Foreclosure Filings Hit 4 Year Low:

The number of U.S. homes that received a foreclosure filing fell to a four-year low in 2011 as a slowdown in processing hit the market, RealtyTrac said in a report on Thursday.

Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, slid by 34 percent in 2011, the lowest level since 2007, just as the housing market was starting to crumble. RealtyTrac said there were filings on 1,887,777 homes last year.

Bank seizures of homes fell to 804,423 from 1,050,500 in 2010, also marking the lowest level in four years.

“A big part that is inflating the size of the decrease is a continuing extended foreclosure process,” said Daren Blomquist, director of marketing communications at RealtyTrac.

Nevada ranked as the state with highest foreclosure rate for the fifth year in a row, with one in 16 Nevada homes receiving at least one foreclosure filing in 2011. Even so, Nevada saw a 31 percent decrease in foreclosure activity for the year.

The length of time for foreclosure processing continued to increase in the final quarter of the year. Homes took on average 348 days to move through the process, up from 336 days in the third quarter and 305 days in the fourth quarter of 2010.

Foreclosures took the longest in New York state, where homes foreclosed in the fourth quarter took an average 1,019 days to complete the process. RealtyTrac also released foreclosure activity for December, which fell to a 49-month low of 205,024 homes, down nearly 9 percent from November. But bank repossessions rose 10 percent to 61,774.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +14 basis points from last Friday to the prior Friday which moved mortgage rates slightly lower. We had a mixed bag of economic data with very strong readings in Consumer Sentiment but we had weaker than expected Retail Sales data. Demand for our 10 year Treasury auction was very strong but pulled back on the 30 year Treasury bond auction. With the long weekend, traders moved their money into bonds on Friday which helped to push mortgage rates lower.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.

Related articles

• Foreclosures Numbers With Big Drop, Reaching 2007 Levels (michael-mcdevitt.com)

Refinance Applications Surge 26.4% as Rates Set New Lows

Mortgage applications jumped 23.1 percent on a seasonally adjusted basis during the week ended January 13, 2012.  The increase in the Market Composite Index, a measure of loan application volume maintained by the Mortgage Bankers Association (MBA) reflected improvements in both the purchase and refinance business following the traditionally slow Christmas and New Year holiday period.  On an unadjusted basis the index increased 38.1 percent.

The Refinance Index increased 26.4 percent from the week ended January 6 to its highest point since August 8, 2011.  The seasonally adjusted Purchase Index rose 10.3 percent, returning to pre-holiday levels.  The unadjusted Purchase Index was up 28.4 percent from the previous week and was 2.2 percent higher than during the same week in 2011.

The four-week moving average for each index also increased; the Composite Index increased by 5.99 percent, the seasonally adjusted Purchase Index by 1.96 percent and the Refinance Index by 7.0 percent.

Refinancing took an 82.2 percent share of all application activity, up from 80.8 percent the previous week and the highest share since October 22, 2010.  Applications for adjustable rate mortgages (ARMs) constituted represented a 5.6 percent share of applications, up two basis points from the previous week.

“Interest rates dropped last week due to continuing anxieties regarding the fragile economic situation in Europe,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.  “With mortgage rates reaching new lows, refinance volume jumped and MBA’s refinance index reached its highest level in the last six months.  Purchase activity also increased as buyers returned to the market after the holiday season.”

With the exception of jumbo loans (with balances over $417,500) interest rates continued their downward trend. Three of the rates, in fact, hit the lowest level in the history of the MBA applications survey.  The jumbo rate – for 30-year fixed-rate (FRM) loans – increased to 4.40 percent from 4.34 percent with points decreasing to 0.37 from 0.47 point.  The effective rate also increased.

Thirty-year FRM with conforming (under $417,500) balances hit a new low, decreasing to 4.06 percent with 0.48 point from 4.11 percent with 0.41 point. The effective rate also decreased.

Rates for FHA guaranteed 30-year FRM were at 3.91 percent with 0.59 point, the lowest FHA rate in the history of MBA’s application survey, down from 3.96 percent with 0.72 point.  The effective rate also decreased from the previous week.

The third all-time low is the 3.33 percent rate with 0.39 point for the 15-year FRM.  This was a drop from 3.40 percent with 0.37 point rate the previous week.  The effective rate also decreased.

The average contract interest rate for 5/1 ARMs was unchanged at the record low 2.90 percent established the previous week.  Points decreased to 0.45 from 0.49.   The effective rate also decreased from last week.

All rates quoted are for 80 percent loan-to-value originations and points include the application fee.

 MBA’s covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.

Foreclosures Numbers With Big Drop, Reaching 2007 Levels

During 2011, one in every 69 homes received a foreclosure filing and 804,000 homes were repossessed — compared to 1.05 million homes that were repossessed during the foreclosure crisis peak in 2010. Foreclosure filings posted a 33 percent drop in 2011, falling to their lowest levels since 2007, RealtyTrac reports.

Foreclosures have plagued many communities, putting downward pressure on overall home prices. In the past five years, more than 4 million homes have been lost to foreclosure.

So is the worst finally over for the housing market?

Not yet, analysts say. Banks took more time to process foreclosures last year, which explains some of the declines, housing analysts note. In fact, the average process time for a foreclosure rose to 348 days in the fourth quarter, up from 305 days one year prior.

The RealtyTrac CEO says that while he expects foreclosures to increase in 2012, he also expects foreclosures to  stay well below the 2010 peak. Refinancing programs, such as the government’s Home Affordable Modification Program, are helping more borrowers lower their payments and avoid foreclosure, although not every homeowner will qualify for these programs.

The biggest problems with foreclosures remains centered in certain areas, particularly where investors helped drive up home prices during the housing boom. For example, Nevada remains the No. 1 foreclosure hot-spot, in which one out of every 16 households received some kind of default notice during 2011. Arizona and California also are continuing to face some of the highest foreclosure rates in the country too, according to RealtyTrac data.

Jobs Data Points The Way To Stronger Housing:

Real Estate used to be about location, location, location. Now it is most certainly about jobs, jobs, jobs.

We received some welcome news on the jobs front last week:

The private sector added a seasonally adjusted 325,000 jobs during the month, up from 204,000 in November, payroll-processing firm ADP said:

It marked the biggest monthly gain since December 2010, and was stronger than expected. Economists surveyed by Briefing.com were forecasting a gain of 180,000 jobs for the month.  And the great news is that half of the gains were made by small business (companies with fewer than 50 employees).

Headline National Unemployment Rate Drops to 8.5%:

Growth in manufacturing jobs helped offset a loss in government positions, while wages edged higher and the length of the work week also lengthened a bit. Job gains came from a variety of quarters: Transportation and warehousing surged by 50,000, the couriers and message industry rose 42,000, and retail added 28,000. Manufacturing grew by 23,000 and the hospitality industry continued its brisk pace, adding 24,000 jobs in December and 230,000 over the past year at food and drinking establishments.

What Happened to Rates Last Week:

Growth in manufacturing jobs helped offset a loss in government positions, while wages edged higher and the length of the work week also lengthened a bit. Job gains came from a variety of quarters: Transportation and warehousing surged by 50,000, the couriers and message industry rose 42,000, and retail added 28,000. Manufacturing grew by 23,000 and the hospitality industry continued its brisk pace, adding 24,000 jobs in December and 230,000 over the past year at food and drinking establishments.

Pending Home Sales Hit 19 Month High:

The number of Americans who signed contracts to buy homes in November rose to the highest level in a year and a half. The best reading on pending homes sales since a federal home-buying tax credit expired appeared to encourage traders on Wall Street.
The Realtors group said Thursday that its index of sales agreements jumped 7.3 percent last month to a reading of 100.1. A reading of 100 is considered healthy. The last time the index was that high was in April 2010, one month before the tax credit expired.

Contract signings usually indicate where the housing market is headed. There’s a one- to two-month lag between a signed contract and a completed deal.

Homes are the most affordable they’ve been in decades. Long-term mortgage rates are at historic lows and prices in most metro areas have tumbled since late 2006.

What Happened to Rates Last Week:

Mortgage backed securities (MBS) gained +95 basis points from last Friday to the prior Friday which moved mortgage rates lower.

We had much better than expected U.S. economic data.  Pending Home Sales, Consumer Confidence, and the Chicago PMI were all very strong.

Normally, these type of strong readings would cause bonds to sell off and your mortgage rates to rise.  But last week was a holiday shortened week that saw very low volumes.

Traders simply “parked” their funds into the safe-haven of bonds over the holiday week which increased demand for bonds and temporarily lowered mortgage rates.