Paul Roesch, St Louis Real Estate Auctions AARE, CDPE

According to a new survey by Relocation.com, more Americans are positioning themselves to purchase a home in the near future.

The survey found that some families are opting to rent while they research for deals to purchase a more desirable home in their area. There’s no surefire way to determine when these sidelined homebuyers will enter the market, but the survey results were encouraging.

Of the 60 percent of individuals moving into rentals, 24 percent were previous homeowners renting temporarily while they look for a new home to purchase. Underscoring this finding is that for many of these families, foreclosure was not the reason for moving. In fact, the number of consumers who moved due to foreclosure dropped by 70 percent compared to Relocation.com’s February 2010 survey.

“While the housing market continues to flux from month to month, we’re seeing strong, continued interest as consumers looking to move start their research with us,” said Sharon Ashser, chairman and founder of New York-based Relocation.com. “These findings suggest that more Americans may be poised to re-enter the housing market this year.”

While it seems that financial and economic issues still continue to exert an effect on U.S. moving behaviors, the survey found signs that the worst of the recession crisis may be over. In the February 2010 survey, 18 percent of respondents indicated that they moved to a new location with a lower cost of living and/or cheaper rent, but this percentage dropped to 7 percent in June. Furthermore, only 4 percent of the consumers in June moved due to a job loss, a drastic drop from the 13 percent who moved for that reason in February.

When it comes to homeownership, the survey found that 18 percent of movers tracked in the June survey were homeowners who moved and purchased a new home, up from 12 percent in February. And an additional 12 percent were former renters who moved to purchase a home. The June survey also found that 4 percent of movers were able to purchase a home for the first time due to the decline in home prices, and another 10 percent moved to a bigger, better home or a better neighborhood.

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Housing-related loan delinquencies improved across the board in the first quarter of 2010, the American Bankers Association (ABA) recently reported.

According to ABA’s first quarter Consumer Credit Delinquency Bulletin, home equity delinquencies fell for the first time in two years to 4.12 percent of all accounts, down from 4.32 percent the previous quarter. During the same period, home equity lines of credit delinquencies fell to 1.81 percent from 2.04 percent, and property improvement loan delinquencies fell to 1.4 from 1.63 percent.

James Chessen, ABA chief economist, said the sweeping improvements in housing-related loan delinquencies indicate stability is returning to the housing market. “This is the first inkling that stability is taking hold in the housing market, but the pace of recovery will still be long and drawn out,” he noted.

In addition to the decline in housing-related loan delinquencies, consumer loan delinquencies as a whole showed broad-based improvement for the third quarter in a row. ABA’s report found that the composite ratio, which tracked delinquencies in eight closed-end installment loan categories, fell to 2.98 percent of all accounts during the first quarter, down from 3.19 percent the previous quarter.

Bank card delinquencies fell to 3.88 percent from 4.39 percent, marking the first time since the second quarter of 2002 that bank card delinquencies have fallen below 4 percent. In addition, direct auto loan delinquencies fell from 1.94 percent to 1.79 percent, and personal loan delinquencies fell from 3.63 percent to 3.61 percent.

Chsess said the improvements reflect concerted efforts be consumers to “shore up” their finances. He said consumer balance sheets are clearly improving as people are borrowing less, saving more, and building wealth.

“The overall risk in banks’ consumer loan portfolios is improving and will continue to do so,” Chessen said. “Banks are putting losses behind them and following a prudent approach to new loans because the on-again, off-again economy is keeping risk high. Regulators are also demanding that banks remain cautious. With job growth creeping back slowly and personal incomes rising a bit, I’m hopeful that improvements in consumer delinquencies will continue.”

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Recent headlines pointing to the detriments of reverse mortgages aren’t getting the story straight. One of the nation’s leading reverse mortgage lenders, Generation Mortgage Company, wants to separate fact from fiction.

“Because so many Americans over the age of 62 are facing significant financial stress due to dropping retirement and savings account balances, as well as higher healthcare costs, many groups are targeting seniors under the guise of helping them,” said Scott Peters, CEO and President of Generation Mortgage. “HECM reverse mortgages are Federal Housing Administration-insured products and are heavily scrutinized by regulators and legislators looking to protect seniors’ best interests. As a result, more than 600,000 American seniors have obtained reverse mortgages that have enriched their lives by allowing them to stay in their homes and pay off their bills.”

The top 9 most common reverse mortgage myths include:

Myth: If I take out a reverse mortgage the lender will own my home.
Fact: False. Homeowners still retain title and ownership to their homes during the life of the loan, and can choose to sell the home at any time. As long as the house is maintained and property taxes and homeowners insurance are paid, the loan cannot be called due.

Myth: My children will be responsible for the repayment of the loan.
Fact: False. Reverse mortgages are non-recourse loans. That means, if the property is sold to pay-off the loan when the homeowner passes away or decides to leave the home for other reasons, there will be no mortgage debt for the family and heirs to repay. The maximum amount owed is the current market value of the house. If the homeowner’s heirs want to keep the home, they would pay the balance in-full to the reverse mortgage lender.

Myth: I can’t get a reverse mortgage if I have an existing mortgage.
Fact: False. With enough equity, you may be able to pay off your existing mortgage or other debt with the reverse mortgage. The reverse mortgage must be in a first lien position, so any existing mortgage must be paid off. Seniors who take out reverse mortgages are free to do anything they want with their reverse mortgage proceeds. Paying off an existing mortgage is the number one reason most seniors take out a reverse mortgage.

Myth: Only low-income seniors get reverse mortgages.
Fact: False. Although some seniors may have a greater need than others for the monthly proceeds or lump sum funds reverse mortgages offer, most simply prefer to be free of monthly mortgage payments. Without monthly mortgage payments, many homeowners find they can maintain their existing quality of life and build their savings to help with future expenses. A growing number of people who have no immediate need are taking out these loans so that they have a financial cushion for future expenses.

Myth: If I outlive my life expectancy, the lender will evict me.
Fact: False. Reverse mortgage lenders put no time limit on how long seniors can stay in their homes. Since homeowners still own the property, lenders cannot evict them, provided they follow the program guidelines.

Myth: There are no objective advisors available to seniors trying to decide if a reverse mortgage suits their needs.
Fact: False. Borrowers are required to work with independent, third party counselors approved by the U.S. Department of Housing and Urban Development (HUD) in their local communities. This educational session helps them make the right decision for their unique situations.

Myth: There are restrictions on how reverse mortgage proceeds may be used.
Fact: False. There are no restrictions. The cash proceeds from the reverse mortgage can be used for virtually any purpose and borrowers should be cautious of lenders attempting to cross sell other products. Many seniors have used reverse mortgages to pay off debt, help their kids, make ends meet or to have a financial reserve.

Myth: Reverse mortgage lenders take advantage of seniors.
Fact: False. Seniors who have been victims of reverse mortgage lending schemes are extreme exceptions and typically victims of unsavory lenders. As a consumer, you should only work with lenders who are Better Business Bureau and National Reverse Mortgage Lenders Association (NRMLA) members and adhere to those organizations’ strict Code of Ethics and Standards for Trust.

Myth: I’ve heard I won’t qualify for a reverse mortgage because of my limited income.
Fact: Unlike a traditional mortgage where mortgage payments must be made each month, a reverse mortgage pays you. Because of this, many seniors who do not qualify for traditional financing are eligible for a reverse mortgage.

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The Home Valuation Code of Conduct (HVCC) instituted by Fannie Mae and Freddie Mac in May of last year has been a topic of heated debate and driven a wedge between industry players since it took form.

The GSEs say it has eliminated undue influence and conflicts of interest on appraisals, while Realtors and home builders argue the new rule has lead to lowball property valuations, botched sales, and higher appraisal fees.

The controversial HVCC is scheduled to sunset in November. The GSEs’ agreement with New York Attorney General Andrew Cuomo gave the appraisal policy a brief 18-month lifespan. But the sweeping financial reform legislation currently awaiting a final vote in Congress could terminate the GSEs’ appraisal edict two months early and establish new standards for property valuations.

As the language of the bill stands now, the most immediate task of the newly created Consumer Financial Protection Bureau would be to develop a new set of industry-wide appraisal rules with the intent of ensuring appraisers’ work is conducted independently and lenders and real estate agents cannot manipulate property valuations.

The legislation states that the Bureau must put forth new appraisal regulations within 60 days from enactment of the bill, defining specific practices that violate appraisal independence as it relates to mortgage lending services. These new rules would replace the GSEs HVCC guidelines.

Appraisal Institute President Leslie Sellers commented, “This is extremely important for consumers and mortgage lenders,” Sellers said. “With distressed sales prevalent in the market, it is critical that highly trained appraisers be actively involved in the mortgage market. In recent years, the inability to earn customary and reasonable fees has been a significant obstacle.”

In addition, the financial reform legislation would require appraisal management companies (AMCs) to register with state agencies. It earmarks funding for oversight and enforcement of the appraisal business and requires companies to separate AMC and appraisal fees on the HUD-1 settlement statement.

Lawmakers also penned language that states “lenders and their agents shall compensate fee appraisers at a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.”

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Fannie Mae says delinquencies on home loans it guarantees declined again in April, marking the second consecutive month that past dues have fallen. Marketobservers say the successive improvements in delinquency numbers at the nation’s largest mortgage financier may be the beginnings of a positive trend that will soon spread to the rest of the industry.

According to the GSE’s monthly summary report released Tuesday, its single-family serious delinquency rate – the tag given to loans at least 90 days past due – fell 17 basis

points in April to 5.30 percent. That follows a drop of 12 basis points in March, which was the first decline for the telling stat in three long years.

Fannie’s serious delinquency rate on multifamily mortgages also headed downward in April, falling 1 basis point to 0.78 percent.

The GSE also reported that its mortgage holdings grew for the third straight month, as it continued to buy back loans from investors that were 120 days or more past due. In May, Fannie purchased approximately $49 billion in delinquent loans from mortgage-backed securities (MBS) trusts, which will not be reflected as liquidated from MBS until June 2010.

Fannie Mae’s mortgage portfolio grew 16 percent in May to a balance of $813.66 billion. The GSE’s total book of business, which includes MBS and other guarantees, dropped 0.2 percent from the previous month to $3.25 trillion.

Fannie also added to its portfolio with $82.46 billion in new mortgage purchase commitments during the month, up 4.2 percent from April.

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