“There’s no need to inflate the value of the home because home prices are rising,” said CoreLogic’s chief economist Mark Fleming.

But new federal regulations forcing lenders to prove that borrowers can repay their loans has some borrowers shifting the focus of their fraud to their personal balance sheets. Lenders are now scouring financial records, unlike during the recent housing boom, in order to make sure they are complying with new rules, so fraudsters are following suit, jacking up the numbers.

(Read more: Forget easing prices, new homes are up, up, up)

That could be more dangerous to the banks, because jacking up a home price only hurts if the home price falls, but inflating income means the borrowers may not be able to pay the loan no matter what.

Article source: http://www.cnbc.com/id/101062232

“People who weren’t sure about whether they were going to buy a house or not are coming back in, and that’s especially true of the affluent buyers,” said Watters. “I know at Chase at least we’ve also put a lot of emphasis on making sure we’re doing what’s best for those affluent buyers, including adding more bankers and working with our chase private client customers to really focus on opportunities in the jumbo space.”

(Read More: Rising Rates Turn Investors From REITs)

Watters admited that investors are still slow to return, as the private label market tries to figure out what securitization standards should be. The complete lack of standards during the housing boom, when securities were issued with bits and pieces of loans and wide ranges of risk, led to the downfall of both the mortgage and the housing markets.

“We are not slicing and dicing any loans. We’re selling loans as whole loan products,” assured Watters. “These are well-underwritten loans, great documentation, great borrowers with strong fico scores, large down payments, so these are great credit products, great investment for people who are looking to get additional yield.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100802833

“It was a bit of a nightmare because I don’t live in Greenville…I have no desire to go back to Greenville because my life is in DC,” says Patel. “It was a lot of coordination and I am still trying to collect over $2,000 from my tenants.”

Patel finally ended up selling the home recently at a large loss. She didn’t want to do a short sale because the process is long and risky, and she didn’t want to damage her credit.

(Read More: Record High New Home Prices to Grow)

While there are no real estimates of how many “accidental landlords” now inhabit the housing market, Realtors say they are one more cause of today’s low inventory issue. Usually a buyer is also a seller, making the transaction a wash in terms of inventory, but if the buyer is not a seller, and instead becomes a landlord, inventory takes a negative hit.

Home prices have been rising steadily, up over ten percent from a year ago, according to the latest reading from CoreLogic. Prices are still well below where they were during the housing boom, when so many people bought into the market.

As millions come above water, others are far below. Forty-eight percent of borrowers in Atlanta are underwater, 37 percent in Miami, 54 percent in Las Vegas and 37 percent in Sacramento.

(Read More: Homes Selling at Fastest Pace Since Boom)

It will take many years of price gains for these homeowners to see the light of equity.

Article source: http://www.cnbc.com/id/100764601

(Read More: Homes Selling at Fastest Pace Since Boom)

“It has the look of a runaway housing boom again,” said Jane Fairweather, a Realtor in Maryland, who added that looks can be deceiving. “What you have is very inexpensive money and you have very few houses for sale. As soon as interest rates go up, I think you’ll see a lot of people back off.”

Interest rates have been moving steadily higher. After Wednesday’s speech by Federal Reserve Chairman Ben Bernanke, rates took another jump of 0.375 percentage points.

“It’s an over-correction, but a painful one for buyers,” said Dan Green of Waterstone Mortgage. “A home buyer has five percent less home purchasing power as compared to 24 hours ago.

In the end, sales will come down to buyer confidence, affordability and mortgage rates. Even if that last one moves higher, rates are still historically low and confidence is gaining steam despite the rising prices.

“This week I had a seller who got a full price offer in about four days and he refused to take it because he wanted multiple contracts, come on!” exclaimed Fairweather.

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100761763

(Read More: Home Buyers Are Back, but Where Are the Houses?)

“What’s holding people back from buying a property is a fear of selling their property and not being able to find one. That’s what the problem is,” noted Herrera.

The Las Vegas market is being fueled by investors, but even the investors can’t find the great bargains anymore. While the economy has improved some, the drop in foreclosures is really due to a new law that went into effect in Nevada last year; it criminalizes faulty foreclosures. Banks have therefore tried to do more short sales and loan modifications. Foreclosures in Nevada dropped 36 percent in 2012 from the previous year, according to RealtyTrac, but the distress is still there.

“People in Las Vegas talk about shadow inventory to the point where nobody really wants to talk about it anymore, said Mike Brunson, a local appraiser. “People will argue and say it isn’t, but I can name a dozen people off the top of my head who have been in their houses for over three years without a payment.”

Brunson called Las Vegas the Titanic of the real estate market. It was once thought unsinkable, and even now that the worst is over, he still thinks the market is on a well-provisioned life raft, not on solid ground.

“The only thing that concerns me is that we have been here before and the market itself is not what is driving the price increases. It’s not that we have new employers coming in and creating tens of thousands of new jobs that are leading to people buying new houses. It’s ‘Las Vegas is on sale,’ and investors are buying up everything they can in the used market.

Whatever the cause, the result is new construction and new life breathed into the nation’s home builders.

“There’s been a lot of talk about shadow inventory. It’s gone on for years, and the reality is there’s not enough inventory out there to meet demand today. Demand has increased, certainly our buyers see that, and we’re getting a lot of buyers because of that,” argued Andrews, whose company is, he said, building 150 percent more homes than a year ago.

(Read More: Home Buyers Are Back, but Where Are the Houses?)

Brunson acknowledged there is no question the demand is real. The sales are real. But he still worries about the fundamentals, such as the slow economic growth and the fact that so much of the funding for new home sales is coming from low down payment, government-backed mortgages.

“We have been here before,” said Brunson.

What remains to be seen is if history will repeat itself or if this recovery is as unique as the collapse that preceded it.

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100522314

“There is this kind of middle man investor who is doing the flipping,” says RealtyTrac’s Daren Blomquist, who ran a webinar last month titled, “Why Property Flipping is Flying High in 2012.” Blomquist says the difference for today’s flippers is that they must add value to the home before selling, because price appreciation alone won’t net the profit they seek. That means rehabbing, which can be pricey, depending on the condition of the property. Many of the distressed homes now that flippers seek have been either ransacked by former owners or left vacant and untended for years.

(Read More: How to Play the Housing ‘Boom’)

“You don’t see any of that highly speculative flipping where it’s solely reliant on the home prices going up for the flip to work,” says Blomquist, which is why many flippers are middle men. They flip to other investors in order to get the profit they need. “It’s probably easier to flip to another investor because this person is an experienced buyer and should have their ducks in a row in terms of being able to finance the property, if not pay up front in cash.”

Large-scale, big money investors, like hedge funds, have flooded the single family real estate market, looking for rental properties that will produce good yield. While some have their own teams attending foreclosure auctions and doing the rehabilitation and remodeling, many would rather buy turn-key products, even if the price is slightly higher. The “pure” property flip appears to be less popular, although in some stronger markets it is certainly still happening.

(Read More: Cities With the Most Affordable Homes)

“I have seen a return of flipping, but only at the individual or small investor level. In some cases, these investors are targeting larger, institutional investors as potential buyers,” says Rick Sharga of Carrington Mortgage Holdings, a large fund investing in single family rentals. “I haven’t seen institutional investors doing much flipping (although they will occasionally sell off a few properties from a pool if the homes don’t fit their business model).”

Investors planning a REIT would not be flippers, Sharga notes, as what they need is a large pool of rental homes delivering the cash flow a REIT would require. Most of the larger investors are paying market price (sometimes a little less, sometimes more), which makes profitable flipping difficult.

(Read More: A Risky Lifeline for Seniors Is Costing Some Their Homes)

Until the rental market chills and the housing market shows strong price gains, pure property flipping will not be nearly as lucrative as it once was. On the positive side, continued strength in the single family rental market and the ensuing large investors interest offers smaller investors willing to do the dirty work a large pool of cash-heavy buyers.

Sector Watch: Construction General Building Materials

• The Home Depot
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• Lowe’s Companies
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• The Sherwin-Williams Company
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• E. I. du Pont de Nemours and Company
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• Apogee Enterprises
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Questions?  Comments?  And follow me on Twitter @Diana_Olick