Mortgage applications decline and the interest rates skyrocket

Mortgage applications fell 3% last week as mortgage rates rose on fears of less Fed intervention in the mortgage-bond market.

The average contract interest rate for a 30-year, fixed-rate mortgage with a conforming loan balance shot up to 4.46% from 4.17% a week earlier: the highest it's been since August 2011, the Mortgage Bankers Association reported.

For the same week ending June 21, refinance applications dipped 5% even as purchase applications edged up by 2%.

The shift in the nation's refi activity accompanied a sharp rise in mortgage rates.

"Interest rates moved up sharply following the Federal Reserve press conference last Wednesday where it was indicated that the Fed could begin tapering their asset purchases later this year," said Mike Fratantoni, MBA’s vice president of research and economics.

Since then, rates have shifted in an upwardly direction. 

On the other hand, refinancing activity continued to fall, with refis representing only 67% of all mortgage applications.

Applications overall moved inverse to rates in this week's report, with mortgage rates rising across the board.

Hitting its highest level since March 2012, the 30-year, FRM jumbo increased to 4.52% from 4.23% a week earlier.

Additionally, the average 30-year, FRM backed by the FHA climbed to 4.20% from 3.85%.

The 15-year, FRM also rose to 3.55% from 3.30%, while the 5/1 ARM grew to 3.06%, it's highest level since October of 2011.

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Florida leads nation in vacated foreclosures, again

Florida has more vacant homes in foreclosure than any other state in the nation, easily beating out other large states with troubled housing markets, according to a report released Thursday by RealtyTrac, a California company that tracks distressed properties.

There are 55,503 housing units in foreclosure in Florida that are vacant. That’s 33 percent of the 167,680 vacated foreclosures in the country. Florida’s vacated foreclosures are more than the next five highest states combined -- Illinois, California, Ohio, New York and New Jersey.

The vacated properties are a drag on property values because many are left neglected, although some cities in Florida have passed ordinances requiring banks to pay for the upkeep of foreclosed homes.

Combined with Florida’s lengthy foreclosure process, the vacated properties add to the state’s “shadow inventory” of homes that have yet to hit the market. Since foreclosed homes typically sell for much lower than market value, new foreclosed properties steadily being dumped on the market will dampen home values.

The average foreclosure takes 893 days in Florida -- nearly two and a half years, according to a report released Wednesday by state economists. There are also 22 percent of mortgages in Florida that are either delinquent or behind on payments as of April, in addition to the 10.5 percent in foreclosure.

The potential for more distressed properties to enter into foreclosure and the lag time for them to re-enter the market has led state economists to temper their projections for the housing recovery, which has been steadily improving in recent months. Numbers released Thursday byFlorida Realtors show existing single family home sales jumped 18.7 percent last month in the year-over-year comparison, and the median sales price rose 15.9 percent to $171,000. The housing market is being heavily boosted by cash sales, however, an indicator of investor participation. Cash sales made up 46 percent of all completed sales of single family homes in May and 73 percent of all completed condo sales.

RealtyTrac’s report shows three Florida metro areas in the top five cities in the country for vacant foreclosures: Miami, second with 13,901; Tampa, fourth with 9,998; Orlando, fifth with 5,569. Florida also has 85 of the top 100 zip codes for total vacant foreclosed housing units.

“Somewhat ironically, efforts to slow the slide of the housing market in previous years are now hampering a smooth recovery by holding back inventory of homes that almost certainly must sell in the future but are not yet listed for sale,” said Daren Blomquist, RealtyTrac vice president.

But Blomquist also noted Florida and other states are passing new laws to speed up the foreclosure process. Gov. Rick Scott signed HB 87 into law this month, which reduces the time for a show cause hearing. Consumer advocates and foreclosure defense attorneys have decried the new law, but supporters of the law point to its consumer protections requiring more proof of ownership of a mortgage before beginning the foreclosure process and reducing the amount of time for a deficiency judgment.

BofA Lied To Homeowners and Gets Sued, Again.

Six former Bank of America Corp. employees have reportedly filed a lawsuit in Massachusetts federal court alleging that Bank of America deliberately denied loan modifications to eligible homeowners in order to force them into foreclosure.

The now former employees, who worked at different bank offices across the U.S. up until last year, claim they were told by upper management to lie to homeowners about the status of their mortgage payments and documents for the purpose of forcing them into foreclosure or getting them to sign modified "in-house" loans at rates of up to 5%, according to a CNBC report.

The ex-employees say they were rewarded with gift cards to stores like Target and Bed, Bath & Beyond by management for denying modifications requested under the Home Affordable Modification Program (HAMP). They say managements practice was to forward distressed homeowners into foreclosure, or get them to agree to high rate in-house loan modifications because the bank stood to make more profits on those deals than it could from referring homeowners to HAMP.

The lawsuit also alleges that Bank of America inflated the number of HAMP loans it reported to the government, basically by "double-counting" the number of loans as they went through different stages of the approval process.

According to the lawsuit, Bank of America routinely denied loan modification requests by telling homeowners that their paperwork was never received. It also alleges that the bank engaged in an operation called "blitz," where it purged loan modification requests that were more than 60 days old from its databases, upon which bank representatives would tell homeowners that the paperwork was never received.

The case is one of several that have been brought against Bank of America and other top U.S. banks in recent years over the alleged mishandling of mortgage modifications. Since 2010, Bank of America has paid more than $42 billion to settle credit crisis and mortgage-related litigation, according to the CNBC report.

Last year, Bank of America and four other Wall Street banks reached a $25 billion landmark settlement with regulators after an investigation revealed that employees "robo signed" documents without verifying them.

Paul Antonelli

www.AntonelliRealty.com

www.PaulAntonelli.com

For Sale: 3BR/2BA Manufactured in Kissimmee, FL, $59,995

For Sale: 3BR/2BA Manufactured in Kissimmee, FL, $59,995

FLORIDA Be Afraid, Be Very Afraid

On Friday, late in the day, when almost everyone else had already gone home Gov. Scott signed house bill 87 that will speed up foreclosures.

Florida Gov. Rick Scott, ignoring veto pleas from consumer advocates, on Friday signed two measures into law that could affect renters and homeowners across the state. One bill, House Bill 87,  will speed up the foreclosure process in Florida. The other makes it easier for landlords to evict tenants.

The landlord-tenant bill comes at a time when more and more people in the state have become renters due to the foreclosure crisis that has troubled Florida for years. Many homeowners have been displaced from their original homesteads due to the Foreclosure crisis of the past few years.
Under the new law, a tenant could pay partial rent and still be evicted within days if they fail to turn over the rest of the money. The measure would also allow a landlord to evict a tenant if a person breaks rules twice in one year. Those rules can include parking in the wrong spot or having an unauthorized pet.

Florida was one of the hardest hit by the Foreclosure Crisis that began in late 2007.  Those foreclosure cases quickly swamped an already overworked court system even to this day.

Rep. Kathleen Passidomo, R-Naples, said earlier this year that her bill preserves due-process rights for distressed homeowners while trying to stimulate Florida's real-estate market by getting foreclosed property "back into the stream of commerce."
The legislation would make banks prove in more detail that they own a mortgage or explain why they can't prove ownership. It also creates a process for others besides mortgage-holders to ask the court to speed up foreclosure cases.  Another key provision would reduce the statute of limitations, or amount of time, for banks to go after foreclosed homeowners on deficiency judgments -- from five years to one year. Deficiencies are the difference between the money obtained from selling a foreclosed home and what the original homeowner still owes on it.

Governor Scott, in a bill signing letter, contended that the legislation would "bring more certainty to the housing market." "This process will put these homes back onto the housing market and allow Florida families who have experienced a foreclosure to begin working to repair their credit and finances," Scott wrote.
The law will also allow any lienholder, including community associations (HOA’s), to request a so-called “show cause” order that would require a homeowner to muster a defense more quickly and give the judge the ability to make a faster ruling.  You see people, this is one reason I’ve always said, “Pay the HOA as long as you can”.

Personally I think it’s going to bring a lot more than that. We all know it’s going to put a lot more inventory on the market. Real Estate prices have risen due to lack of inventory for one. What do you suppose will happen when we have twice the amount of inventory on the market? The hedge fund investors that were buying up everything have already moved onto better investment choices since the price increases so many are not in the market right now.  This could mean we are seeing the beginning of the second Foreclosure Bubble here in Florida.

Lawyers who represent homeowners in foreclosure cases have already said they plan to sue to challenge the new foreclosure law. Matt Weidner, a St. Petersburg attorney, said one of the provisions of the bill limits the ability of a judge to correct a simple mistake in a foreclosure order.

"This finality of foreclosure provision provides that if a home is lost to foreclosure, even if the foreclosure was the product of gross fraud, complete error or total mistake, the innocent consumer can never, ever get their home back," Weidner stated.

With the timeline for deficiency judgments from the banks reduced to one year from five, you know they will seek to collect it now. Either the banks will start in house collections or there will be mass deficiency judgment docs sold to collection companies. Maybe this will become another new investment area for those hedge fund companies out there.

In a nutshell what we have here is that the Governor signed bill, HB87, is helping the banks and not preserving the Homeowners Rights.  The new law, which is now law, makes proof irrelevant if the court chooses to disregard it. For non-owner occupied home owners must pay contested mortgage payments into a court registry, even if the bank can not prove it owns the home, in order to maintain foreclosure defense. BH87 makes foreclosure judgments final. If the foreclosure was obtained by fraud, after judgment the former homeowner can never challenge it. Under HB87 the banks would not have to prove their foreclosure case as they do now. You say you already began the process a month ago? HB87 allows current cases in litigation to be subject to a new legal standard that did not exist when the case was filed. That gives the banks an unfair advantage in current foreclosure cases.

Tomorrow will begin a new day for Florida Foreclosures and the people that have already been served and those going through a short sale right now. Many are feeling that this new law will put a dead stop on the Short Sale. Especially if a lender can foreclose in 45 days, many banks need that much time just to get a loan finished so a buyer can buy a short sale, and that is only after the short sale has been approved.

Never a dull moment here in the sunshine state, especially when it comes to what looks like becoming The Florida Foreclosure Crisis.

Paul Antonelli                  
That Short Sale Guy
REALTOR & BROKER at
ANTONELLI Realty
Orlando, FL
321-443-4028

Coastal homeowners scared off by insurance costs

GULF SHORES, Ala. – June 3, 2013 – When Stan Virden moved into his 2,400-square-foot house overlooking a rock-lined canal in 1996, he paid less than $1,000 a year for homeowners insurance.

Now, as he seeks to move to Atlanta to be near family, Virden says potential buyers for the house are being scared off by the annual premium, which has skyrocketed to $5,000.

“We feel like we’re prisoners here now because the market is so screwed up because of this,” the 80-year-old retired Navy captain said.

From Cape Cod to the southern tip of Texas, rates for homeowner coverage have risen sharply since 2003, pinching homeowners financially, forcing them to take greater risk by accepting higher deductibles and sparking outrage as insurance companies report profits higher in many coastal states than inland.

Nationwide, the cost of homeowners insurance rose 36 percent from 2003 to 2010 – almost double the rate of inflation. Of the 15 states where rates increased by the largest percentages in that time, 14 border the Gulf of Mexico or the Atlantic Ocean, according to an analysis of National Association of Insurance Commissioners figures by The Associated Press. All those states saw rates go up at least 44 percent. Rates in Florida rose 91 percent, most in the nation, while rates in Rhode Island went up 62 percent.

Insurers say the increases are necessary to offset the risk they take in insuring millions of homeowners in harm’s way, but their increasingly angry customers question how they calculate rates and whether state officials in charge of balancing public and corporate interest are being too favorable toward the companies.

“It’s hard to see how the insurance companies can justify the kind of premiums we have to pay down here,” Virden said.

Rate increases have leveled off in recent years, and some homeowners have even found cheaper policies. But it’s clear prices aren’t going back to where they were before the spike following the expensive hurricane seasons of 2004 and 2005.

Overall, coastal homeowners in 18 states along the Gulf and Atlantic pay about $4 billion more than inland residents for insurance against hurricane winds, according to AP calculations using comparisons of coastal and inland rates in states where they’re available.

The Atlantic hurricane season officially started Saturday and runs through Nov. 30. Forecasters project 13 to 20 named storms.

Worsening the situation: premiums for the federally run National Flood Insurance Program – whose policies many coastal homeowners also must buy – are scheduled to shoot up Oct. 1. A homeowners policy typically covers wind, but not flood damage.

With the U.S. housing market in a slow revival, it may be too early to say what the skyrocketing insurance rates could do. Some real estate agents in coastal areas say there are warning signs.

Starke Irvine, an agent in Daphne, Ala., said the cost of insurance is driving down the market value of homes there. Homebuyers have only so much to pay toward a mortgage, insurance and taxes.

Some critics also say insurers are inflating the insured value of houses, saying they would cost more to rebuild, thus raising the total bill each year without raising rates.

“We’ve had insurers applying a 10 percent to 12 percent inflation factor every year to dwelling value,” said Willo Kelly, who lobbies for real estate agents and homebuilders on North Carolina’s Outer Banks. “Every increase that company applies to dwelling value is an increase in the premium, an increase in the deductible and an increase in the agent’s commission.”

A study by consulting group Towers Watson showed the cost of the goods and services insurers typically buy to pay a homeowners claim has actually declined from 2009 to 2012. That reflects falling building costs, said Towers Watson risk consultant Jeremy Pecora.

It’s still unclear how the $19 billion in privately insured damages caused by Superstorm Sandy in October 2012 will hit policyholders. In the Northeast, insurers started seeking higher rates after Tropical Storm Irene in 2011 and continue to seek increases of up to 10 percent.

Industry advocates say the increases were inevitable. “Insurance rates in hurricane areas were too low for too long,” said libertarian-leaning Eli Lehrer of the Washington, D.C.-based R Street Institute.

Robert Hartwig, president of the industry-backed Insurance Information Institute in New York, said insurers may have sold policies cheaply to attract customers to more profitable auto and life insurance, and regulators may have been unfairly holding prices down in some states.

And, he said, claims from severe weather have gone up. The Insurance Research Council found hurricanes and other weather catastrophes caused 39 percent of nationwide homeowners insurance claims payments from 2004-2011, compared with 25 percent from 1997-2003.

“You have to first accept the fact you live in harm’s way,” Hartwig said.

About 16 million households are in coastal counties along the Gulf and Atlantic.

Company profit margins for all kinds of property and casualty insurance from 2003-2010 match historic averages, according to the Insurance Service Office, which compiles data. Homeowners insurance is generally less profitable than the category as a whole.

Despite particularly heavy losses in Louisiana and Mississippi – mostly from hurricanes Katrina, Rita and Gustav – their average return in the 18 states was 7.4 percent, higher than the nationwide average for homeowners insurance.

A more important driver of rates than past losses is what insurers expect to lose in the future.

In the 21 years since Hurricane Andrew slammed Florida, insurers, reinsurers and credit rating agencies have come to rely on computer models that generate an array of hypothetical storms and try to predict the extent of possible property damage.

The models’ worst-case scenarios are big factors in driving rates. Companies have to build up enough reserves or buy enough backup coverage, called reinsurance, to avoid going broke after a severe storm. If loss projections look too great, companies may dump coastal policies to cut risk.

In some states, regulators have been critical of modeling to determine rates.

Even if regulators block their use, policyholders may still pay for their predictions indirectly. Reinsurers use models to set their prices, and credit rating agencies may downgrade an insurer’s rating if they don’t like what model results show.

“It appears to be a cycle where it drives insurance companies to purchase even more reinsurance,” said Wayne Goodwin, a Democrat who is North Carolina’s elected insurance commissioner.

One way to fight against higher rates is to shop widely for better prices. Sometimes, though, lower prices mean higher risks to a homeowner.

Virden said his premium fell by about $400 when he found a new policy that offered less coverage. But he said it helped only marginally. “That increase to $5,000 a year really put the kibosh on our standard of living.”

Virden is a member of the Homeowners’ Hurricane Insurance Initiative, a group seeking lower rates and more justification for pricing. The group has been trying to unite similar citizen-led efforts in Florida, South Carolina, North Carolina, Massachusetts and elsewhere.

In South Florida, Nancy Loft-Powers is paying $7,300 a year to insure a 1,700-square-foot house in Deerfield Beach, Fla.

“They’re just jacking me and jacking me and jacking me,” she said. “Really, it’s horrific.”

Loft-Powers, who works as a nutrition consultant, said she bought additional houses in her neighborhood in 2000 and 2001 as investments. She said she lost the houses in short sales because the insurance payments became too high.

“I had to sell them off,” Loft-Powers said.

Complaints also focus on state regulators.

“We do not believe our Division of Insurance is doing the job that they should be doing in protecting the consumer from the greed of the industry,” said Paula Aschettino, an Eastham, Mass., resident who founded Citizens for Homeowners Insurance Reform. “If they are not denying these increases, they are part of the problem.”

Goodwin, the North Carolina’s insurance commissioner, said there’s more to regulation than capping rate increases.

“State insurance regulators have a dual role. One is to protect the consumer from excessive rates and inadequate insurance and to have insurance available,” Goodwin said. “At the same time, state insurance regulators must balance with those duties the responsibility for companies to have an opportunity for profit and be solvent.”

One way companies are managing profits is by shifting risk to policyholders with exceptions to coverage and higher deductibles.

Deductibles now can reach 5 percent of insured value when a hurricane hits, raising questions about whether some homeowners will be able to afford repairs.

Alabama’s Virden, for example, would have to pay for the first $18,500 of damage before his insurance kicks in.

Amy Bach, executive director of United Policyholders, a California-based advocacy group that works with consumers on claims after disasters, said higher deductibles weaken the value of insurance, especially when premiums don’t go down.

“They’ve carved so many things out in recent years,” Bach said of the industry. “Why aren’t we seeing offsets for that?