Archive for September 26th, 2013

Household Net Worth Growth Slows in Q2

Household Net Worth Growth Slows in Q2

09/25/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Household net worth improved $1.3 trillion in the second quarter — half as fast as the first quarter — as real estate values grew $626.7 billion, the Federal Reserve reported Wednesday in its quarterly Flow of Funds report.

But, with a drop in mortgage debt — including home equity loans and lines of credit –- from $9.39 trillion in the first quarter to $9.34 trillion in the second, homeowner equity grew to 49.8 percent in the second quarter from 48.1 percent in the first.

Household investment in the stock market grew $265 billion in the second quarter compared with $929 billion in the first when overall net worth grew $2.8 trillion.

Owners’ equity as a percentage of real estate value has been on a steady upward trajectory since dropping to 36.3 percent in the first quarter of 2009. It rose to 45.4 percent at the end of 2012 and to 48.1 percent one quarter later. The 2.7 percentage point increase in the first quarter of this year is the fastest quarter-to-quarter growth this century. Even with the increase, though, the equity percentage remains sharply lower than 57.7 percent in 2000.

After falling $223 billion in the first quarter, disposable personal income grew $98.6 billion in the second. The first quarter drop reflected the rollback of the cut in payroll taxes which ended January 1. With the increase, second quarter disposable personal income — essentially after-tax income — was $12.39 trillion, about $130 billion less than the record $12.52 trillion in the fourth quarter last year.

Consumer borrowing – non-real estate debt – grew $41.7 billion in the second quarter after increasing just $104 million (cq) in the first. Residential mortgage debt fell $41.8 billion in the second quarter after dropping $49.7 billion in the first. Residential mortgage debt has dropped for 21 consecutive quarters from a peak of $10.67 trillion in the first quarter of 2008.

All in, household assets grew $1.3 trillion in the second quarter – compared with $2.8 trillion in the first – to $88.4 trillion.

Hear Mark Lieberman on P.O.T.U.S Radio (Sirius-XM 124) Friday at 6:20 am eastern time. Follow him on Twitter at @foxeconomics.

2013
09/26
CATEGORY
Home equity
Mortgage
Real Estate
TAGS






Leave a comment

NFHA Accuses Bank of America of REO Neglect

NFHA Accuses Bank of America of REO Neglect

09/25/2013 BY: HUGH MOORE

The National Fair Housing Alliance (NFHA) held a press conference Wednesday announcing that it will file a new complaint with HUD accusing Bank of America of ongoing neglect of REO properties in minority neighborhoods, which the NFHA says would be in violation of the federal Fair Housing Act. The NFHA added five new cities to the complaint – Memphis, Denver, Las Vegas, Tuscon, and Philadelphia – bringing the total to 18 metropolitan areas.

Bank of America Senior Vice President Dan Frahm responded that NFHA had not contacted Bank of America about the properties mentioned Wednesday, and if they had Bank of America would have helped to ensure the accuracy of their information.

“Bank of America applies uniform practices to the management and marketing of vacant bank-owned properties across the U.S., regardless of their location. Any suggestion to the contrary is simply untrue,” Frahm said. “Previous claims by NFHA revealed numerous, material flaws in their methodology and how they represented that information publicly. The majority of properties NFHA faulted us for were, in fact, the responsibility of other entities to maintain and market, didn’t take into account the property condition at the time we were granted authority to maintain it, and included properties the bank had agreed to donate to local groups in their existing condition.”

Shannah Smith, president and CEO of NFHA, said that Bank of America’s policies allow home prices to deteriorate to the point that investors can buy them at a discount.

“Every day Bank of America continues to neglect homes it owns in communities of color and prices decline, allowing investors to snatch up these foreclosures, turning communities into neighborhoods of absentee landlords,” Smith said. “Bank of America is the second largest commercial bank in the United States and it has been on notice of these problems since 2009. And yet, Bank of America chooses to ignore its responsibility to maintain and market foreclosures regardless of the racial or ethnic makeup of the community.”

2013
09/26
CATEGORY
Foreclosures
Mortgage
TAGS






Leave a comment

Cuomo Proposes Reforms in Force-Placed Insurance

Cuomo Proposes Reforms in Force-Placed Insurance

09/24/2013 BY: HUGH MOORE

New York Governor Andrew Cuomo has proposed a series of sweeping reforms for that state’s force-placed insurance industry. The reforms come in the wake of an investigation that found numerous instances of abuse among lenders and force-placed insurance providers.

Forced-placed insurance, which is insurance that a lien holder places on a property to cover a lapse of mortgage insurance, has drawn particular scrutiny from regulators because it has proven relatively easy to abuse. The cost of the insurance is paid upfront by the lien holder, but added to the balance of the lien. Abuse has been particularly prevalent in cases where the loan servicer owns the insurer.

“Two years ago, my administration launched an investigation of the force-placed insurance industry that revealed widespread abuses of consumers by banks and mortgage companies,” Governor Cuomo said. “Today we are taking a major step in righting this injustice and reforming the industry by proposing tough new regulations to protect homeowners. Insurers should be on notice that New York State is going to continue rooting out abuse in the industry and protecting taxpayers.”

The New York Department of Financial Serices (DFS) began its investigation of the force-placed insurance business in 2011. It found that force-placed insurance can be two to ten more times expensive than voluntary insurance, despite offering far less protection.

“Our investigation uncovered a kickback culture in this industry that inflated premiums and did serious damage to struggling homeowners,” said Benjamin Lawsky, superintendent of DFS. “These new rules will help ensure that homeowners remain protected and force-placed insurers don’t simply slide back to the bad old practices of the past.”

The new regulations would prevent force-placed insurers from issuing insurance on mortgaged property serviced by a bank or property affiliated with the insurer. They would also prohibit the payment of commission on force-placed insurance policies.

2013
09/26
CATEGORY
Homeowners
Mortgage
TAGS





Leave a comment

Household Net Worth Growth Slows in Q2

Household Net Worth Growth Slows in Q2

09/25/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Household net worth improved $1.3 trillion in the second quarter — half as fast as the first quarter — as real estate values grew $626.7 billion, the Federal Reserve reported Wednesday in its quarterly Flow of Funds report.

But, with a drop in mortgage debt — including home equity loans and lines of credit –- from $9.39 trillion in the first quarter to $9.34 trillion in the second, homeowner equity grew to 49.8 percent in the second quarter from 48.1 percent in the first.

Household investment in the stock market grew $265 billion in the second quarter compared with $929 billion in the first when overall net worth grew $2.8 trillion.

Owners’ equity as a percentage of real estate value has been on a steady upward trajectory since dropping to 36.3 percent in the first quarter of 2009. It rose to 45.4 percent at the end of 2012 and to 48.1 percent one quarter later. The 2.7 percentage point increase in the first quarter of this year is the fastest quarter-to-quarter growth this century. Even with the increase, though, the equity percentage remains sharply lower than 57.7 percent in 2000.

After falling $223 billion in the first quarter, disposable personal income grew $98.6 billion in the second. The first quarter drop reflected the rollback of the cut in payroll taxes which ended January 1. With the increase, second quarter disposable personal income — essentially after-tax income — was $12.39 trillion, about $130 billion less than the record $12.52 trillion in the fourth quarter last year.

Consumer borrowing – non-real estate debt – grew $41.7 billion in the second quarter after increasing just $104 million (cq) in the first. Residential mortgage debt fell $41.8 billion in the second quarter after dropping $49.7 billion in the first. Residential mortgage debt has dropped for 21 consecutive quarters from a peak of $10.67 trillion in the first quarter of 2008.

All in, household assets grew $1.3 trillion in the second quarter – compared with $2.8 trillion in the first – to $88.4 trillion.

2013
09/26
CATEGORY
Real Estate
TAGS








Leave a comment

Report Shows Home Price Rebound in Nearly 25 Percent of Key Markets

Report Shows Home Price Rebound in Nearly 25 Percent of Key Markets

09/25/2013 BY: TORY BARRINGER

Property data through July shows home prices have rebounded completely in more than one-fifth of the nation’s top regional markets, according to a report from Homes.com.

According to the site’s latest report, 22 of the top 100 markets in the United States reported price increases of more than 100 percent from their respective troughs, up from 19 the month prior.

Marketing analyst Nicole Selvaggi explained that most of the markets that have come back completely “never suffered the significant numbers of foreclosures and short

sales that characterized the housing economy from 2007 to 2012,” and seven of the top 20 have benefited greatly from energy development from oil, gas, shale, or coal.

“As a result, these markets experienced a very different housing scenario, with lower peaks and higher troughs than other markets in the same region,” Selvaggi said.

At this point, 44 markets have seen a rebound of at least 50 percent, up from 41 in the last report.

In addition to the rebound, all 100 of the markets tracked in the Homes.com Local Market Index Report reported increases in home prices on both a monthly and yearly basis.

In terms of yearly growth, many of California’s most highly populated markets (including the Los Angeles, San Diego, and San Francisco areas) were among the top metros, with five additional smaller cities making the top list.

“Rising home prices in California’s coastal areas (Los Angeles, San Diego, and San Francisco), could be ‘pushing buyers inland to more affordable Riverside and San Bernardino counties,’” Selvaggi said, quoting an analysis from John Burns, CEO of John Burns Real Estate Consulting.

2013
09/26
CATEGORY
Home Prices
TAGS





Leave a comment