Fewer April home sales, higher sale prices in King County
Puget Sound Business Journal
Date: Thursday, May 5, 2011, 10:42am PDT

There were fewer April home sales in King County compared with a year ago, but the average home sale price rose dramatically.

In King County, there were 1,896 home closings last month, compared with 2,096 a year ago, but the average home sale in April was $410,289, up from $408,715 in 2010 and $394,918 in March 2011.

Brokers surveyed by the Northwest Multiple Listing Service (NWMLS) said the lower number of homes on the market is leading to a competitive market, with sellers receiving multiple offers from buyers on their homes.

One optimistic broker is J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, who said in a statement that “with healthy sales activity over the last several months, a shortage of homes coming on the market and low foreclosure activity, the stage has been set for a multiple offer market.”

NWMLS data from the 21 Western Washington counties it surveys indicate that there were 10,083 new listings in April, compared with 12,664 a year earlier. Total inventory in the NWMLS-surveyed area is down 13 percent from a year earlier.

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Seattle Real Estate Tyler Freed

Condo construction rules could shut out buyers, hit builders
The Federal Housing Administration has started limiting the number of buyers in condo buildings that can get loans insured by the agency. The rules also put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals.

By ALAN ZIBEL and ADRIAN SAINZ

The Associated Press

New lending rules for condominium buyers are already forcing some developers to change or scrap plans for new projects for fear too many buyers will be shut out.

Last Monday, the Federal Housing Administration started limiting the number of buyers in condo buildings that can get loans insured by the agency. The rules also put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals.

The tighter lending standards are to protect the FHA’s financial health. Roughly 18 percent of loans insured by the agency are either delinquent or in foreclosure, and the agency’s financial cushion has dipped below the federal minimum.

But the move is a blow to condo buyers because the FHA has become a key source of mortgage financing. The agency insures roughly one in four new loans today because buyers need only have a 3.5 percent down payment.

“It is a huge debacle for us,” said Rene Oehlerking, marketing director for Salt Lake City developer Garbett Homes.

The company has canceled a 300-unit condo project, spending $300,000 to redesign it into free-standing homes. Most of its homes and condos this year went to buyers with FHA loans.

Garbett’s condo project didn’t pencil out with the new FHA rule that allows only half of a condo building’s units to have FHA-backed loans, with some exceptions. That number falls to 30 percent in 2011.

Another new rule requires at least 30 percent of units in new buildings be presold before the agency insures any loans. That number will rise to 50 percent in 2011.

Projects in Florida, where the condo market has been devastated, will require special approval before FHA-backed loans can be made.

“Many of our developers won’t be able to pursue condominium projects because the risk is too great that they won’t be able to sell the units,” said David Ledford, a senior at the National Association of Home Builders.

Government officials, however, say the rules are necessary to ensure consumers are purchasing units in viable buildings and to help ensure that defaults on condo projects don’t rise too high.

“We believe that we have a balanced policy that is flexible … yet will help us manage and mitigate the risk,” said Joanne Kuczma, director of the FHA’s home mortgage insurance division.

While the rules could be tough for builders, they will protect consumers because lenders will be forced to be more careful about which projects they fund, said Richard Vetstein, a real-estate lawyer in Framingham, Mass.

“On the whole, it’s a good thing,” he said. “Financially sound condominiums make better investments.”

During the housing boom, the FHA was not a big source of condo loans, and the agency had not updated its condominium rules since the mid-1990s. When the new rules were released this year, the lending industry lobbied aggressively to persuade the agency to loosen them.

“We worked very closely with them,” said Tamara King, director of loan origination at the Mortgage Bankers Association. Now that the rules have been relaxed, she said, “for the most part we are in support of the direction that they’re going.”

Critics, however, say the industry’s influence on the process shows the FHA is all too willing to bend to pressure from powerful interest groups, and they say condo loans will be highly prone to default and foreclosure.

“Rather than stopping the foreclosure mess, we’re actually adding more foreclosures to the mix,” said Edward Pinto, a financial consultant and an FHA critic.

For buyers, the new rules cinch already tight mortgage financing. Earlier this year both Fannie Mae and Freddie Mac slapped tighter restrictions on condo loans.

The new FHA rules are “going to create substantial confusion and turmoil,” for mortgage companies that make FHA loans, said Jack McCabe, a real-estate researcher in Fort Lauderdale, Fla.

“They have to be pulling their hair out right now.”

Seattle Real Estate Tyler Freed

Standardized short-sale plan may relieve big headache

By Kenneth R. Harney

Syndicated columnist

WASHINGTON — If you’re in trouble on your mortgage and can’t get a loan modification, check out the Obama administration’s new standardized short-sale plan scheduled to roll out during the coming months.

The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives.

A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a negotiated sale of the property.

Often a short sale is the last alternative to foreclosure. Say you’ve lost your job and fallen behind on your mortgage payments. With little or no income, you can’t qualify for a modification program.

In this situation — grim as it is — your best move may be to see if your lender will accept a short sale. Though the idea sounds straightforward, in practice it is not.

First, the bank needs to be convinced a short sale will yield it more money at the bottom line than a foreclosure.

This usually means you need to bring in a real-estate agent who knows the ropes and can pull together the key information needed by the bank: recent comparables on closed sales, local market trends and the likely selling price of your house.

Plus you’ll need to have a buyer for the house, one who’ll pay a price acceptable to the bank and has financing to close the deal. If you happen to have a second mortgage or home-equity credit line on the property, you’ll also need to negotiate how much that lender will receive from the sale proceeds.

That can be tricky. In depressed real-estate markets, the second-lien lender may be holding a note that’s worthless in a foreclosure because plummeting property values have wiped out the collateral.

Yet that same bank is in a pivotal position: It has the legal power to block the short sale by refusing to sign on to the deal.

Equally troublesome is the fact banks, mortgage servicers and bond investors often have conflicting requirements for documentation and financial yields that can complicate and drag out the haggling for months.

Enter the Obama administration’s new streamlining plan.

Besides requiring lenders and servicers to use uniform documentation, preapproved short sale terms and accelerated turnaround times, the plan also provides financial incentives for key players:

• Homeowners who successfully complete a short sale under the program receive $1,500 to defray relocation costs.

• Mortgage servicers can receive $1,000 per case.

• Investors get $1,000.

• Second-lien holders receive up to $3,000 from the sale proceeds.

Even real-estate agents get something: The rules prohibit banks from forcing them to cut their commissions from the listing agreement as part of the final deal.

Sounds like a formula for encouraging a lot more short sales, right? The jury will be out on that for months, and most major lenders are still studying the fine print of the Obama program. But early reactions from big banks appear to be positive.

Dave Sunlin, a senior vice president for Bank of America, said, “We’re very pleased. We welcome any effort to reach standardization for all parties” in short sales.

Faith Schwartz, executive director of Hope Now — a Washington, D.C.-based group representing the country’s largest banks, mortgage servicers, bond investors and consumer-counseling organizations — said the plan should bring “uniformity and standards” to a process usually characterized by “mayhem” among the negotiating parties.

Scott Brinkley, a senior vice president for First American, a firm that provides market data for banks, said “you’re going to see a lot of cooperation” by lenders and investors.

But there could be a major pothole: The Obama plan tilts to consumers by requiring second-lien holders to drop all financial claims against short-selling borrowers beyond the $3,000 they take out of the deal.

Travis Hamel Olsen, chief operating officer of Loan Resolution, a Scottsdale, Ariz., consulting firm, says the $3,000 payment won’t be enough for many second-mortgage lenders.

Today they frequently get additional short-sale compensation from sellers as the price of their participation — in cash or through promissory notes — far beyond $3,000.

“I’m concerned that that could limit participation” by second-lien holders, Olsen said.

Bottom line for homeowners: Don’t have wild expectations, but definitely ask your servicer whether it plans to participate and whether the forthcoming standardized plan for short sales just might work for you.

Kenneth R. Harney: kenharney@earthlink.net

Seattle Real Estate Tyler Freed

US Treasury sets guidance on housing short sales
Mon Nov 30, 2009 4:15pm EST

More Business & Investing News… NEW YORK, Nov 30 (Reuters) – The U.S. Treasury on Monday set guidance on a plan for mortgage companies to use “short sales” and other loan modification alternatives to stem a rising tide of foreclosures.

The Home Affordable Foreclosure Alternatives Program simplifies the procedures for completing short sales, a growing practice in which a house is sold for less than the principal owed on existing mortgages, according to an announcement on the Treasury’s website.

(Reporting by Al Yoon; Editing by Dan Grebler)

((albert.yoon@thomsonreuters.com; +1 646-223-6347; Reuters Messaging: albert.yoon.reuters.com@reuters.net))

Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed

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Seattle Real Estate Tyler Freed