Mortgage firm must pay $1.2M in fraud case
The Republic | azcentral.com
May. 29, 2008 12:29 PM
A Chandler company and its owner have been ordered to pay $1.2 million in restitution and fines for violating the Arizona Consumer Fraud Act and state banking laws, the Arizona Attorney General’s office announced Thursday.
The ruling was made by Maricopa County Superior Court Judge Edward Burke against Virtual Realty Funding Company and its owner, Kenneth D. Perkins.
The state Attorney General’s office filed a consumer protection lawsuit in 2005 after receiving many consumer complaints.
The company advertised it could help homeowners who were behind in their mortgage payments avoid losing their homes. In fact, the transactions offered by the company were structured so that homeowners would transfer title to the company or sell the home to a business associate of the company.
“This case represents the worst in our community,” Attorney General Terry Goddard said in a statement. “This company took advantage of homeowners desperate to save their homes from foreclosure and deceived them into turning over their homes.”
The court ordered Perkins to pay $620,000 in civil penalties and $611,950 in restitution.
Wright home making rare appearance on market
Peter Corbett
The Arizona Republic
May. 29, 2008 01:40 PM
SCOTTSDALE - One of the Valley’s most significant Frank Lloyd Wright-designed homes will likely be on the market within a few weeks, said Anne Lloyd Wright-Levi, a great granddaughter of the famed architect.
Tucked away in a former Arcadia orange grove, the David Wright House is expected to draw keen interest from Wright aficionados, particularly since the half dozen Wright homes in the Valley are rarely available.
This Wright design was built in 1952 for his son, David. An unusual circular home with a lot of glass, it has a spiral ramp leading to a second-level living space.
“It’s in its original state,” said Wright-Levi, adding that other Wright-designed homes have lost their architectural integrity because of remodeling or additions.
Gladys Wright, the widow of David Wright, passed away in February and heirs are expecting to put the home on the market, Wright-Levi said.
The 2-acre property alone could be worth well over $1 million and the Wright-designed home enhances its value.
A two-bedroom Wright home in Stillwater, Minn., is on the market for $3.75 million.
A home adjacent to the David Wright House in Arcadia, designed by Frank Lloyd Wright Jr., is currently on the market for $2.8 million, Realtor Matthew Gruender said.
Home Sales Rise in Hard-Hit Areas
Although nationally, home sales are still on the soft side, new data shows an uptick in several of the areas — including Fort Myers, Fla.; Las Vegas; Sacramento, Calif.; and inner-city Detroit — hit hardest by foreclosures and falling prices.
Americans generally remain wary of further declines in residential prices, but the data from these areas suggest buyers are finding the bargains too enticing to pass up.
Thomas Lawler, a Virginia-based housing economist, says home sellers “have moved into the acceptance mode” and are pricing properties more realistically.
DataQuick Information Systems calculates that sales of single-family homes in California’s Sacramento County totaled 1,669 last month, a 41-percent jump from a year earlier as the median sales price fell 34 percent to $226,250. Meanwhile, the Greater Las Vegas Association of REALTORS® reports that properties being sold by lenders account for more than 50 percent of recent sales.
Source: Wall Street Journal, James R. Hagerty (05/27/08)
Lots of ‘For Sale’ signs but actual sales lagging
Associated Press
May. 26, 2008 11:20 AM
WASHINGTON - Like spring flowers, the “For Sale” signs are sprouting in front yards all over the country. But anxious sellers are facing the most brutal environment in decades, with a slumping economy, falling home prices and rising mortgage foreclosures.
And even the faint promise of better days ahead might not come true, given all the headwinds the housing industry is facing at the moment.
“This is going to be another difficult spring,” said Mark Zandi, chief economist at Moody’s Economy.com. “I think we are at the beginning of the end of the housing downturn, but it is going to be a long and painful end.”
The devastation is certainly a far cry from the boom years from 2001 to 2005 when sales of new and existing homes were setting records for five straight years. During that time, home prices were soaring, luring thousands of investors into the market, hoping to buy homes and flip them for quick profit.
But since 2006, the country has been mired in a housing bust which, in many ways, is the worst since World War II.
Construction is expected to drop to the slowest pace since the 1940s and prices are expected to decline by the largest amount since the Great Depression.
Hardest hit are the states where sales boomed the most: California, Florida, Nevada, Arizona and parts of the Northeast. In the Midwest, the problem is shrinking jobs in the auto industry, making homes hard to sell. But virtually all of the country has felt the aftershocks of the housing slump, either through weaker home sales or the massive drag housing has imposed on the overall economy.
Housing has shaved more than a full percentage point off economic growth, trimming the gross domestic product for the past two quarters to a barely discernible 0.6 percent rate and raising the threat that the country could topple into a full-blown recession.
The National Association of Realtors reported that 46 states saw sales decline in the first three months of this year compared with the same period in 2007. Two-thirds of 149 metropolitan areas saw prices decline during the same period, the largest percentage of cities reporting price drops in the history of the NAR survey, which goes back to 1979.
The state with the biggest sales decline was Maryland, with sales down 38.6 percent in the first three months of this year compared with the same period in 2007. The drop nationwide was 22.2 percent.
The price decline nationally was 7.7 percent in the first quarter, with the biggest plunge a 29.2 percent decline in the Sacramento, Calif., area.
As the spring sales season got under way, the slump was continuing. The Realtors reported Friday that existing home sales fell 1 percent in April, the eighth drop in the past nine months, with the median home price falling 8 percent compared with a year ago, the second-biggest drop on record.
So just how much worse will things get?
Lawrence Yun, chief economist for the Realtors, sees some hopeful signs. Some parts of the country that have been hammered with sharp declines in sales and prices, such as San Diego, Calif., and Fort Myers, Fla., are now reporting sales increases, as buyers are being lured back into the market, looking for bargains.
“Lower prices and low interest rates are starting to generate results,” Yun said, noting that 30-year fixed-rate mortgages averaged 5.92 percent in April, down from 6.18 percent in April 2007. That reflected an aggressive rate-cutting effort by the Federal Reserve to try to keep the country out of a recession.
Sales should also be helped in coming months, Yun predicted, by the reappearance of more mortgage products as lenders reopen the tap for certain loans. That supply had been closed following the credit crisis that hit last August, triggered by rising defaults in subprime mortgages.
Other economists are not so optimistic, noting that the Realtors’ latest report showed the number of unsold single-family homes jumping to a 23-year high, reflecting, in part, a rising tide of mortgage foreclosures, which are dumping more homes on an already glutted market.
Adding to the foreclosure problem is the weak economy, which has resulted in four straight months of job layoffs, an indication to some analysts that the country has already fallen into a recession.
Rising job layoffs and higher gasoline and food prices have sent consumer confidence plunging - not a great environment to mount a rebound in housing.
And then there is the problem of the huge overhang of unsold homes generating further declines in prices, which seem to be keeping more prospective buyers on the fence.
“Right now a lot of people are staying away because they don’t want to buy an asset that might lose value right away,” said Patrick Newport, an economist at Global Insight.
Newport predicted that prices, which by some measures have fallen by about 15 percent nationwide from their peak two years ago, will decline another 10 percent before bottoming out in the spring of 2009. A 25 percent fall in prices would be the biggest since home prices plunged by about one-third during the Great Depression of the 1930s.
David Seiders, chief economist for the National Association of Home Builders, said he believed sales will bottom out by the middle of this year and then start to move higher by the end of this year.
He said builders, trying to control inventories, will continue slashing production, with housing starts expected to drop by 39 percent this year following a 30 percent decline in 2007. That will push activity to the slowest annual pace since the end of World War II. Seiders predicted a gradual rebound in construction starting next year.
“This is stacking up as the most dramatic housing contraction in the post-World War II period,” he said.
And while sales, construction and prices should all start to recover by next year, the rebound is not expected to be a rapid one. Some analysts are forecasting it will take a couple of years for housing to regain its footing.
“It is going to take some time first to restore confidence that housing is a reasonably OK investment, then to work off this inventory and then for the financial system to revive,” Zandi predicted.
U.S. Rep Loses Home to Foreclosure
Even U.S. lawmakers aren’t immune to the foreclosure crisis.
Congresswoman Laura Richardson, a California Democrat, said Friday that her home was foreclosed and auctioned off without her knowledge, despite having reached an agreement with her lender Washington Mutual.
Richardson fell behind in her mortgage payments because she used her money to win the House seat left vacant by the death of Rep. Juanita Millender-McDonald.
Richardson bought the 1,600-square-foot home in Sacramento’s desirable Curtis Park neighborhood for $535,500 in January 2007. It was sold at auction earlier this month to a Sacramento mortgage lender who paid $388,000, according to the Sacramento County Recorder’s Office.
A default notice sent to Richardson in March put her unpaid balance at $578,384. WaMu reused to discuss the case.
Richardson voted in favor of a mortgage debt forgiveness bill, which subsequently became law. She was absent earlier this month for votes on a foreclosure prevention bill, because of her father’s funeral.
Source: The Associated Press, Erica Werner (05/24/08)
30-Year Mortgage Rates Drop
After four weeks in an upward trajectory, Freddie Mac reports that long-term mortgage rates are falling again.
The average interest on a 30-year fixed loan settled at 5.98 percent this week, down 0.03 percent from the prior week. Rates on 15-year fixed mortgages, meanwhile, slipped 0.5 percent for the week to an average of 5.55 percent.
Borrowing costs drifted slightly higher, however, on adjustable-rate products.
Five-year ARMs bumped up 0.04 percent to 5.61 percent, while one-year ARMs moved up 0.06 percent to 5.24 percent.
Source: Chicago Sun-Times (05/23/08)
Existing-Home Sales Ease Due to Mortgage Restrictions; Some Markets Rising
WASHINGTON, May 23, 2008
Existing-home sales slowed in April, partly because restrictive lending practices hampered home buyers. At the same time, a greater number of areas are showing sales gains from a year ago and a recent reversal in mortgage policy means the market is better positioned for a turnaround, according to the National Association of Realtors®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 1.0 percent to a seasonally adjusted annual rate 1 of 4.89 million units in April from an upwardly revised pace of 4.94 million in March, and are 17.5 percent below the 5.93 million-unit level in April 2007.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the good news is that mortgage restrictions have just been eased. “In the past week, Freddie Mac and Fannie Mae announced that they were eliminating their ‘declining market’ policies, effective June 1,” he said. “This means consumers across the country will have access to safe, affordable financing with downpayments of only 5 percent on most mortgages, with 100 percent financing available on some loan products, and we could see an upturn in home sales this summer.”
Lawrence Yun, NAR chief economist, said eliminating restrictive policies should be a big help to home buyers. “I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant,” he said. “Also, a recent notable drop in interest rates on conforming jumbo loans will help consumers in high-cost markets like California and New York.”
The unusual mix of market conditions around the country continues, but areas showing healthy price gains include Greenville, S.C., and Springfield, Mo., both with solid local economies. “On the other hand, some markets like San Diego, Calif., and Fort Myers, Fla., are experiencing rising sales after sudden double-digit drops in local home prices, so lower prices and low interest rates are starting to generate results,” Yun said.
The national median existing-home price2 for all housing types was $202,300 in April, which is 8.0 percent below a year ago when the median was $219,900. Because the slowdown in sales from a year ago is greatest in high-cost areas, there is a downward distortion to the national median with relatively more sales in low- and moderate-priced markets.
Total housing inventory at the end of April rose 10.5 percent to 4.55 million existing homes available for sale, which represents an 11.2-month supply3 at the current sales pace, up from a 10.0-month supply in March.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage slipped to 5.92 percent in April from 5.97 percent in March; the rate was 6.18 percent in April 2007.
Single-family home sales slipped 0.5 percent to a seasonally adjusted annual rate of 4.34 million in April from 4.36 million in March, and are 16.1 percent below the 5.17 million-unit level recorded one year ago. The median existing single-family home price was $200,700 in April, down 8.5 percent from April 2007.
Existing condominium and co-op sales fell 5.2 percent to a seasonally adjusted annual rate of 550,000 units in April from 580,000 in March, and are 27.9 percent below the 763,000-unit pace in April 2007. The median existing condo price4 was $214,900 in April, which is 3.7 percent below a year ago.
Regionally, existing-home sales in the West rose 6.4 percent in April to a level of 1.00 million but are 15.3 percent below a year ago. The median price in the West was $285,700, which is 16.7 percent lower than April 2007.
In the South, existing-home sales were unchanged from March at an annual rate of 1.92 million in April, but are 18.6 percent below April 2007. The median price in the South was $170,800, down 5.1 percent from a year ago.
Existing-home sales in the Northeast fell 4.4 percent to an annual pace of 870,000 in April, and are 14.7 percent below a year ago. The median price in the Northeast was $262,000, which is 7.7 percent below April 2007.
In the Midwest, existing-home sales were at an annual rate of 1.10 million in April, which is 6.0 below March and 19.7 percent lower than April 2007. The median price in the Midwest was $159,100, down 2.9 percent from April 2007.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Sales of existing homes fall 1 percent in April
Associated Press
May. 23, 2008 08:18 AM
WASHINGTON - Sales of existing homes fell for the eighth time in the past nine months, with the backlog of unsold single-family homes rising to the highest level in more than two decades.
The National Association of Realtors said that existing home sales dropped by 1 percent to 4.89 million units, matching the all-time low set in January. These records go back to 1999.
The median price for an existing home dropped 8 percent, compared with a year ago, to $202,300. Analysts predicted further price declines given the huge backlog of unsold single-family homes, which rose in April to 10.7 months supply at the current sales pace, the highest inventory level since June 1985.
The April sales drop was slightly smaller than had been expected. The housing industry is being battered by a prolonged slump that has seen sales and prices decline and mortgage foreclosures soar, the aftermath of a five-year housing boom.
Sales were down the most in the Midwest, a drop of 6 percent, followed by a 4.4 percent decline in the Northeast. Sales were up 6.4 percent in the West, a region of the country where prices fell by the sharpest amount, and were unchanged in the South.
Even with the weak results for April, Lawrence Yun, chief economist for the Realtors, said he saw reasons for optimism for the second half of this year as more types of mortgages become available as industry and the government respond to a severe credit crunch that began last August.
“I would encourage buyers who were disappointed by poor mortgage options to take another look at the market because the lending changes are significant,” he said.
However, other economists were not as optimistic about a rebound in sales, contending that the continued drop in prices was keeping potential buyers sitting on the fence, waiting for prices to fall further.
“With prices collapsing, the incentive not to buy a home is increasing by the week, and with inventory showing no sign of improvement, prices will keep falling,” predicted Ian Shepherdson, chief U.S. economist at High Frequency Economics.
The severe slump in housing and the related credit crunch, which has resulted in multibillion-dollar losses at some of the nation’s largest financial institutions, has depressed growth and raised worries about a recession.
However, the Bush administration believes that the 130 million economic stimulus payments being sent out currently will help keep the country out of a full-blown recession.
REALTORS® Say RESPA Reform Too Confusing and Overly Expansive
WASHINGTON, May 22, 2008
The U.S. Department of Housing and Urban Development’s proposed Real Estate Settlement Procedures Act reform “tips the balance in favor of the largest financial industry players, opens the door to legal challenges, and does little if anything to benefit consumers,” according to the National Association of Realtors®.
“NAR appreciates the House of Representatives’ request to HUD to extend the comment period for 60 days, but HUD only granted 30 days. This reform, and getting it right, is too important to try to push it through without full consideration,” Realtor® Adam D. Cockey Jr., chair of NAR’s Real Estate Services Forum, told the House Committee on Small Business today. “We would like to see HUD withdraw its RESPA proposal, refocus it and republish.”
Reform should focus on reformatting the Good Faith Estimate (GFE) and HUD-1 for clearer disclosures that help borrowers better understand and compare mortgage products and closing costs. “We believe it is in the best interests of home buyers to have just one set of simplified rules and disclosures. The current proposal will require expensive and time-consuming changes to the industry at a time when the industry and consumers can least deal with controversial wholesale changes,” Cockey said.
NAR opposes the current rule, which is too complex, and requests its withdrawal. NAR recommends reissuing the rule with narrowly focused disclosure changes that are consistent with the consensus developed during HUD’s seven roundtables in 2005.
In a recent memo on new regulation, White House Chief of Staff Josh Bolton quoted President George W. Bush in saying “the American people deserve ‘a regulatory system that protects and improves their health, safety, environment, secures rights, and ensures a fair and competitive economic system, while respecting their prerogative to make their own decisions and not imposing unnecessary costs.’”
“The RESPA proposal fails this test, limiting choice and competition and imposing costs and confusion on consumers and industry,” Cockey said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
Permanent Loan Limit Increase would be good for Homeownership, Says NAR
WASHINGTON, May 22, 2008
Making the temporary loan limit increases authorized by the Economic Stimulus Act of 2008 permanent will give families in high-cost areas equal access to fair and affordable loans on a continuous basis, according to the National Association of Realtors®.
“Congress created Fannie Mae and Freddie Mac to provide liquidity and stability to the mortgage markets. Making the Economic Stimulus Act limits permanent will significantly boost home buyer, lender and investor confidence and will bring more families in high-cost areas back to the marketplace with greater access to affordable financing,” said Realtor® Vince Malta, Chair of NAR’s Public Policy Coordinating Committee, in testimony before the House Financial Services Committee today. “This will also make more affordable interest rates available for families regardless of where they live because of the added liquidity to the mortgage market. We believe the result will be additional sales, lower inventories, and stronger home prices.”
Research studies have found that home prices have the biggest impact on foreclosures, and that strengthening and stabilizing home prices would reduce foreclosures.
“While jumbo mortgages were once associated with luxury housing, today every region of the country has areas that qualify for jumbo conforming loans,” said Malta. NAR estimates that adopting permanent high-cost area limits of 125 percent of the local median home sales price, up to $729,750, will allow more than 500,000 homeowners to refinance into lower interest rate loans every year, helping to reduce foreclosures by as many as 210,000. Additionally, this would generate over $35 billion in increased economic activity, strengthen home prices by 2 to 3 percent, increase home sales by up to 350,000 and save homeowners up to $600 per month.
“For all of these reasons, NAR urges Congress to make the Economic Stimulus Act loan limit increases permanent. Doing so is the right move for the nation’s housing markets and economy and is a matter of simple equity for American families residing in higher cost areas. Stability is what we are after and stability is what this action would provide,” Malta said.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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