• Existing home sales in November fell far short of sales the previous month according to today's report from the National Association of Realtors® (NAR).  Sales in November were at a seasonally adjusted annual rate of 4.93 million units, the lowest since May's 4.91 million unit pace and a 6.1 percent decline from the previous month.  November sales were still 2.1 percent higher than a year earlier, the second consecutive month of year-over-year gains.

    October was a banner month for existing home sales with volume originally reported at an annual rate of 5.26 million units.  Despite the slight downward revision to 5.25 million reported today October remains the best month for sales since September 2013.

     

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  • RealtyTrac devotes the bulk of its most recent edition of HousingNewsReport, its monthly web magazine to detailing some real estate investment strategies.  The lead article by Octavio Nuiry, Managing Editor gives advice compiled from interviews with and articles by several successful investors.  However, even if the advice did come from Warren Buffet we can hardly get excited about such business models as buying distressed properties or finding undervalued ones. 

    However one useful theme did emerge from several of the investors featured in Nuiry's article, "Real Estate Investment Strategies for 2015."   The message was characterized by Tony Youngs, a Georgia investor as finding the "hidden market," one to which no one else is paying attention.

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  • Referring to its "roller-coaster pattern of economic growth," Fannie Mae summarized the economy and housing in 2014 as a year that started with a deep hole and ended with a whimper.  A brutally cold first quarter put economic growth in that deep hole at the beginning but it came back "with a vengeance" making the second quarter the strongest for growth in more than two years.  The third quarter saw growth flag again and it "is poised to weaken further, as some unsustainable forces that drove activity in the third quarter reverse in the final quarter."

    Fannie Mae's Macroeconomic Forecasting Team headed by Senior Vice President and Chief Economist Doug Duncan reprise 2014 in the December edition of its Economic and Strategic Research report.  They see the year overall as one in which economic growth comes in at what they call an unspectacularpace of 2.1 percent, 1 percentage point below the 2013 pace.  Next year however will be better, driven by improving private domestic demand, a better outlook for consumer income, rising consumer and business confidence, a broadening housing recovery and they expect full year 2015 growth of 2.7 percent.

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  • Fannie Mae's writers use the word "stable" repeatedly to describe many of the findings from its fourth quarter 2014 Mortgage Lender Sentiment Survey, especially where the senior executives completing the questionnaire detailed their operational expectations.

    The November survey found fewerlenders reporting tightened credit standards. Thirteen percent of respondents said their standards had tightened for GSE eligible loans compared to 28 percent in the first quarter of 2014.  More lenders reported their institutions had loosened standards for non-GSE-eligible loans than reported tightening them, the second consecutive quarter this pattern has prevailed.

     

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  • The person who perhaps made it possible for state and federal governments to collect billions from the Bank of America will apparently be amply compensated for his actions.  The New York Timesis reporting that Edward O'Donnell, a former employee at Countrywide Mortgage which was purchased by the bank in 2008, will receive a whistle-blower reward of more than $57 MILLION  for his role in an August civil settlement.

    Bank of America agreed to pay $16.65 billion in penalties to settle claims from federal prosecutors and several state attorneys general.  The bank was sued as successor in interest to Countrywide, one of the largest mortgage lenders in the country at the beginning of the century, has been repeated accused, along with its founder and CEO Angelo Mozilo of writing and selling shoddy mortgages...

     

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  • Mortgage applications were down modestlyduring the week ended December 12, with purchase applications accounting for the decline.  The Mortgage Bankers Association said its Market Composite Index, a measure of application volume, lost 3.3 percent on a seasonally adjusted basis from the week ended December 5 and was 4 percent lower on an unadjusted basis.

    The Refinance Index was unchangedfrom the previous week but the portion of all mortgage applications intended for refinancing rose from 64 percent to 66 percent.  This was the highest share of applications captured by refinancing since December 2014.

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  • All three of the U.S. Census Bureau/Department of Housing and Urban Development construction indicators dropped in November from their October levels and both residential building permits and housing starts were also lower than one year earlier.  The number of housing completions did manage to surpass the November 2013 level.

    Privately-owned housing units were permitted at a seasonally adjustedannual rate of 1,035,000 in November, a 5.2 percent decline from October.  The estimate of October permits was revised upward in this morning's report from 1,080,000 to 1,092,000.  The November number was down 0.2 percent from 1,037,000 units reported in November 2013.

     

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  • The BuildFax Remodeling Index for October indicates a slight slowdown in the number of building permits issued for the purpose of residential remodeling from the previous month.   The number of these permits, however were substantially increased compared to one year earlier. 

    Permits issued nationwide in October were at a seasonally adjusted annual rate of 3.993 million.  This is 4 percent below the revised September estimate of 4.141 million.  Permits were issued in October at a rate 10 percent above the 3.637 million in October 2013.

     

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  • Builder confidence as measured by the National Association of Home Builders (NAHB)/Wells Fargo Home Market Index (HMI) fell back slightlyin December after a four point uptick in November, and is ending the year just about where it began.  The HMI which is designed to indicate the home builder perceptions of the market for new single-family homes, was at 57 this month, down from 58 in November and one point higher than in January 2014.  The index has fluctuated from a low of 45 in May to 59 in September.

    NAHB Chairman Kevin Kelly said, "Members in many markets across the country have, seen their businesses improve over the course of the year, and we expect builders to remain confidentin 2015."

     

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  • Bank of America was hit this week with another civil penalty, this time for making what are termed excessive and harassing mortgage debt collection calls.  A federal court judge has ordered the bank to pay over $1 million to Nelson and Joyce Coniglio who received, according to court documents, over 700 robocalls over a four year period.

    The calls were made to every number the couple had, home and cell, and came at all hours of the day and night.  The automatic system left messages each time.  The bank also sent numerous letters threatening foreclosure.

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  • Amid the wrangling over the budget and the CIA report the Senate did manage to extend some extra foreclosure protections for military service members who have recently returned from active duty.  In a unanimous voice vote on Thursday the Senate passed S2404 which makes permanent a portion of the Servicemembers' Civil Relief Act (SCRA) which would have expired at the end of this month.

    The extensions, originally incorporated into the act in 2008, forbids banks from foreclosing on a member of the military for a period after that member returns from active duty as long as the subject mortgage was taken out prior to active duty.  The original period of nine months was lengthened to a full year in 2012 under a bill introduced by Senator Sheldon Whitehouse (D-RI).  It was that action that was set to expire at the end of this December returning the period of protection to the pre-2008 level of only 90 days.

     

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  • The Housing Finance Policy Center, part of the Urban Institute, has released a new measure of credit availability.  In an article in the Urban Institute's blog, Metro Blog,Wei Li and Laurie Goodman talk about the initial findings from their measure, the Credit Availability Index or HCAI, that product not borrower risk fueled the housing bubble. 

    We will return to those findings later, but first an explanation of how the Index is calculated and, more interestingly, how the authors compare it to others that attempt to measure credit accessibility; the Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices (SLO),  mortgage application denial     rates based on annual Home Mortgage Disclosure Act (HMDA) data; the Mortgage Credit Availability Index produced by the Mortgage Bankers Association (MBA), and median borrower's credit score at origination.  Li and Goodman claim these measures suffer variously from being too narrow, too subjective, limited in time, opaque, or inaccurate in certain situations.

     

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  • While overall foreclosure activity overall continued its now years-long decline from housing crisis peaks there was a significant year-over-year increase in foreclosure starts.  RealtyTrac says in its November U.S. Foreclosure Market Report that 55,906 properties started the foreclosure process during the month, a decrease of 1 percent from October but a 6 percent increase from a year ago.  This was the first such increase after 27 consecutive months of year-over-year declines.  

    RealtyTrac also said that the 2012 vintage of mortgages is not performing as well as some of its predecessors.  The company however did not link this to the recent increase in early stage defaults.

     

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  • Cash sales continued to decline in importance in September.  These sales, which represented close to half of all home sales when foreclosures and lender owned real estate (REO) were at their peak, have now fallen to just over a one -third share.

    CoreLogic said on Tuesday that 34.8 percentof home sales were all cashin September.  While this was up one percentage point from August, on a year-over-year basis these sales have declined for 21 consecutive months.  In September 2013 cash sales had a 37.2 percent share.  CoreLogic said that comparisons of these sales should be made on an annual basis because of the seasonal nature of the housing market.

     

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  • The week ended December 5 was another of those post-holiday periods when mortgage application data skews all over the place just as it did during the holiday week itself.  At the end most figures ended up essentially where they were before the festivities began. 

    The Mortgage Bankers Association (MBA) said that its Market Composite Index, a measure of mortgage application volume, increased by 7.3 percent on a seasonally adjusted basis, precisely offsetting the decline in the index the previous week which was shortened by the Thanksgiving holiday.  On an unadjusted basis the index rose 52 percent, more than overcoming its 37 percent plunge the week before.

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