Refinance activity was due to most of that increase last week. Applications for refinancings increased 9.4 percent compared to a week earlier, while applications for purchases only ticked up slightly at 0.1 percent.

The 30-year fixed-rate mortgage on conforming loans reached its lowest rate in the survey’s history last week — falling from 4.09 percent to 4.05 percent. Freddie Mac was reporting even lower for the week ending Feb. 2, with 30-year rates averaging 3.87 percent nationwide.

Source: “Mortgage Applications Surge on Low Interest Rates,” HousingWire (Feb. 8, 2012)

State and federal officials have been in settlement talks for more than a year but have been unable to reach an agreement.

The proposed deal would include mortgage principal write-downs for distressed home owners. Banks would also pay up to $25 billion. In return, state and federal officials would release banks from facing civil claims from any errors in servicing and originating loans, Reuters reports.

The banks involved in settlement negotiations are Bank of America, Wells Fargo & Co., JPMorgan Chase & Co., Citigroup, and Ally Financial Inc.

Some states have been reluctant to sign onto the deal, criticizing the settlement as being too lenient on banks.

Reuters News says that states have one week to make a decision about whether to sign on with the settlement. An announcement is expected next week.

Source: “States to Decide This Week on Mortgage Deal,” Reuters (Jan. 30, 2012)

The Federal Housing Finance Agency plans to offer some of its 180,000 foreclosed homes through Fannie Mae and Freddie Mac to private operators who will turn them into rental properties, Bloomberg News reports.

The Federal Housing Administration also plans to participate in a rental program. In a November memo, it has suggested that its program work with public-private partnerships to share the risk and profits, as well as explore offering rent-to-own opportunities to tenants of the homes.

Private equity firms are stepping up to acquire some single-family homes to manage as rentals. GTIS Partners has already earmarked $1 billion by 2016 to acquire single-family homes to manage as rentals. GI Partners also says it will invest $1 billion on rental housing.

“We’re starting to see this as a billion-dollar opportunity to buy rental housing,” Thomas Shapiro, the founder of the GTIS Partners fund, told Bloomberg News.

A few months ago, the White House solicited ideas from the public on how to work a foreclosure rental program to get a better grip on the government’s foreclosure inventory. The White house says it hopes that by turning some of the foreclosures that have dogged many markets into rentals, it will be able to ward off any further drops to overall home prices.

Source: “Foreclosures Draw Private Equity as U.S. Sells Homes,” Bloomberg (Jan. 31, 2012)

The home ownership rate now stands at 66 percent, a level that hasn’t been reached since 1997, the U.S. Census Bureau reported this week. The home ownership rate peaked at 69.2 percent in the fourth quarter of 2004, and has gradually fallen ever since.

The home ownership rate has fallen the most in the West, standing at 60 percent — a big drop compared to 64.5 percent in the fourth quarter of 2006, the Census reports.

Some people who want to own a home are being shut out of the market because they’re unable to qualify for financing for a mortgage, Paul Dales, an economist with Capital Economics, told the USA Today. Stringent loan standards have been blamed on holding back a housing recovery.

As such, more people are turning to renting. Nearly 34 percent of occupied homes in the fourth quarter were rentals, Census data shows.

“The share of Americans who are willing and able to own their own home is still falling,” analysts at Capital Economics told HousingWire. “The flipside is more households in the rented sector and fewer properties lacking tenants. This is helping to drive rents, and therefore landlords’ returns, higher.”

Source: “Home Ownership Rate Falls to 14-Year Low,” HousingWire (Jan. 31, 2012) and “Home Ownership Rate Falls to 66% as Downturn Nears a Bottom,” USA Today (Jan. 31, 2012)

In its December Housing Pulse Tracking Survey, the company found that investors accounted for one out of three real estate transactions last month, and about 74 percent of those purchases by investors were made using all cash.

“Investors have an over-sized command on the market since their ability to pay cash in the majority of transactions puts undue downward pressure on home prices,” an article at Housing Predictor notes about the study.

Cash buyers can be attractive to home sellers, banks, and mortgage companies, since they do not usually come with contingencies, require extra time to secure financing, and tend to move more quickly to closing. As such, cash buyers tend to make purchases at lower prices than those who may need financing or come with contingencies.

Source: “Cash Buyers Pushing Home Prices Lower,” Housing Predictor (Jan. 24, 2012)

Diggle’s analysis of the housing market showed a 33 percent drop in home prices, record-low mortgage rates (with 30-year fixed-rate mortgages available under 4 percent now), and a 15 percent rise in rents since the housing market turned sour are making more consumers take a closer look at buying.

“The median monthly mortgage payment of about $700 has fallen to about the level of a median monthly rent check,” an article at MSNBC.com notes about Diggle’s analysis. “If mortgage rates keep falling and rents keep rising, the equation will tip even further toward owning.”

Case in point: Diggle says that a buyer who purchases a median-priced home and stays there for at least seven years would likely come out ahead by about $9,000 than if they chose to rent for those seven years. Diggle’s calculations factor in rents continuing to rise 3 percent a year, and housing prices staying flat for the next two years before rising in 2014.

But while more Americans may be motivated to buy, many still can’t, Diggle notes. Home owners who lost their home to foreclosure may be forced to wait on the sidelines before owning again, other Americans may not have a 20 percent down payment that more lenders are wanting, lack a high credit score to qualify for the best financing, or have steady employment.

Source: “Home Buying Could Soon Beat Renting,” MSNBC.com (Jan. 23, 2012)

In following instructions from the Federal Housing Finance Agency, government-sponsored enterprises Freddie and Fannie Mae are both looking at how they can ease requirements to spur more refinances so more borrowers can take advantage of record-low mortgage rates.

Fannie Mae has removed a refinancing requirement that lenders must determine the borrower’s ability to repay — aimed at increasing refis and helping more underwater borrowers stay current on their mortgages.

HousingWire reports that about 4 million loans serviced by Fannie Mae and Freddie Mac are underwater, in which the borrower owes more on their loan then their home is currently worth.

Source: “Freddie Cuts Some Refi Credit Score Requirements,” HousingWire (Jan. 5, 2012)

The white paper, The U.S. Housing Market: Current Conditions and Policy Considerations, calls for increased lending to creditworthy home buyers and more loan modifications, mortgage refinancings, and short sales to reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry; an approach long recommended by NAR to help spur the housing market recovery.

“As the nation’s leading advocate for home ownership and housing issues, NAR knows that a strong housing market recovery is key to the nation’s future economic strength,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Improving access to affordable mortgage financing for qualified home buyers and investors and aggressively pursuing more loan modifications and short sales is necessary to help reenergize the housing market and spur an economic recovery.”

The pendulum on mortgage credit has swung too far following the housing downturn. According to the 2011 NAR Member Profile, 34 percent of REALTORS® reported that the most important factor in limiting their clients’ ability to buy a home was difficulty in obtaining a mortgage. While NAR supports responsible and strong underwriting standards, unnecessarily tight credit restrictions are keeping many qualified home buyers from purchasing homes, which could help absorb excess inventories of homes in foreclosure.

“Creditworthy consumers continue to have difficulties securing affordable financing despite their proven ability to afford the monthly payments,” said Veissi. “Expanding financing opportunities to qualified buyers could help reduce distressed property inventories, minimize the negative impact those homes have on local markets, and restore vibrant housing markets and neighborhoods.”

To prevent further foreclosure inventory increases, NAR also urges lenders to take more aggressive steps to modify loans and keep struggling families in their homes. Significantly reducing monthly mortgage payments will help more families remain current on their mortgage and allow them to remain in their home, reducing the impact of foreclosures on local home prices.

For home owners who are unable to meet their mortgage obligations, NAR has urged lenders and servicers to quickly approve reasonable short sale offers so these people can avoid foreclosure. The short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from the transaction.

“Loan modifications and short sales help stabilize home values and neighborhoods, and limit the losses incurred by lenders, the federal government and taxpayers, which is good for everyone,” said Veissi.

The Fed paper also addresses converting foreclosed properties into affordable rentals. NAR supports reducing the barriers that prevent owner-occupants and small investors from accessing financing, such as opening the Federal Housing Administration 203(k) program to investors. NAR also believes these efforts are best made by local entities that understand the challenges of the local community and will respond to renters’ needs.

In addition, NAR is concerned about proposed bulk sales of distressed properties and believes that every effort should be made to increase liquidity for consumers and small investors since bulk sales will likely result in greater losses for taxpayers and have a more negative impact on housing values.

Source: NAR

For the fifth consecutive week, 30-year fixed-rate mortgages have averaged below 4 percent, which was unheard of until a few months ago.

“Fixed mortgage rates started the year a little lower this week just as recent data reports indicate the housing market and manufacturing industry are showing signs of improvement,” Frank Nothaft, Freddie Mac’s chief economist, said in a statement. Pending home sales for existing-homes soared 7.3 percent in November — its strongest pace since April 2010, the National Association of REALTORS® recently reported. Construction spending also increased in November by 1.2 percent — all serving as positive signs that housing is on the rebound.

Here’s a closer look at rates for the week ending Jan. 5:
•30-year fixed-rate mortgages: averaged 3.91 percent, with an average 0.8 point, matching its previous record low that it set a few weeks ago. Last week, 30-year rates averaged 3.95 percent and a year ago at this time, 30-year rates averaged 4.77 percent.
•15-year fixed-rate mortgages: averaged 3.23 percent, with an average 0.8 point, dropping from last week’s 3.24 percent average. Last year at this time, 15-year mortgages averaged 4.13 percent.
•5-year adjustable-rate mortgages: averaged 2.86 percent, with an average 0.7 point, dropping from last week’s 2.88 percent average. Last year at this time, 5-year ARMs averaged 3.75 percent.
•1-year ARMs: averaged 2.80 percent this week, with an average 0.6 point, inching up slightly from last week’s 2.78 percent average. A year ago, 1-year ARMs averaged 3.24 percent.

Source: Freddie Mac

“Barring Europe imploding, we do generally expect the economy to continue to improve and the real estate market to continue to improve,” says Ryan Severino, senior economist at Reis Inc., a commercial real estate research firm in New York. “If someone is thinking about ramping up their [CRE] lending process, now would not be a bad time to do it.”

Umpqua Holdings recently reported that it is enhancing its CRE divisions in certain cities. Many of those cities have lost many local competitors when the real estate market collapsed, and survivors want to take advantage on a recovery.

“We think the markets are starting to, and will continue to, come back,” says John Swanson, who is leading Umpqua’s new commercial real estate division. “Now is the time to bring in some experienced CRE people. With the downturn and reduction in many CRE groups over the last two-to three-plus years, I’ve had an impressive list of candidates to choose from.”

Source: “More Banks Laying Groundwork for CRE Comeback,” American Banker (Dec. 22, 2011)