Zillow to show homes in foreclosure, before they are listed

October 25, 2012 By 2 Comments

Company expects some criticism for putting personal data at consumers’ fingertips

ForeclosureA Cook COunty sheriff’s deputy puts a foreclosure notice on the door of a Chicago home. (Nancy Stone/Chicago Tribune photo / October 24, 2012)
By Mary Ellen PodmolikTribune staff reporter8:12 a.m. CDT, October 25, 2012

Zillow will display detailed information on approximately 1.5 million homes that are in foreclosure but are not yet for sale, in a bid to position itself as the go-to web site for homebuyers.All of the data that Zillow is making available is public information but until now, accessing it typically required buying a subscription to a website or a trip to county courthouses, digging through individual case records. By putting such personal data at consumers’ fingertips, the Seattle-based realty website acknowledges it may face criticism regarding privacy concerns.However, the Seattle-based company views its latest site enhancement, which went live late Wednesday night, similarly to when it shook up the real estate market in 2006 by debuting a site that listing individual home values, called ‘Zestimates,’ of for-sale and not-for-sale homes. The site today has information on more than 110 million properties. Back in 2006, the stated goal was to make potential homebuyers more market-savvy shoppers. It doesn’t see the addition of foreclosure data any differently.”It’s all part of the public record and what the buyer chooses to do with information is up to them and their real estate agent,” said Amy Bohutinsky, Zillow’s chief marketing officer. “Ultimately, what we’re trying to do is help buyers get a better picture.”

Anyone who logs in with a free account will have access to the information, which will also include completed foreclosures that have not been listed for sale.

The homes listed in ‘pre-market’ inventory will be properties where a foreclosure has been filed against the borrower but the action is not resolved. Among the details available for each property will be the address, the date and amount of the original mortgage, the unpaid balance and the dollar amount past due. It also will show the party that initiated the foreclosure action, an estimate of what the foreclosure sales price might be, based on the sales prices of nearby foreclosures, and details of where it is in the process. If the home was previously listed on Zillow as a for-sale home, that picture will be used. Otherwise, there will be a satellite view of the neighborhood.

The borrower’s names will not be listed.

When the additional information was added to the site late Wednesday night, it included 11,000 pre-market single-family homes and condominiums just within the city of Chicago.

Home shoppers have a need for the extra information, according to Bohutinsky, because the dearth of available homes listed for sale is constraining the housing market at a time when there are indications that the market has bottomed nationally and mortgage rates remain well under 4 percent for a 30-year, fixed-rate loan.

“What buyers can learn from this is what homes might be listed for sale soon, or they can actually try and buy the home out of the foreclosure process by making an offer to the owner or the bank,” she said. “It opens up a whole new category of inventory to people that they didn’t know existed.”

That so-called shadow inventory has been on the mind of real estate agents for years, as they waited for properties in foreclosure to make their way through the process and return to the market for resale. Foreclosure proceedings first slowed because of the volume of cases and more recently because of various state and federal investigations into how banks handled the cases. With many of those probes behind the mortgage lending industry, lenders are again seeking to push foreclosure cases through the system.

Still, according to RealtyTrac, it takes an average of almost two years to foreclose on a home in the Chicago area, so a property listed in Zillow’s pre-market inventory could be there a while before it’s officially listed for sale. On Thursday, RealtyTrac reported that foreclosure activity in the Chicago area rose 34 percent from 2011′s third quarter. During the past three months, notices of default, the first step in the foreclosure process were filed against 18,923 homes locally.

As information on those properties is entered in court databases, it would be added to Zillow’s site, which will be updated daily.

The company calls the addition of pre-market inventory a step forward in ‘consumer empowerment.”  Housing advocacy groups and counselors aren’t so sure.

“While, generally speaking, we support disclosure of public data, there is a big leap from the general case to a specific one,” said Katie Buitrago, a senior policy associate at Woodstock Institute, a Chicago-based research and public policy group. “It’s important to look at Zillow’s methodology, data coverage, and compliance with privacy laws before coming to any conclusions. Given that it’s not Zillow’s goal to help observers understand foreclosure trends but to facilitate real estate transactions, I would be concerned that they are not providing sufficient context for the general public to put foreclosure trends into perspective

Debra Olson, executive director of the DuPage Homeownership Center, worries that the easy access to personal data on homeowners’ financial problems not only makes them more likely to receive low-ball offers on homes but may also make them a target for mortgage-related scams.

“Many of the families that come in here that are in pre-foreclosure are able to get it turned around, either through the Illinois Hardest Hit program or through mortgage modifications or other means,” Olson said. “I understand that the information is already available through public court records but it takes some real digging. This just seems much too easy for predators.”

mepodmolik@tribune.com
Twitter @mepodmolik

 

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New home sales jump to near 2-1/2 year high in September

October 24, 2012 By Leave a Comment

New housing construction is seen in Poolesville, Maryland, October 23, 2012. New U.S. single-family home sales surged in September to their highest level in nearly 2-1-2 years, further evidence the housing market recovery is gaining steam. REUTERS-Gary Cameron
New housing construction is seen in Darnestown, Maryland, October 23, 2012. New U.S. single-family home sales surged in September to their highest level in nearly 2-1-2 years, further evidence the housing market recovery is gaining steam. REUTERS-Gary Cameron

WASHINGTON | Wed Oct 24, 2012 10:50am EDT

(Reuters) – New single-family home sales surged in September to their highest level in nearly 2-1/2 years, further evidence the housing market recovery is gaining steam.

The Commerce Department said on Wednesday sales increased 5.7 percent to a seasonally adjusted 389,000-unit annual rate – the highest level since April 2010, when sales were boosted by a tax credit for first-time homebuyers.

Though August’s sales pace was revised down to a 368,000-unit pace from the previously reported 373,000 units, the tenor of the report was relatively strong, with the median home price of a new home rising 11.7 percent from a year ago.

Economists polled by Reuters had forecast sales rising to a 385,000-unit rate last month.

While the increase in sales last month added to signs of a broadening housing market recovery, new home sales are just over a quarter of their peak in July 2005. Compared to September last year, new home sales were up 27.1 percent.

The housing market is on the mend after collapsing in 2006 and dragging the economy through its worst recession since the Great Depression. Home sales are increasing, pushing down the stock of unsold properties, giving a modest lift to house prices and builders’ confidence to take on new projects.

However, the housing market recovery lacks the muscle to take the baton from manufacturing as the main driver of the economic recovery.

The recovery in the sector is being supported by record-low mortgage rates, which have been held down by the Federal Reserve’s ultra-accommodative monetary policy stance.

The U.S. central bank has targeted housing as a channel to boost growth, announcing last month that it would buy $40 billion in mortgage-backed securities per month until the outlook for employment improved significantly.

Though the inventory of new homes on the market rose 1.4 percent in September, it remained near record lows.

At September’s sales pace it would take 4.5 months to clear the houses on the market, the lowest since October 2005, down from 4.7 months in August.

Sales last month were up in three of the four regions. They tumbled 37.3 percent in the Midwest.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

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Will The Real Credit Score Please Stand Up?

October 4, 2012 By Leave a Comment
by Broderick Perkins

The credit score you buy may not be the credit score your lender uses when you apply for credit and, fortunately, most of the time it doesn’t matter.

However, for what the Consumer Financial Protection Bureau (CFPB) considers a “substantial minority,” the difference could make or break a mortgage application or application for other credit.

In from 1 percent to 24 percent of the time, the difference between consumer-purchased and creditor-purchased credit scores could toss consumers into one, two or more different credit-quality categories.

Which way the score goes, better or worse, often isn’t clear.

The CFPB’s new ”Analysis of Differences between Consumer- and Creditor-Purchased Credit Scores”is a follow up to CFPB’s report earlier this year, ”The Impact of Differences Between Consumer- and Creditor-Purchased Credit Scores,” which revealed the different sources and types of credit scores and potential for harm associated with the differences.

The new report attempts to quantify the impact of those differences and says consumers do not know ahead of time whether the scores they purchase will closely track, vary moderately or vary significantly from a score sold to creditors.

What’s a credit score?

Credit scores are a numerical representation of your credit report. The lower the score, the worse your credit and the greater your risk for default on credit. Conversely, the higher the score, the lower your risk. How you handle your credit raises or lowers your score.

Lenders widely use credit scores to make a decision about your application for most types of credit, including mortgages, auto loans, credit cards, personal loans and others. Credit scores are also used to make decisions about insurance, rental applications, even jobs.

Scores also determine if your creditor will raise or lower your credit limits, change your interest rate or cut you off from existing credit. High credit scores will also get you the best credit rates and terms, while low scores will make you pay more for credit — if you can get it.

By federal law, credit scores are free under certain circumstances, typically after the fact, say, because a lender rejected your application.

Otherwise you pay $10 to $20 for the privilege of buying your score, often from companies that attempt to sell you other questionable services bundled with your credit score purchase.

Purchased credit scores aren’t gospel

CFPB’s new report advises consumers not to rely upon purchased credit scores as a guide to how creditors will actually view their credit quality.

Because credit scores can vary from the scores actually used to approve or decline credit, consumers have no way of knowing if the purchased scores are the same, higher or lower than those used by creditors.

• If a purchased score leads the consumer to overestimate lenders’ likely assessment of his or her creditworthiness, the consumer might be likely to apply for credit lines that would not be approved, with a cost of wasted time and effort on both the consumer’s and lender’s part.

• A consumer who underestimates a lender’s likely assessment of his or her creditworthiness, might fail to or delay applying for credit to buy a house or a refinance.

A consumer might also apply to lenders who offer less favorable terms than the borrower is qualified for or accept a less favorable offer than necessary.

The study also admonishes and advises firms selling scores to consumers to disclose to consumers those credit score differences and the potential impact from those differences.

Given the CFPB’s new oversight on consumer financial matters, including the operations of consumer credit reporting agencies, regulations to mandate such disclosures are likely.

The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Consumer Financial Protection Bureau (CFPB) to compare credit scores sold to creditors and those sold to consumers by nationwide credit reporting agencies to look at the differences.

CFPB analyzed credit scores from 200,000 credit files from each of the three major nationwide CRAs: TransUnion, Equifax, and Experian.

CFPB found:

• Different scoring models would place consumers in the same credit-quality category 73 to 80 percent of the time.

That is, if a consumer had a good score from one scoring model, the consumer likely had a good score on another model.

• Different scoring models would place consumers in credit-quality categories that are off by one category 19 to 24 percent of the time.

• Different scoring models would place consumers in credit-quality categories that are off by two or more categories from 1 to 3 percent of the time.

Published: October 4, 2012

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How to choose your next neighborhood wisely

October 2, 2012 By 1 Comment

Mood of the Market

BY TARA-NICHOLLE NELSON, MONDAY, OCTOBER 1, 2012.

Inman News®

<a href="http://www.shutterstock.com/pic.mhtml?id=92728492" target="_blank">Neighborhood</a> image via Shutterstock.Neighborhood image via Shutterstock.

If you plan to buy your next home in your current town, you probably think you already know precisely what neighborhood(s) you’d entertain.

You might have driven around and spotted a street you’d love to call your own, or maybe you’ve always heard rave reviews of the schools, shops and other quintessential elements of a particular part of town. But there are numerous Internet resources that can surface gems you might not know about.

And, needless to say, if you’re relocating to a new area entirely, these same sites can make the daunting challenge of narrowing your house hunt down to the just-right city and neighborhood much less overwhelming — and much more likely to result in success.

Here are a handful of the online neighborhood-finding resources that I believe are vastly underutilized by house hunters:

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1. NabeWise. NabeWise is where you go to get a real taste for a neighborhood’s flavor, online. This is where you find out where the hipsters, families, pet lovers or musicians live in your target town. It’s also where you can get a feel for whether the neighborhood tends more toward dive bars or farmers markets, and whether residents who’ve rated it were more inclined to call it gritty or peaceful; these are actual neighborhood reputation label options that the site offers and that visitors freely use.

Beyond the helpful and, in my experience, accurate neighborhood “flavor” ratings and many photos of the most popular neighborhoods in the couple of dozen cities it covers, NabeWise also offers uber-helpful, insight-rich blog posts from neighborhood residents, and surfaces nearby neighborhoods for those who think the location of a particular neighborhood is perfect, but not the noise level

2. Nextdoor. The age-old measure of friendly neighbors was how amenable they might be to a request to borrow a cup of sugar. Then, it was all about whether an area had its own Neighborhood Watch, then whether it throws a block party for National Night Out. Increasingly, though, the measure of a connected neighborhood is its social infrastructure online: Email lists and Facebook groups can be a good sign, but are often tough to find unless a home’s seller or the neighbors simply tell you they exist.

Nextdoor is a site where nothing but neighborhood social networks live and operate in one user-friendly place. It’s relatively new, so chances are good that your target neighborhood might not be there (yet), but if you do happen to see that the neighborhood of your dreams has a Nextdoor network, that’s a very good sign.

3. Walk Score. If you’re looking for a neighborhood with high “walkability” (as defined by WalkScore.com to encompass everything from ample amenities for everyone from bus riders to walkers to bicyclists, to shopping areas where the storefronts are very near to the sidewalks), this is the authoritative resource.

Walk Score actually assigns cities, neighborhoods, streets and individual addresses a numerical Walk Score rating that is exceedingly useful in helping buyers compare homes and neighborhoods on walkability; helping relocators start to get a feel for the daily lifestyle they would experience in various parts of the same town; and even helping sellers communicate their home’s walkability in a meaningful way to buyers.

4. StreetAdvisor. StreetAdvisor is like Yelp for neighborhoods: You type in a city price range or “personality” factor, and it gives you the local neighborhoods that have rated the highest on these elements, along with oodles of reviews of that part of town by the locals who live there. It also has a handy Q-and-A feature, where neighborhood residents-to-be ask very detailed questions, and those who live there readily reply, and a leaderboard that lives on the home page, showing which neighborhoods’ rankings have been moving up or down, of late.

5. Trulia Local. Trulia Local offers all sorts of beautiful, easy-to-use, data-driven interactive maps for homebuyers considering a property in a given neighborhood.

Type in a given city, and you’ll be given color-coded heat maps that allow you to surface, in a single click, everything from the rate of violent-to-non-violent crimes across town and in specific, zoomed-in neighborhoods, to grocery stores, restaurants, banks and post offices and even the actual homes listed for sale overlaid on this same map with little price tags, so you can see at a glance how prices are different in different parts of town.

And this map also has a feature I’ve never seen anywhere else: a commute-time map. You can use a simple slider to give the map your maximum desired commute time, and the map adjusts in color and scope to show you what areas you can reach from a given address on the map within that commute time frame. As you move your map to various spots, the map gives you even more precise time frames for how long it would take to get to your mouse from the “from” address.

6. National Clandestine Laboratory Locator. The title of this site sounds almost intriguing, with its hint of James Bond-style mystery. But the subject matter is super-serious: The federal Drug Enforcement Agency operates this database of homes that have been used to operate drug laboratories — mostly for the manufacture of methamphetamines.

A number of homebuyers have been hit with the horror of buying a bargain-priced home from an estate or bank, only to realize after moving in and after suffering medical symptoms that their home was once a drug lab and is completely contaminated with costly-to-eradicate chemicals.

Many times, these homes are sweet-looking, older homes that had been left vacant by an elderly owner’s illness or had been longtime rentals. This is more a neighborhood- and property-specific vetting tool than one you would use to find a neighborhood in the first place, but you’d be remiss not to click the link for your state and search for the name of your prospective street(s) before you buy a home.

Similarly, many states offer their own meth lab property database(s), and some third-party real estate disclosure providers will even search these databases for a homebuyer.

Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.” Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

 

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Home prices rebound

September 25, 2012 By Leave a Comment

By Chris Isidore @CNNMoney September 25, 2012: 10:11 AM ET

Home prices are back to 2003 levels in the latest sign of an improved housing market.

NEW YORK (CNNMoney) — In another sign of a turnaround in the long-battered real estate market, average home prices rebounded in July to the same level as they were nine years ago.

According to the closely watched S&P/Case-Shiller national home price index, which covers more than 80% of the housing market in the United States, the typical home price in July rose 1.6% compared to the previous month.

It marked the third straight month that prices in all 20 major markets followed by the index improved, and it would have been the fourth straight month of improvement across the full spectrum if not for a slight decline in Detroit in April.

The index was up 1.2% compared to a year earlier, an improvement from the year-over-year change reported for June. While home prices have been showing a sequential change in recent months, it wasn’t until June that prices were higher than a year earlier.

The July reading matched levels last seen in summer 2003, when the market was marching toward its peak in 2006. The collapse of the market after that led to the financial crisis of 2008.

“The news on home prices in this report confirm recent good news about housing,” said David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. “Single-family housing starts are well ahead of last year’s pace, existing home sales are up, the inventory of homes for sale is down and foreclosure activity is slowing.”

Record low mortgage rates and a tighter supply of homes available for sale have helped to lift home prices. Lower unemployment also has helped with home prices, although job growth in recent months has been slower than hoped.

Earlier this month, the Federal Reserve announced it would buy $40 billion in mortgage bonds a month for the foreseeable future. This third round of asset purchases by the central bank, popularly known as QE3, is its effort to jump start the economy through even lower home loan rates.

Related: Best home deals in Best Places

Mike Larson, real estate analyst with Weiss Research, said part of the improvement in the housing market is due to investors using the low mortgage rates to buy up homes that are in foreclosure and renting them in a strong rental market.

But he said that he doesn’t think there’s much chance of housing prices forming any kind of new bubble in the foreseeable future.

“Clearly the worst is behind us for this market., but this is not a market that is going to take off again,” he said. “While you have a firming up, you still have tight lending standards and people who have been burned are reluctant or unable to get back in the market.” He predicts it will take several more years before housing prices can gain more than 1% to 2% a year.

Related: Buy or rent? 10 major cities

But that is good news for a housing market that was plagued by plunging home values and high foreclosure rates for much of the last six years. And the good news has the potential to build on itself, said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.

“Housing remains a rare bright spot in an economy that is otherwise muddling through,” he wrote in a note to clients Tuesday. “The price trend for housing is significant, because it provides economic stimulus via stronger household balance sheets.”

Correction: An earlier version of this article incorrectly reported that home prices had reached a 9-year high. In fact, they rebounded to the level last seen in summer 2003, before their peak several years later. To top of page

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Can You Afford to Buy a Second Home?

September 19, 2012 By Leave a Comment

By Jeff Brown
With more and more signs that the housing market is inching off the bottom, homeowners with good credit and lots of resourcesare once again asking the question: Can I afford a second home?There’s something irresistible about the dream of a vacation place at the beach, lake or in the mountains. Summer vacations, the clan gathering for holidays, a place to pass down through the generations… It’s the American Dream, Act II.

The problem, of course, is coming up with the money. If you don’t have a trunk full of cash, the next easiest option is to borrow against your primary residence, thus avoiding the complex issues raised by a loan application specifically to buy a second home. But to borrow against your main home, it must be worth substantially more than you owe on a mortgage or home equity loan.

To take out a new loan to buy a second home you will have to convince the lender you are an especially good risk. That’s because lenders know that people are more likely to default on payments for a second home than a primary residence, or to skimp on maintenance or fall behind on property taxes or insurance.

So the first issue is your debt-to-income ratio, figured by dividing your total monthly debt payments for everything — existing mortgage, the new mortgage, car and credit card payments, and so on — by your gross monthly income. If the figure is less than 36 percent, you have a fair shot at a loan, if your payment history and credit rating are good. Some lenders will approve applicants with higher ratios; you’ll have to shop around.

Also expect lenders to demand a down payment of at least 20 percent, possibly twice that much, or even more. A large down payment reduces the loan-to-value ratio, figured by dividing the loan amount by the property’s current value, estimated by an appraiser approved by the lender. The smaller the loan relative to the value, the more likely the lender would recover what it is owed if you default and the lender must foreclose and sell the property.

You’re also likely to pay a higher interest rate on a mortgage for a second home — again, to offset the greater risk to the lender.

Discouraged yet? Don’t be. After all, even if lenders are more conservative these days, they make money only if they approve loans.

To make all this easier, try this calculator from The Mortgage Professor website. In the Occupancy Type window click Second Home. Note that in the Monthly Debt Payments window you should include your current mortgage payment if you will add a new mortgage for the second home.

Also play with this calculator from SmartMoney.

Before going too far down the road, check with some lenders for down payment requirementsand interest rates on second-home loans. Until then, experiment with down payments of 20 percent, 30 percent and 40 percent, and add 0.5 to 1 percentage points to the mortgage rates from the Bankingmyway.com survey.

For a sense of how lenders approach second-home applications, look at this site from Wells Fargo. It shows, for example, that it is difficult to get potential rental income included in the loan qualification calculation, a key consideration if you plan to rent out your second home part of the time.

Even if a lender will approve your loan, think about how comfortable you would be with this new financial obligation. You’ll need a healthy financial cushion for unexpected repairs and upkeep, a drop in your pay, a shortfall in rental income or a jump in taxes or insurance fees.

Finally, give your dream a reality check. Many people find, for example, that they lose interest in vacationing at the same place all the time. And a second home can someday become a bone of contention among the buyer’s children or grandchildren.

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U.S. existing home sales rise in August, prices up from year ago

September 19, 2012 By Leave a Comment

WASHINGTON, Sept 19 | Wed Sep 19, 2012 9:59am EDT

(Reuters) – The pace of U.S. home resales rose in August to its fastest in over two years and the price for sold homes climbed from a year earlier, hopeful signs that a budding housing market recovery is gaining traction.

The National Association of Realtors said on Wednesday that existing home sales increased 7.8 percent last month to an annual rate of 4.82 million units last month.

That was the fastest annual rate since May 2010 and well above analysts’ expectations of a 4.55 million-unit rate.

Nationwide, the median price for a home resale rose to $187,400 in August, up 9.5 percent from a year earlier as fewer people sold their homes under distressed conditions.

The nation’s inventory of homes – those for sale on the market – rose 2.9 percent during the month to 2.47 million.

“The housing market recovery is becoming much more convincing,” said NAR economist Lawrence Yun.

The price increase is measured against August 2011, and since then distressed sales have fallen to 22 percent of total sales from 31 percent. Distressed sales also fell in August of this year compared to the prior month.

While the broader U.S. economy appears to be losing steam, housing has gained traction and has become a relative bright spot

 

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Pasadena Market Report (May 2011 – May 2012)

June 22, 2012 By Leave a Comment

Pasadena Market Report (May 2012)

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Arcadia Market Report (May 2011 – May 2012)

June 20, 2012 By Leave a Comment

Arcadia Market Report (May 2012)

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