Market Studies

Mortgage application volume has fallen for the second straight week, led by a steep drop in home loan refinances even as mortgage interest rates edged downward again. The Mortgage Bankers Association reported Wednesday that its measure of new mortgage applications decreased 8.9 percent for the week ending September 10, 2010. That follows a 1.5 percent drop in home loan applications the week prior.

Independent mortgage bankers and subsidiaries made an average profit of $917 on each loan they originated in the second quarter of 2010, up from $606 per loan in the first quarter of 2010, the Mortgage Bankers Association (MBA) reported Tuesday. The increase was driven by a rise in the average production volume for each firm, as more loans for home purchases were written thanks to the federal government's tax credit incentive.

California's notice of default filings, the first step in the state's foreclosure process, rose for the fourth successive month in August, jumping another 16.6 percent, according to the locally based tracking firm ForeclosureRadar. The company's latest data on the Golden State also show that fewer distressed homeowners are finding foreclosure relief, with cancellations down and foreclosure sales up. ForeclosureRadar has also expanded its coverage starting this month to include data on Arizona, Nevada, Oregon, and Washington.

HUD released a new survey of New Orleans area housing conditions this week. The agency says its the most comprehensive analysis of the metro's housing stock since the department's last assessment in 2004 (prior to Hurricane Katrina). In the five years since Hurricane Katrina struck the area, the New Orleans metro lost 75,000 housing units, nearly 13 percent of its housing stock, and the median monthly cost of housing rose by nearly 33 percent from $662 in 2004 to $882 in 2009.

The government has shifted its resources from civil to criminal mortgage-related cases in recent months. As a result, an industry index that tracks mortgage litigation lawsuits has dropped by more than half. Active cases totaled 75 in the second quarter, according to the report released this week. Activity tumbled 52 percent from the first quarter and was 40 percent lower than a year ago, as the U.S. Department of Justice executed its nationwide crackdown on mortgage fraud, dubbed Operation Stolen Dreams.

Home prices have hit upon relatively stable ground in recent months -- a welcome reprieve from the freefall days most markets had grown acutely accustomed to after the reverberating bursting of the housing bubble. But that stability may be fleeting fast. If you heed the words of the seers keeping a close watch over industry trends and movements in price lines, you should be bracing for another decline in property values, as the elusive floor drops a little lower.

Special servicers of commercial real estate loans are feverishly pursing workouts and liquidations. Their efforts have helped to moderate increases in past dues, but delinquency rates, nonetheless, continue to rise. Two industry reports released last week served to drive this point home. Fitch Ratings says the delinquency rate on loans held in its rated commercial mortgage-backed securities (CMBS) hit 8.48 percent in August. Moody's reported a similar increase to 8.10 percent.

Housing conditions continued to show signs of stabilizing during the second quarter, following a downward trend that began to reverse itself in mid-2009, HUD says in a new report. The federal agency immediately follows that assessment, though, with ""the housing market's recovery remains fragile."" HUD's quarterly commentary on the state of housing in the U.S. sums up a dichotomy of positives and negatives in market indicators. For example, sales and prices of existing homes rose in Q2, but fell for new homes.

A survey conducted of more than 5,000 licensed appraisers across the country by the appraisal management company Coester Appraisal reveals that only 3 percent of appraiser respondents have less than five years of experience, a result that contradicts lenders' and independent appraisers' claims that appraisal management companies (AMCs) are employing inexperienced appraisers. More than half of the AMC appraiser respondents have been in the business for 15 years or more.

For the first time in five months, fewer sellers cut the asking price of their home in August, according to the online real estate marketplace Zillow. As of the end of last month, the company says just over one-fourth, 28.8 percent, of all listings on Zillow had at least one price reduction. That's a decrease from the 30.1 percent of listings that had a price reduction as of the end of July. Zillow says nationally, the median price cut amounts to 7 percent.