Avoid Force-Placed Insurance

Being broke has all kinds of negative consequences.

When your mortgage insurance is cancelled for non-payment, your bank or loan servicer may obtain insurance to protect the property and charge you for it. That right is in your mortgage and deed of trust and is called “force-placed” or “lender-placed” insurance. Let’s explore why it’s no good for you.

First, you will receive a bill. Most lenders increase your monthly payment to pay the negative escrow balance caused by purchasing the insurance policy. Force-placed insurance is usually more expensive than homeowner’s insurance. This can raise your monthly payment several hundred dollars. If you fail to pay the insurance, the lender can foreclose on your property.

Second, force-placed insurance is designed to cover the mortgage company, not the homeowner. For example, should a fire burn down your house, most force-placed insurance policies will cover the lender up to the amount of the loan. It does not pay you for your equity in the home, and it does not cover your personal property, such as clothing or household items. Likewise, force-placed insurance does not provide liability coverage for instances where the homeowner is responsible for damage or injuries to others.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that notice must be given to the homeowner before force-place insurance can be ordered. The notice must provide:

  • there is an obligation to maintain hazard insurance
  • that the servicer does not have proof of insurance coverage
  • the procedures for providing evidence of existing coverage, and
  • if the borrower does not prove coverage, the servicer may force place the insurance.

A second written notice to the homeowner is required 30 days after mailing the first notice. If the homeowner does not provide proof of insurance coverage within 15 days after the second notice, the servicer can force-place the insurance coverage. Force-placed insurance may be cancelled when the homeowner provides evidence of insurance coverage.

Renters Protection Law Set to Expire


During the mortgage crisis, many renters were evicted from their homes when landlords lost property to foreclosure. Often renters were given just a few days to leave, even though all rents were paid current. Renters are generally given little or no warning when landlords are in default on mortgage loans. Under the “first in time, first in right” property rule, a lease signed after a mortgage was obtained is voided once that mortgage is foreclosed.

In 2009, President Obama signed the Protecting Tenants at Foreclosure Act (PTFA) into law that gave tenants the right to stay for the term of the lease if the property was purchased by an investor at a foreclosure sale, or 90 days if the house was purchased by an owner with the intention to occupy it as a residence. This law is set to expire December 31, 2014. If PTFA is allowed to expire, renters will again be subject to state law which leaves tenants in over half the country without protection or recourse during a landlord’s foreclosure.

The National Housing Law Project, a nonprofit national housing and legal advocacy center, reports that “nationwide as many as 40% of the families that face eviction due to foreclosure are renters.” Several bills have been proposed in Congress to extend the PTFA deadline. Recently, Representative Keith Ellison (D-MN) proposed a bill to make PTFA permanent. Representative Ellison has urges other Representatives to join him so that renters are “protected irrespective of where a foreclosure takes place.” Senator Richard Blumenthal (D-CT) also introduced a bill in November 2013 to make the PTFA permanent, S. 1761.

HAMP Denial May Mean Lawsuit

Under the Home Affordable Modification Program (“HAMP”), an underwater homeowner may request that a lender modify his or her home mortgage. Typically, a request is made after the homeowner has missed payments and needs the modification to eliminate negative equity, reduce monthly payments (and interest in some cases), and bring the mortgage current. If the homeowner meets certain eligibility requirements, the lender will offer a trial period plan that requires the homeowner to make three modified payments. After the trial period plan payments are made on time, the homeowner is supposed to receive a permanent loan modification agreement.

Unfortunately, lenders do not interpret the HAMP rules the same as the rest of the world. Many lenders and mortgage servicers are denying home loan modification after the trial plan period is successfully completed by the homeowner. The lenders categorically state that even though homeowners are enticed into paying the trial period plan payments, there is no contractual obligation to permanently modify loans. They point out that even if a lender promises to modify a loan (in writing), the lender never signs a contract and is not legally obligated. Lenders have also argued that HAMP laws do not provide a homeowner with a private right to sue the lender for failure to provide a loan modification. Consequently, even if a lender did something wrong, the homeowner cannot do anything about it.

Some courts are now allowing lawsuits against lenders and/or servicers for breach of contract when homeowners are denied loan modifications after successfully completing trial plan periods. In the recent case of Topchain v JPMorgan Chase, No. 13-2128 (8th Cir. 2014), the Eighth Circuit Court of Appeals held that a homeowner has a private right to sue a mortgage lender when it fails to properly process a modification.  Other courts have likewise ruled that homeowners can sue under HAMP when lenders refuse loan modifications for eligible borrowers. See Wigod v Wells Fargo Bank, N.A. 673 F.3d 547 (7th Cir. 2012); Corvello v. Wells Fargo Bank, N.A., 728 F.3d 878 (9th Cir. 2013); Young v. Wells Fargo Bank N.A., 717 F.3d 224 (1st Cir 2013).

Naturally, lawsuits are expensive and time-consuming. In many cases Chapter 13 bankruptcy is a cost-effective alternative when a homeowner is unfairly denied a loan modification. A bankruptcy debtor may litigate a HAMP lawsuit in federal court while under the protection of the bankruptcy laws prohibiting foreclosure. Chapter 13 bankruptcy may also allow the debtor to “catch-up” missed payments or “strip-off” wholly unsecured junior mortgages.

Flagstar Bank Penalized for Mortgage Servicing Violations

The Consumer Financial Protection Bureau (CFPB) announced that it has reached a consent agreement with Flagstar Bank to settle accusations that the bank delayed or prevented thousands of homeowners from obtaining mortgage relief and avoid foreclosure. The agreement calls for Flagstar to pay $27.5 million to the roughly 6,500 consumers whose loans were serviced by the bank. The bank will also pay a $10 million fine to the agency. Flagstar is one of the nation’s largest mortgage servicers.

What makes this penalty unique is that the CFPB halted Flagstar’s mortgage servicing operation until it can show that it is in compliance with federal laws.

The consent agreement outlined many of Flagstar’s wrongful acts, including assigning only 25 full-time employees and a third-party vendor in India to review nearly 13,000 active loss mitigation applications. During 2011, it took Flagstar up to nine months to review a single application. When consumers called Flagstar for information, the average call wait time was 25 minutes and the average call abandonment rate was almost 50 percent. In many cases loan modification applicants were wrongfully denied, often without explanation.

Pursuant to the consent order with the CFPB, Flagstar is prohibited from acquiring any servicing rights for defaulted loans. If a loan it services goes into default, Flagstar must transfer the servicing of that loan to another mortgage servicer. These prohibitions continue until Flagstar has demonstrated compliance with the consent order's operational reform provisions.

The CFPB, like the rest of the country, has figured out that mortgage servicers benefit from non-compliance with the law, and that it is more profitable to simply pay fines without change. Halting Flagstar’s operations changes the character of the penalty and may ultimately provide incentive for the industry to reform itself. 

BANKRUPTCY TRAP: Divorce after Bankruptcy

As one court put it, “Neither knaves nor fools should be representing debtors who need legal assistance.” Bankruptcy law is not for the inexperienced, imprudent, or unprepared. Take, for example, a very common situation: divorce after bankruptcy.

It is an unfortunate reality that some debtors divorce after Chapter 7 bankruptcy. In fact, some clients show up for an initial attorney consultation already determined to file divorce “right after the bankruptcy.” For the most part, eliminating financial obligations and obtaining a financial fresh start is a good first step, and alleviating the financial pressures can sometimes even save a marriage.

There are traps along the way for debtors who are intent on divorce after bankruptcy. The most significant is found in Section 541(a)(5) of the Bankruptcy Code which states that property acquired by the debtor within 180 days as a result of a marital property settlement agreement or divorce decree becomes property of the debtor’s bankruptcy estate. Under this statute, a bankruptcy debtor who receives property during a dissolution case will lose it unless the property is already protected with available exemptions.

Cases where a debtor has lost property under this section include a home owned by a husband and wife. The family court awarded the wife full interest in the marital home which was protected during bankruptcy by a tenants by the entireties exemption. Upon divorce within 180 days of the bankruptcy filing, the tenants by the entireties protection was extinguished and the bankruptcy trustee was able to take and sell the home to pay creditors. See In re Cordova, 73 F.3d 38 (4th Cir. 1996).

Other courts have broadly construed Section 541(b)(5) and found that property acquired ''as a result of a property settlement agreement ... or of an interlocutory or final divorce decree'' includes alimony and spousal support received within six months after the bankruptcy is filed. If these payments cannot be exempted, which is the case in some states, the result is that all payments due in the six months after the bankruptcy filing must be turned over to the trustee. Some courts, including the Court of Appeals for the Tenth Circuit in Peters v. Wise (In re Wise), 346 F.3d 1239 (10th Cir. 2003), and the Bankruptcy Appellate Panel for the Eighth Circuit in In re Jeter, 257 B.R. 907 (B.A.P. 8th Cir. 2001), have held that section 541(a)(5)(B) does not apply to alimony, maintenance or support payments.

Avoiding these traps is fairly simple. First, a debtor who expects to receive property in a dissolution proceeding should avoid commencing a bankruptcy case, unless it is clear that all property that may be awarded in an after bankruptcy dissolution is protected by exemptions. Second, the debtor may delay the award of property beyond the 180 day claw back period. While these tips appear simple and direct, competent legal assistance from an experienced bankruptcy attorney is needed to ensure that the debtor’s actions cannot be construed as efforts to conceal property and otherwise run afoul of the bankruptcy process.

If you are considering filing for bankruptcy please call the experienced attorneys at Fears | Nachawati Law Firm to set up a free consultation. Call 1.866.705.7584 or send an email to fears@fnlawfirm.com.

Purchasing a Home after Bankruptcy

Various government programs are available to assist individuals in purchasing real estate. Naturally, wherever there is government, there are rules—many rules. But on a positive note, a history of bankruptcy is not a death blow to home ownership. Below are general guidelines for purchasing a home after bankruptcy.

 

2013 FHA Guidelines –You may apply for a FHA insured loan as early as one (1) year after bankruptcy if you experienced an economic hardship that caused more than a 20% drop in household income. Otherwise, you must wait two (2) years after a Chapter 7 bankruptcy discharge and one (1) year after a Chapter 13 bankruptcy has been discharged or dismissed. The minimum down payment is 3.5% and credit must be re-established with a 640 minimum credit score.

 

A Chapter 13 debtor who has made twelve (12) timely payments on a confirmed plan can qualify for a FHA loan if there are no other credit delinquencies and if they receive bankruptcy court permission.

 

2013 VA Guidelines – The VA Lender Handbook spells out guidelines for a veteran to qualify between one (1) and two (2) years after a bankruptcy discharge:

  1. The borrower and/or co-borrower must reestablish satisfactory credit, and
  2. The bankruptcy must have been caused by circumstances beyond the borrower or co-borrower’s control (such as unemployment, medical bills, etc.)

 

If you have finished making all payments in a Chapter 13 bankruptcy case, the lender may conclude that you have reestablished satisfactory credit. If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration. In this situation 100% financing is available and credit must be re-established with a minimum 620 credit score

 

2013 USDA Guidelines - You may apply for a USDA rural loan three (3) years after the discharge of a Chapter 7, or one (1) year after a Chapter 13 bankruptcy (with evidence of twelve months of timely plan payments). In this case 100% financing is available. The USDA does not enforce a credit score minimum, but generally at least a 640-660 score is required.

 

2013 Conventional (Fannie Mae) - You may apply for a Conventional Fannie Mae loan after your Chapter 7 bankruptcy has been discharged or dismissed for four (4) years, two (2) years from the discharge of a Chapter 13.  A two (2) year waiting period for Chapter 7 debtors is allowed if certain “extenuating circumstances” can be documented.  The time is extended to sixty (60) months if there are multiple bankruptcies within the last seven (7) yrs. There is a minimum down payment is 5% and credit must be re-established with a minimum 680 credit score.

 

2013 Conventional (Fannie Mac) – This loan guarantee generally requires a borrower to wait eighty-four (84) months (that’s 7 years!) after bankruptcy unless either “extenuating circumstances” are met (then the waiting period is 24 months) or when “financial mismanagement” is present (then the waiting period is 48 months). The minimum down payment is 5% and a 680 credit score with a perfect rental history are required.

 

2013 Jumbo Mortgage Guidelines - You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for four (4) years. That waiting period is extended to five (5) years if multiple bankruptcies are present on the credit profile.

Lehman's Bankruptcy Creates Questions over Major Austin Office Portfolio

According to the Austin Business Journal, Lehman Brothers Holdings, Inc., the investment company that recently filed for Chapter 11 bankruptcy was a primary equity partner in a joint venture one year ago to buy most of Austin’s premier office space. Lehman Brothers put up 75 percent of the equity and provided debt financing on the deal. They purchased 10 properties totaling over 3.5 million square feet. Their purchases included the Frost Bank Tower, One Congress Plaza and 300 West Sixth – some of the most “coveted assets” in Austin. It is now predicted that as Lehman proceeds through bankruptcy it is likely that its Austin properties will come up for sale at a significant discount. Austin Business Journal states that, “. . . analysts and industry insiders have blamed Lehman’s demise partly on its position as the one-time biggest U.S. underwriter of commercial mortgage-backed securities.” Dan Fasulo, managing director of New York-based research group Real Capital Analytics Inc., states, “If there is a deal under the Lehman umbrella that may be in trouble, it’s the Austin deal” . . . “Everything has flipped upside down . . . If you had to sell such a portfolio now, you would probably have to sell at a significant discount.” Keep your eye on Austin’s premier office space to see what effect Lehman Brother’s bankruptcy will have on the local real estate economy.

New Home Sales Down

New home sales tumbled in August to the slowest pace in 17 years, while the average sales price fell by the largest amount on record, demonstrating the depth of the problem that Washington is trying to solve.

The Commerce Department said Thursday that new homes sales fell by 11.5 percent in August to a seasonally adjusted annual sales rate of 460,000 units, the slowest sales pace since January 1991.

The Dallas Morning News reported, it was a much bigger sales decline than the small 1 percent drop that economists had been expecting. The average price of a new home sold in August dropped by a record amount of 11.8 percent to $263,900, compared to the July average of $299,100. The median price was also down, falling 5.5 percent to $221,900.

The big drop in new home sales followed news Wednesday that sales of existing homes were down 2.2 percent in August to a seasonally adjusted annual rate of 4.91 million units. Both segments of the market remain under pressure from the steepest housing downturn in decades.

That housing slump has contributed to a record surge in mortgage defaults, leading to billions of dollars in losses by financial firms and spawning a severe credit crisis that is threatening to send the country into a steep recession.

In a nationally televised speech Wednesday night, President Bush said the credit crisis could trigger a “long and painful recession” unless Congress acts quickly to pass a $700 billion bailout plan for the nation’s financial system. Negotiations on that plan were continuing Thursday with expectations that an agreement would be reached soon.

Besides the weak housing report, the government said Thursday that new claims for unemployment benefits shot up last week to the highest level in seven years. Orders to factories for big-ticket manufactured goods fell by a much-bigger-amount than expected amount of 4.5 percent in August. Both indicate the rising pressures facing the economy.

The report on new home sales showed that business was off in every region of the country except the Midwest, which posted a 7.2 percent increase. Sales plunged by 36.1 percent in the West and were down 31.9 percent in the Northeast. Sales fell a more modest 2.1 percent in the South.

 

Housing Bargains

A new study on home prices shows that the Dallas area still has a big edge in providing affordable housing for relocating corporate 5c7e490cemployees.

The Dallas Morning News reported, Coldwell Banker Real Estate's annual home price comparison index tracks the cost of homes in more than 300 U.S. markets in areas that would appeal to "typical corporate middle-management transferees."

But that's substantially below the nationwide average of $403,738 in the survey, which compares the cost of a typical single-family dwelling with about 2,200 square feet, four bedrooms, 2 ½ baths, a family room and a two-car garage. The real estate sales firm said all the houses used in the comparison were in neighborhoods popular with corporate transferees.

Nationwide, the average price in Coldwell Banker's report was down about 4 percent from last year, which reflects the softer housing market.

The most expensive markets on the real estate firm's annual price list are La Jolla, Calif., at $1.84 million, and Greenwich, Conn., at $1.79 million.

At the other end of the spectrum, the cheapest U.S. markets include Sioux City, Iowa, at $133,459 and Jackson, Mich., at $134,325.

In Texas, the cheapest markets, according to Coldwell Banker, include Arlington at $143,775 and Killeen at $145,812.

A similar house would cost $209,557 in Plano and $149,108 in Fort Worth.

Coldwell Banker has been issuing the report since the 1980s.

 

Pre Owned Home Sales Down in August

No sign yet of a housing turnaround in North Texas.

The Dallas Morning News reported, Pre-owned home sales slumped 18 percent in August compared with a year ago.

And median sales prices slid 3 percent to $150,000, according to the latest statistics from the North Texas Real Estate Information System and Texas A&M University's Real Estate Center.

The fall-off in condo sales was even steeper – 31 percent last month.

The only good news in the monthly report is that the number of houses on the market continues to fall, dropping 14 percent at the end of August. But that may be because some sellers have taken their homes off the market.

Just over 42,000 pre-owned single-family homes were listed for sale in the Realtors' multiple listing service at the start of this month.

August's drop in home sales was one of the largest in North Texas in the current housing sector slowdown. Monthly pre-owned home sales volumes are now down more than 30 percent from the peak in mid-2006.

So far in 2008, local pre-owned home sales have fallen 15 percent from the first eight months of 2007. And overall prices are down 1 percent.

Real estate agents say that buyers are taking longer to make a decision and sometimes have trouble lining up financing.

"I've never seen a market like this where we have people sometimes looking at 30 to 40 homes before they pull the trigger," said agent Scott Schueler with Keller Williams Realty. "When they do pull the trigger, there is a 30 percent fallout rate. They are not making quick decisions, even when they find good deals."

On average it takes 77 days to sell a house in North Texas – 10 percent longer than in August 2007.

There is a 6.5-month inventory of houses on the market. That compares with a national inventory of more than 10 months.

Mortgage market problems are definitely adding to the home sales slowdown.

 

Dallas Area Home Prices Dropping

Dallas-area home prices continue to drift lower, dropping 3.2 percent over last year in the latest national study.

But there were indications in the report that home prices in North Texas are bottoming.

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U.S. new-home sales rise a little
The drop in local home prices has remained at just over 3 percent for several months in the Standard & Poor's/Case-Shiller home price index, which was released Tuesday.

Dallas' small decline was just a fraction of the nationwide drop, a record 15.9 percent in the 20 cities included in the survey.

The Dallas Morning News reports, "While there is no national turnaround in residential real estate prices, it is possible that we are seeing some regions struggling to come back, which has resulted in some moderation in price declines at the national level," Standard & Poor's David M. Blitzer said in the monthly report. "The rate of home price decline may be slowing."

In the Dallas area, home prices were up a scant 0.7 percent from May to June.

But researchers are cautious about using month-over-month comparisons.

"Don't forget we're in the middle of the annual sales season, so things are generally the best then," said economist James Gaines of Texas A&M University's Real Estate Center.

"On the other hand, we've been saying for some time that the Texas markets have weathered the housing bust storm much better than most areas, Dallas included most especially.

"I guess the word might be to be cautiously optimistic that the Dallas market has reached or is reaching a bottom, but sales volumes will continue to be down relative to the frenzied activity of 2005-2006."

Another survey out Tuesday – from the Office of Federal Housing Enterprise Oversight, or OFHEO – found that home prices in the Dallas area were up about 2 percent at midyear from the same time in 2007.

But the report uses a narrower housing sample than Case-Shiller: only homes financed by government-sponsored mortgage companies Fannie Mae and Freddie Mac.

Case-Shiller tracks the prices of typical single-family homes in each metropolitan area.

 

Home Price Index Tumbled During Second Quarter

A widely watched housing index shows home prices dropping by the sharpest rate ever in the second quarter.

The Standard & Poor's/Case-Shiller U.S. National Home Price Index tumbled a record 15.4 percent during the quarter.

The Dallas Morning News states, the monthly indices also clocked in record declines. The 20-city index fell by 15.9 percent in June compared with a year ago, the largest drop since its inception in 2000. The 10-city index plunged 17 percent, its biggest decline in its 21-year history.

No city in the Case-Shiller 20-city index saw year-over-year price gains in June, the third straight month that's happened.

However, the rate of home price declines slowed in June from the month before, a possible silver lining, the index creators said.

 

Construction of Homes Fall to Lowest Level

The Dallas Morning News reports, construction of homes and apartments fell in July to the lowest level in more than 17 years, the government reported Tuesday.

The Commerce Department said that builders broke ground on 965,000 housing units on an annualized basis. That was down from a pace of 1.08 million in June and the weakest showing since March 1991.

However, July's performance was better than analysts expected. Wall Street economists forecast that housing starts would drop to a pace of 950,000.

Still, the latest housing figures continue to show a badly battered housing market, one of the biggest problems plaguing the already shaky national economy.

The report showed that construction of single-family homes in July fell by 2.9 percent to a pace of 641,000. That was the lowest since January 1991, when the economy also was in distress.

Construction of apartments and other multifamily dwellings also fell sharply in July, after a large jump in the previous month due to a change in New York City's building codes. That change, which went into effect July 1, gave a rare lift to overall housing construction in June.

Housing permits in July fell to a rate of 937,000, a 17.7 percent drop from June, but still above analysts' expectations of 925,000. Permits are considered a reliable sign of future activity.

Homebuilders are hoping the housing rescue package approved by Congress last month will boost the dismal real estate sector. The law includes a temporary $7,500 tax credit for first-time homebuyers that essentially works out to a 15-year, interest-free loan.

The National Association of Home Builders/Wells Fargo housing market index, released Monday, remained at a record low of 16 in August for the second consecutive month. Readings below 50 indicate negative sentiment about the market.

But one measure of longer-term sentiment improved slightly: a measure of builders' sales expectations in six months rose two points to 25.

Still, homebuilder Toll Brothers Inc. reported dismal quarterly results last week when its revenue fell 34 percent and its order backlog plunged 52 percent.

Shares of several homebuilders, including Toll Brothers, D.R. Horton Inc. and Pulte Homes Inc., dropped Monday, partly due to renewed fears about the financial health of mortgage giants Fannie Mae and Freddie Mac.

 

Home Foreclosures in Dallas - Fort Worth

The latest foreclosure statistics show only a 7 percent increase in the Dallas-Fort Worth area from a year ago.

But more than 3,700 homes are scheduled for foreclosure sale in September, according to the numbers released Thursday by Addison-based Foreclosure Listing Service.

The Dallas Morning News reported, the biggest gain in September foreclosures is in Collin County, where the number of homes facing forced sale jumped 38 percent from a year ago.

Foreclosure totals were unchanged in Dallas and Tarrant counties.

The period ending with September's foreclosure auctions will be the second quarter in a row that total postings in the area have declined.

"It's a welcome change, but I don't think you can say it's for a definite reason or that it will continue," said Foreclosure Listing Service president George Roddy. "We've seen before that foreclosure postings go up and down."

So far this year, 37,572 residential properties have been posted for foreclosure – an increase of 20 percent from the first nine months of 2007.

Between 50 percent and 60 percent of the monthly foreclosure postings result in an actual forced sale of the property.

In some cases the sales are delayed, or the borrower reaches a new agreement regarding the debt.

 

Ruduction In Homes Hitting Foreclosure Block

The Texas residential real-estate market is experiencing a reduction in the number of homes hitting the foreclosure block.

The San Antonio News reported, according to the July report compiled by Irvine, Calif.-based RealtyTrac, over the month of July, a total of 10,354 homes in Texas entered the foreclosure process — marking a 6.3 percent decline from the volume of filings posted in June 2008.

Meanwhile, foreclosure filings were down 16.8 percent between July 2007 and July 2008.

With more than 10,000 filings in July, Texas ranks among the Top 10 states in the volume of foreclosure filings. Texas ranked sixth in the country between No. 5 Michigan, which reported 11,591 foreclosure filing during July, and No. 7 Georgia, which had 10,061 filings.

Nationwide, a total of 272,171 residential foreclosure filings were reported over the course of July — representing an 8 percent increase from figures posted in June. However, compared with July 2007, the number of residential foreclosure filings was up 55 percent.

RealtyTrac figures are based on filings for all three phases of foreclosure: Default, auction and real estate owned. (Real estate owned, or REO, means that the property has been foreclosed on and is now owned by a lender).

It is the last category that showed a significant spike. Over the course of July, 77,295 properties nationwide fell into REO status — marking a 184 percent increase from the number reported for July 2007, RealtyTrac reports.

It is a phenomenon that has created an unbalanced housing market, according to James J. Saccacio, CEO of RealtyTrac.

“The sharp rise in REOs, combined with slow sales, has resulted in a bloated inventory of bank-owned properties for sale,” Saccacio says.

At present, more than 750,000 homes nationwide are categorized by RealtyTrac as REO properties, Saccacio adds.

 

North Texas Home Sales Down

North Texas pre-owned home sales were down 16 percent during July compared with year-earlier numbers.

That means about 8,100 fewer homes have sold in the 29-county area in the first seven months of 2008 than in the same period of last year.

But even with the substantial falloff, median home sales prices are virtually unchanged – down only 1 percent for the year and flat in July.

The Dallas Morning News reported, real estate agents sold 7,394 pre-owned homes last month through their multiple listing service, according to statistics released Thursday by Texas A&M University's Real Estate Center and North Texas Real Estate Information Systems.

"Sales volumes will be down all year," said Dr. James Gaines, research economist at the A&M Real Estate Center. "Next year will be better because we'll be measuring from a lower base.

"I noticed that nationally, sales have flattened," he said. "There may be some light at the end, but I think the next 12 months or so won't be all that good."

The median sales price for single-family homes sold was unchanged from a year ago at $154,640.

While home sales have fallen significantly this year, that has not caused an increase in inventory.

At the end of July, 44,451 pre-owned single-family homes were for sale in North Texas.

That's 11 percent fewer than last summer.

Based on recent sales, the current listings add up to just under 7 months' worth of houses on the market.

Americans Default on Home Mortgages

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

The Dallas Morning News reports, Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.

The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

The mortgage troubles have been exacerbated by an economy that is still struggling. Reports last week showed another drop in home prices, slower-than-expected economic growth and a huge loss at General Motors. On Friday, the Labor Department reported that the unemployment rate in July climbed to a four-year high.

While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.

Defaults are likely to accelerate because many homeowners' monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets.

“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”

In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”

Delinquencies on mortgages tend to peak three to five years after loans are made, said Mark Fleming, the chief economist at First American CoreLogic, a research firm. Not surprisingly, subprime loans from 2005 appear closer to the end of defaults than those made in 2007, for which default rates continue to rise steeply.

“We will hit those points in a few years, and that will help in many ways,” Fleming said, referring to the loans made later in the housing boom. “We just have to survive through this part of the cycle.”

Housing Market Worsens

Dallas-based Centex Corp. said it lost an additional $150 million – $1.21 per share – in the just-completed quarter.

TheDallas Morning News reported,the big homebuilding company's loss was greater than the $128 million recorded a year earlier. But the latest financial report was an improvement from the $910 million the company lost during the period ending March 31.

Even so, Centex officials aren't expecting a turnaround in the beleaguered housing market.

"The housing market worsened in the June quarter, and I don't expect to see it improve this fiscal year," Tim Eller, Centex chairman and chief executive, said in a statement.

Centex's revenue for the most recent quarter was $1.13 billion, down 41 percent from a year earlier.

And Centex took $80 million in charges and write-offs in the latest quarter.

The company sold 3,939 houses in the period ended June 30, a 35 percent drop in sales from a year earlier. And the average home sales price was 10 percent lower at $262,044.

During the past quarter, Centex's greatest regional decline in home sales was in the eastern United States, which fell 42 percent.

In Texas, the builder's sales were down 34 percent from a year ago.

Centex's nationwide sales orders at the end of June were down 35 percent from the same quarter last year.

Bush Signs Massive Housing Bill

President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.

The Dallas Morning News reported, Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto before normal business hours at the White House.

“We look forward to put in place new authorities to improve confidence and stability in markets,” White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies “intended to keep more deserving American families in their homes.”

The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.

It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.

Dallas Home Prices Down

Dallas home prices are down by 3.1 percent in a just-released study of the U.S. housing market.

But the local price decline is modest compared to the almost 16 percent nationwide fall in May compared with the previous year, according to the Standard & Poor's/Case-Shiller home price index released Tuesday.

The Dallas Morning News reports, The home price slide in the 20 major cities surveyed set a record.

“Regional patterns stand out: the Sunbelt led by Miami, Tampa, Phoenix, Las Vegas, San Diego and Los Angeles saw the biggest booms and now see the largest declines,” Standard & Poor’s David M. Blitzer said in the report. “One possible bright spot is that seven (metropolitan areas), while still negative, showed some improvement in their annual figures over those reported last month.”

Compared with April’s index, the Dallas area saw a 1 percent increase in home prices.

The worst annual declines were in Las Vegas (-28.4 percent), Miami (-28.3 percent) and Phoenix (-26.5 percent).

Charlotte (-02 percent) and Dallas had the smallest annual price declines.

Case-Shiller tracks the prices of typical single-family homes located in each metropolitan area. The index survey does not include condominiums and townhouses. It only covers preowned properties – no new construction.

The Case-Shiller researchers compare “arms-length sales” of specific single-family homes over time.

Foreclosures Double in Second Quarter

The number of households facing the foreclosure process more than doubled in the second quarter compared to a year ago, according to data released today.

The Houston Chronicle reports, Nationwide, 739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households, Irvine, Calif.-based RealtyTrac Inc. said.

Soft housing sales, declining home values, tighter lending standards and a sluggish U.S. economy have left strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan.

Foreclosure filings increased year-over-year in all but two states, North Dakota and Alaska.

Nevada, California, Arizona, and Florida continued to clock in the highest foreclosure rates. One in every 43 Nevada households received a filing during the quarter.

Cities in California and Florida accounted for 16 of the worst 20 metro foreclosure rates. Stockton, Calif., had the worst rate, with one in every 25 homes in the town receiving a foreclosure filing. That's nearly seven times the national average.

RealtyTrac monitors default notices, auction sale notices and bank repossessions. Banks took back more than 222,000 properties nationwide in the second quarter, the company said. Bank repossessions accounted for 30 percent of total foreclosure activity, up from 24 percent in the previous quarter.

Economists estimated 2.5 million homes nationwide will enter the foreclosure process this year, up from about 1.5 million in 2007.

Bush Drops Opposition to Legislation to Calm Housing Market

President Bush dropped his opposition Wednesday to legislation aiming to calm the chaotic housing market despite his objections to a $3.9 billion provision. The House was expected to vote on the bill Wednesday, and it could become law as early as this week.

The Dallas Morning News stated, under the bill, the government would help struggling homeowners get new, cheaper loans and would be allowed to offer troubled mortgage giants Fannie Mae and Freddie Mac a cash infusion.


Graphic: Making sense of the mortgage backers
The Bush administration and lawmakers in both parties teamed to negotiate the measure, which pairs Democrats’ top priorities — federal help for homeowners facing foreclosure and $3.9 billion for neighborhoods hit hardest by the housing crisis — with Republicans’ goal of reining in mortgage giants Fannie Mae and Freddie Mac while reassuring financial markets of their stability.

Bush had objected to the $3.9 billion provision in the measure, saying that it was aimed at helping bankers and lenders, not homeowners who are in trouble.

White House press secretary Dana Perino announced Bush’s switch in a telephone conference call with reporters. “We believe this is not the time for a prolonged veto fight but we are confident the president would prevail in one,” she said.

It hands the Treasury Department the power to extend the government-sponsored mortgage companies an unlimited line of credit and buy an unspecified amount of their stock, if necessary, to prop up Fannie Mae and Freddie Mac, two companies chartered by Congress. The two companies back or own $5 trillion in U.S. mortgages — nearly half the nation’s total.

“The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets,” Perino said. “While we have concerns with other aspects of the bill, it is important that the new authorities are put in place promptly. And so President Bush will accept Secretary (Henry) Paulson’s recommendation to sign the bill.”

She said she expected that the $3.9 billion provision would be included in the final legislation. “With Congress scheduled soon for yet another recess,” she said, “the risk of not having a bill until at best the middle of September — if they even were act then — is not a risk worth taking in the current environment.”

Congressional analysts estimated Tuesday that the rescue could cost $25 billion, but predicted there’s a better than even chance it won’t be needed at all.

The bill would let hundreds of thousands of homeowners trapped in mortgages they can’t afford on homes that have plummeted in value escape foreclosure by refinancing into more affordable, fixed-rate loans backed by the Federal Housing Administration. Lenders would have to agree to take a substantial loss on the existing loans, and in return, they would walk away with at least some payoff and avoid the often-costly foreclosure process.

The plan also creates a new regulator with tighter controls for Fannie Mae and Freddie Mac and modernizes the FHA.

It includes about $15 billion in housing tax breaks, including a credit of up to $7,500 for first-time home buyers for people who bought homes between April 9, 2008, and July 1, 2009. It also allows people who don’t itemize their taxes to claim a $500-$1,000 deduction on their 2008 property taxes. That chiefly benefits homeowners who have paid off their homes and can’t claim a deduction for mortgage interest.

And it increases the statutory limit on the national debt by $800 billion, to $10.6 trillion.

The White House, which initially denounced the FHA rescue as too burdensome on the government and risky for taxpayers, dropped most of its objections to the measure in recent weeks in search of a swift deal. The urgent request by Paulson to throw Fannie Mae and Freddie Mac a federal lifeline acted as a powerful locomotive for a deal.

The bill sets a cap of $625,000 on the loans that Fannie Mae and Freddie Mac may buy and the FHA may insure. It lets them buy and back mortgages up to 15 percent above the median home price in certain areas.

Lawmakers abandoned efforts to place conditions on any Fannie and Freddie rescue, but the bill hands the new regulator approval power over the pay packages of executives at the companies regardless of whether the government moves to financially reinforce them.

It also counts any federal infusion for the mortgage giants under the debt limit, essentially capping how much the government could spend to stabilize the companies without further approval from Congress. As of Tuesday, the national debt that counts toward the limit stood at about $9.5 trillion, roughly $360 billion below the statutory ceiling.

Texas Property Markets Continue to Outpace Nation

Texas property markets will continue to outpace the nation, but things are likely to cool a bit through next year.

“The Texas housing markets are going to be spotty,” said Dr. James Gaines, a research economist with Texas A&M University’s Real Estate Center.

The Dallas Morning News states, some residential markets “will be doing very well and some will be doing poorly,” Dr. Gaines said to a corporate real estate group meeting in Addison on Thursday.

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Check out our interactive map.
Area home sales fall 15% Home sales statewide declined more than 14 percent through May compared with the same period of 2007, Dr. Gaines told a meeting of CoreNet Global’s Southwest chapter.

With the tougher lending standards and a pullout by home investors, the drop-off in sales in Texas could have been much steeper.

“Sales volumes should have fallen somewhere around 40 percent, but they haven’t fallen that far,” Dr. Gaines said. “It’s a testament to the strength of our economy and the fundamentals in Texas.

“Generally our housing prices are sustaining and holding up.”

Statewide home prices are up about 1.4 percent this year.

In the Dallas-Fort Worth area, median home sales prices fell by 2 percent in the first half of 2008.

“From a total market perspective, this is not too bad - it’s not the end of the world,” Dr. Gaines said.

But the recovery of Texas’ housing markets may take awhile – particularly on the construction side.

“Residential projects are almost dead in the water now,” he said. “It’s very difficult to find lenders willing fund them.”

The housing markets in Dallas-Fort Worth and the rest of Texas will benefit from huge population increases, he said.

“The D-FW Metroplex is bigger than the state of Arizona in population,” Dr. Gaines said. “It’s bigger than 30 other states.”

Likewise, job growth in the area is close to the highest in the country.

So far, that’s kept the commercial real estate market in North Texas and other markets strong.

“Rents and occupancy rates in Texas commercial properties will probably stay high for the rest of this year,” Dr. Gaines said. “But we are seeing early signs that market will settle down a little bit.”

Developers have been adding millions of square feet of new construction in Texas.

“Demand so far is keeping pace but we are not sure that is going to keep up.”

Home Foreclosures up 18%

Home foreclosure postings in the Dallas-Fort Worth area are up 18 percent in the latest filings.

The Dallas Morning News reported, Almost 4,600 homes are scheduled for foreclosure next month, according Addison-based Foreclosure Listing Service.

That compares with 3,870 postings for August 2007.

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Interactive map: 2007 Dallas-Fort Worth foreclosures by ZIP code

Interactive foreclosure primer
Despite the big increase since last year, total foreclosure filings for the D-FW area are below the recent peak in February, when more than 5,300 postings were recorded.

The largest volume of postings for August was recorded in Dallas County, with 2,072 filings. That's an increase of 18 percent from a year ago.

Denton and Collin counties had the biggest percentage gain in foreclosure postings – up about 40 percent from a year ago.

With August postings, the total so far for 2008 in the four-county area is almost 34,000.

"For the first eight monthly foreclosure auctions of 2008, foreclosure posting activity has climbed 21 percent compared to the 27,911 notices filed by this time last year," Foreclosure Listing Service president George Roddy said.

"Foreclosure postings filed on D-FW homes during the first eight months of the year reached another new record-level high," Mr. Roddy said.

And don't look for a slowdown in foreclosures any time soon, said James Gaines of Texas A&M University's Real Estate Center.

"Foreclosures are going to stay high probably through next year and into early 2010," Dr. Gaines said.

The number of home loan defaults will begin to subside only after thousands of subprime loans are refinanced or go into foreclosure, he said.

"It's going to take us a little while to work through those," Dr. Gaines said. "They won't come down completely until we start seeing a bottoming of home prices, and prices start picking back up."

Home Foreclosures in Dallas - Fort Worth Area Up

Home foreclosure postings in the Dallas-Fort Worth area are up 18 percent in the latest filings.

The Dallas Morning News reports, almost 4,600 homes are scheduled for foreclosure next month, according Addison-based Foreclosure Listing Service.

That compares with 3,870 postings for August 2007.

Also Online
Interactive map: 2007 Dallas-Fort Worth foreclosures by ZIP code

Interactive foreclosure primer
Despite the big increase since last year, total foreclosure filings for the D-FW area are below the recent peak in February, when more than 5,300 postings were recorded.

The largest volume of postings for August was recorded in Dallas County, with 2,072 filings. That's an increase of 18 percent from a year ago.

Denton and Collin counties had the biggest percentage gain in foreclosure postings – up about 40 percent from a year ago.

With August postings, the total so far for 2008 in the four-county area is almost 34,000.

"For the first eight monthly foreclosure auctions of 2008, foreclosure posting activity has climbed 21 percent compared to the 27,911 notices filed by this time last year," Foreclosure Listing Service president George Roddy said.

"Foreclosure postings filed on D-FW homes during the first eight months of the year reached another new record-level high," Mr. Roddy said.

And don't look for a slowdown in foreclosures any time soon, said James Gaines of Texas A&M University's Real Estate Center.

"Foreclosures are going to stay high probably through next year and into early 2010," Dr. Gaines said.

The number of home loan defaults will begin to subside only after thousands of subprime loans are refinanced or go into foreclosure, he said.

"It's going to take us a little while to work through those," Dr. Gaines said. "They won't come down completely until we start seeing a bottoming of home prices, and prices start picking back up."

Construction of SIngle Family Homes Fall

Construction of single-family homes fell in June to the slowest pace in 17 years although a change in New York laws helped give a big boost to apartment building.

The Houston Chronicle reported,The Commerce Department reported today that construction of single-family homes dropped by 5.3 percent in June to a seasonally adjusted annual rate of 647,000 units, the weakest performance since January 1991, another period when the housing industry was going through a severe downturn.

However, construction of multifamily units surged by 42.5 percent last month, thanks to a change in New York City building codes that spurred a wave of apartment construction in that area. Taken together, single and apartment construction rose by 9.1 percent to an annual rate of 1.066 million units.

But the total increase was viewed as an aberration that did not give a true picture of the continued weak state for the housing industry because it was skewed by the huge jump in apartment building in New York.

Private economists are predicting that housing will continue to be under strains for the rest of the year. The troubles in housing, combined with related turmoil in the financial sector attributed to billions of dollars of losses on mortgage loans, are dragging down the total economy, raising risks of a recession.

Separately, the Labor Department reported that the number of newly laid-off people signing up for jobless benefits rose by 18,000 last week to 366,000, the highest level since late June. The increase was below the number that economists had been expecting.

The report on housing construction showed that applications for building permits, considered a good sign of future activity, rose by 11.6 percent to a seasonally adjusted annual rate of 1.091 million units. However, this increase was also skewed by a big rise in the volatile apartment sector. Permits for multifamily construction soared by 39.4 percent while permits for single-family homes fell by 3.5 percent.

Analysts said they expect that builders will continue to slash construction as they struggle with an extremely difficult environment. The National Association of Home Builders said Wednesday that its survey of builder sentiment fell to a record low of 16 in July, down from 18 in June,

That decline reflected all the problems facing the housing industry at the moment from a weak economy that is pushing down employment and consumer sentiment to surging mortgage foreclosures which are dumping more homes on an already glutted market.

June Sales Down 20 %

Hot summer weather isn't heating up the North Texas home market.

The Dallas Morning News reports, June sales were down 20 percent from a year ago. And for the first six months of 2008, the number of pre-owned houses sold in the area is off 15 percent from the same period last year.

The good news: Prices are holding up relatively well.

North Texas real estate agents sold 7,371 pre-owned homes last month, the North Texas Real Estate Information System and Texas A&M University's Real Estate Center reported Monday.

It's the lowest sales total for June since 2003.

The falloff is "maybe a tad higher than we expected," said Dr. James Gaines of A&M's Real Estate Center.

"We've seen the high-end market decline significantly with the high cost of financing for jumbo mortgages" over $417,000.

Indeed, some of the biggest local home sales declines this year have been for properties priced over $700,000, Realtor statistics show.

In June, the median price of homes sold in North Texas was $158,580 – unchanged from a year ago.

Through the first six months of this year, median prices are down 2 percent from the first half of 2007.

That compares with a more than 6 percent dip in nationwide pre-owned home prices, according to the latest statistics.

But any decline in local prices could be a problem, Dr. Gaines said.

"Some will see the small price decline and decide to postpone any buying decision to see if prices go down further," he said.

And decreasing prices in the local home market "will not bode well for getting out of the foreclosure problems – in fact, it'll add to the problem," Dr. Gaines said.

While it's taking longer this summer to sell a home here – 77 days in June – the number of houses for sale continues to decline.

Last month there were 45,125 pre-owned single-family homes on the market in North Texas. That's down 10 percent from June 2007.

Currently there is just under a seven-month supply of homes for sale in the area.

Dalas - Fort Worth Shows Stable Home Values

The latest home price risk forecast shows that Dallas-Fort Worth is overall the safest place in the country for stable home values.

The Dallas Morning News, also states the latest report by mortgage insurance company PMI Group ranked the D-FW area dead last among the 50 cities it rates for possible declines in home prices.

That means PMI is betting there is less than a 1 percent chance that average home prices here will be lower two years from now.

PMI's summer 2008 risk ranking for D-FW is similar to the insurance company's previous studies.

As in other PMI reports, the U.S. cities with the biggest run-up in home prices in recent years are at the greatest risk for losses.

During the last year, some markets have seen a significant increase in the number of existing single-family homes for sale, PMI chief economist David Berson said in the report.

"Given the magnitude of the inventory overhang, we expect national home price declines to continue into at least 2009," Mr. Berson said.

In North Texas, however, the number of pre-owned homes listed for sale has declined during the last year.

Although PMI Group's report about D-FW home prices should be encouraging, Mr. Berson said that doesn't mean there won't be short-term declines in values.

"It is also an average for a metropolitan area, so individual neighborhoods and houses could behave differently," he said, perhaps considerably so.

Dalas - Fort Worth Shows Stable Home Values

The latest home price risk forecast shows that Dallas-Fort Worth is overall the safest place in the country for stable home values.

The Dallas Morning News, also states the latest report by mortgage insurance company PMI Group ranked the D-FW area dead last among the 50 cities it rates for possible declines in home prices.

That means PMI is betting there is less than a 1 percent chance that average home prices here will be lower two years from now.

PMI's summer 2008 risk ranking for D-FW is similar to the insurance company's previous studies.

As in other PMI reports, the U.S. cities with the biggest run-up in home prices in recent years are at the greatest risk for losses.

During the last year, some markets have seen a significant increase in the number of existing single-family homes for sale, PMI chief economist David Berson said in the report.

"Given the magnitude of the inventory overhang, we expect national home price declines to continue into at least 2009," Mr. Berson said.

In North Texas, however, the number of pre-owned homes listed for sale has declined during the last year.

Although PMI Group's report about D-FW home prices should be encouraging, Mr. Berson said that doesn't mean there won't be short-term declines in values.

"It is also an average for a metropolitan area, so individual neighborhoods and houses could behave differently," he said, perhaps considerably so.

Wachovia Corp. Stops Mortgage Payment Option

Beleaguered consumer bank Wachovia Corp. will quit offering a mortgage payment option that allows borrowers to pay less each month than the bank charges in interest.

The Dallas Morning News also state that the choice to pay less was one of the options of Wachovia's controversial Pick-A-Payment mortgages, which offer customers four different payment options each month.

Wachovia told The Associated Press on Monday that it will no longer offer the less-than-full interest payment option on all new home loans.

Critics have said such paying less than the amount of interest charged can lead to negative amortization, in which the borrower owes more than the value of their home, increasing the chance of foreclosure.

Foreclosures Rise

Jacksonville is heading into the third year of the real estate slump and the number of home foreclosures continues to rise. The San Antonio News also reports ,so many homes are being auctioned off at the Duval County Courthouse that in July, the foreclosure auctions will be put online to move them through faster.

"I don't see any bright skies on the horizon," said University of North Florida real estate professor Sid Rosenberg.

Evelyn Mew, the Jacksonville grandmother pictured at right, was able to save her home after falling behind on her mortgage payments. Thousands of others have not been so fortunate. Local agencies, such as Jacksonville Area Legal Aid, are quickly trying to gear up to help, but the caseload is heavier each month.

Meanwhile, a cottage industry has developed.

KB Home Reports Second - Quarter Loss

KB Home, one of the nation's largest homebuilders, reported a larger second-quarter loss Friday, as weak sales and falling home prices led to a 55% drop in revenue. The San Antonio News also reported that the company also booked charges to lower the value of unsold homes, joint venture deals and land option contracts.

The Los Angeles-based company reported a loss of $255.9 million, or $3.30 per share, for the three months ended May 31. A year ago, it lost $148.7 million, or $1.93 per share.

The latest results included a $176.5 million charge to cut the value of its unsold homes and to abandon some land option contracts.

Revenue plunged to $639.1 million from $1.41 billion in the year-ago period. The decline was driven by lower housing and land sale revenues, the builder said.

Analysts surveyed by Thomson Financial were expecting KB to post a loss of 94 cents per share on revenue of $691.3 million. The earnings estimates typically exclude one-time items.

Dip in Home Prices

This morning The Dallas Morning News Reported, home prices took another dip in the latest measure of the U.S. housing market.

Local home prices fell 3.4 percent in April from a year earlier in the Standard & Poor's/Case-Shiller home price index released Tuesday.

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Map: Dallas-Fort Worth home sales and prices
The local decline is much lower than the 15.3 percent falloff in prices for the 20 cities surveyed in the monthly report. It was the largest nationwide drop in home prices on record.

Across the country, home prices have retreated to levels last seen in August 2004.

Every city in the benchmark Case-Shiller April report saw prices lower than a year ago.

Las Vegas and Miami had the biggest price declines, down more than 26 percent from last year.

The smallest decline was in Charlotte, N.C. – down 0.1 percent.

But there were small gains in some markets in April compared with March, including a 1.1 percent increase in Dallas.

"There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline," Standard & Poor's David Blitzer said.

"If there is anywhere to look for possible improvement, it would be that the pace of monthly declines has slowed down for most of the markets," Mr. Blitzer said.

Case-Shiller tracks the prices of typical single-family homes in each metropolitan area.

The index survey does not include condominiums and townhouses. It only covers pre-owned properties – no new construction.

The Case-Shiller researchers compare "arms-length sales" of specific single-family homes over time.

Also Tuesday, the Office of Federal Housing Enterprise Oversight reported that its home price index showed a 4.6 percent nationwide decline in prices for the 12 months ending in April.

But in the region that includes Texas, prices were up 1.9 percent from a year ago.

Agency surveys don't include all houses sold in the market and only those with mortgages of less than $417,000.

A report released this week by Harvard University's Joint Center for Housing Studies suggests that a turnaround in the nation's depressed housing market is a ways off.

Harvard's State of the Nation's Housing 2008 study

Vacant Homes in U.S.

The Dallas Morning News Reported, The percentage of vacant homes for sale in the U.S. set a new record high in the first quarter of this year, the government said Monday.

The Census Bureau report shows that 2.9 percent of U.S. homes – excluding rental properties – were vacant and up for sale, compared with 2.8 percent in the fourth quarter of 2007. It was the highest quarterly number in records going back to 1956.

That works out to 2.28 million properties, up from 2.18 million in the same quarter last year, according to the report.

The West had the biggest gain in vacancy rates among homeowners, rising to 3.2 percent in the January-March period from 2.6 percent in the same quarter a year earlier. Vacancy rates inched up in the Northeast and remained steady in the Midwest and South. The national vacancy rate, including new and existing homes, has been steadily rising since mid-2005.

Global Insight economist Patrick Newport called the report "worrisome."

"The inventory problem has not gotten any better," Newport said. Although glut-fighting home builders have reined in construction, "they still will have to cut back more."

The Census Bureau's report also said that the U.S. homeownership rate remained at 67.8 percent in the first quarter, down from a peak of 69.2 percent at the end of 2004.

The housing market's five-year boom is quickly becoming a faint memory, as sales and home prices have fallen dramatically over the past two years in once hot areas such as California and Nevada.

Last week, a Commerce Department report said sales of new homes plunged in March to the slowest pace in 16 1/2 years.

Centex Corp., Pulte Homes Inc., Hovnanian Enterprises Inc. and other builders have been caught with unsold properties over the past year as mortgages became harder to get, sales slowed and the economy soured.

Builders have slashed prices, but the discounts have done little to lure buyers who are holding out, uncertain about when the price-drop will stop.

The National Association of Realtors reported last week that sales of existing homes also fell in March, dropping by 2 percent, with prices declining on a year-over-year basis by 7.7 percent.

Countrywide Selling Foreclosed Homes

San Antonio News Reported, Countrywide Financial Corp., the mortgage company being bought out by Bank of America Corp., is working with New Vista Asset Management to sell real-estate owned (REO) homes in San Antonio.

These are homes that have been foreclosed on by the lender. Countrywide is in the process of working with New Vista's network real estate professionals to sell these properties.

The two companies will work to ensure that homes are made available to qualified first-time and minority homebuyers. The companies will be hosting several community seminars for first-time buyers to teach them about buying real-estate owned homes and different financing options.

The seminars initially will be held in Los Angeles and Dallas. However, the companies are also working in the San Diego, Sacramento, Las Vegas, Fort Worth, Houston, San Antonio and Atlanta markets.

"By marketing and selling REO units directly to first-time and minority home buyers, New Vista and Countrywide are advancing our mutual commitment to increase affordable housing opportunities and act as responsible contributors to the local housing market," New Vista's Chairman Gary Acosta says.

Countrywide originates, purchases, securitizes, sells and services prime and nonprime loans. The company also provides credit reports, appraisals and flood determinations. It markets property, life and casualty insurance and banking services.

New Vista is a San Diego-based national REO management and marketing company. New Vista has set up a strategy to use its clients' inventory of foreclosed homes for minority homeowners.

Housing Slump May Exceed Depression

Dallas Morning News Reports, An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression and bailouts will be needed so millions don't lose their homes.

Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.

"I think there is a scenario that they could be down substantially more," Shiller said during a speech at the New Haven Lawn Club.

Shiller's Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct.

Home prices rose about 85 percent from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Shiller said.

"Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before."

Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy.

Shiller, who said it's difficult to forecast prices, endorsed legislation proposed by Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners. Servicers would have to agree to take a loss on the existing loans, while borrowers would have to show they could afford to make new payments on their refinanced mortgages.

On Tuesday, the National Association of Realtors said that sales of existing homes fell in March while the median home price declined to $200,700, a decline of 7.7 percent from the median price a year ago.

Sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units.

Many analysts said they do not expect a rebound for a number of months, given the problems weighing on housing from a severe glut of unsold homes to tighter credit standards for prospective buyers and a rising tide of mortgage foreclosures.

Home Sales Fall

The Dallas Morning News, Sales of existing homes fell in March while the median home price declined, compared with the price a year ago, as a severe slump in housing showed no signs of abating.

The National Association of Realtors said that sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units.

The median price of a home sold last month dropped to $200,700, a decline of 7.7 percent from the median price a year ago. That was the second-biggest year-over-year price decline on records dating back to 1999.

In the Dallas-Fort Worth area, pre-owned home sales fell 25 percent in March, while median prices remained relatively unchanged – down only 1 percent during the quarter, according to statistics released earlier this month by the North Texas Real Estate Information System.

The March U.S. sales decline, which was in line with expectations, followed a 2.9 percent increase in sales in February. The February rise, which followed six straight monthly declines, had raised hopes that the steep housing correction could be hitting bottom.

However, many private analysts said they do not expect a rebound for a number of months, given the problems weighing on housing from a severe glut of unsold homes to tighter credit standards for prospective buyers and a rising tide of mortgage foreclosures.

Sales were down 19.3 percent compared with a year ago, reflecting the depth of the housing bust, which is coming after sales set records for five consecutive years.

For March, sales were down 6.5 percent in the Midwest and 3.5 percent in the South but increased by 2.2 percent in the Northeast and 2.2 percent in the West.

The Northeast was the only region of the country to experience a rise in median prices, which were up 4.6 percent compared with a year ago. Prices were down in all other regions of the country, dropping by 14.7 percent in the West, 7.1 percent in the South and 5.3 percent in the Midwest.

Lawrence Yun, chief economist for the Realtors, said that he expected sales would begin to show improvements in the second half of this year, helped by an improved availability of mortgage-backed insurance from the Federal Housing Administration and higher limits for jumbo mortgages, loans which are critically important in high-priced areas of the country such as California.

Tarrant Foreclosures Up

 Fort Worth News stated , Home foreclosures in Tarrant County are up 39 percent for May, with 1,380 homes posted for foreclosure at the May 6 auction, according to figures released Thursday by Foreclosure Listing Service.

For the year, there have been 6,971 postings in Tarrant County, 29 percent more than a year earlier.

Tarrant, Dallas, Denton and Collin counties combined had 4,426 postings for the May auction, also up 39 percent from a year earlier.

There are a number of reasons that foreclosures are continuing to rise, said George Roddy, president of Foreclosure Listing Service. The cost of living -- including the price of gasoline and groceries -- continues to rise, contributing to the rise of people's bills, but salaries have not kept up.

"The cost of living has gone to the moon," he said.

In addition, some people have mortgages with variable rates that are adjusting.

These higher costs are compounding the usual underlying causes that contribute to foreclosures: job loss, divorce and insurmountable medical bills.

The mortgage is usually the one of the last bills that people stop paying.

"Once you get behind, it's extremely hard to get caught back up," Roddy said.

U.S Home Prices Decline

The drop in U.S. home prices accelerated in early 2008 and shows no sign of bottoming.

Preowned home prices nationwide fell by a record 11.4 percent in January, according to the monthly S&P/Case-Shiller home price index released Tuesday.

And while Dallas home prices continued to hold up better than those in its peer cities, the closely watched report showed that values here fell by 3.3 percent from a year earlier – the biggest drop yet. Prices locally were down 1.8 percent from December.

"Unfortunately it does not look like early 2008 is marking any turnaround in the housing market, after the declining year recorded throughout 2007," S&P's David M. Blitzer said in a statement. "Home prices continue to fall, decelerate and reach record lows across the nation."

The largest January declines were in Las Vegas and Miami, where prices fell by more than 19 percent from a year earlier. The only market where prices were still rising was Charlotte, N.C., which had a 1.8 percent increase.

Half of the 20 cities Case-Shiller surveyed had double-digit price drops in January compared with a year earlier.

Case-Shiller compiles its price index using sales data for typical single-family homes located in each of the metropolitan areas. The survey does not include condominiums and townhouses. It also only covers preowned properties – no new construction. The Case-Shiller researchers say they compare specific single-family homes that have sold more than once in order to measure true appreciation of a home. They exclude homes that are not typical for an area.

Since the number of North Texas homes on the market has stayed relatively flat in recent months, some analysts are puzzled by the degree of local price declines. In February, just over 43,000 preowned homes were for sale in North Texas. That's down 1 percent from a year ago.

"Price appreciation is driven largely by the inventory levels," said Mark Dotzour, an economist with Texas A&M University's Real Estate Center. "I'm a little surprised we are seeing price declines in Dallas. I wouldn't panic about it."

The latest Case-Shiller report follows figures released Monday by the National Association of Realtors that showed median existing sales prices in February fell 8.2 percent to $195,900. That's the largest nationwide annual drop in the Realtors statistics going back to 1999. Local statistics show that North Texas preowned home sales prices peaked at $158,000 in June 2007. In February, the median price was $138,550, according to the North Texas Real Estate Information System.

That works out to just over an 11 percent decline from the high point last summer. But prices typically fall during winter months.

Yet another national report out on Tuesday said that U.S. home prices fell by 3 percent during the 12 months ending January. That estimate by the Office of Federal Housing Enterprise Oversight also includes data from mortgage refinancings and new home sales. The OFHEO statistics also do not include higher-priced houses.

Economists are already worried that the usually busy spring season could be in jeopardy.

"I wouldn't be looking for a pattern of improvement until April, May or June," said Brian Bethune, chief U.S. economist at Global Insight.

Home Sales Rise Nationally

According to the Houston Chronicle, after falling for six straight months, sales of existing homes posted an unexpected increase in February which may have reflected more aggressive price cutting by sellers in some parts of the country, a real estate trade group reported today.

The National Association of Realtors said that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a year and caught economists by surprise. They had been expecting a small decline.

The trade group reported that the median existing sales price in February fell to $195,900. That was the largest year-over-year drop on records that go back to 1999.

In the Houston area, the trend was reversed. Last week, the Houston Association of Realtors reported a 10.2 percent decline in home sales while the median price actually rose 3.1 percent to $151,430.

Lawrence Yun, chief economist for the National Association of Realtors, said that prices in some formerly hot markets in California and Florida were seeing significant price declines now as sellers try to attract buyers.

Analysts cautioned against reading too much into the one-month rise in sales. Many economists are predicting that the steep slump in housing will not bottom-out until later this year after prices fall further and allow huge levels of unsold inventories to be reduced.

"We're not expecting a notable gain in existing-home sales until the second half of this year, but the (February) improvement is nother sign that the market is stabilizing," Yun said.

By region of the country, sales surged by 11.3 percent in the Northeast and were up 2.5 percent in the Midwest and 2.1 percent in the South. The only region of the country to see a decline in the sales was the West, where they dropped by 1.1 percent.

Sales of existing homes fell by 12.7 percent in 2007, the biggest decline in 25 years. Over the past two years, housing has been in a steep downturn made worse by a severe credit crunch as financial institutions tightened their lending standards in reaction to their multibillion-dollar losses on mortgages that have gone into default.