(Read more: Mortgage alert: Borrowers change how they cheat)

“It is estimated that the improvement in recovery rates alone is worth more than $5 billion to the MMIF—which would far exceed the amount of the mandatory appropriation,” wrote Galante.

The FHA, which insures low down-payment loans, or loans with a minimum 3.5 percent down, stepped in to save the housing market. It went from about a 3 percent share of the market to almost a third of the mortgage market during the crash. But now, it’s paying the price.

“Over the years, the FHA has strayed far from its original mission. It has become the nation’s largest subprime lender,” wrote Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee.

(Read more: Map: Tracking the recovery)

Most of the FHA losses, around $70 billion, were from loans originated between 2007 and 2009. The biggest trouble has been in reverse-mortgages for senior citizens and seller-funded down payments; the latter was banned in 2008.

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC

Article source: http://www.cnbc.com/id/101068629

Home prices were up over 12 percent in the nation’s top 20 housing markets in July, according to a report this week from SP/Case-Shiller. While the price gains are moderating, the jumps make it increasingly difficult for first-time home buyers to get into the housing market.

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

Article source: http://www.cnbc.com/id/101065140

(Read more: Map: Tracking the recovery)

While inventories improved slightly in August on a national basis, up 0.4 percent month-to-month, they are still down 6.3 percent from a year ago, according to the National Association of Realtors.

While home sales were higher in August, the Realtors said it was, “the last hurrah,” as several indicators showed buyer traffic slowed dramatically at the end of the summer.

“The sharpest falloff in the HousingPulse Homebuyer Traffic Indexes was seen among current homeowners, the largest group of home purchasers in this year’s housing market. The first-time homebuyer group also saw a decline in its traffic index,” according to a new report from Campbell/Inside Mortgage Finance.

The fall and winter months are traditionally the slowest in the housing business, and weaker demand will affect prices. Sales of newly built homes have not exactly been gangbusters, and new orders at both Lennar and KB Home were weaker than expected. Make no mistake, underlying demand exists, it’s just a question of when it emerges in force.

So far, even weak demand has pushed prices higher, again, due to historically low supply.

(Read more: Real estate’s new frontier: Crowdfunding)

“Construction of single-family homes has been depressed since late 2007, while the U.S. population has increased by more than 12 million over that time,” said economist Patrick Newport of IHS Global Insight. “Since underlying demand is, by our estimate, running at a rate nearly twice that of housing completions, the shortages are likely to get larger before getting smaller.”

This means that home-price gains, as measured by the Case-Shiller indexes, are likely to remain strong for some time, even if they retreat some from the current pace.”

—By CNBC’s Diana Olick. Follow her on Twitter @Diana_Olick.

Questions?Comments? facebook.com/DianaOlickCNBC.

Article source: http://www.cnbc.com/id/101058777

This home at 3800 Washington St. in the Presidio Heights neighborhood of San Francisco is on the market for $21 million. It has eight bedrooms, seven bathrooms and 17,895 square feet. Prices for homes above $1 million grew by 11 percent during the past year.

Blanca Torres
Reporter- San Francisco Business Times

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The Bay Area’s housing market continues heating up, but for how long?

Home values in the Bay Area rose by 27.8 percent during the past year to an average of $628,200 in July, according to Zillow, a real estate information site. Zillow calculates home value appreciation for all homes, not just homes that have sold or are on the market.

Click on the image for a slideshow of Bay Area homes that are on the market or have risen significantly in value.

San Francisco ranked third nationwide for home value appreciation after Sacramento with 33.1 percent growth to $274,600 and Las Vegas with 30.8 percent growth to $151,600.

Nationwide, home values crept up by 6 percent during the past year to an average $161,600 — about 25 percent of San Francisco’s average (kind of makes you want to move doesn’t it?).

“The U.S. housing market recovery has proven it is on very sound footing,” said Zillow Chief Economist Dr. Stan Humphries. “We have entered a new phase in the recovery when we can begin to turn away from ugly recent history and turn toward what the housing market of the future will look like and how it will act.”

The housing market has improved significantly, but I’m not sure the Bay Area’s performance will continue to rise at the rapid pace we’ve seen in the past couple of years.

Also, the market here is increasingly shifting toward the high-end and away from first-time and entry-level buyers.

First Republic Bank reported today that luxury home prices in the Bay Area jumped 10.9 percent during the second quarter of this year compared with 2012 to an average of $2.9 million — the highest since the fourth quarter of 2008 and approaching the all-time highs of 2007.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

Article source: http://www.bizjournals.com/sanfrancisco/blog/real-estate/2013/08/bay-area-home-values-up-28-percent.html

During the next several years, as the housing market crashed and then began to eke its way back, Fannie and Freddie drew $188 billion from the Treasury. They were in turn forced to pay 10 percent stock dividends back. Then in 2012, the Treasury announced that that agreement would be replaced by a quarterly sweep of every dollar of profit that each institution earned in the future.

(Read more: Map: Tracking the recovery)

The move was designed to, “help expedite the wind down of Fannie Mae and Freddie Mac, make sure that every dollar of earnings each firm generates is used to benefit taxpayers, and support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market,” went the 2012 release.

By 2012, with the housing market rebounding and newly originated loans faring better than any in history, Fannie Mae and Freddie Mac began turning annual profits. By 2013, those profits were growing dynamically, and the two are now nearing the amount they originally drew from the Treasury, although the payments do not go to pay back the draw. The Treasury still owns the preferred stock. The money simply goes to the government.

Now, as individual investors in Fannie and Freddie stock cry foul, launching lawsuits against the government and demanding their share, lawmakers are under increased pressure to find a fitting end for the conservatorship and the entities. The question is whether or not to put a government backstop into the market yet again.

“The construct of a government-guaranteed, mortgage-backed security is absolutely going to be needed,” said David Stevens, CEO of the Mortgage Bankers Association. “You can’t have a functioning housing finance system where private capital just leaves it in the next recession. You need to have constant liquidity provided to the U.S. system, and that comes from the guaranteed mortgage-backed security.”

Confidence is key going forward, and investors are unlikely to pour money back into the mortgage market without a guarantee that in another catastrophic crash there won’t be some government backstop. One of the leading bipartisan proposals in Congress, introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., does create an investor and borrower-funded backstop. It will make loans slightly more costly, but the government guarantee on mortgage-backed securities would be there.

“The biggest problem is that Congress wants supercheap mortgages and they want to eliminate taxpayer risk for the housing market, and that’s just a holy grail to get,” said Guggenheim’s Seiberg. “Anything less than 100 percent government backstop is going to raise questions about whether fixed income investors are really going to be there to pick up the slack and to buy those securities.”

Federal regulators are already trying to shrink the portfolios of Fannie Mae and Freddie Mac, even as Congress still debates their future. They have layered on heavy fees to lenders, which have actually made conforming loans (those backed by Fannie and Freddie) more costly than jumbo loans funded by banks. There is also a move to lower the loan limits on conforming loans, which would push banks and investors to take on more of the markets.

(Read more: Jobs report tempers mortgage rates)

Article source: http://www.cnbc.com/id/101018586

During the next several years, as the housing market crashed and then began to eke its way back, Fannie and Freddie drew $188 billion from the Treasury. They were in turn forced to pay 10 percent stock dividends back. Then in 2012, the Treasury announced that that agreement would be replaced by a quarterly sweep of every dollar of profit that each institution earned in the future.

(Read more: Map: Tracking the recovery)

The move was designed to, “help expedite the wind down of Fannie Mae and Freddie Mac, make sure that every dollar of earnings each firm generates is used to benefit taxpayers, and support the continued flow of mortgage credit during a responsible transition to a reformed housing finance market,” went the 2012 release.

By 2012, with the housing market rebounding and newly originated loans faring better than any in history, Fannie Mae and Freddie Mac began turning annual profits. By 2013, those profits were growing dynamically, and the two are now nearing the amount they originally drew from the Treasury, although the payments do not go to pay back the draw. The Treasury still owns the preferred stock. The money simply goes to the government.

Now, as individual investors in Fannie and Freddie stock cry foul, launching lawsuits against the government and demanding their share, lawmakers are under increased pressure to find a fitting end for the conservatorship and the entities. The question is whether or not to put a government backstop into the market yet again.

“The construct of a government-guaranteed, mortgage-backed security is absolutely going to be needed,” said David Stevens, CEO of the Mortgage Bankers Association. “You can’t have a functioning housing finance system where private capital just leaves it in the next recession. You need to have constant liquidity provided to the U.S. system, and that comes from the guaranteed mortgage-backed security.”

Confidence is key going forward, and investors are unlikely to pour money back into the mortgage market without a guarantee that in another catastrophic crash there won’t be some government backstop. One of the leading bipartisan proposals in Congress, introduced by Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va., does create an investor and borrower-funded backstop. It will make loans slightly more costly, but the government guarantee on mortgage-backed securities would be there.

“The biggest problem is that Congress wants supercheap mortgages and they want to eliminate taxpayer risk for the housing market, and that’s just a holy grail to get,” said Guggenheim’s Seiberg. “Anything less than 100 percent government backstop is going to raise questions about whether fixed income investors are really going to be there to pick up the slack and to buy those securities.”

Federal regulators are already trying to shrink the portfolios of Fannie Mae and Freddie Mac, even as Congress still debates their future. They have layered on heavy fees to lenders, which have actually made conforming loans (those backed by Fannie and Freddie) more costly than jumbo loans funded by banks. There is also a move to lower the loan limits on conforming loans, which would push banks and investors to take on more of the markets.

(Read more: Jobs report tempers mortgage rates)

Article source: http://www.cnbc.com/id/101018586

The experts at RealtyTrac told 7 On Your Side that home prices have increased 28 percent in the Bay Area from the time the housing market hit bottom in February 2012. In San Francisco, the prices have risen even more dramatically.

Brian Miller saw first hand how frantic the housing market in San Francisco can be right now.

“I found myself being constantly outbid, putting in offers of 20 percent over asking, getting outbid at 50 percent over asking in cash,” Miller said.

That type of activity didn’t surprise Serena Kokjer Greening of Guarantee Mortgage. She says the small number of homes for sale combined with the improved employment picture is leading to bidding wars.

“You’ll see properties getting six, eight, even 20 offers which, you know, hadn’t happened in four to five years here,” Kokjer Greening said.

All those offers mean rising prices taking us closer to the bubble, the point when homes are considered overpriced.

The Vice President of RealtyTrac Daren Blomquist says we’re still 21 percentage points below the peak of the housing bubble in the Bay Area.

“But then if you focus in on the city, that’s where we’re very close actually to the peak of the housing bubble in San Francisco,” he said.

Blomquist says San Francisco is just 6 percentage points from reaching that bubble stage.

“I think it’s pretty dangerous,” he said.

“Today I received probably my eighth denial of a modification,” San Francisco resident Gale Rosboro said.

Rosboro wrote President Barack Obama and the White House forwarded her case to the Treasury Department to assist her in getting a modification from Wells Fargo. So far, even that hasn’t helped.

“They’ve made no move towards working with me to get a modification,” Rosboro said.

In an email, Wells Fargo told 7 On Your Side, “We have worked with Ms. Rosboro for nearly three years and will continue to try to identify options that are appropriate for her individual financial circumstances. Our foreclosure rate is less than 1 percent.”

Ironically, rising home values could make it even more difficult for struggling homeowners to get modifications.

“I think that people are barely hanging on. There have been a lot of cuts and its been very difficult for families,” Alliance of Californians for Community Empowerment spokesperson Grace Martinez said.

Blomquist predicts another round of foreclosures in San Francisco in the coming months.

“Four of the last five months in San Francisco foreclosure starts have increased from the previous month,” he said.

Blomquist advises home buyers to be patient and not feel you have to buy right now.

Miller waited and found something he could afford. “It feels great, I mean I’m very excited, he said.

RealtyTrac says the next wave of foreclosures in San Francisco won’t be an overwhelming flood, but it does expect an uptick.

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(Read more: What you need to know if Fannie and Freddie go)

“Consumers have taken the interest rate rise in stride. Expectations for continued improvement in housing persist, and sentiment toward the current buying and selling environment is back on track from its dip last month,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “These results are consistent with our own analysis of previous housing cycles, which finds that interest rates and home prices are not strongly correlated.”

(Read more: Taking your calls now: Obama sells housing agenda via Zillow)

Another survey from home builder PulteGroup found 43 percent of move-up buyers indicating they are planning to buy a new home within the next five years, with 76 percent saying they believe they can sell their current home within the next two years for enough to move up. Pulte targets the move-up buyer.

Mortgage applications to purchase a newly built home rose 14 percent month to month, according to the Mortgage Bankers Association, but new home buyers may be less sensitive to rates, as builders can buy down mortgage rates as part of the deal.

It all prompts the question: With rates still historically low, does a 1 percentage point jump in rates really matter?

Article source: http://www.cnbc.com/id/100952350

Home News Bay Area Housing: Santa Rosa House Prices Continue to Rise, Along With Demand

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By Brandon Cornett | Housing Market News
August 5, 2013 | © 2013, All rights reserved

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By Brandon Cornett | August 5, 2013 | 2013, All rights reserved

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Mortgage shopping?

If Zillow’s Home Value Index (ZHVI) is any indication, the Santa Rosa real estate market is undergoing a major transformation right now. The ZHVI for Santa Rosa increased by 24.6% over the last year or so.

Granted, the ZHVI is not an exact science. But it does give us some insight into which way the market is moving. And the Santa Rosa housing market is clearly headed north, where home prices are concerned. The same could be said for the entire San Francisco Bay Area.

The median sale price is arguably a better indicator, because it’s based on actual sales prices. Here again, the trend is undeniable. According to Zillow, the median price paid for homes in Santa Rosa has risen by more than 27% in the last year or so. The median list price climbed by 21.7% during the same period.

Data from Trulia, another real estate information website, confirms this trend. Trulia’s numbers show a 28% increase in Santa Rosa’s median sale price over the last year, closely matching Zillow’s figures.

These are tremendous gains, and they mirror the broader trends we are seeing across the San Francisco Bay Area housing market. All across the nine-county Bay Area, home prices are surging in response to inventory shortage and growing demand. It’s good news for homeowners. But it presents certain challenges for home buyers.

Bay Area Housing Market En Fuego

The entire Bay Area real estate market is on fire right now – for better or worse. Consider the evidence. According to DataQuick, a San Diego-based company that tracks housing trends in key cities across the country, the region’s median sale price rose at its fastest pace ever in June 2013.

The largest gain occurred in Alameda County, where the median rose by a whopping 44% over the last year. Sonoma County’s median sale price rose by 29.8% during the same 12-month period.

Granted, home prices in the Santa Rosa real estate market (and elsewhere across the Bay Area) are still well below their pre-crisis peaks. This is partly why we are seeing such big gains right now.

According to DataQuick president John Walsh: “It’s easier for a market to regain lost ground than to push into new territory. We’re still bouncing off the bottom.”

Santa Rosa Real Estate Trends Good for Sellers

This is all good news for Santa Rosa area homeowners, particularly those who lost a significant amount of equity during the housing downturn. While home prices are still well below their pre-crisis peaks, they are gaining ground quickly.

This could be a game changer for homeowners who were unable to sell or refinance their homes in the past, due to their negative or low-equity situations. Property values in the area will likely continue to rise for some time, further empowering homeowners by restoring lost equity.

But the news is not so good for home buyers. The real estate market in Santa Rosa, California has become increasingly competitive. Housing demand has increased on the heels of economic improvement, but inventory levels have fallen over the last year. This means there are more buyers competing for fewer properties. This is what we’re seeing across the entire Bay Area housing market right now.

“There’s a slew of buyers, and there’s nothing for them out there,” said Santa Rosa real estate agent Mike Kelly, when speaking to the Press Democrat recently.

At the same time, rising prices will create affordability issues for many would-be buyers.

The Santa Rosa housing market is emblematic of what is happening across the entire San Francisco Bay Area. Declining inventories, along with the release of pent-up demand, are driving prices north with surprising speed. It’s not a question of if home prices will continue rising through the end of 2013. The question is, by how much.

Disclaimer: This story contains forward-looking statements about the Bay Area real estate market in general, and Santa Rosa in particular. These statements represent an educated guess made by the author. They should not be viewed as facts or financial advice. We make no guarantees about the future of home prices or other housing trends.

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Article source: http://www.homebuyinginstitute.com/news/santa-rosa-prices-rise-437/

A new report out Tuesday shows the real estate market in the Bay Area is hot.

San Francisco home prices have surged nearly 25 percent in the past year; the biggest increase in seven years. That’s more than double the nationwide average of major cities.

According to the SP/Case-Shiller index that ranks metropolitan cities, Las Vegas reported the next biggest jump at 23 percent, followed by Phoenix at nearly 21 percent.

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