Bank of America getting sued by SEC and DOJ
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Bank of America

I love it. Its about time the banks had to pay for their crookedness.

Bank of America is charged with defrauding investors who bought residential mortgage-backed securities (RMBS) from the firm. The Securities and Exchange Commission (SEC) alleges that the bank failed to tell investors that more than 70 percent of the mortgages backing the offer – called BOAMS 2008-  were not worth the paper they were written on. Just what i said back in 2005.

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Will rising mortgage rates hurt the housing recovery?
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Rising Mortgage Rates

A rule of thumb holds that every one percentage point increase in interest rates reduces affordability by 10%, so the recent move in rates just made homes about 10% more expensive to buyers who need to finance their purchase.

“There’s no one in the business right now who doesn’t think the market hasn’t taken a step back. The evidence is all around us,” said Glenn Kelman, chief executive of real-estate brokerage Redfin. The number of Redfin customers who requested tours during the last week of June was down 5% from the average for the previous three weeks, while the number of customers making offers was down by 8% and the number of new customers edged down by 2%.

A sign that inventory has picked up is that competitive offer situations are dropping. The share of offers written by Redfin agents that faced a competing offer fell to 69.5% of offers in May, down from 73.3% in April. One year ago, some 69.3% of offers faced at least one competing bid.

Markets that have seen larger increases in listings have seen even bigger declines in multiple-bid situations.

So things are slowly going to return to normal. If you have been discouraged by the difficult situation for investors, take heart- things will get better for us.


This is what investors should be doing
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Real estate agent Ryan Mathys points out a view.

Realtors are going in the field and farming like they used to. They are contacting home owners even before they even think about selling. They are calling, driving and sending mail. They have lots of “pocket listings” this way- people who are considering selling. They don’t wait until the home owner is ready to sell. It’s too late then.

This is what real estate investors should be doing in a hot sellers market. If you wait until it is listed, lots of luck. You will be outbid by a cash buyer who does not care about comps.

Read the story.

 

Hooray- hedge funds are stepping down from buying real estate
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Hedge fund real estate

For the past three years they have been swarming over the hardest-hit housing markets, buying distressed properties in bulk and pushing prices higher by double digits. The idea for these investors was not to buy and flip, but to hold and rent. Now some investors say that they have priced themselves out of the market.

“Higher prices are reducing returns on investment, and investors are responding by cutting back on their purchasing plans until conditions sort out,” said Chris Clothier, a partner in MemphisInvest.com and
Premier Property Management Group, which commissioned a national survey of investors conducted by ORC International. “Fewer foreclosures, rising property values and competition from hedge funds are making it tough to find good deals on distress sales.”

Nearly half the investors surveyed said that they planned to cut back on purchases of homes in the coming year; in a survey last August, just 30 percent said they planned to cut back. Only 20 percent of investors said they plan to increase purchases, compared with 39 percent who said they would last August. All this could have a significant impact on the housing recovery.

Bargains are drying up when it comes to buying foreclosed properties. The number of foreclosure sales in the first quarter of this year fell 22 percent from a year ago, according to RealtyTrac, a real estate website. The number of
short sales, when the home is sold for less than the value of the mortgage, also fell, as rising prices provided less incentive for banks to agree to such deals. Some claim banks are actually holding onto repossessed homes, waiting for prices to rise higher.

Investors accounted for 19 percent of home sales in April, according to the National Association of Realtors, down from 24 percent in all of 2012. Investors include individual buyers as well as large hedge funds, but the hedge funds have been getting much of the attention, credited with juicing prices in the hardest hit housing markets like Phoenix and Las Vegas. Their so-called REO-to-Rent strategy (Real Estate Owned-to-Rent) has evolved into a new asset class, with two of the companies that engage in the practice going public this year as real estate investment trusts (REITs).

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Lenders are upset
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Upset Lender

They say that the rules brought on by the Consumer Financial Protection Bureau go too far in insisting that lenders verify borrowers ability to pay.

A new government agency called the Consumer Financial Protection Bureau has been created to protect consumers from predatory lending practices. As with every government act, it goes too far.

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