was the lone dissenting vote.

For rate shoppers , take note. 

The Fed specifically mentioned that the its $1.25 trillion mortgage buyback program will end, as planned, March 31, 2010.  This could force rates higher over the next two weeks because, according to the Fed, the existence of a buyback program forced rates lower by 1 percentage point in 2009.

When the program ends, it's expected that markets will give back some of that 1 percent, leading to higher mortgage rates for conventional and FHA borrowers.

This week, in addition to the buyback program's looming end-date, there's several other potential influences on mortgage rates:

1. The Existing Home Sales data for February is released Tuesday, along with the Home Price Index
2. The New Home Sales data for February is released Wednesday
3. Consumer Confidence data hits Friday

Strength in any -- or all three -- of these reports should put pressure on mortgage rates to rise.

But there's one wildcard this week and that's the aforementioned Kansas Fed President Hoenig's scheduled speech Wednesday morning. Typically, Fed members stay on message when making public appearances, but Hoenig is expected to talk about why rates should be higher, and what the Fed needs to do to prepare the economy for late-2010 and beyond.

His words could lead Wall Street to rethink its position on the mortgage bond market and that could cause rates to spike Wednesday afternoon.

Mortgage rates remain volatile and are still relatively low. If you're unsure of whether now is a good time to lock in, consider that there's a lot more room for rates to rise than to fall right now. Especially with momentum shifting for the worse.

Homes are more affordable across the nation as the housing market emerges from a slow winter season with mortgage rates still near 5 percent.

Soft housing and low rates are an excellent combination for home buyers but whereas home values rise with a gradual pace, mortgage rates change in an instant.  It's something worth watching.

Each 0.25% increase to conventional or FHA rates adds approximately $16 per month for each $100,000 borrowed. Mortgage rate volatility can change your household budget.

If you're trying to gauge whether rates will be rising or falling, one keyword for which to listen is "inflation". Mortgage rates are highly responsive to inflation.

By definition, inflation is when a currency loses its value; when what used to cost $2.00 now costs $2.15. As consumers, we perceive inflation as goods becoming more expensive.  However, it's not that goods are more expensive, per se. It's that the dollars used to buy them are worth less.

This is a big deal to mortgage rates because mortgage bonds are denominated, bought, and sold in U.S. dollars.  As the dollar loses value to inflation, therefore, so does the value of every mortgage bond in existence. When bonds lose their value, investors don't want them and bond prices fall.  Mortgage rates move opposite of bond prices.

Prices down, rates up.

In today's market, the relationship between inflation and mortgage rates is helping home buyers. The Cost of Living made its smallest annual gain in 6 years last month and the Fed has repeatedly said that inflation will stay low for some time. The combination is driving investors to buy mortgage bonds which, in turn, suppresses rates.

So long as it lasts, the cost of homeownership will remain relatively low. Combined with the expiring tax credit, the timing to buy a home may be as good as it gets.

<!--[if gte mso 9]>Normal0falsefalsefalseEN-USX-NONEX-NONEMicrosoftInternetExplorer4<![endif]--><!--[if gte mso 9]><![endif]--><!-- /* Font Definitions */ @font-face {font-family:"Cambria Math"; panose-1:2 4 5 3 5 4 6 3 2 4; mso-font-charset:0; mso-generic-font-family:roman; mso-font-pitch:variable; mso-font-signature:-1610611985 1107304683 0 0 415 0;}@font-face {font-family:Calibri; panose-1:2 15 5 2 2 2 4 3 2 4; mso-font-charset:0; mso-generic-font-family:swiss; mso-font-pitch:variable; mso-font-signature:-520092929 1073786111 9 0 415 0;} /* Style Definitions */ p.MsoNormal, li.MsoNormal, div.MsoNormal {mso-style-unhide:no; mso-style-qformat:yes; mso-style-parent:""; margin-top:0in; margin-right:0in; margin-bottom:10.0pt; margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;}a:link, span.MsoHyperlink {mso-style-noshow:yes; mso-style-priority:99; color:blue; mso-themecolor:hyperlink; text-decoration:underline; text-underline:single;}a:visited, span.MsoHyperlinkFollowed {mso-style-noshow:yes; mso-style-priority:99; color:purple; mso-themecolor:followedhyperlink; text-decoration:underline; text-underline:single;}.MsoChpDefault {mso-style-type:export-only; mso-default-props:yes; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:Calibri; mso-fareast-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;}.MsoPapDefault {mso-style-type:export-only; margin-bottom:10.0pt; line-height:115%;}@page Section1 {size:8.5in 11.0in; margin:1.0in 1.0in 1.0in 1.0in; mso-header-margin:.5in; mso-footer-margin:.5in; mso-paper-source:0;}div.Section1 {page:Section1;}--><!--[if gte mso 10]>/* Style Definitions */table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-priority:99;mso-style-qformat:yes;mso-style-parent:"";mso-padding-alt:0in 5.4pt 0in 5.4pt;mso-para-margin-top:0in;mso-para-margin-right:0in;mso-para-margin-bottom:10.0pt;mso-para-margin-left:0in;line-height:115%;mso-pagination:widow-orphan;font-size:11.0pt;font-family:"Calibri","sans-serif";mso-ascii-font-family:Calibri;mso-ascii-theme-font:minor-latin;mso-hansi-font-family:Calibri;mso-hansi-theme-font:minor-latin;mso-bidi-font-family:"Times New Roman";mso-bidi-theme-font:minor-bidi;}<![endif]-->

Wednesday, March 17th, 2010, 9:51 am, from HousingWire.com

 

HOPE NOW, an alliance between mortgage service professionals and non-profit counselors, reported 99,499 modifications in January, compared to 50,364 new permanent modifications under the Home Affordable Modification Program (HAMP).

January HOPE NOW modification numbers dropped only slightly from 104,423 non-HAMP modifications in December, compared to roughly 35,000 permanent modifications under HAMP in that same month.

The US Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. Through February 2010, the 113 participating servicers provided 170,000 permanent modifications.

HOPE NOW reported 74% of its January modifications involved interest and principal reductions, equaling more than 73,000 loans. According to the HOPE NOW statement, the fact that non-HAMP workouts outnumbered HAMP modifications two to one is proof that the industry is exploring a wide range of solutions to keep borrowers in their homes.

“While Treasury and other government sponsored programs have garnered much attention, much of the servicers’ hard work has gone unnoticed. Our new data set is proof that the industry continues to aggressively find solutions for borrowers facing default,” said Faith Schwartz, executive director of HOPE NOW.

Since 2008, 2,600,000 borrowers received modifications from the HOPE NOW alliance.( End of HousingWire.com article.)

Meanwhile, doom & gloom bubble bloggers continue to spew their misinformation that such programs are dismal failures. Perhaps if they brought their information up to date, they would gain a little credibility.  They continue to spout figures from almost a year ago, when in fact, there were almost no loan modification programs at all, 12 months ago.  Here’s a twist on an old saying:  “If it sounds too negative to be possible, it probably isn’t – either true, or possible.

Both loan modifications and short sales are gaining more traction every day.  In two and a half weeks, when HAFA hits the ground running, things will only get even better.

Friday, March 12th, 2010, 1:01 pm  -  From HousingWire.com

A year into the Home Affordable Modification Program (HAMP), servicers converted 170,207 permanent modifications through February, up from 116,297 in January, according to the US Treasury Department.

The Treasury launched HAMP in March 2009 to provide capped incentives to servicers for the modification of loans on the verge of foreclosure. To address critics that claim HAMP isn’t having the effect of reaching its target 3m to 4m borrowers, a House Committee on Oversight and Government Reform in February began an investigation of HAMP on concerns of the “effectiveness and efficiency” of the program.

According to the latest Troubled Asset Relief Program (TARP) transaction report, the 113 participating servicers under HAMP can earn a total cap of $36.9bn. The Treasury has slated $75bn for the program. Borrowers in HAMP received a median savings of $518 a month, or 36% of the payment before the modification.

More than 91,843 active trial modifications need only a borrower signature to become permanent, totaling more than 260,00 permanent modifications approved by servicers. More than 835,000 three-month trial modifications began through February. Active modifications – both trials and permanent modifications – totaled more than 1m.

Wells Fargo (WFC: 30.28 0.00%) completed 24,975 permanent modifications, leading all servicers again. Wells had 17,652 permanent modifications in January. In February, Wells had active modifications on 37% of its 379,357 HAMP-eligible loans, up from 38% in January.

Bank of America (BAC: 17.03 0.00%) provided 20,666 permanent modifications through February, the second-highest volume of all servicers and an increase from 12,761 in January. In November, BofA had 98 permanent modifications. BofA has active modifications on 24% of the more than 1m mortgages in its HAMP-eligible portfolio in February, up from 22% in January.

JPMorgan Chase (JPM: 43.24 0.00%) had the third most permanent modifications at 19,385 through February, up from 11,581 in January. In February, JPM had active modifications on 39% of the 437,323 loans in its HAMP-eligible portfolio, up from 38% in January.

CitiMortgage, a subsidiary of Citigroup (C: 4.05 0.00%), provided 15,607 permanent modifications through February, taking its place as the fourth-largest servicer in terms of volume, up from 10,929 in January when it ranked fifth. It has 52% of its 249,901 HAMP-eligible loans in active modifications.

GMAC provided 14,675 permanent modifications, dropping to the fifth highest of any servicer, from January when it was the fourth-highest with 11,494 permanent modifications. GMAC has 66,289 loans in its HAMP-eligible portfolio and started active modifications on 53% of them, the highest of any servicer and up from 50% in January.

To qualify for HAMP, a mortgage must have a current unpaid principal balance of less than $729,750 be occupied by the owner and originated prior to Jan. 1, 2009. Qualifying borrowers must be employed. More than 57% of the borrowers who received permanent modifications claimed a loss of income as the predominant reason for hardship, the same percentage in January. More than 10% claimed excessive obligation, and 2% claimed illness of the principal borrower.

Despite the increases in permanent modifications from 31,382 in November, when the Treasury began reporting that statistic, officials admit the program is not for every borrower. Seth Wheeler, senior adviser to the Treasury when speaking at the American Securitization Forum (ASF) in Washington, DC, said the Treasury is adjusting its focus away from modifications as HAMP is not always the best solution.

A new program, the Home Affordable Foreclosures Alternatives (HAFA), will provide incentives to servicers to provide short sales and deeds-in-lieu of foreclosure. HAFA launches in April 5, 2010 as lenders and officials buffer against potential fraud cases. ( End of article.)

ALL the lenders above, and most of the Country's larger lenders are gearing up to implement the new HAFA program, mentioned above, which promises to provide improvements in short sales, in both speed to process, and in the number of short sales that become successful.

If YOU have a mortgage hardship now, or one on the horizon, NOW is a great time to seek assistance.  For more information on either a loan modification or a short sale, just give me a call, or shoot me an email.

The Federal Open Market Committee adjourns from a scheduled 1-day meeting today, its second of the year. 

The FOMC has held the Fed Funds Rate in a target range of 0.000-0.250 percent since December 16, 2008, and the voting members of the Fed are expected to vote "no change" again today.

However, no change in the Fed Funds Rate doesn't necessarily mean no change in mortgage rates.  This is because the Fed Funds Rate is a different interest rate from the rates home buyers get from a loan officer. 

• Fed Funds Rate : Short-term rate at which banks borrow from each other
• Mortgage Rate : Long-term rate of interest a homeowner pays on a mortgage

Mortgage rates are more responsive to what the Fed says as compared to what the Fed does. 

After each FOMC meeting, Fed Chairman Ben Bernanke & Co issue a formal press release to the markets.  At roughly 400 words, the statement is a brief commentary on the strengths, weaknesses, and threats for the U.S. economy.

Wall Street watches the statement with great interest and this is why mortgage rates are often volatile on the days of an FOMC adjournment. One mention of a word like "inflation" and traders rush to dump their mortgage bond positions.

Inflation is the enemy of mortgage rates.

After the Fed’s last meeting in January, it told us that the economy had "weakened further", led by steep declines both in housing and employment. Global demand was off, too.  The negative tone of the Fed's statement caused mortgage rates to fall to near an all-time low.

This month, expect a less gloomy message.

Since January, there's been a modest rebound in housing, employment appears more stable, and Retail Sales just posted huge gains.  If the Fed alludes to improvement in any or all three, mortgage rates will likely reverse and zoom higher.

We can’t know what the Fed today will say so if you're floating a mortgage rate and wondering whether to lock, the safe approach would be to do it today, prior to 2:15 PM ET.

Mortgage markets worsened last week with little economic news to push markets in either direction. Momentum trading and rebalancing of portfolios drove mortgage rates higher, on average.

FHA and conventional mortgage rates rose last week, marking the first time that's happened this month. 

Mortgage rates have been on impressive run lately and mortgages are priced far better than what most experts predicted.  Weaker-than-expected economic data is one reason why.  Lack of economic data may be another.

This week, however, data returns.

• Monday : Industrial Production and Home Builder Index
• Tuesday : Housing Starts and Building Permits
• Wednesday: Consumer Confidence
• Thursday : Producer Price Index and Initial Jobless Claims
• Friday : Consumer Price Index and Continuing Jobless Claims

And, as if all that weren't enough to spook you, the Federal Open Market Committee meets for a scheduled, 1-day event Tuesday.

The Federal Reserve is expected to vote to hold the Fed Funds Rate in its current target range near 0.000%, but that doesn't mean mortgage rates won't change. Markets are responsive to the FOMC's post-meeting press release and any clear talk of economic strengthening should drive rates higher.

Wall Street is in Wait-and-See Mode and this week will give it plenty to look at.

If you're floating a mortgage rate, or waiting to lock, be prepared for wild swings in mortgage rates -- especially leading up to Tuesday afternoon's FOMC adjournment. The Fed adjourns at 2:15 PM.

The Federal Housing Finance Agency has extended the government's Home Affordable Refinance Program by 12 months.

HARP's new end date is June 30, 2011.

Originally known as Making Home Affordable, HARP aims to help homeowners refinance their mortgage who may otherwise be ineligible because of falling home values.

There are 4 basic HARP criteria every borrower must meet:

1. The existing home loan must be guaranteed by Fannie Mae or Freddie Mac.
2. Your home must be a 1- to 4-unit property
3. You must have a perfect mortgage payment history going back 12 months. No 30-day lates allowed.
4. Your first mortgage balance must be 125% or less of your home's market value

If you're not sure whether Fannie Mae or Freddie Mac back your mortgage, you can look it up. Fannie's website is http://www.fanniemae.com/loanlookup; Freddie's is http://freddiemac.com/mymortgage.  If you don't locate your loan on either website, your mortgage is backed by a third-party and is not HARP-eligible.

For homeowners that meet HARP's criteria, there are some underwriting details of which to be aware.

First, if your original mortgage does not require mortgage insurance, your HARP mortgage will not require it, either -- regardless of your new loan-to-value.

Second, all HARP refinances require income verification. It doesn't matter if your original mortgage was a stated income or no income verification loan. You should expect to produce 1040s and W-2s for your HARP refinance and asset statements, too.

And, lastly, second (and third) mortgages may not be "rolled in" to a new first mortgage loan balance. Junior lien holders must agree to remain in a junior lien position, regardless of combined loan-to-value.

There is a thorough HARP FAQ section on the government's website, but it's for general questions only. For specific Home Affordable Refinance Program information, first make sure you're program-eligible, then pick up the phone to call your loan officer. 

HARP is complex enough that you'll want to talk with a human before taking a proper next step.

According to foreclosure-tracking firm RealtyTrac, foreclosure filings topped 300,000 for the 12th straight month last month as 1 in every 418 U.S. homes received a foreclosure filing.

It's a small improvement from January and a just 6 percent increase over February 2009.

On a per-capita basis, foreclosure density varied by state:

• Nevada : 1 foreclosure filing per 102 homes
• Florida : 1 foreclosure filing per 163 homes
• Arizona : 1 foreclosure filing per 163 homes
• California : 1 foreclosure filing per 195 homes

Also, as in January 2010, foreclosures across the country were concentrated. 10 states beat the national Foreclosure Per Capita average; 40 states fell below. Like everything else is real estate, it seems, foreclosures are local.

For today's home buyers, foreclosures represent an interesting opportunity. 

Homes bought in various stages of foreclosure are often less expensive than other, non-foreclosure homes. It's one reason why distressed home sales account for 38 percent of all resales. However, less expensive doesn't always mean less costly.  A foreclosed home may be in various stages of disrepair and they're often sold as-is, as policy.

Buying new or used can be cheaper than buying broken-down.

Therefore, if you're in the market for a bank-owned home, make sure you know what you're buying before you sign a contract. Have qualified professionals review and inspect the property, as needed. Damage to pipes or the property's structure, for example, may not be so obvious on a walk-though and you'll want to know about it before you buy.

Also, foreclosed homes are federal tax credit-eligible. Buyers must be under contract by April 30, 2010 and closed by June 30, 2010.

In November, Congress extended and expanded the First-Time Home Buyer Tax Credit program to include a subset of "move-up" buyers -- homeowners that have owned and lived in their home for 5 of the last 8 years.

The credit ranges up to $8,000 per buyer. There's now just 7 weeks left to take advantage.

To be eligible, home buyers must be under contract for a new home no later than April 30, 2010, and must be closed no later than June 30, 2010.

In addition to meeting the deadline dates, there's a basic set of requirements to be tax credit-eligible:

• You can't purchase the home from a parent, spouse, or child
• You can't purchase the home from an entity in which the seller is a majority owner
• You can't acquire the home by gift or inheritance
• Each buyer in the purchase must meet eligibility requirements

There's other criteria, too.

For one, the sales price on the subject property cannot exceed $800,000. Homes sold for more than $800,000 are ineligible for the tax credit. Furthermore, households earning more than $125,000 as single-filers, or $225,500 for joint-filers, are ineligible.

You can read the complete eligibility requirements at the IRS website, or, you may just find it simpler to speak with your accountant about it. There are some nuances in qualifying for and claiming the tax credit on your returns and getting a professional's opinion is always wise.

And lastly, don't forget that government's tax credit program is a true tax credit. It's not a tax deduction.  This means that a tax filer whose "normal" tax liability is $3,500 and who is eligible for $8,000 in credit will receive a $4,500 refund from the U.S. Treasury.

If you're currently in the House Hunt, mark your calendar for April 30, 2010. It's 7 weeks away and you can be sure that as the date gets closer, buyer traffic is going to increase.  You may find sellers more willing to negotiate today than several weeks from now.

 

According to the the National Association of Realtors®, "distressed homes" represented nearly 2 of every fifth home sold in January 2010.  Clearly, real estate investors are taking advantage of good deals on cheap property.  But there's risk involved.

This NBC Today Show interview first ran in March 2009, featuring real estate expert Barbara Corcoran. Despite its age, the message remains relevant. Today may be a terrific time to buy a bank-owned home -- just make sure you do your research first.  There's plenty of ways for investors to get burned.

Some of the tips in the video include:

• Buy in your own backyard
• Start small, then build to a bigger portfolio
• Watch receipts -- rent rolls don't matter if tenants aren't paying rent

Corcoran also gives pointers on how to evaluate a prospective tenant.

Foreclosures should represent a large number of 2010's total home sales and will offer interesting opportunities to bona fide real estate investors. Before you jump in, make sure to watch the video. The rents you save may be your own.

Remember, the stats and the data are from 12 months ago, but the advice stays meaningful.

The Home Affordable Refinance Program (HARP) has been extended until June 30, 2011, according to the Federal Housing Finance Agency (FHFA).

“FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said FHFA Acting Director Ed DeMarco, in a statement on its website.

“Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011.”

The program is one portion of the government’s Making Home Affordable Program, which also includes the Home Affordable Modification Program (HAMP).

It began in April 2009 and was set to expire on June 10 of this year; HAMP is expected to run until December 31, 2012.

Apparently things are worse than anticipated, what with more than 11.3 million, or 24 percent, of all residential properties with mortgages in the United States underwater as of year-end.

Of the more than four million refinanced mortgages purchased or guaranteed by Fannie Mae and Freddie Mac in 2009, 190,180 were HARP refinances with loan-to-value ratios between 80 percent and 125 percent.

If you’re looking to refinance with negative equity, this is your ticket.

Hat tip to my friend Matthew Frey of Bankers Funding Co.   Matt lives in Coto and can be reached at  Matthew.A.Frey@bankersfundingcompany.com

Mortgage markets improved last week as economic reports painted a less-than-stellar portrait of the U.S. economy and concerns of a looming monetary policy change eased. Mortgage pricing improved dramatically, despite a late-Friday retreat.

Mortgage rates are now at their lowest levels since early-February.

Last week was heavy on negative data:

• Consumer Confidence posted 16% short of expectations
• New Home Sales posted 13% short of expectations
• Initial Jobless Claims were higher than expected

In addition, both the Case-Shiller and Home Price Indices showed a slight pullback in the housing sector.

The impact of these statistics was muted, however. This is because Fed Chairman Ben Bernanke gave his semi-annual outlook to Congress and markets focused more on the chairman verbiage than hard data, looking for clues about the future of Fed policy.

Bernanke stayed on message -- the Fed Funds Rate will stay low for an extended period of time.

Mortgage rates were also helped by a strengthening U.S. dollar and demand for U.S.-denominated bonds. When demand for mortgage-backed bonds is strong, mortgage rates fall.

This week, mortgage rates will jockey around Friday's Non-Farm Payrolls report.

Jobs are playing a large role in mortgage bond trading and markets expect that 30,000 jobs were lost in February.  If the actual figure is better than 30,000 jobs lost, mortgage rates will rise. If it's worse, rates will rise.

Other important data this week include Personal Consumption Expenditures -- the Fed's preferred inflation gauge -- plus the Fed's Beige Book release.  Mortgage rates remain in flux so float with caution.

Mortgage rates look good today, but by Friday, they could be much, much worse.