Chicago Home Prices Rise for Fourth Straight Month

Nationwide, home prices rose slightly in August compared to the same month last year, according to the monthly Standard & Poor's/Case-Shiller Home Price Index.

A 10-city composite index rose 2.6 percent year-over-year in August and a 20-city composite index rose 1.7 percent year-over-year. Compared to July, both indexes dipped slightly for the first time in several months: 0.1 percent and 0.2 percent, respectively.

Fifteen out of 20 tracked metro areas saw index declines compared to July. Despite the overall index increase, 12 metro areas also saw declines compared to August 2009. Seventeen metro areas saw slowing annual growth rates.

Average home prices nationwide are back to late 2003 and early 2004 levels.

Chicago, Detroit, New York and Washington, D.C., have posted at least four straight months of month-to-month increases, though none of the 20 metro areas posted more than a 1 percent increase from July, the report said.

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Homebuilder confidence up but still low

An index measuring homebuilder conference rose for the first time in five months during October, but showed the vast majority of builders view the current level of sales as poor.

Although more builders are expecting sales to pick up in the next six months, they remain in the minority, and traffic from prospective buyers remains low.

The National Association of Home Builders/Wells Fargo Housing Market Index asks builders builders to rate current single-family home sales, sales expectations for the next six months, and traffic from prospective buyers.

The index gauging current sales conditions rose three points in October, to 16. The index gauging sales expectations in the next six months rose five points, to 23. The index gauging traffic of prospective buyers rose two points, to 11.

The new-homes market is finally moving past the lull that occurred when the homebuyer tax credits expired and economic growth stalled this summer," said NAHB Chief Economist David Crowe in a press release.
Challenges to homebuilders include competition from foreclosures, inaccurate appraisal values, and "general consumer uncertainty about the economy and job market," Crowe said.

The toughest obstacles are credit-related, Crowe said: the scarcity of construction credit for builders and tighter mortgage requirements for consumers.

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Mortgage Rates Ease Again

Mortgage rates are at new lows for a third consecutive week as investor demand for mortgage-backed securities that fund most home loans continues to be more than adequate to satisfy demand for mortgages.

Rates for 30-year fixed-rate mortgages averaged 4.19 percent with an average 0.8 point for the week ending Oct. 14, down from 4.27 percent last week and 4.92 percent a year ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey.

That's a new low in Freddie Mac's records, which date back to 1971. Rates haven't been lower since April 1951, according to another set of data based on FHA rates that goes back to 1948.

Rates for 15-year fixed-rate mortgages averaged 3.62 percent with an average 0.7 point, down from 3.72 percent last week and 4.37 percent a year ago. That's a new low in Freddie Mac records dating to 1991.
Rates for 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans averaged 3.47 percent with an average 0.6 point, unchanged from a week ago but down from 4.38 percent a year ago. Rates on 5-year ARM loans have never been lower since Freddie Mac began tracking them in 2005.

"September's employment report held no big surprises to financial markets, allowing long-term bond yields and fixed mortgage rates to continue to ease," said Freddie Mac Chief Economist Frank Nothaft. "As a result, both the 30-year and 15-year fixed mortgage rates hit all-time record lows for the third consecutive week."

Although the latest slide in mortgage rates has sparked another refinancing boom, demand for purchase loans remains down 37.1 percent from a year ago, according to a separate survey by the Mortgage Bankers Association.

Via Inman News

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Home-sale discounts jump 24%, Chicago 5th Highest Share of Discounted Listings

Sellers cut asking prices on 2.1 percent more homes last month compared to August -- a total of 323,316 homes.

Meanwhile, total inventory rose 0.6 percent from August and 13.6 percent from September 2009 to a total of 675,872 homes. The share of discounted homes is therefore 47.8 percent, up from 43.8 percent in September 2009 when 260,358 homes had experienced a price cut.

On average, sellers had reduced their list prices twice last month. Median list price last month was $245,265, down 1.8 percent from August and 15.3 percent lower than in September 2009.

Markets with the highest share of discounted listings (of 26 markets surveyed):

1. Jacksonville, Fla. (55.8 percent)
2. Phoenix, Ariz. (55.4 percent)
3. Minneapolis-St. Paul, Minn. (53.2 percent)
4. Orlando, Fla. (52.8 percent)
5. Chicago, Ill. (52.1 percent)
6. Tucson, Ariz. (51.7 percent)
7. Baltimore, Md. (51.3 percent)

Markets with the lowest share of discounted listings (of 26 markets surveyed):

1. Denver, Colo. (34.4 percent)
2. Los Angeles (39.1 percent)
3. Richmond, Va. (42.9 percent)
4. Miami-Ft. Lauderdale-Palm Beach, Fla. (43.3 percent)
5. San Francisco (45.2 percent)
6. Charlotte, N.C. (46 percent)

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Title Companies Asking For Reassurance from "Robo-Signing" Lenders

In addition to satisfying federal and state regulators that they're following the letter of the law, lenders embroiled in the "robo signing" scandal may soon have to provide warranties to title insurers in order to continue selling foreclosed homes.

Bank of America has already agreed to provide warranties to Fidelity National Financial Inc. that cover the title insurer's costs if employees processing foreclosure documents for the bank make mistakes, Bloomberg News reports, and is in talks with other title insurers to do the same.

Bank of America announced Friday that it would temporarily halt foreclosure sales in all 50 states until it completed a review of its foreclosure procedures, which so far "shows the basis for foreclosure decisions is accurate."

At least four other loan servicers have slowed or halted some foreclosure proceedings in 23 judicial foreclosure states, following allegations that employees handling court filings for the companies signed affidavits that contained information they had not personally verified.Other loan servicers taking action, to date, are GMAC Mortgage, JP Morgan Chase, PNC Financial Services Group Inc. and Litton Loan Servicing.

In addition to mollifying state and federal officials, lenders that want to sell properties they have foreclosed must also convince title insurers they have followed the proper procedures.

ALTA, the title insurance industry's trade group, continues to maintain that flaws in documentation filed in the foreclosure process should ultimately have little adverse impact on buyers of "real estate owned" (also known as bank-owned or REO) properties or on title insurance claims.

Old Republic National Title Insurance Co. has reportedly stopped insuring title for properties foreclosed on by JP Morgan Chase and GMAC Mortgage. The Associated Press reported Friday that Stewart Title Guaranty Co. has issued guidelines to agents that include restrictions on insuring title for properties foreclosed on by JP Morgan Chase, Bank of America, OneWest Bank and GMAC Mortgage.
In arguing against a foreclosure moratorium, Peter Swire, an Ohio State University law professor who until August was a special assistant to President Obama for economic policy, said senior corporate officers at banks should instead personally certify that they have checked their internal foreclosure processes.

The scope of such certifications could vary, based on the what the senior bank official can actually promise, Swire said.

The Mortgage Electronic Registration Systems, or MERS, saved financial firms hundreds of millions of dollars by reducing paperwork involved with reassigning loans, the Washington Post reports. "If you read nothing else," Pfotenhauer advised, "check out MERS's response to speculation about their role in the foreclosure process."

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Nancy Pelosi Pushes For Forclosure Fraud Investigation

House Speaker Nancy Pelosi and the other California Democrats are calling for an investigation into the foreclosure fraud scandal that has forced the nation's biggest banks to halt foreclosures in 23 states.

Bank of America, JPMorgan Chase, and Ally Financial (formerly known as GMAC) halted foreclosures in 23 states after employees admitted in sworn depositions that they didn't verify information in thousands of foreclosure documents. Their use of false affidavits to prove they have the right to foreclose is an eerie reminder of the predatory lending and “liar’s loans” that created the housing bubble and bust to begin with.

Menendez and Sen. Al Franken (D-Minn.) asked the Government Accountability Office to investigate as well, and Sen. Jeff Merkley (D-Ore.) sent a similar request to Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan on Monday.

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"Robo-signing" Controversy Continues

The "robo-signing" controversy over lenders' allegedly lax foreclosure procedures is picking up momentum, with the Office of Comptroller of the Currency ordering the nation's largest lenders to review their foreclosure processes.

Attorneys general in California, Florida, Colorado, Ohio, Illinois, Iowa, North Carolina and Connecticut are also looking into lenders' foreclosure procedures. Connecticut Attorney General Richard Blumenthal today asked the state's Judicial Department to freeze all home foreclosures for 60 days.

GMAC Mortgage and JP Morgan Chase have already halted foreclosure proceedings in 23 states, following allegations that workers the companies employed failed to follow the proper legal procedures in filing paperwork related to judicial foreclosure proceedings.

While lawyers representing homeowners in foreclosure proceedings have challenged lenders on such grounds before, they have mostly succeeded only in delaying, not stopping, foreclosure proceedings. The "robo-signing" controversy could slow the foreclosure process for thousands of homeowners, which some analysts say might help stabilize prices in distressed markets.

The Times reported that Old Republic National Title has instructed agents not to issue title insurance policies on properties foreclosed on by GMAC Mortgage (A spokeswoman for Old Republic told Inman News the company has a "policy of not speaking to the press.")

Is it safe to buy a foreclosed home now? Foreclosure laws vary from state to state, so it is difficult to make a blanket statement on issues involved with purchasing foreclosed and REO homes, the spokesman said.

In a statement, the American Land Title Association said flaws in documentation filed in the foreclosure process should ultimately have little adverse impact on new owners of REO properties, or on title insurance claims.

"If a new homeowner’s title is challenged because of a faulty foreclosure, the title insurer may have an obligation to defend the challenge," said Kurt Pfotenhauer, chief executive officer of ALTA. Laws vary from state to state, but homeowners who have purchased properties that have been through foreclosure have "numerous defenses available to assure their continued ownership," ALTA said.

The alleged deficiency in the foreclosure process may not have harmed the previous owner, for example. Mortgage financiers Fannie Mae and Freddie Mac employ loan servicers who are handling hundreds of thousands of delinquent mortgages, and both companies have large inventories of REO properties they are trying to dispose of.

Their regulator, the Federal Housing Finance Agency (FHFA), issued a statement today acknowledging that accounts of problems with GMAC Mortgage and Chase's handling of foreclosures "raise concerns for homeowners and mortgage investors alike."

FHFA said it supports efforts by Fannie and Freddie to remind loan servicers to process foreclosures "in accordance with their seller-servicer agreements and applicable laws and regulations." Terry Edwards, Fannie Mae executive vice president for foreclosure process compliance, said in a statement that the company is disturbed by reports of servicers failing to follow proper procedures in the administration of foreclosure cases.

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