DS News - Digital Archives

PRO TECK SAYS INVESTORS, INVENTORY SHORTAGE ARE CATALYSTS TO HOUSING REBOUND Demand for distressed properties from investors is contributing to the recovery, not creating an artificial one, according to Pro Teck Valuation Services' Home Value Forecast (HVF) for the month of April. The HVF study indicates one of the catalysts driving the housing market rebound has been large investment funds, which are buying distressed single-family homes to be used as rentals. "These funds have also been renovating homes, which has helped to improve the overall conditions of the surrounding neighborhoods and provided a positive injection of capital," said Tom O'Grady, CEO of Pro Teck. Furthermore, the company says, the reduction in the supply of homes available for sale is fueling positive home price reports. A year ago, Pro Teck boldly projected that the market was likely to turn "much faster than anyone could imagine." That forecast has "not only been realized, but also exceeded," Pro Teck says. The real estate valuations company came to its conclusion after noting the number of new homes being built remained at historically low rates for more than five years, which Pro Teck expected would eventually lead to a supply shortage once demand returned. In addition, earlier declines in home values prevented many homeowners from selling, further reducing supply. After observing a number of real estate cycles, Pro Teck also said that while each one may appear to be different, they all have one thing in common: a catalyst to propel movement. "Once the cycle starts, a virtuous process of higher sales leads to higher prices, which leads to more buyers coming into the market out of fear that they will miss out. At the same time, higher sales typically lead to a shortage of inventory available for sale except in those markets where new homes can easily be built," Pro Teck explained in its report. 42 However, the current real estate market also has two unique traits—very low mortgage rates and historically high levels of home affordability, Pro Teck noted. Each month HVF ranks the single-family home markets in the nation's top 200 core-based statistical areas (CBSAs) to highlight the best and worst metros with regard to a number of marketbased indicators. The ranking system is purely objective and based on directional trends. The top ranked metros for the month of April included markets from all major regions of the United States. Of particular note is that five of the top markets were in California—Los Angeles, Orange County, the Sacramento metro, and the Stockton metro. Texas was also well represented on the list with both the Dallas and Austin metros claiming top-market spots. A new entrant to the HVF top-10 list in April was Warren-Troy-Farmington Hills, Michigan, a market hit very hard in the recent recession to the point that it currently has some of the most favorable home prices and one of the highest affordability index levels in the United States. Pro Teck has highlighted an interesting development seen in its HVF reports in recent months: several of the top markets from late last year such as Phoenix, Arizona, and Salt Lake City, Utah, are no longer on its top-10 list because their yearover-year sales counts are down sharply. However, the company says the reason for the steep declines is a lack of inventory, which is constraining sales, as opposed to a decrease in demand. Pro Teck says it's seeing evidence of this same phenomenon within other markets currently on the HVF top-10 list as well. The company stressed, though, that all are exhibiting positive trends in all the important market indicators except sales activity. FED: PROBLEMS WITH CASHING FORECLOSURE SETTLEMENT CHECKS CORRECTED The Federal Reserve and the Office of the Comptroller of the Currency (OCC), disclosed in mid-April that not all recipients of compensation resulting from the recent foreclosure settlement between regulators and 13 servicers were able to cash their checks upon receipt due to insufficient funds. In a statement issued April 17, the Fed announced "early problems with some checks have been corrected" and "funds are available to cash all checks." The Fed explained that some of the first to receive the settlement checks called the central bank's consumer helpline the day before when they were told their checks could not be cashed. As a result of those consumer calls, the Federal Reserve contacted Rust Consulting, Inc., the paying agent, and the Huntington National Bank, the paying bank, regarding the issue. And within a day, the "problems that led to some checks being rejected" have been corrected, the Fed stated. "We apologize to anyone who experienced problems trying to cash their checks. We are working hard and communicating with the banking regulators, the servicers, and other banks to ensure those issues are not repeated," said Rust Consulting SVP James Parks in a statement to the press. Before the announcement from the Fed, complaints of the un-cashable checks had surfaced online. In the response section of an article posted on UprisingRadio.org, one individual posted a comment on April 15 and stated he received a check for $6,000, but was told it was "insufficient" and questioned whether it was a scam. The initial wave of payments for borrowers covered by the foreclosure settlement with 13 servicers was sent April 12 and included 1.4 million checks. About 4.2 million borrowers who were involved in a foreclosure between 2009 and 2010 and had a mortgage serviced by one of the servicers subject to the settlement are eligible for a payment ranging from $300 to $125,000. The servicers in the settlement—which required them to pay a collective $3.6 billion in cash—include Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. The final wave of payments is scheduled to be sent in mid-July; 90 percent of the total payments had been mailed out as of the end of April, according to officials. The settlement replaced the Independent Foreclosure Review first issued through consent orders from federal regulators in early 2011.

• Cover