74.6 percent of homes affordable to median-income households, trade group finds

Housing affordability hit a new high in the first quarter, surpassing the previous high set in fourth-quarter 2010, according to the National Association of Home Builders and Wells Fargo.

The Housing Opportunity Index found that 74.6 percent of new and existing homes sold in the first quarter were affordable to families earning the national median income of $64,400. That’s up from 73.9 percent in the fourth quarter of 2010, and it’s the highest level in the more than 20 years the index has been measured.

“With interest rates remaining at historically low levels, today’s report indicates that homeownership is within reach of more households than it has been for more than two decades,” Bob Nielsen, chairman of the National Association of Home Builders (NAHB), said after the index was issued last week.

“While this is good news for consumers, homebuyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.”

The Seattle metropolitan area also became more affordable with 67.5 percent of homes within reach of those earning the median income of $85,600. That number is the highest recorded since the index started in the first quarter of 1999.

Before 2009, the national index rarely topped 65 percent, the association said. Last quarter was the ninth straight quarter the index was above 70 percent.

Indiana, Ohio and Michigan dominated among the most affordable metro areas. Among metro areas with populations under 500,000, Kokomo, Ind., was the most affordable area, with 98.6 percent of homes affordable to households making a median income of $61,400. The median sales price in the area was $88,000 in the first quarter.

California dominated among the least affordable metro areas. San Luis Obispo-Paso Robles, Calif., was the least affordable among the smaller metro areas with 47.6 percent of homes affordable to households making the median income of $72,500. The median sales price in the area was $320,000 in the first quarter.

Among metro areas with populations of 500,000 or more, Syracuse, N.Y., was the most affordable to households making the median income of $64,300. The median sales price in the area was $80,000 in the first quarter.

Another New York market, New York-White Plains-Wayne, N.Y.-N.J, was the least affordable among both the larger metros.

Less than a quarter of homes, 24.1 percent, were affordable to families making the median income of $65,600 in the first quarter. The median sales price was $425,000.

In other cities in Washington state, Spokane was the most affordable with 82.2 percent of homes within reach of those earning the median income of $60,300. Olympia recorded 81.8 percent; Tacoma, 78.5 percent; Bremerton-Silverdale, 70.1 percent; Bellingham, 69.7 percent; and Mount Vernon-Anacortes, 60.5 percent.

Source: By Inman News

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BofA opens office for foreclosure alternatives

Bank of America announced Wednesday it had opened an office in Seattle to allow distressed homeowners whose mortgages it services to meet face to face with specialists and consider alternatives to foreclosure.

Meetings are by appointment only, available from 9 a.m. to 6 p.m. weekdays and 9 a.m. to 1 p.m. on Saturdays. Bank of America customers can call the office at (206) 358-4338 to make an appointment.

The bank is also holding outreach events from 9 a.m. to 6:30 p.m. May 19-21 at the Meydenbauer Convention Center in Bellevue and the Spokane Convention Center. To register, go to www.bankofamerica.com/outreachevent or call toll-free (855) 201-7426.

Property-tax deadline looms; need some help?

With the first installment of property taxes due May 2, Barbara Alsheikh has her work cut out for her.

“For many people, it is the first time they have really looked at the property-tax bill,” says Alsheikh, supervisor for the King County Tax Advisor Office.

“And before writing the check, they have questions about the value of their property, the levy rate and the amount due.”

The Tax Advisor Office is independent from the assessor and provides residents with advice and assistance, including appeals.

“We are, in effect, a one-stop shop for property questions,” she says.

The primary complaint this year, says Alsheikh, is that a drop in house values did not result in lower tax bills.

“It is a very tough year for many taxpayers,” she adds.

The property-tax bill is not based on real-estate markets at all. Like Ohio, Washington state operates under a “budget-based” property-tax system in which taxing districts, such as fire departments and library and school districts, submit their annual budgets to the assessor, who then determines the taxing rate necessary to meet the adopted budgets.

King County Assessor Lloyd Hara says several factors are at play.

“The most common is that voters approve a property-tax measure, typically a school levy, and that increases the overall property-tax levy that is reflected on the 2011 bill.”

Taxpayers in King County, on average, will pay about 3.33 percent more in property taxes this year, according to Treasury Operations Manager Scott Matheson.

Only 17 percent (or $624 million dollars) of property taxes support King County purposes, says Phillip Sit, Department of Assessments communication and outreach coordinator. The other 83 percent is divvied up among state and local government.

While taxpayers cannot appeal their property taxes, they have the right to appeal the valuation (assessment) of their property — the basis upon which their taxes are calculated — to the King County Board of Equalization, an independent board made up of citizens appointed by the King County executive. Generally, this must be done within 60 days from the time official property-value notices are received.

Alsheikh said her office typically handles about 800 calls in the first two weeks after billings are mailed in February.

Assessed value should not to be confused with market value, which is defined as the amount a buyer, willing but not obligated to buy, would pay to a seller, willing but not obligated to sell.

Assessed value is determined by actual sales and the real-estate market, rather than the current market, notes Alsheikh; assessed values use historical data, which lags behind real time by one or two years.

“Like any business, the budget for a public service tends to increase over time as employees’ wages and benefits, energy costs, transportation and facilities’ costs increase. In addition, voter-approved ballot issues tend to increase the taxes each year,” says Alsheikh.

Meanwhile, taxpayers who are unable to pay their property tax in full are encouraged to contact the Assessor’s Office. Additionally, seniors or disabled persons, may be able to qualify for a property-tax exemption or deferral program.

Alsheikh, for her part, won’t be slowing down anytime soon. She says her busiest season will begin in a month or two, when new official (property) value notices will be mailed out.

“We strive to put each taxpayer on “equal” footing with the assessor’s staff,” she says. “But we don’t take sides; we aren’t out to ‘beat’ the assessor. The goal for all three agencies [including the Office of the Assessor, the Treasury, and the Tax Advisor] is the same: fair and equitable distribution of property taxes.”

Of the 6,000 to 7,000 phone calls the office gets, Alsheikh said, perhaps 10 percent are asking for research and appeal advice.

At the end of last year, nearly 12,300 accounts, including households and undeveloped property for a business, hadn’t paid any taxes for 2010; and just below 12,750 accounts paid only the first half of their taxes owed for the same year according to Scott Matheson, Treasury Operations Manager for King County.

Together, those figures represent 3.7 percent of the 681,757 accounts that were billed last year. “Our historical collection rate,” notes Matheson, “has held steady at around 98 percent for the last several years, and we don’t expect to see a change this year.”

Source: By Elizabeth M. Economou, Seattle Times (4/22/2011)

Gov’t to Lenders: Pay Up for Foreclosure Errors

The nation’s largest banks reached a settlement with federal regulators, agreeing to compensate home owners who were wrongly foreclosed upon and to overhaul their operations.

The settlement also directed financial firms to hire auditors to determine if they improperly foreclosed on home owners in 2009 and 2010.

However, the settlement reached with federal regulators on Wednesday is hardly the end of punishment and investigation into banks’ shoddy lending practices and wrongful foreclosures, officials say. Officials warn fines will be determined later for the lenders and banking companies, which include Bank of America, Wells Fargo, JPMorgan Chase, and Citigroup.

Wednesday’s settlement with banks was reached with three federal banking regulators: the Office of the Comptroller of the Currency, the Federal Reserve, and the Office of Thrift Supervision.

Banks still face settlement talks — which are believed to be even more stringent — with the 50 state attorneys general, the Treasury and Justice departments, the Federal Trade Commission, and the newly created Consumer Financial Protection Bureau. This group has called for tougher measures, including detailed document procedures and even guidelines for modifying loans that include reducing the mortgage principal of struggling borrowers.

Banks continue to face investigations and punishments from abusive lending practices that plagued the industry, including probes that have revealed banks approved foreclosure paperwork without proper reviews, court filings that weren’t properly notarized, mortgage documents that weren’t transferred properly, and having inadequate staff to handle the foreclosure process.

Source: “14 Lenders and 2 Servicers to Reimburse Home Owners who Were Incorrectly Foreclosed Upon,” Associated Press (April 13, 2011) and “Mortgage Lenders Settle but Still Face Probe,” MSNBC.com (April 13, 2011)

Foreclosure Activity Drops to 3-Year Lows

New data released from RealtyTrac on Thursday show the foreclosure crisis is easing: Foreclosure notices filed during the first three months of 2011 dropped 27 percent compared with the first quarter of 2010. More than 681,000 homes received a foreclosure filing during the first quarter of 2011.

And while 215,046 borrowers lost their homes, that marks a 17 percent decrease year-over-year.

However, while the improvement may be encouraging, experts warn that the decrease in foreclosure activity is likely temporary.

“The nation’s housing market continued to languish in the first quarter, even as foreclosure activity fell to a three-year low,” says James Saccacio, RealtyTrac’s CEO. “Weak demand, declining home prices, and the lack of credit availability are weighing heavily on the market, which is still facing the dual threat of a looming shadow inventory of distressed properties and the probability that foreclosure activity will begin to increase again as lenders and servicers gradually work their way through the backlog of thousands of foreclosures that have been delayed due to improperly processed paperwork.”

Following this fall’s “robo-signing” scandal, in which banks were accused of processing foreclosures without proper reviews, banks have slowed their pace of foreclosures until they clean up their paperwork procedures, experts say. Otherwise, the number of foreclosures would be much higher for the quarter, says RealtyTrac spokesman Rick Sharga.

Meanwhile, Nevada continues to post the highest rate of foreclosure activity, followed by Arizona and California. Nevada alone had 32,000 properties, or one in every 35, receiving a foreclosure filing.

Source: “Foreclosures Off 30% This Year,” CNNMoney.com (April 14, 2011) and “Processing Delays Cut Foreclosure Activity by 27% in 1Q 2011: RealtyTrac,” HousingWire (April 14, 2011)

Homeowners facing foreclosure about to win right to mediation

More homeowners in Washington state could get help avoiding unnecessary foreclosures under a bill awaiting Gov. Chris Gregoire’s signature.

The bill, the “Foreclosure Fairness Act,” would give distressed homeowners working with housing counselors or attorneys the right to in-person mediation with the bank or company servicing their mortgage. Consumer advocates expect Gregoire to sign the bill Thursday.

Washington, among the 27 states where court approval of foreclosures isn’t required, would become only the third state — after Nevada and Maryland — to adopt a foreclosure-mediation program in which a homeowner can seek to modify terms of their loan.

“There’s no silver bullet, but this will at least be a competent response to the irresponsibility of the financial industry,” said Bruce Neas, a Columbia Legal Services attorney who helped negotiate the bill.

State regulators, who receive hundreds of complaints each year against national mortgage servicers, have been stymied by federal rules that limit their power to intervene.

The only recourse for homeowners has been going to court, where they’re usually outmatched by servicers.

Also Wednesday, federal regulators announced they had ordered eight national banks — Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank and Wells Fargo — to hire an outside firm to review all foreclosure actions from 2009 to 2010 and submit a plan to remedy “all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies” identified by outside consultants.

The move by state lawmakers to require mediation comes as the foreclosure crisis in Washington continues. In the first three months of the year, more than 5,600 homes were seized and more than 7,000 were headed to foreclosure auction, according to RealtyTrac.

The bill before Gregoire also would provide an estimated $7.5 million for foreclosure-prevention efforts and more than double the number of housing counselors. Washington has just over 40.

“The real hope is that by adding the counselors, the banks and families would reach some kind of agreement before going to mediation,” said Kim Herman, executive director of the Washington State Housing Finance Commission.

Under the proposed law, once a homeowner becomes delinquent, the servicer must send a letter asking the owner to contact the server and urging the person to call a housing counselor or attorney for help.

Homeowners who respond to the letter would be given 60 more days before the servicer could file a notice of default.

If the counselor or attorney couldn’t resolve the issue with the servicer, they could refer the homeowner to a mediator through the state Department of Commerce.

The Commerce Department selects the mediator, who must hold a session within 45 days. The homeowner and servicer share in the cost of the mediator’s fee, which can be up to $400.

If the mediator finds the servicer didn’t participate in good faith, a homeowner can use that to ask a court to stop the foreclosure. The state Attorney General’s Office also could pursue penalties against servicers.

When lawmakers opened negotiations on the bill, consumer advocates were surprised by the bankers’ first move.

Without prompting, the Washington Bankers Association offered to pay a $250 fee for every default notice filed, with the stipulation that 80 percent of the money pay for housing counselors.

“It did surprise people,” Herman said.

The association, which represents national and community banks, suggested the fee because it wants more delinquent homeowners to work with housing counselors, said James Pishue, the group’s president.

National studies show that homeowners who work with trained housing counselors have much higher success rates in reaching an agreement with their servicer.

“We thought that would prevent the need for mediation,” Pishue said. “Ultimately it results in fewer foreclosures.”

Marc Cote, a housing counselor who oversees the state’s foreclosure-prevention hotline, said he’s pleased with the measure.

“The main thing I’m hopeful for is that the mediation piece will inspire servicers to resolve the hundreds, in my experience, of [loan] workouts that are still not resolved after months and months.”

Source: Sanjay Bhatt, Seattle Times (April 13th, 2011)

Northwest MLS brokers report 51% jump in pending sales

Home sales around Washington state surged last month, with brokers reporting activity at levels “like we haven‟t seen in a while,” according to the owner of a Seattle brokerage. Northwest Multiple Listing Service members reported 8,605 pending sales during March for a 51 percent increase over the same month a year ago.

Notably, while entry-level home sales have been driving the market, brokers also reported strong activity at the upper end of the price spectrum. Last month, 91 residences (76 of them in King County) sold for $1 million or more; twelve months ago only 40 homes and condos fetched $1 million or more.

Pending sales (offers made and accepted, but not yet closed) in the four-county Puget Sound region rose 60 percent from twelve months ago, led by Snohomish County where the number of transactions jumped more than 77 percent.

NWMLS director Diedre Haines, regional managing broker for Coldwell Banker Bain in Snohomish County, said her network of three offices broke a nine-year old record for the most transactions in a single month. She attributes the gains to several factors, including tax incentives and the return of jumbo loan financing, but also noted an uptick in activity for parcels of land.

“We are once again representing buyers in the purchase of both raw undeveloped land and platted lots,” Haines remarked, adding, “This is the first time we have seen land purchases in over two years.” Of the buyers, she said some intend to start building now and others are buying for investment.

 MLS brokers also reported year-over-year increases in the number of new listings added to inventory and in the volume of closed sales. Members added 12,994 new listings to the system last month, up 26.7 percent from the year-ago total of 10,252 new listings.

Last month‟s new listings included 11,041 single family homes and 1,953 condominiums. Those additions brought the total inventory to 38,716. That compares to 39,825 total active listings at the same time a year ago, a decrease of about 2.8 percent.

Closed sales outpaced year-ago totals by a wide margin. Members reported 4,972 completed transactions during March, a gain of 1,590 sales for a 47 percent increase.

Prices for last month‟s closed sales of single family homes and condominiums (combined) were down about 2 percent system wide. Since January, however, prices have inched up almost 1.8 percent.

Within King County, price changes from a year ago ranged from double-digit increases for homes on Mercer Island (up 26.9 percent), Central Seattle (up 14.9 percent), and Vashon (up 10 percent), to double- digit declines in some parts of South King County.

“Homes that are positioned well – at every price range – are selling quickly,” commented NWMLS director Pat Grimm, the owner/designated broker at Windermere Real Estate/Capitol Hill, Inc. in Seattle. Among examples he cited was a Medina home that sold for its $2.35 million asking price in seven days. It drew three quick offers with escalation clauses. At the lower end of the price spectrum was a 2-bedroom Capitol Hill condo listed at $230,000. It also received multiple offers and sold for full price in three days.

Some buyers have to make offers on multiple properties before they win, but they‟re still reticent about paying more than the list price, according to Grimm. He noted buyers are not waiving inspections, but said some bidders are doing pre-offer inspections.

“Sales activity is at a high level like we haven‟t seen in a while, but still not the frenzy we saw a few years ago,” Grimm remarked, adding, “And that‟s a good thing.”

Condo sales across the 21 counties in the MLS system showed significant improvement from a year ago. MLS members reported 1,199 pending sales last month, which compares to 645 sales for the same month a year ago for an increase of almost 86 percent.

Condo prices still lag year-ago figures. The median price for last month‟s completed sales was $225,000, down about 7 percent from the year ago figure of $242,000. Within Seattle, however, prices are up. The median price for last month‟s completed sales of condos in Seattle was $291,000, an increase of 5.8 percent from a year ago when the median sales price was $275,000.

“The Seattle surge has returned thanks to the opportunities that have been afforded to homeowners through the federal tax credit, historically low interest rates, and increased affordability,” observed J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “As predicted, there is a surge of sales activity in the „more affordable‟ price ranges which is causing a chain reaction of sales up the price points,” he reported. Scott said he expects the momentum to continue in the coming weeks as the April 30 expiration of the tax credit approaches.

Source: NWMLS (04/05/2010)