NAR Economist Among Top Forecasters
THE NATIONAL ASSOCIATION OF REALTORS’® Chief Economist Lawrence Yun has been named among the top 10 economic forecasters by USA Today. Yun is ranked fifth on the list and is responsible for NAR’s real estate statistics and economic forecasting. The annual list recognizes accuracy in forecasting.
“NAR is proud of USA Today’s recognition of Lawrence Yun and his economic forecast accuracy. He is a highly regarded economist, and the housing and real estate industry have come to rely heavily on his economic analyses,” says Dale Stinton, NAR executive vice president and chief executive officer. “This acknowledgement contributes greatly to NAR’s reputation as the leading innovator in housing-related research.”
Yun was named NAR’s chief economist and senior vice president of research in November 2007. He has been with the association since 2000, previously serving as vice president and senior economist. He pioneered the development of the Commercial Leading Index after helping develop the residential Pending Home Sales Index.
“I’m honored to be recognized among some of the best economists in the country,” says Yun. “The economy and housing industry are facing many challenging issues at this time, which makes this an interesting and stimulating position.”
USA Today enlisted the help of the Federal Reserve Bank of Atlanta to determine the most accurate forecasters among the economists surveyed in the newspaper’s quarterly survey on the U.S. economy.
The economists, whose identities were unknown to those gathering the data, received four scores — one for each quarterly survey — and were ranked on the average of those four scores. FRBA used statistical methods to assess the joint accuracy of the predictions rather than assessing the accuracy of each forecast variable separately, as is commonly done.
Before joining NAR, Yun worked as an economic consultant to the U.S. Department of Veterans Affairs and the U.S. Department of Education. As a research associate at the University of Maryland, Yun developed the graduate economics curriculum for and taught free-market economics in the former Soviet Union as that country transitioned from communism to a free-market system.
Yun received his Ph.D. in economics from the University of Maryland in 1995. He received a B.S. degree in mechanical engineering from Purdue University in 1987.
Tips for Buying at Auction
Ben Anderson, a real estate auctioneer and member the National Auctioneers Association, predicts auctions may make up as much as 15 percent to 20 percent of all real estate sales given nationwide foreclosure rates. Traditionally, auctions represent just 8 percent to 10 percent of such sales.
Here are his tips for buying at auction:
Conduct due diligence in advance of the auction. Inspect the property. Review any available documentation, such as previous inspections, appraisals, and seller disclosure statements.
Review the title search. The seller’s representative usually requests this at the time of the listing.
Arrange for financing. Clarify with the lender the qualifications and the amount available for a loan.
Know the market. Check comparable properties and what they have sold for, and analyze nearby listings.
Review the terms and conditions of the auction. Before auction day get a copy of the purchase agreement and the auctioneer’s terms and conditions. Read and understand them.
Source: Denver Post, Christian Toto (03/16/08)
Tough Markets Bring Fraud to Surface
Mortgage loan origination may have fallen to its lowest level since 2002, but mortgage fraud was on the rise in 2007, according to the Tenth Periodic Mortgage Fraud Case Report, prepared by the Mortgage Asset Research Institute.
Speaking at a MBA fraud conference in Chicago yesterday, Merle D. Sharick, vice president of sales for MARI, stated that Suspicious Activity Reports received by the Federal Bureau of Investigation and the Financial Crimes Enforcement Network from federally regulated banks jumped 139 percent between 2006 and 2007. The jump in fraud will spell record losses for lenders, easily topping $1 billion, says the report.
As it was in 2006, the most common types of mortgage fraud were misstatement about employment and income. However, borrowers’ failure to disclose debts, liens, and judgments grew by 50 percent in the last year.
Several factors contributed to the rise, says Sharick, including reduced loan volume that prompted lenders to more carefully scrutinize loans, falling home values, and an oversupply of properties, especially in markets such as Florida and Nevada where a significantly number of recent home purchasers were made by investors. (View a report and state breakdown of mortgage fraud by the Mortgage Asset Research Institute.)
In efforts to staunch the fraud flood, the Mortgage Bankers are developing a national mortgage fraud database so its members can share information on mortgage scams. The association also plans to develop a national database of property values.
— By Mariwyn Evans for REALTOR® magazine online
Million Dollar Homes at Bargain Prices
Now could be a great time to buy a million dollar home in a nice area at a bargain price.
Forbes magazine has identified Rancho Santa Fe, Calif., Marco Island, Fla., Castle Rock, Colo., Annandale, Va., and Bergen County, N.J., as five high-end areas where million dollar foreclosures abound.
Traditionally good borrowers with strong credit scores previously purchased a lot of these homes. In many cases, the foreclosure has come about because the homes are now worth significantly less than the inflated prices the owners originally paid. The homes have sunk into negative equity situations and the previous owners don’t want to make the payments, so they walk away, says Wendell Cox, founder of Demographia, a housing research company.
But foreclosures are not all bad news for the high-end real estate market. Nelson Gonzalez, a practitioner with Esslinger-Wooten-Maxwell, specializing in Miami Beach, says that the rash of foreclosures in Florida, which has the second-highest foreclosure rate in the country, has driven interest from out-of-town and foreign buyers looking to snag a deal.
“They think that every house in Florida is in foreclosure,” he says. “The offers we’re getting are fairly decent, but the sellers are not coming down yet.”
Source: Forbes, Matt Woolsey (03/13/08)
Subprime Crisis Triggers Lawsuits
Navigant Consulting Inc. says civil lawsuits tied to the subprime mortgage crisis totaled 278 in 2007, and experts believe mounting subprime losses will push the total number of cases above the 559 filed during the savings and loan crisis.
Of last year’s cases, 43 percent involved allegations of predatory lending, and 22 percent involved securities.
Chicago-based attorney Richard Gottlieb says lawsuits are getting creative, and observers note that all parties involved in the mortgage business face litigation. Nearly two dozen investment banks are being sued by the City of Cleveland because their subprime investments allegedly created a public nuisance, while officials in Buffalo are suing 28 lenders with regard to vacant properties.
Without factoring in the costs of these lawsuits, experts say losses from the subprime meltdown could reach $400 billion.
Source: Chicago Tribune, Ameet Sachdev (03/11/08)
Why Now is a Smart Time to Buy
Now is a great time to buy a home, say the financial gurus at the Wall Street Journal.
The Journal calls it a buyers market and offers these suggestions for first-timers getting their feet wet. While their advice is solid, it’s not revolutionary, but some potential customers might find it reassuring.
Remember this is a place to live not a stock market investment, they say. Lenders want buyers to spend no more than 28 percent of their gross monthly income on mortgage payments, real estate taxes, and home insurance. Buyers shouldn’t count on stretching further because lenders won’t approve their loans.
Cash is king. Having enough money in the bank to pay closing costs that are typically an additional 2 percent to 3 percent of the price of the home is necessary.
Location. Location, location. As any good real estate professional knows, homes in good school districts where the crime is low are much more likely to hold or increase their value.
Compare. Besides just looking at the comps, buyers should examine what it would cost to rent a similar house in the same area and they might consider what it would cost to buy land and build a comparable home.
Think long haul. It will probably take at least six or seven years of living in the house to be able to sell and come out ahead.
Source: The Wall Street Journal, Shelly Banjo (03/11/08)
Lease-to-Own Primer
Lease-to-own agreements can help sell a hard-to-sell property during a sluggish housing market. Here’s how they work:
A seller agrees to rent a property to an interested buyer for a set period of time, usually one to three years. At the end of the lease, the buyer has the option to purchase the home at a preset price.
A portion of the monthly rent paid during the lease is usually counted toward the down payment. To cover that, the seller charges a rent increment or monthly premium of $200 to $300 compared to comparable rentals.
Many owners also charge an option fee for taking the property off the market, usually 1 percent to 2 percent of the sale price. This may be applied toward the purchase.
Sellers have no guarantee that renters will buy at the end of the term, but if they don’t, they keep the option fee and the amount of the rent that would have gone toward the down payment.
Source: Orlando Sentinel (03/09/08)
Couple Settles Lawsuit Over Home’s History
A lawsuit filed by a Dubuque, Iowa, couple who claimed they weren’t told that a house they bought was haunted by the suicide of the previous owner’s husband has been settled out of court for an undisclosed amount.
Chad and Michelle Miller sued 65-year-old Rita Russow and the real estate practitioner who represented her, Dominic Goodmann of Dominic Goodmann Real Estate. The couple claimed the suicide of Rita Russow’s husband in 1992 and structural problems, including a leaky roof, caused them to suffer damage.
The Millers said if they had known about the problems, they wouldn’t have purchased the $136,000 home. The suit claimed negligence, misrepresentation, equitable fraud, rescission, and statutory nondisclosure. They also sued Russow for breach of contract.
Source: The Associated Press (03/08/08)
Snag a Bargain: Foreclosed Properties
Now’s the time to pick up properties at fire sale prices, says Ralph R. Roberts, author of Foreclosure Investing for Dummies and Flipping Houses for Dummies.
“Properties could double in value over the next 10 years. But you have to be willing to go in, buy them, and hang on for the longer term,” he advises.
Roberts, owner of Ralph Roberts Realty in suburban Detroit, who says he has bought and sold more than 2,000 foreclosed properties in his career, says profitable investing in foreclosures requires exhaustive records searches in advance.
Roberts recommends that buyers of foreclosures create a file that contains a range of property information that will establish what the property is worth and help avoid bureaucratic snafus.
Here is his list of must-have information:
A copy of the foreclosure notice, or notice of default.
Title commitment and a 24-month history in the chain of title or the last two recorded documents.
Deed with the current home owners’ names.
Last recorded first mortgage, so you know how much the current home owners owe.
Documentation of all liens against the property, including property tax liens.
Map showing the location of the property.
Exterior home inspection (with photos and videos), plus neighborhood photos.
City worksheet on the property showing all repairs, inspection reports, and other information.
MLS data showing how much comparable homes are selling for in the area.
Tax bills.
SEV (standard equalized value) of the property, on which property taxes are based.
Any notes documenting conversations with neighbors.
Source: ThinkGlink.com, Ilyce Glink (03/07/08)
Mortgage Rates Drop This Week
Freddie Mac says the 30-year fixed mortgage rate fell to 6.03 percent during the week ended March 6, from 6.24 percent the prior week.
Interest on 15-year, fixed-rate mortgages also declined, falling to 5.47 percent from 5.72 percent over the same period.
The five-year adjustable mortgage rate dipped to 5.34 percent from 5.43 percent, while the one-year ARM dropped to 4.94 percent from 5.11 percent.
Freddie Mac chief economist Frank Nothaft attributes the decrease in mortgage rates to reports of weakness in the job market, manufacturing sector, and consumer confidence.
Source: San Diego Union-Tribune (03/07/08)
