The average price of a single-family home fell 0.7% in September from August, as prices dropped in 18 of the 20 largest metropolitan areas during the month, according to the Standard & Poor’s/Case-Shiller index.

For the third quarter, the ratings agency’s benchmark 20-city composite index showed a 1.5% decline from a year earlier and a 2% drop from the prior quarter.

“While housing prices are still above their spring 2009 lows, the end of the tax incentives and still active foreclosures appear to be weighing down the market,” according to Standard & Poor’s.

The 20-city composite index rose 0.6% in September from a year earlier and the 10-city composite climbed 1.6%. The rates have moderated for four months in a row. For the 20-city index, home prices rose 1.7% in August, after a 3.2% gain in July and a 4.2% increase in June.

“Another weak report; weaker than last month,” said David Blitzer, chairman of the Standard & Poor’s index committee. “The national index is down 1.5% from the third quarter of last year and 15 of 20 cities are down over the last 12 months. Other than Tampa, there are no new lows this month but many analysts will argue that a double dip will be confirmed before spring. While some of the bad numbers may reflect the end of the government’s tax incentive for first time homebuyers, there are other problems weighing on the housing market.”

National average home prices have climbed 4.9% since reaching a bottom in the first quarter of 2009, but are now at levels last seen in the middle of 2003, according to the S&P/Case-Shiller indices. From the peak recorded in the summer of 2006, home prices included in the 20-city index are down 28.6% while the 10-city composite index is off 28.7%.

“The national economy is certainly the number one issue for housing,” Blitzer said. “Additionally, there is a large supply of houses on the market and further, hidden, supply due to delinquent mortgages, pending foreclosures or vacant homes. New construction is running at less than half the pace needed to meet normal demand, so a sustained recovery could be a ways off.”

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NEW YORK (CNNMoney.com) — Any possible housing market recovery hit a snag during the three months ended September 30, as a government tax credit for homebuyers wound down.

Home prices fell only slightly during the quarter, according to a report from the National Association of Realtors (NAR), but the number of homes sold plummeted more than 25%, compared with the previous quarter.

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The fall-off in sales volume remains a troubling feature of the current housing market scene because there’s rarely been a more attractive time to buy.

“Given the relationship between mortgage interest rates, home prices and median family income, the buying power in today’s market is matching the highest levels we’ve seen dating all the way back to 1970,” said NAR President Ron Phipps.

Many sales were undoubtedly happened in early 2010 as homebuyers accelerated their purchases to qualify for the tax credit, which shaved as much as $8,000 off their tax bills.

Contracts had to be signed by the end of April to qualify and the deals had to close by the end of September.

The national median price for a single-family home sold during the quarter was $177,900, down 0.2% from the same period a year ago and up 0.6% from the second quarter of 2010.

Single-family home prices rose 2.5% to $253,400 in the Northeast, the only region that showed price improvement. Midwest prices fell 3% to $145,600, prices dropped 1.9% in the South and 0.4% in the West region.

The metro area with the biggest gain was Burlington, Vt., where the median price of $286,300 was 17.6% higher than 12 months earlier. The biggest loser was Ocala, Fla., down 20% to $82,200.

San Jose, Calif., recorded the highest median price — $628,700 — during the quarter, just nosing out Honolulu at $628,100.

Youngstown, Ohio, the old steel town, had the lowest median sale price, at $60,400.

Condo prices fared worse than those of single-family houses. The national median fell 3.9% from 12 months earlier to $171,400.

Palm Bay, Fla., had the biggest year-over-year loss: down 32% to $73,000; Jacksonville. Fla., was off 31% to $63,200. Phoenix condo prices also plunged, down 26.6% to $73,300.

Condo prices in the New York metro area soared, up 34.5% to $400,000, the most, by far, of any city.

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Ginnie Mae bonds carry the full faith of the United States government, but investors should not take that to mean the risks are lower, according to two recent mortgage-backed securitization market reports.

Barclays Capital notes that the amount of previously delinquent and now-cured mortgages in Ginnie Mae pools are raising investor concerns because of higher probability of redefaults and spotty performances from individual servicers.

Ginnie Mae does not buy or sell loans or issue mortgage-backed securities. It guarantees investors a timely payment of principal and interest on MBS backed by Federal Housing Administration and VA loans.

The BarCap analysts estimate that as much as 12% to 13% of new production Ginnie pools are backed by reperforming loans — meaning servicers worked with the borrower to turn the mortgage from delinquent to current either through a modification or some other form of loss mitigation.

Analysts added that 45% of these reperforming loans will redefault over the next two years, which would boost prepayments.

“Increasingly [Ginnie Mae] investors have been concerned by the preponderance of new issue pools with very high delinquencies shortly following issuance,” according to BarCap. This, they add, raised concerns over Ginnie valuations for mortgage derivatives.

Read the rest at HousingWire.com

Tom Hoenig, the Fed banker who has said at seven straight Federal Open Market Committee meetings that he believes the Fed’s current policy is a mistake, repeated Friday that he believes the Fed should raise interest rates to put the economy on a path to balanced growth.

This is not a huge surprise, as Hoenig has spent the entire year urging his colleagues on the FOMC to wean the economy off the zero-rate drip it has been on for almost two years.

Even so, you’d have to say he picked about the toughest possible crowd to make his latest pitch for a normalized rate policy: the annual conference of the National Association of Realtors.

“I realize that advocating an interest rate increase is not the best applause line at a Realtors’ conference,” said Hoenig, who is president of the Federal Reserve Bank of Kansas City. “However, I believe that moving rates modestly off of zero, where they have been since December 2008, still represents highly accommodative monetary policy. More importantly, such action is necessary if we are to ensure a more stable economy that can thereby foster a more sustainable housing market.”

Speaking of which, Hoenig wasn’t content to propose just one policy the Realtors hate. Having laid out the case for higher rates, he went on to explain why he believes the government should vastly scale back subsidies it provides to homeowners.

“Housing policy is badly flawed, and today’s budget environment requires reform,” he said Friday morning in New Orleans. “We must move toward a system with fewer subsidies and misdirected incentives.”

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NEW YORK (CNNMoney.com) — The robo-signing controversy is just another issue that the already sluggish housing market didn’t need — but most analysts do not think it will have far-reaching impact.

Nevertheless, the housing market still faces many problems: a weak economy, sluggish hiring, tight mortgage underwriting, falling home prices, and slowing sales.

Then there’s the potentially disastrous number of foreclosures that may occur over the coming years.

“The market faces much bigger problems than the robo-signing issue,” said Mike Larson, a housing market analyst for Weiss Research.

Prime among them are declines in home prices. And while cheaper homes are good for buyers, they also speak to a housing market that won’t stabilize.

Fiserv, a market analytics company, has scaled back its home price projections considerably. In February, it forecast national price gains of about 4% through the end of 2011. The company’s latest prediction is for a 7.1% drop in prices between June 30, 2010 and June 30, 2011.

In fact, after five months of gains, prices in the 20 largest metro areas fell 0.2% in August, according to the latest S&P/Case-Shiller report.

The good news is, “There’ll be no vicious, self-reinforcing spiral down,” according to Mark Zandi, chief economist with Moody’s Analytics.

But, he added, “more home price declines are coming.”

He’s forecasting another 8% drop in home prices through the third quarter of 2011, which will put the total peak-to-trough decline at 34%.

Even after that, in 2012, he sees very little price growth.

Home prices continue to fall because sales aren’t taking off. Without buyers, the market can’t bottom out.

New home sales continue to languish around historic lows, barely exceeding an annual rate of 307,000. Existing home sales did rise to a 4.53 million annualized rate in September, up 10% compared with a month earlier, but are still well below the boom years.

Of course, nobody is buying homes when they can’t find jobs. And still more people can’t hang on to their homes because they’re out of work.

Nearly a million homes are expected to be repossessed this year, and analysts seem to be competing to issue the most dire forecast for future foreclosure numbers.

• Morgan Stanley reported that about 3.1 million borrowers are seriously delinquent with many expected to lose their homes.
• Zandi said more than 4 million are in trouble with half of those expected to go to foreclosure.
  And Laurie Goodman, of Amherst Securities, estimates the number of homes in danger of foreclosure at a whopping 11 million.
• Real estate analyst Kyle Lundstedt of LPS Applied Analytics said serious delinquencies will continue to spike and will not return even to the current rates — which are already at peak levels — until late 2012 or early 2013.

“The housing market is very fragile,” said Goodman.

However, Zandi sees a few factors that are positive.

These include: Low interest rates; FHA, Fannie Mae and Freddie Mac all lending to qualified buyers; and an improving job picture.

Zandi is especially confident that the employment picture is about to brighten. Corporate profits have spiked and, historically, hiring follow profits — with a lag of eight to 10 months. That means companies should start hiring workers very soon, Zandi said.

And once Americans start returning to work, they’ll find home prices are very reasonable. Housing is the most affordable it’s been since the pre-boom years. During the boom, Zandi said, prices were overvalued by about 50%; today it’s close to zero.

That has attracted many investors, including foreign buyers. They’ve been scooping up single-family-homes and condos in hard-hit markets like Florida, the Southwest and the Midwest and renting them out.

“The reason they’re in these markets is because they see value,” said Zandi.

But, he added, “If they see the robo-signing issue continue, they could begin to exit the market. If they do, there could be more price declines. That’s one reason why a foreclosure moratorium could be destructive.”

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NEW YORK (CNNMoney.com) — Bank of America reviewed 102,000 foreclosures in the 23 states where a court must sign off on the proceedings, and it is now restarting the process on those cases, the company said Monday.

The company said the first of the new affidavits will be submitted by Oct. 25, and that it will continue its review in 27 other states.

According to a spokeswoman for the bank, no errors were found during the review, and fewer than 30,000 foreclosure sales across all 50 states will be delayed as a result of the investigation.

The announcement comes one day before the bank’s third quarter earnings report, and might ease investor concerns over the scale and timeframe of the bank’s review process.

“This is an even better outcome than we previously thought,” said Paul Miller, an analyst at FBR Capital Markets. “We thought January was a more likely time to restart the [foreclosure] process.”

The news sent Bank of America shares up 36 cents to $12.34, or 3.01%.

The bank said in a statement that the review process “has been an important step to give customers confidence they are being treated fairly.”

State attorneys general have stepped up pressure on banks in recent weeks after it was revealed that some bank employees had signed foreclosure affidavits without verifying that the documents were accurate, a process known as “robo-signing.”

Bank of America launched its initial review on Oct.1, and said on Oct. 18 that it was expanding its document probe to all 50 states.

The company maintained that initial assessments in the remaining 27 states show the basis for foreclosure decisions were accurate.

At least five other major mortgage servicers have announced their own document reviews.

All told, 1.8 million loans are in foreclosure in the 23 so-called judicial states, while 1.3 million are pending elsewhere in the country, according to a Morgan Stanley analyst report.

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NEW YORK (CNNMoney.com) — Major mortagage servicers are broadening their investigations into the possible mishandling of foreclosures.

Ally Financial said Tuesday it has hired outside accounting and legal firms to examine its foreclosure procedures in all 50 states. That effort will not look at individual cases.

Ally also said it would review pending foreclosure sales to ensure that all documents are accurate.

In addition, Ally had previously announced that it was temporarily suspending evictions and post-foreclosure closings in the 23 states in which judges must sign off before someone loses their home.

The company, previously known as GMAC, the finance arm of General Motors, will continue its internal review in those 23 states.

Ally Financial said it has found no evidence of any inappropriate foreclosures.

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Special servicers modified a record $2.1 billion in loans backing commercial mortgage-backed securities (CMBS) in August, but delinquencies continue to grow, according to the credit-rating agency Fitch Ratings.

The delinquency rate on CMBS loans reached 8.48%, a 23 basis point increase from July. There were $3.1 billion in new delinquencies, driven mostly by five loans recent defaults of loans worth more than $100 million.

Another credit-rating agency Moody’s reported the CMBS delinquency rate increased 21 bps to 8.1% in August.

“Delinquency rate increases have moderated over the past three months, but the overall rate itself is expected to continue rising over the near term, with the potential for an occasional spike given the large reservoir of troubled loans in special servicing,” said Moody’s Managing
Director Nick Levidy.

An analytics firm Trepp also reported the delinquency rate on CMBS at 8.92%.

“Though special servicers are working out loans at an increased rate, the volume of new delinquencies has not yet subsided,” Fitch Senior Director Adam Fox said. “Highly levered loans originated at the market’s peak continue to default as borrowers seek modifications or hand back the keys to underperforming assets.”

New delinquent loans in August included the Innkeepers Portfolio, worth more than $825 million. The Hyatt Regency in Bethesda, Md. worth $140 million also fell into delinquency in August.

The delinquency rate on hotels passed 20% in August, up from 18.6% in July. Multifamily was second with 14.18% delinquency rate, and retail third with a 6.11% rate. Industrial properties had a 5.55% delinquency rate, and delinquencies on office properties was just over 5%.

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Home prices gained 5.7% over the three months ending in August, according to real estate data provider Clear Capital. But analysts added price growth has slowed and will drop to a new low in 2011.

The price gain through August is down 240 basis points from the July report, which dropped 70 bps from June. Alex Villacorta, senior statistician at Clear Capital, said prices built up a 13% cushion from its trough in 2009.

“Overall, prices look poised to continue their deceleration with a likely drop into negative territory by the end of the year,” Villacorta said.

With the drastic drop in home sales shown in July, prices will continue to soften and drop below 2009 levels next year.

Drilling down to the metropolitan statistical areas (MSAs), many of the 15 highest performing markets showed double-digit quarterly gains through August. Home prices in San Diego increased 11.2% above levels seen a year ago, but most of the improved areas were in the Midwest and South regions.

Conversely, 11 of the previously top-performing markets showed accelerating declines. New Orleans, Cleveland and Columbus had prices fall by more than 7%.

“The interesting part about all of these markets is that for the first time, the local markets are left to their own devices,” Villacorta said.

Read the rest at HousingWire.com

Tennessee will get about $10.2 million in Neighborhood Stabilization Program grants as part of $1 billion U.S. Housing and Urban Development earmarked for states struggling to reverse the effects of the foreclosure crisis.

State and local governments can use the neighborhood stabilization grants to buy land and property; to demolish or rehabilitate abandoned properties; and/or to offer downpayment and closing cost assistance to low- to moderate-income homebuyers (household incomes not exceeding 120 percent of area median income).
Memphis will get more than half of the state funding, with about $5.2 million set aside for the Bluff City. The rest of the state will get $5 million.
“These grants will support local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods,” said HUD Secretary Shaun Donovan, in a press release. “We want to make certain that we target these funds to those places with especially high foreclosure activity so we can help turn the tide in our battle against abandonment and blight.”
Memphis has struggled with high foreclosure rates since the housing crisis began, although the numbers seem to be trending down. The Memphis metro area had 1,388 foreclosure filings in July, or one in every 399 households, according to RealtyTrac Inc. data. Foreclosures in the MSA increased 6.3 percent from June but fell 31.6 percent from the previous July.
The latest $1 billion in Neighborhood Stabilization Program funding is provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act and follows some $6 billion in similar funding in recent years. The two other rounds of Neighborhood Stabilization Program funding came with the Housing and Economic Recovery Act of 2008 ($3.92 billion) and the American Recovery and Reinvestment Act of 2009 ($2 billion).

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