Market Studies

While mortgage defaults declined in California during the first quarter of 2011, foreclosures edged up. DataQuick reports that a total of 68,239 notices of default were recorded during the period, down nearly 16 percent from a year earlier. It was the lowest period of activity for default filings in the state since the second quarter of 2007. Homes lost to foreclosure tallied 43,052 during the first three months of this year, while short sales made up an estimated 18 percent of statewide resale activity.

Distressed homes - typically REOs and short sales - accounted for 40 percent of the existing homes sold in March, the National Association of Realtors (NAR) reported Wednesday. The trade group notes that these properties generally sell at discounts in the vicinity of 20 percent. Their large market share served to dampen the median existing-home price. For all housing types, it came in at $159,600 in March, down 5.9 percent from March 2010. Overall, sales of previously owned homes rose 3.7 percent last month as the spring buying season began to take hold.

Lender Processing Services (LPS) reports that the nation's mortgage delinquency rate plunged to 7.78 percent at the end of March. That figure includes loans that are at least 30 days past due but not yet in foreclosure. March's delinquency rate is down nearly 12 percent from the month before and 20 percent below a year ago. At the same time, though, the nation's foreclosure rate edged up to 4.21 percent. Altogether, LPS says there are 6,333,000 homes in the U.S. that are delinquent or in foreclosure.

Industry data released this week shows that the dollar volume of mortgage loans associated with fraud has dropped to a three-year low, cut by more than half over the past 12 months to $900,000. Likewise, the number of fraud cases tracked has declined to push the index to its lowest level since early 2008. The drop coincides with the U.S. Department of Justice's late 2010 sting involving 120,000 fraud victims who lost more than $8 billion. However, recent activity suggests the lull might only be temporary.

Foreclosure sales accounted for roughly 43 percent of home sale closings in the Twin Cities metropolitan area of Minnesota last month, and 40 percent of pending home sales contracts. While those market shares are in line with recent trends, Brad Fisher, president of the Minneapolis Area Association of Realtors, says they're still higher than what he'd like to see. While overall purchase activity in March was down 17 percent, the foreclosure segment saw a 30 percent jump in closed sales.

Freddie Mac forecasts a 5 percent increase in 2011 home sales over 2010, according to its U.S. Economic and Housing Market Outlook for April. The expected pick-up in home sales is due to recent positive employment reports, including gains in the real estate sector. The GSE's outlook also contends that refinancing will likely account for a smaller share of loan applications later this year as wealthy borrowers decrease and mortgage rates increase.

The delinquency rate on loans included in U.S. commercial mortgage-backed securities (CMBS) conduit/fusion transactions inched down 2 basis points in March to 9.16 percent, Moody's Investors Service reported Thursday. More significantly, the agency says the total dollar balance of delinquent loans declined in March, slipping to $56.5 billion from $56.8 billion the month before. It's the first monthly decline in the balance since October 2007.

Interest rates on home loans headed higher this week, marking the fourth consecutive increase recorded. Still, rates remain extremely low by historical standards - a selling point market players hope will buoy activity as we move into the spring home buying season. Freddie Mac reports that rates on a 30-year mortgage are now averaging 4.91 percent, while the 15-year rate came in at 4.13 percent. Adjustable-rate mortgages are also slowly increasing.

Bank repossessions in South Florida decreased during the first quarter of 2011, according to a new report from the locally based firm Condo Vultures. Lenders repossessed 2 percent fewer properties between January and March 2011 than in the same three-month period in 2010 in Miami-Dade, Broward, and Palm Beach counties. The decline represents the tri-county region's first quarterly drop since the real estate crash began in 2007.

RealtyTrac says processing delays have reduced foreclosure activity to its lowest level since the first quarter of 2008. New data released by the tracking firm shows that foreclosure filings were reported on 681,153 U.S. properties during the first three months of this year. That represents a 15 percent decline from the previous quarter and a 27 percent drop from a year ago. Declines were steepest in states where a judicial foreclosure process is used, but looking at the nationwide data for March, RealtyTrac's report indicates that activity is already beginning to pick up some.