As first time buyers begin coming back into the real estate market, we take a look at what is going on in the mortgage industry since last year's $25 billion settlement with the country's five largest mortgage lenders.
Under the settlement, mortgage lenders agreed to make unprecedented changes in how they service mortgage loans and handle foreclosures. With the backing of a federal court order and the oversight of an independent monitor, the agreement created dozens of new consumer protections, making the servicing process substantially more transparent.
The protections range from requiring a single point of contact for borrowers, establishing case review and paperwork processing requirements and deadlines, and restricting practices such as "dual tracking" in which banks pursue a loan modification while simultaneously pursuing a foreclosure.
The $25 billion settlement was with the country's five largest mortgage lenders including Bank of America, Citi, JPMorgan Chase, Wells Fargo, and Ally/GMAC. The settlement raised hopes for a real estate recovery. It's especially urgent in Florida, the state which leads the nation in foreclosures yet which also posted strong across-the-board improvements in 2012.
If you have or want a home loan or refi from Bank of America in Florida, the person ultimately responsible is 54-year-old Tampa-based senior vice president Sandy Robertson. The Bradenton Herald's Stephen Frater caught up with Robertson on Friday for an exclusive interview with the banking giant's go-to-guy for mortgages in the Sunshine State, "the nation's most troubled real estate market."
Q: What is Bank of America's portion of the housing debt market?
A: The bank is the fourth largest bank in the country and has the largest share of the market in Florida.
Q: Currently in Florida, 11 percent of the housing stock is distressed by some definitions, and 40 percent of the market is underwater. Some underwater owners take a calculated decision to walk away and take the credit hit. Does that concern you?
A: Much of the distressed housing stock is due to a back log in the foreclosure process. The bank is working more on proactive short sales and CACs are located in Tampa Bay to help people make the transition easier. People should contact their lender and talk with them when they are underwater. I have a more bullish outlook on the topic. The bank has been able to do more proactive short sales and I'm excited to see the appreciation in home prices. The numbers are trending in a new direction.
Q: Recent "bank-owned" data shows that 45 percent of homeowners believe owning is more affordable than renting. What is the buy-versus-rent calculus in the Florida market following the great recession?
A: The rise in rents relative to home prices may encourage buyers to enter the housing market. Interest rates are also at historic lows, and affordability is high due to lower home prices and low interest rates. Rental prices are dramatically increasing in the Florida market which is another reason why purchasing a home is a more affordable option in many cases.
Q: Please describe Bank of America's program for low-to-moderate income buyer.
A: The bank offers quarterly programs and seminars in the market which educates buyers on the home-buying process. The goal is to provide a realistic view of a buyer's true budget versus what they think they can afford. A buyer should focus on paying themselves first and save for a down payment. Customer Assistance Centers (CAC) are also available in the market to help find resolutions.
Q: With the recession and many people taking hits to their credit score, what is the "new" normal?
A: The standard has not changed much except what we are seeing now is more documentation being needed in terms of income earnings and bank statements. The loan process has changed over the last few years, it takes longer now. Borrowers must be prepared to fully document income and expenses.
Q: Fifty-percent of deals in the Miami market were cash-only in 2012. Is this a new trend? Will it continue?
A: This is not necessarily an increase or something new. We've been seeing this in the market over the past two years. In 2012, there was a range of 30-70% of cash buyers in any market depending on where in the state they were located.
Q: How is the prominence of cash buyers affecting first-time homebuyers?
A: We believe over time we will see less cash buyers as inventory continues to shrink and new development emerges. The best thing for a potential home buyer to do is to work with a lender upfront. It is important to note that more construction will go into the first-time homebuyer market going forward.
Q: What can a potential buyer with a credit score of 600 and a regular job expect? Can this person buy a home?
A: The best thing for someone in this situation to do would be to come in and talk with a lender. We may have some work to do, but they should come in and have a talk with us.
Q: President Obama touched on difficulties people are having with refinancing and mortgage availability during his State of the Union address, How will this be fixed?
A: The relation of loan to value is the biggest issue right now, along with unemployment. The unemployment rate is even higher in Florida. Job growth will be critical in fixing the current state of housing and refinancing options. The state of Florida had a rate of about 50% of the market being underwater homeowners, this has now dropped to approximately 38%. Through the HARP Program (a federal program for homeowners not behind on mortgage payments but unable to get traditional refinancing because the value of the home has declined, they may be eligible to refinance through the U.S. HUD Home Affordable Refinance Program with a new, more affordable, more stable mortgage.) Bank of America has been able to provide help to many underwater homeowners with HARP.
Q: What are some of the bank's Web-based tools used to educate homeowners or would-be buyers?
A; I would refer your readers to our online Home Loan Guide. It is a comprehensive tool for potential home buyers and current homeowners on mortgages, refinancing, and home equity. It is located at, https://www.bankofamerica.com/home-loans/home-loan-guide.go.
Much of the information used in our local market seminars is also included in this guide.
Stephen Frater, Herald senior business reporter, can be reached at 941-745-7095.