Fannie Mae to investigate abandoned horse [The Press-Enterprise, Riverside …


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By Peter Surowski, The Press-Enterprise, Riverside, Calif.

McClatchy-Tribune Information Services

July 25–An investigation is under way into who may have made a mistake that resulted in a blind horse being left in unhealthy conditions on a foreclosed property.

The Federal National Mortgage Association, commonly called Fannie Mae, is investigating whether the company neglected the horse, or whether the former owners did.

Beatriz Andert, a 19-year-old who lives near the vacant home in the 18000 block of Wood Lane in the unincorporated area near Perris, rescued the horse with the help of her father, Michael, in March.

A couple bought the home in 1989, and they signed the deed over to Fannie Mae on Oct. 14, 2011, according to Riverside County assessor’s records.

The owners then abandoned the horse, according to Andrew Wilson, a spokesman for Fannie Mae.

“Let’s be clear who left the animal here,” he said. “The owners.”

Fannie Mae requires its associates to call animal services when they discover an animal living on the property, and this rule was followed, he said.

“The notes on the property we have indicate the broker called animal control,” he said. This accords with the association’s guidelines, he said.

“(The Fannie Mae managers dealing with the property) are supposed to call animal control as quickly as possible,” Wilson said.

That manager made that call on Jan. 23 or 24, according to John Welsh, a spokesman for Riverside County Animal Services.

“When our officer arrived at the property, he met up with an employee of the bank, and he saw a white boxer and a blind horse,” Welsh said. “Both animals had water. He fed the dog and the horse with a flake (of hay) and left three flakes in the barn.”

The officer then told the manager the animals were the bank’s property for 15 days after the foreclosure. The manager told the officer the foreclosure was finalized only a few days earlier, so the officer urged the manager to take care of the animals.

“He made sure the bank folks knew, ‘This is on you to make sure the animals are taken care of,'” Welsh said.

The horse’s condition did not seem dire when an officer saw her, according to Welsh. If that were the case, animal services would have taken her.

Beatriz Andert heard from a friend the horse was still living on the property in March, she said.

She contacted the manager, the manager contacted the bank, and they gave her permission to adopt the horse. The horse is recovering at the Anderts’ home in Perris.

“We are going to look into this case to determine if our guidelines were followed,” Wilson said.

It is unclear what happened to the dog.

___

(c)2012 The Press-Enterprise (Riverside, Calif.)

Visit The Press-Enterprise (Riverside, Calif.) at www.PE.com

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Fannie Mae, Freddie Mac Getting Receivership Contingency Plan

The U.S. regulator overseeing Fannie
Mae
, Freddie Mac and the Federal Home Loan Banks has hired a
consulting firm to create contingency plans for taking the
mortgage-finance firms into receivership, according to contract
documents.

The plan is part of “ordinary regulatory activities” and
does not indicate that the Federal Housing Finance Agency intends
to take the companies or the banks into receivership, agency
spokeswoman Denise Dunckel said. Receivership would involve
winding down the companies and selling off their assets.

“This planning activity is routine and does not indicate
any condition of the current status of the regulated entities,”
Dunckel said.

Fannie Mae and Freddie Mac (FMCC) have been operating under U.S.
conservatorship since September 2008, when investments in risky
loans pushed them to the brink of insolvency. Under
conservatorship, as opposed to receivership, the two taxpayer-
owned companies continue to operate while having drawn almost
$190 billion in aid from the U.S. Treasury.

The FHFA in May signed a contract with New York-based
PricewaterhouseCoopers LLP to “recommend guidelines, procedures
and other protocols the FHFA should have in place prior to
placing any regulated entity into receivership,” according to
the document.

The document said PricewaterhouseCoopers will “develop a
framework for the FHFA to use in building the capacity” to
liquidate Fannie Mae, Freddie Mac, or any of the 12 regional
U.S. Home Loan Banks.

Uncertain Future

The fate of Fannie Mae and Freddie Mac is in limbo. Private
financing for mortgages evaporated in the aftermath of the 2008
financial crisis, and the two companies now own or guarantee
about 60 percent of residential mortgages. President Barack
Obama
’s administration and members of Congress called for
shrinking the government role in the housing market, but have
not taken action.

Edward J. DeMarco, acting director of the FHFA, has said
the agency will do what it can to prepare for the future of the
government-sponsored enterprises in the absence of a plan from
Congress and the White House to wind them down or otherwise
reorganize them. The FHFA is working on plans to build a single
platform for securitizing home loans and to set standards for
how those loans are managed.

The FHFA released the PricewaterhouseCoopers contract to
Vern McKinley, a financial consultant working with the
Washington-based legal organization Judicial Watch, in response
to a Freedom of Information Act request.

“Conservatorship is kind of this limbo they’ve been in
since 2008 and receivership would be more aggressive toward
liquidating Fannie and Freddie and putting them out of
business,” said McKinley, who has filed other FOIA requests
with the FHFA seeking to find out why Fannie Mae (FNMA) and Freddie Mac
weren’t dissolved in 2008. “They’ve never taken any steps in
that direction.”

Staff from the FHFA and PricewaterhouseCoopers have met
since May with staff from Fannie Mae and Freddie Mac to discuss
the receivership plans, the documents show.

PricewaterhouseCoopers will deliver the receivership plans
by Oct. 1 and will be paid $757,000, the contract says.

To contact the reporters on this story:
Meera Louis in Washington at
mlouis1@bloomberg.net
Clea Benson in Washington at
cbenson20@bloomberg.net;

To contact the editor responsible for this story:
Maura Reynolds at
mreynolds34@bloomberg.net

Campbell mayor sues Freddie Mac, Fannie Mae

Lawsuit filed in U.S. District Court by Campbell County Mayor William Baird


Campbell County’s mayor is accusing Fannie Mae and Freddie Mac of robbing his county’s coffers, and he’s filed a proposed class action lawsuit over the dispute.

Mayor William Baird, acting on behalf of Campbell County, filed suit in U.S. District Court against the two government-sponsored entities as well as the Federal Housing Finance Agency, which was granted conservatorship over the companies after the housing market went bust in 2008.

Fannie Mae and Freddie Mac buy mortgages from lenders and issue guaranteed mortgage-related securities.

Critics of the agencies have said they contributed to the recent financial crisis, in part by investing in so-called toxic mortgages — loans made to homeowners who did not have the financial wherewithal to foot the bill.

Baird contends in his lawsuit that Fannie Mae and Freddie Mac now control a huge chunk of foreclosed homes and properties in the wake of the housing market crash in not only his county but potentially in all of Tennessee’s 95 counties.

“As these mortgages become delinquent and properties enter into foreclosure, defendants Fannie Mae and Freddie Mac take ownership of the properties and attempt to locate buyers,” the lawsuit stated. “Once defendants Fannie Mae and Freddie Mac locate a buyer for a foreclosed property, they convey the property and record the deed.”

But what the agencies won’t do is pay a “transfer fee” required by state law, Baird alleges. The organizations, he says, insist they are exempt from the fee. Since those fees are supposed to go into county coffers, Baird argues local governments are being robbed of money.

It’s not clear how much money is at issue. According to state law, a transfer fee of 37 cents per $100 of either purchase price or property value is to be assessed on each deed recorded in a particular county. There are exceptions under the law, and those exemptions include government entities.

“(Freddie Mac and Fannie Mae) sometimes claim the transactions are exempt because they are government entities and, under Tennessee statute, government entities are exempt,” the lawsuit states. “At other times they claim they are exempt pursuant to federal statute. Neither exemption claimed to the transfer tax applies.”

Baird is asking a federal judge to designate the lawsuit a class action case, with Campbell County serving as the representative plaintiff for all other counties. No hearing date has yet been set. Freddie Mac and Fannie Mae have not yet been served with the lawsuit, which was filed Tuesday.

Freddie Mac: Mortgages Rose 2.8% in June

Mortgage-finance company Freddie Mac (FMCC) said its mortgage-related securities and other guarantee commitments increased at an annualized rate of 2.8% in June.

Meanwhile, the total mortgage portfolio decreased at an annualized rate of 2.5% in June. The total morgage portfolio consists of Freddie Mac mortgage-related securities and other …

Auditor, federal agency appears to be breaking rules, columnist says

Never underestimate the government’s capacity for incompetence when it comes to overseeing large financial institutions. The latest example: an ill-advised consulting contract between Freddie Mac’s outside auditor and the federal agency in charge of running the company.

Freddie Mac, the housing financier with a $2.1 trillion balance sheet that was seized by regulators in 2008, remains under the control of its conservator, the Federal Housing Finance Agency. Yet its shares and bonds are still publicly traded. And it continues to file reports with the Securities and Exchange Commission, which means it must follow the SEC’s rules.

Some of those regulations seem to have been ignored when the FHFA hired Freddie Mac’s auditor, PricewaterhouseCoopers LLP, in May to provide advice on managing the company. The firm’s work includes consulting services that are barred under the SEC’s auditor-independence rules, as far as I can tell. The agency and the accounting firm say they are following the rules.

Their explanations aren’t convincing.

The contract came to light last week after the housing-finance agency released a copy to Vern McKinley, a consultant working with the Washington-based advocacy group Judicial Watch, in response to a Freedom of Information Act request. The agency hired Pricewaterhouse to create contingency plans that would be used if the government someday decides that Freddie Mac, Fannie Mae or any of the Federal Home Loan Banks should be taken into receivership and liquidated.

(Pricewaterhouse audits the 12 Federal Home Loan Banks, none of which is in conservatorship. Fannie Mae’s auditor is Deloitte Touche LLP.)

The reason for having auditor-independence rules is to promote confidence in the integrity of companies’ financial statements. Auditors are supposed to be watchdogs for the public, not beholden to their clients. To be sure, the system is a bit of a charade. The client pays the firm for its audit, so there always are conflicts of interest.

The independence problem in this instance arises from the FHFA’s connection to Freddie Mac. In substance, the agency is Freddie Mac. Here’s how the company explained the relationship in its latest annual report:

“As our conservator, FHFA succeeded to all rights, titles, powers and privileges of Freddie Mac, and of any stockholder, officer or director thereof, with respect to the company and its assets,” the company said. “FHFA has delegated certain authority to our board of directors to oversee, and to management to conduct, day-to-day operations. The directors serve on behalf of, and exercise authority as directed by, the conservator.”

With that in mind, the auditor-independence problems become obvious. There are three main principles underlying the SEC’s rules: An auditor can’t function in the role of management. It can’t audit its own work. And it can’t serve in any advocacy role for an audit client.

The contract, under which Pricewaterhouse will receive about $757,000, calls for “providing general advice on receivership preparation, assisting the FHFA in developing pre- and post-receivership procedures, implementing those procedures,” and “assisting the FHFA in the operation and administration of a receivership.”

That means Pricewaterhouse is giving advice on how to run Freddie Mac, and even could be called upon to help operate the company at some point. The contract says the firm’s work includes making recommendations regarding “valuation services” and “human resources.” The SEC’s rules list those as services that auditors are prohibited from providing to audit clients.

Additionally, the contract calls for Pricewaterhouse to offer advice on “public relations,” which is an advocacy role.

Other services include making recommendations on risk management, claims management, asset management, and securities management.

The housing-finance agency released a statement from its general counsel, Alfred Pollard. “This is not a contract for PwC to perform work for Freddie Mac or any other entity regulated by FHFA,” he said. Additionally, Pollard said “measures are in place to ensure against conflicts of interest and to maintain independence, including a process that prevents PwC employees working on this FHFA contract from working on contracts for a regulated entity.”

Nothing in his statement addressed the point that the agency, as Freddie Mac’s conservator, is standing in the company’s shoes, or that Pricewaterhouse is providing advice on how to manage the company’s affairs. A Freddie Mac spokeswoman, Sharon McHale, declined to comment.

In a world where rules were consistently enforced, the SEC would be cracking down. Of course, we know better than to expect the government to enforce rules against itself.

Here’s what the SEC should be demanding that the housing-finance agency tell Pricewaterhouse: As Freddie Mac’s auditor, you’re fired.

Freddie Mac Announces The Issuance Of A New Seven-year Reference Notes® Security

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China’s Gift to US Homeowners

They are increasingly rich, hungry for the good things this country has to offer, buying high-end homes, and don’t mind paying huge amounts of cash upfront to get them without going into debt. If you don’t think this reads like a typical American story today, you’re right—these new homeowners are Chinese living in the U.S.

For a housing market just starting its recovery, foreign investment in U.S. residential real estate has been a bright spot, and there’s no sign of the trend letting up. According to data released last month by the National Association of Realtors, non-U.S. buyers accounted for $82.5 billion in residential property sales in the 12 months ended March 2012. Chinese purchasers made up 11 percent of this total, while Canadians continued to represent the largest swath at 24 percent. Perhaps even more striking is the fact that 27 percent of Realtors surveyed by the NAR reported working with international clients in the last year. Along with China and Canada, buyers from countries including Mexico, India, and the U.K. combined to make up 55 percent of purchases from abroad—mainly concentrated in Florida, Texas, Arizona, California, and New York. The fastest growth in recent years is among Chinese buyers.

The global interest is driven by several different factors, yet for the Chinese in particular, the chance to get their children into top universities is probably the largest motivation. To Chinese parents, the opportunity provides proof that their years of effort have paid off. “The Chinese work very hard—it’s part of their culture,” says Cathy Zhao, a real estate broker in Maryland who has served many wealthy Chinese clients. “For them, the most important thing is education, and with prices being very low as they are, they see a chance to get near a good school.” And once here, most international buyers want to stay, Zhao adds, because their chance of a better-paying job is still better in the U.S. than back home.

The chance to earn a prestigious degree is not the only reason Chinese buyers find the U.S. market increasingly appealing. “There is an increasing number of wealthy Chinese who are buying in the U.S. to diversify their portfolio,” says NAR economist Jed Smith, who helped compile the annual survey. “Even with the rally in recent months, homes here still look very good from an investment point of view.”

Unlike Japanese corporations in the 1980s, which bought at the top of the market in their quest for big-name commercial properties, the Chinese are more interested in good deals. With residential real estate prices still almost a third less than they were at their peak in 2007, it’s a strategy that may well pay off if job growth returns and triggers a rally in the housing market, according to Smith.

Last year the average price of a foreign-purchased U.S. home was more than $400,000, which is double the national average—so the search for good value might only extend so far. That high figure becomes even more impressive when one considers that buyers from abroad often lack credit scores and access to mortgages, and frequently opt to pay the whole price upfront. “[S]ales transactions can often be completed quickly as many Chinese purchasers prefer all-cash deals,” Pamela Liebman, president and chief executive officer of the Corcoran Group, a New York real estate firm, writes in an e-mail. Liebman also says that her company has serviced more Chinese clients this year than at any time in the past, and that their interest is not just in residential real estate but in commercial property as well. Sixty-two percent of purchases by foreign buyers last year were in cash, according to the NAR. Zhao says many of the deals are for very large homes, capable of supporting several generations under one roof, which is a preference for affluent families.

Foreign buyers still make up a small part of all U.S. sales, accounting for just 4.8 percent of the total dollar amount in the last year. While in relative terms this represents an increase, the numbers will probably not spur a nationwide real estate recovery.

“In a market the size of New York, it would take a substantial influx of any one buyer group to significantly affect market prices,” writes Liebman of Corcoran. “The number of Chinese purchasers of New York real estate has not reached the critical mass it would require to impact prices.” It’s a point echoed by Smith of the NAR. “The only thing that will really get the market back to where it was is jobs. Really it’s all about jobs in the end,” he says.

That may be true, but the pattern of recent years might allow Americans to take some solace in the fact that their country is still top of the list when it comes to places where individuals from around the world want to live and learn.

June Existing-Home Prices Rise Again, Sales Down With Constrained Supply

WASHINGTON, DC–(Marketwire -07/19/12)-
Existing-home prices continued to show gains but sales fell in June with tight supplies of affordable homes limiting first-time buyers, according to the National Association of Realtors®.

Total existing-home sales(1), which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 5.4 percent to a seasonally adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million in May, but are 4.5 percent higher than the 4.18 million-unit level in June 2011.

Lawrence Yun, NAR chief economist, said the bigger story is lower inventory and the recovery in home prices. “Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets,” he said. “The price improvement also results from fewer distressed homes in the sales mix.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.68 percent in June from 3.80 percent in May; the rate was 4.51 percent in June 2011; recordkeeping began in 1971.

The national median existing-home price(2) for all housing types was $189,400 in June, up 7.9 percent from a year ago. This marks four back-to-back monthly price increases from a year earlier, which last occurred in February to May of 2006. June’s gain was the strongest since February 2006 when the median price rose 8.7 percent from a year prior.

Distressed homes(3) — foreclosures and short sales sold at deep discounts — accounted for 25 percent of June sales (13 percent were foreclosures and 12 percent were short sales), unchanged from May but down from 30 percent in June 2011. Foreclosures sold for an average discount of 18 percent below market value in June, while short sales were discounted 15 percent. “The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling,” said Yun.

NAR President Moe Veissi, broker-owner of Veissi Associates Inc., in Miami, said there’s been a steady growth in buyer interest. “Buyer traffic has virtually doubled from last fall, while seller traffic has risen only modestly,” he said. “The very favorable market conditions are helping to unleash a pent-up demand, which is why housing supplies have tightened and are supporting growth in home prices. Nonetheless, incorrectly priced homes will not attract buyers.”

Total housing inventory at the end June fell another 3.2 percent to 2.39 million existing homes available for sale, which represents a 6.6-month supply(4) at the current sales pace, up from a 6.4-month supply in May. Listed inventory is 24.4 percent below a year ago when there was a 9.1-month supply.

First-time buyers accounted for 32 percent of purchasers in June, compared with 34 percent in May and 31 percent in June 2011. “A healthy market share of first-time buyers would be about 40 percent, so these figures show that tight inventory in the lower price ranges, along with unnecessarily tight credit standards, are holding back entry level activity,” Yun said.

All-cash sales edged up to 29 percent of transactions in June from 28 percent in May; they were 29 percent in June 2011. Investors, who account for the bulk of cash sales, purchased 19 percent of homes in June, up from 17 percent in May; they were 19 percent in June 2011.

Single-family home sales declined 5.1 percent to a seasonally adjusted annual rate of 3.90 million in June from 4.11 million in May, but are 4.8 percent above the 3.72 million-unit pace in June 2011. The median existing single-family home price was $190,100 in June, up 8.0 percent from a year ago.

Existing condominium and co-op sales fell 7.8 percent to a seasonally adjusted annual rate of 470,000 in June from 510,000 in May, but are 2.2 percent higher than the 460,000-unit level a year ago. The median existing condo price was $183,200 in June, which is 6.9 percent above June 2011.

Regionally, existing-home sales in the Northeast dropped 11.5 percent to an annual pace of 540,000 in June but are 1.9 percent above June 2011. The median price in the Northeast was $253,700, down 1.8 percent from a year ago.

Existing-home sales in the Midwest slipped 1.9 percent in June to a level of 1.02 million but are 14.6 percent higher than a year ago. The median price in the Midwest was $157,600, up 8.4 percent from June 2011.

In the South, existing-home sales declined 4.4 percent to an annual pace of 1.73 million in June but are 5.5 percent above June 2011. The median price in the South was $165,000, up 6.6 percent from a year ago.

Existing-home sales in the West fell 6.9 percent to an annual level of 1.08 million in June and are 3.6 percent below a year ago. The median price in the West was $233,300, up 13.3 percent from May 2011. Given tight supply in both the low and middle price ranges in this region, sales in the West are stronger in the higher price ranges.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

NOTE: For local information, please contact the local association of Realtors® for data from local multiple listing services. Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

(1)Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from multiple listing services. Changes in sales trends outside of MLSs are not captured in the monthly series. A rebenchmarking of home sales is done periodically using other sources to assess the overall home sales trend, including sales not reported by MLSs.
Existing-home sales differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90 percent of total home sales, are based on a much larger sample – about 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.
Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

(2)The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.

(3)Distressed sales (foreclosures and short sales), all-cash transactions, investors and first-time buyers and are from a monthly survey for the Realtors® Confidence Index, posted at Realtor.org.

(4)Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, condos were measured quarterly while single-family sales accounted for more than 90 percent of transactions).

The Pending Home Sales Index for June will be released July 26 and existing-home sales for July is scheduled for August 22. Metro area home prices for the second quarter will be reported August 9; all release times are 10:00 a.m. EDT.

Information about NAR is available at www.realtor.org. News releases are posted in the website’s “News and Commentary” tab. Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab of www.realtor.org.

For further information contact:
Walter Molony
202/383-1177
Email Contact

On the House: The state of real estate misery

Is your glass half-empty or half-full today?

I think mine is half-empty. I’m looking at a statistic from the search engine Redfin that says one in four real estate listings comes under contract after less than 14 days on the market.

Which prompts two responses from me: First, how long does it take to move the three other houses? Second, how many of those contracts collapse under the weight of appraisals?

As of May, according to Prudential Fox Roach’s HomExpert Market Report, properties were spending an average 98 days on the market, four fewer than the same month in 2011.

In May 2010, the average was 80 days, and that was at the end of the government’s $8,000 tax-credit program for qualified buyers.

The National Association of Realtors reported in April that one in three of its members was reporting a contract cancellation. I have neither heard nor seen anything that would suggest that the situation has changed.

Before one can make blanket statements about the market, one needs to consider that houses won’t sell quickly if they are in places where no one wants to live. They also won’t sell quickly if they are overpriced.

Therefore, the one in four that reaches agreement in less than 14 days is likely to be in the right location and also properly priced.

There are some indications that the housing market is, indeed, improving. Yet Trulia, another real estate search engine, maintains that in the hardest-hit foreclosure states, housing will be an issue that could determine which presidential candidate gets the most votes.

Trulia has developed a “housing misery” index to determine how and where the candidates will focus on the issue.

These are the criteria it uses for the index: •The percentage change in home prices from each state’s own peak during the last decade’s real estate bubble until today, based on information from the Federal Housing Finance Agency. Big price drops lead to more underwater borrowers and less household wealth, which hurt the housing market and hold back economic recovery. •The percentage of mortgages either severely delinquent or in foreclosure, based on data from CoreLogic, the real estate information service.

Defaults and foreclosures damage consumer confidence in the housing recovery. Foreclosures hurt not only the people who lose their homes, but their neighbors, as well.

Four states stand out: Nevada, Florida, Arizona, and California. In those states, home prices are 40 percent or more below their bubble-era peak — almost 60 percent in Nevada. Florida also has the highest share of home loans on which borrowers are either delinquent or in foreclosure.

Things are looking up here. In all but Nevada, this misery index has fallen several points in the last year.

But housing misery has been spread out across other regions of the country, too. The index is 30 or above in Michigan and Illinois in the Midwest; Georgia in the South; Maryland and New Jersey in the Mid-Atlantic, and Idaho, Washington and Oregon in the Northwest.

At the other extreme, Texas escaped housing misery altogether. Prices are no lower today than they were during the bubble, and relatively few home loans are delinquent or in foreclosure.

How will housing play out in the presidential campaign? Trulia chief economist Jed Kolko says voters in key swing states will surely want to hear what the candidates have to say.

“And what will they say?’ Kolko asks. “As the incumbent, Obama needs to point to some clear housing-policy successes; as the challenger, Romney needs to point to some fresh new ideas about housing.”

“They’ve both got their work cut out for them,” Kolko says.

 

US home sales drop 5.4 pct., fewest since October

WASHINGTON (AP) — Americans bought fewer homes in June than May, indicating the weak economy could make a modest housing recovery choppy.

The National Association of Realtors said Thursday that sales of previously occupied homes fell 5.4 percent in June to a seasonally adjusted annual rate of 4.37 million homes. That’s the fewest since October.

Sales are up 4.5 percent from a year ago, evidence that the market is still recovering. But the annual sales pace is below the 6 million that economists consider healthy.

The June drop in completed re-sales contrasts with more encouraging data that show gains in new residential construction, higher builder confidence and more signed contracts to buy previously owned homes.

“It is only one month and the rest of the housing indicators have all continued to show improvement,” said Jennifer Lee, senior economist at BMO Capital Markets. “Let’s hope this June decline is a blip.”

The number of first-time buyers, critical to a housing recovery, made up just 32 percent of sales. That’s down from 34 percent in May. In healthy markets, first-time buyers make up more than 40 percent of the market.

The median home price rose 5 percent to $189,400. That’s mostly because sales of more expensive homes rose, while sales of cheaper homes fell, the Realtors group said.

Prices are also rising because there are fewer homes for sale. The inventory of unsold homes fell to 2.39 million. It would take six and a half months to exhaust the supply at the current sales pace. That’s just above the six months that economists consider healthy.

Other recent reports have indicated that the housing market is slowly recovering, even as the broader economy struggles.

Builders broke ground last month on the most new homes and apartments in four years. And the number of new single-family homes, the bulk of the market, rose for the fourth straight month to the highest level since March 2010.

A report from the Federal Reserve Wednesday found that home sales improved in all 12 of the bank’s districts in June and early July.

More Americans are showing interest in buying homes, boosting builder confidence. The National Association of Home Builders/Wells Fargo builder sentiment index jumped to 35 this month, its highest level in five years. Builders said they are seeing more traffic from prospective customers.

Still, the index remains below 50, the level that indicates builder sentiment is in positive territory. It hasn’t reached that level since April 2006, the height of the housing bubble.

There are also fewer homes for sale, which is spurring more home building and raising the prices of those that are on the market.

The housing market is also being supported by record-low mortgage rates. The average rate on the 30-year fixed mortgage fell this week to 3.53 percent, the lowest since long-term mortgages began in the 1950s.

But even with the low rates, many would-be buyers are having difficulty qualifying for home loans or can’t afford the larger down payments being required by banks.

And the job market has weakened considerably in recent months, threatening the recovery in housing. Employers added just 80,000 jobs in June. Job gains averaged only 75,000 in the April-June quarter, after averaging 226,000 in the first three months of the year. The unemployment rate is stuck at 8.2 percent.

Without more job growth, consumers may feel less secure about their financial futures and delay purchasing a new home.