For example, one New York renter said he started looking into owning a home when his landlord tried to increase his rent by 13 percent when his lease was up for renewal. He found that he could buy a home and get the same amount of space for cheaper than continuing to rent, plus he’d be building equity. 

Other renters are starting to see that buying may be a better option for them, too. 

Rents are increasing at about the same pace that home values are dropping, says Stan Humphries, Zillow’s chief economist, who says, according to their surveys, home prices have dropped 3.1 percent year-over-year whereas rents have increased 2.5 percent. 

"Herein lie the seeds to eventually more interest in buying on the part of consumers, which will help put a floor under home prices," Humphries told Investors Business Daily. Recent housing surveys, including Zillow’s, are showing home prices are starting to rise in recent months. 

Affordability in housing has been at record highs from the combination of falling home values and record-low mortgages. Humphries says that housing prices have rolled back to 2003 levels. 

"That increased affordability in the face of rising rental prices will begin to get buyers off the fence this year,” Humphries says. "What's been keeping buyers on the fence is a crisis of confidence. People who don't have a job, or who are worried about losing their job, don't buy homes. They also don't want to buy an asset they think is rapidly depreciating.”

National Association of REALTORS®’ Chief Economist Lawrence Yun says the tighter restrictions from lenders are also preventing many potential buyers from securing financing in order to buy. But for those who are able to qualify, Yun says “it’s better to get in now” than wait. 

Source: “Rising Rents Prompt Buys, May Help Housing Recover,” Investors Business Daily (May 10, 2012)

Calling the initiative “highly inappropriate on a national scale,” Burns said the “markets are carefully selected, based on obvious market characteristics – an oversupply of single family homes for sale and a strong demand for rental housing.”

Burns also added that “the pilot will not result in severely discounted sales,” and said the properties won’t be sold to investors if they aren’t purchased at prices close to what Fannie Mae can get through a retail execution.

As a pilot program with many unknowns, deliberate decisions were made regarding the selection of just one company and the sale of already occupied properties.

Burns said “uncertainty surrounding the outcomes of the pilot” led to the involvement of just Fannie Mae.

And why Fannie Mae properties? For one, the GSE holds a concentration of homes in specific markets. Also, FHFA decided only one company should use its resources to test the new model, and three, “legal and operational challenges associated with bundling a group of properties in any given market” led to the decision to have just one company.

This “uncertainty” is also why Burns said a decision was made to sell already renter-occupied homes. When Fannie Mae first announced it put up 2,490 REOs up for sale earlier this year, about 85 percent of them were already occupied by tenants.

“Fannie Mae and FHFA decided to assemble pools composed mainly of rental properties to ensure that large numbers of vacant properties were not held off-market for the significant period of time required to execute a sale,” said Burns.

Recent surveys have shown that foreclosure sales have dropped to their lowest point in more than two years. And while according to March data, 8 percent more homes did enter the foreclosure process from the previous month, that number is down more than 30 percent from a year ago, according to Lender Processing Services. 

CNBC real estate reporter Diana Olick notes that it could be another delay in the foreclosure system “as banks try to modify more loans to meet some of the terms of the [$25 billion] servicing settlement. The foreclosure sales decline also appears to be exclusively in private and portfolio loans, which again points to the settlement.” 

Meanwhile, banks are increasing their number of short-sale transactions, and some surveys have shown that short sales are actually now outpacing foreclosure sales — the first time that's ever occurred.

“Lenders are increasingly recognizing that short sales may be a better alternative for them than foreclosure,” RealtyTrac’s Daren Blomquist told CNBC. “This trend began in markets with stronger demand and where the distressed inventory tends to be newer homes (Phoenix, Los Angeles, Las Vegas), but the trend appears to be spreading to other markets like Atlanta and Detroit.”

Source: “Flood of Foreclosures Still Fails to Materialize,” CNBC (May 2, 2012)

The number of people who say now is a good time to buy is also on the rise, increasing to 73 percent—also the highest level in more than a year. The percentage who said it's a good time to sell a home also increased one point to 14 percent in March.

Meanwhile, more Americans expect rental prices to rise and are projecting an increase by 4.1 percent over the next year, the highest number recorded to date. 

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is more compelling house choice.” 

Source: “Americans’ Expectations Align to Encourage Home Buying,” RISMedia (May 6, 2012)

I think it’s time to flip the script on how we think about down payments. What if we looked at them less as an obstacle, and more as an opportunity? Saving and collecting a down payment takes time, discipline and financial planning. It forces us into creating and practicing sound money management skills and habits, and into making clear choices about what’s important to us - things that will stand us in good stead throughout our tenure as home owners. To boot, the more money we have to put down, the more choice we have in terms of our purchase price range and the more control we have over our monthly payment.

All that said, down payments can be take years to save for, and some buyers are concerned they might miss a good market opportunity by continuing to wait. If you count yourself in that number, here are a handful of less-well known sources for boosting your down payment stockpile:

1. Your City.  Most of us remember the days of the zero-down loan, the federal home buyer tax credit era, and even have memories of when we could use tax credit funds toward our down payment and closing cost requirements. The keyword here is ‘memories’ - those days are long gone, as are the times when there were nationwide programs that allowed a home’s seller to ‘gift’ the buyer a down payment from the overall purchase price of the home.

Where have all the down payment assistance programs gone? Local, that’s where.

The best programs of this sort are now largely operated by local governments, primarily cities and counties. As such, the rules vary widely. Some are exclusively operated for buyers with low or moderate incomes. Others are dedicated to helping first-time home buyers, usually defined as someone who hasn’t owned a home in the past 3 years. Many of these programs have a limited pool of funds that may run out over the course of the fiscal or calendar year, and almost all of them require buyers to jump some major hoops in terms of:

• bringing their own funds to the table
• picking a home that meets certain minimum condition criteria and/or
• completing a course of homeowner education classes

in order to qualify for the funds.  Some state and local programs in areas which were particularly hard hit by the recession also offer big-time bonuses for buyers who agree to purchase a bank-owned home or a property in a designated economic recovery zone.

To find these programs, just run a series of Google searches to find your city, county and state websites.  Most will have a link for Residents, Housing, Homebuyer Assistance or some similar category of resources. And here’s a hint - make sure you’re on a site that ends in .gov - scammers posing as governmental agencies abound.  Also, talk with your trusted, local real estate agent or mortgage broker; they often know the ins and outs of the local programs that can help a home buyer out.

2. Your Parents, Family and Friends.  Many more home buyers than you might think get by with a little help from their friends (and relatives). Most mortgage programs will allow for some portion of your down payment to come in the form of ‘gift money,’ which is exactly what it sounds like: money someone gives you to help you buy a home. Check in with your mortgage pro about how much of your down payment needs you can satisfy with gift money - guidelines varies widely based on how much of your own cash you have to put down and what loan programs you’re applying for.

While gift money sounds great, it’s far from a panacea to the problem of coming up with a down payment. Taking gift money from a relative may create relationship issues or come with emotional strings attached, something you should consider and evaluate before you even have conversations about it with your potential benefactors.

And gift money generally also comes with lender strings attached, as well. Namely, lenders almost always require that gift money be contributed along with a gift letter that states that the giver is a relative and that the money is a gift, not a loan. The lender may also require to see a bank account statement from the giver showing that the money was theirs to give - just to be sure they didn’t go out and get some sort of loan that they expect you to help them repay.

Most insiders think of gift money as large gifts exclusively allowable in the context of a familial relationship, but at least one program I know of allows any general well-wisher to contribute any amount to your cause, whether or not they are a relative. The FHA Bridal Registry program allows couples to open a down payment registry account with their lender, and to deposit checks into that account from anyone who wants to give any amount to help them become home owners. Talk to your FHA mortgage broker for more information on how to open such a registry account.

3. Your Employer.  Universities and the municipal agencies that employ first responders like police and fire personnel frequently make available down payment and other home buying assistance programs to their staffers. So do some large employers or even smaller companies who are seeking to lure top-level recruits, in the form of relocation assistance programs. Check in with your employers’ Human Resource division to explore whether any such assistance is available - and if you happen to find yourself a hot prospect on the job market, consider trying to negotiate relocation or down payment assistance into your offer package.

4. Your Income.  This is not about cutting out a cup of coffee here or there. Euro-style austerity measures are just too hard to keep up for the months or years it can take to save up a down payment. Rather, the idea is to get gut-level real with yourself about what’s really important to you. And if the answer is buying a home, then it’s time to go through your spending with a fine tooth comb and look for the leakage you can stop up  - cash you can redirect to your down payment savings.  

If you spend $20 a workday on oatmeal and coffee at breakfast and your takeout lunch, that’s $400 per month - almost $5000 a year, you can save by simply bringing these things from home (not to mention the health and other benefits you’ll gain). And those numbers are not inflated, if you work in a big city.  Nor is the $100/month cable bill, the $15 yoga class or the $2,000 vacation.

Fact is, you can have much of the enjoyment of these things for much, much less than you’re used to spending - at least while you’re in down payment-saving mode. Stream TV shows and movies online at Netflix, Hulu or Amazon - you can also find great workout videos on some of these channels for 10 percent of what you’d pay to go to a class! Bring the staycation back, or cut hotel costs by renting a private room or small apartment on a site like VRBO or Airbnb (you might be surprised at how nice the experience is if you stick with the vacation rentals that have rave reviews - I certainly was.)  

Redirecting the dollars you would normally spend - whether intentionally or on autopilot - for some of these big-ticket items back into your down payment savings account is like pressing fast forward on your home buying timeline. The key is to click out of money-spending autopilot and to transfer the saved money, asap, into a  separate down payment savings account - ideally one that is online, so you have to think hard and wait a few days before pulling money out.

5. Your Assets.  Some retirement accounts allow you to borrow against or pull out funds, penalty-free, to apply them toward your down payment on a home. Is it advisable for everyone, in every situation to deplete their 401K or IRA to plug that cash into a house?  Absolutely not. But there are situations in which it may make sense to get your down payment up to 20%, say, by borrowing a few thousand dollars from yourself.

If getting your down payment to the 20 percent mark by borrowing from your 401K gets your mortgage interest rate down and allows you to repay that cash to your own retirement account (vs. to your mortgage lender) with interest, you and your financial advisor might agree that this move is the right move for you.  Or not - this is a highly personal decision that must be made strategically, but some home buyers should at least explore whether their retirement accounts are a sensible source of some portion of their down payment funds.

And these aren’t the only assets that can help fund your down payment. I know a young family who has given themselves a complete financial makeover over the last few years by getting rid of unnecessary belongings and selling them at flea markets, yard sales and online. Don’t underestimate what reselling your stuff can yield; my own Mom has had a few four-figure yard sales over the years!

Do you have ‘stuff’ you don’t need or use that someone else would love? Consider liquidating it online or taking it to a consignment store, and using the cash to fluff your down payment savings.  Side benefit: you’ll have less to move when you’re ready to move into your new home!

1. Fierce competition. 

Housing affordability is at record highs, due to falling home values and mortgage rates hovering near record lows. More buyers are taking notice and jumping off the sidelines. And mixed with sinking inventories of homes listed for sale, the competition is getting more fierce. 

Investors are snapping up bargain prices, often in all-cash deals, which means greater competition for traditional home buyers too. 

"Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest," says Jed Smith, managing director of quantitative research for the National Association of REALTORS^®. Smith adds that first-time home buyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market. 

2. More renters show desire to become home owners. 

Recent surveys have shown that buying a home nowadays is more affordable than renting. As such, more renters are finding home ownership more enticing.

The signs are already starting to show: About 59.5 percent of tenants recently surveyed say they intend to renew their leases this year, which is the lowest rate since early 2009, according to a study by Kingsley Associates.

3. Mortgages may be a little pricier. 

Fannie Mae, Freddie Mac, and the Federal Housing Administration recently have raised their loan fees, which means home buyers can expect to pay a little more for their mortgage this spring. 

"Those who don't have credit scores in the high 600s to low 700s may be forced to go the FHA route," says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. "And they will be stuck with the higher fees."

Buyers with smaller down payments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount. 

Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it’ll increase its annual insurance for mortgages more than $625,500. "A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone," Bankrate.com reports. 

Read about more trends expected for the spring selling-season. 

Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)

1. Lowball offers won’t likely stick: Sure, deals are still around, but lowball offers that aren’t in line with comparable sales data are increasingly proving to be a waste of time. Buyers may be better off asking for seller concessions, such as closing cost assistance or making home repairs, rather than making offers way below the asking price. “Keep in mind that a lowball number may turn off the seller and close down any chance at negotiation,” the U.S. News & World Report article cautions potential buyers.  

2. Get pre-approved: Getting a loan isn’t easy nowadays as lenders have tightened their credit standards in recent years. Serious buyers should check their credit and get pre-appoved for a loan to determine how much of a home they can even afford even before they start their home search. 

3. Get realistic about the market: Real estate agents can show buyers comparable nearby sales to help educate them about local market conditions. Transactions from the last six months are the most important. Another important piece of information for buyers is knowing how long properties are staying on the market.  

4. Expect some competition. Housing inventories are dropping in many areas and spurring an increase in demand. Home buyers may face increased competition for the home they want, particularly among short sales and foreclosed properties, in which they may be up against investors who are making all-cash offers. That’s why experts say it’s important bank-financed buyers know their financial situation in advance to better compete. 

5. Conduct property research: Real estate agents will help guide clients on what all they need to do when they find a property they like, but one important step nowadays: Buyers should hire a title company to check for any liens or tax arrearages, the article notes. Housing experts also recommend hiring a home inspector, verifying the accuracy of the property line (by asking seller for the survey or having your own conducted), and make sure all necessary disclosures about the property, required by the state, have been made. 

Source: “Traditional 'Rules' of Home Buying Return,” US News & World Report (May 1, 2012)

“The crash is over,” Mark Zandi, chief economist for Moody’s Analytics Inc., told Bloomberg about the real estate market. “Home sales—both new and existing—and housing starts are now off the bottom.” 

Several economists are saying the bottom of the housing market has already been reached, and the market has been showing several signs of progress, including home prices stabilizing and demand increasing. The economists say they’re optimistic about a recovery in the housing market, despite threats of a foreclosure wave coming. 

One of the biggest signs that a sustainable housing market recovery is taking shape: Consumer confidence is up. 

"Today's consumer confidence shows labor markets recovering and that confidence is going to allow consumers to go out and buy homes," Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi in New York, told Bloomberg. 

Indeed, real estate professionals have been reporting increased activity among home shoppers this spring, too. 

"This year's selling season is shaping up to be the strongest we've seen in years," says Margaret Kelly, RE/MAX's chief executive officer. "Although we don't expect home prices to rise in every market at the same rate, the worst is definitely behind us, and a slow, steady recovery is taking hold."

Source: “Housing Declared Bottoming in U.S.,” Bloomberg News (April 25, 2012)

Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys. 

But the housing deals aren’t expected to stick around much longer.

An improving job market, a decrease in the number of home owners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year, economists say. 

Investors eyeing profits in rentals also have been snapping up bank-owned properties, which Clear Capital’s Alex Villacorte attributes as helping to lead to an increase in prices on foreclosed properties. This “could have a significant impact on the market overall in terms of providing a rising floor to home values,” Villacorte told CNNMoney.

Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and Miami saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data.

"Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000," Tanya Marchiol, founder of Team Investments in Phoenix, told CNNMoney.

Loan Rates, Demand Predictions

Buyers may want to act more quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards. 

The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion.  

Source: “Buying a Home Won't get Much Cheaper,” CNNMoney (May 3, 2012) and “Time To Trade The Lease For A Mortgage?” NPR (May 1, 2012)

"It's a little surprising because we thought bidding wars were done with," Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report. 

"We're writing a record number of offers, but we're not seeing a record number of closings and that's because it's so competitive," Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals. 

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

In the last five years, China alone has seen prices soar more than 110 percent. The sudden spike in home prices has led the government take several efforts to try to curtail the rapid growth, such as by limiting multiple home purchases, raising interest rates, and increasing bank reserve requirements. 

So where are the world’s hottest property markets? CNBC highlights the top five, basing its research on countries that have seen the highest average growth in housing prices from the fourth quarter of 2006 to the fourth quarter in 2011.

1. China
Growth in home prices from 2006-2011: 110.9%

2. Hong Kong
Growth in home prices from 2006-2011: 93.7% 

*Hong Kong has the world’s priciest property.

3. Israel
Growth in home prices from 2006-2011: 54.5%

4. Singapore
Growth in home prices from 2006-2011: 50.5%

5. Colombia
Growth in home prices from 2006-2011: 39.4%

Source: “The World's Hottest Real Estate Markets,” CNBC (April 29, 2012)

According to a survey this March of 4,500 agents and brokers, no REALTORS® complained about low-ball offers. The main problem nowadays: The sudden drop in inventory of for-sale homes has led to fewer homes available to sell.

For home buyers who still think they have a chance of hitting it lucky with a low-ball offer, they’re finding in many markets that their offers are more often being rejected or countered closer to the original asking price, the Los Angeles Times reports.

West Neal with Prudential Olympia in Olympia, Wash., recalls a buyer who came in recently with an offer of $150,000 for a home listed at $250,000. Eventually, they negotiated a final sales price of $230,000, but it took a lot of negotiating on the agents’ parts to get the buyer higher.

"Low-ball offers are down a lot because we're seeing more homes come on the market that are more realistically priced," Neal told the Los Angeles Times. 

Source: “Low-ball Offers Decline in Some Housing Markets,” Los Angeles Times (April 22, 2012)

Here’s what they had to say as some of the best ways to get the “sold” sign out this spring: 

1. Pay attention to “curb appeal”: First impressions are critical, and homes with inviting landscapes and exteriors tend to sell better, agents say. Pay attention that the driveway is in good condition, lawn well-kept, and the house looks freshly painted.  
2. Set the right price: Real estate professionals know how to set the price and prepare a home for sale. Agents use comparable sales of homes sold in the last 60 days to help set the most realistic price for the sales price of a home. By setting a realistic price from the beginning, sellers should be reminded that this will prevent having to drop the price of the home several times before getting it sold and having it linger on the market. If no recent comps are available, some experts recommended sellers get an appraisal, which will also offer a realistic price that the bank may be willing to take when a buyer tries to qualify for financing the home.
3. Talk about energy efficiency: Many buyers don’t fully understand “green” homes but they understand savings. Sellers should point out any features in their homes — such as energy-efficient windows or appliances — that could save buyers money with utility costs. 
4. Give the home Web appeal: Good photographs make a home stand-out online and help lure more potential buyers to the front door. Realtor.com says that more than 6,300 photos are viewed per minute on listings posted at its site.
5. Make it move-in ready: Fix any needed repairs, such as water stains, creaky doors, and windows that don’t shut. Flaws in the home — even if relatively minor — can distract buyers, and should be fixed before the home is even listed. Some agents recommend that sellers get a home inspection prior to putting the home up for sale, which can help sellers be proactive in identifying any potential problems that could potentially derail a sale later on. Once a problem is uncovered, sellers are obligated to disclose it or fix it. 

Read more ideas at 24/7 Wall St.

Source: “13 Ways to Sell Your Home in 2012,” 24/7  Wall St. (April 24, 2012)

“We think of public education as being free, and we think of the main divide in education between public and private schools,” Jonathan Rothwell, a senior research analyst at Brookings, told The New York Times. “But it turns out that it’s actually very expensive to enroll your children in a high-scoring public school.” The cost of living in a high-scoring public neighborhood can be higher than paying a private tuition at a school, researchers note. 

Housing costs near high-scoring schools — those in the top one-fifth of schools in the area — were 2.4 times higher on average, or $11,000 more per year, than homes located in school districts in the bottom fifth, the study found. 

“Some of the areas with the largest differences in housing costs also have the widest gaps in school test scores,” reports CNNMoney about the study’s findings. 

Students from low-income families — classified as those who are eligible for free or reduced-price school lunches — were found to be more likely to attend schools that score in the 42nd percentile on state tests, according to Brookings. On the other hand, students from middle- to high-income households, on average, tend to attend schools that score in the 61st percentile.

Source: “Test Scores and Housing Costs,” The New York Times (April 19, 2012) and “Living Near Good Schools will Cost an Extra $200k,” CNNMoney (April 19, 2012)

“Buying a home is more affordable than renting now in almost every part of the United States,” says Jed Kolko, Trulia’s chief economist. 

The national vacancy rate for apartments during the first quarter fell to its lowest point since late 2001, according to a report by Reis Inc. Cities that have the lowest number of available rental units are seeing some of the largest increases in rents. 

"A lot of people who were owners lost their homes in the bust in these places," Kolko says. As such, many of these former home owners have turned to renting, which has been ramping up demand and driving up rents across the country. 

Nationally, the median rent was $1,350 a month in March — up from $1,285 a year ago, according to Trulia. 

Rents have risen the most the last year in markets such as Sarasota, Fla. (12.9 percent); Miami (12.1 percent), San Francisco (11.1 percent), Middlesex County, Mass. (10.6 percent), and Edison, N.J. (10.5 percent), according to Trulia.

Source: “Rents Keep Rising as Home Prices Stagnate,” CNNMoney (April 5, 2012)

“After five years of a brutal housing market, many people now view their homes more objectively and with less sentimentality,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. “Regardless of legal or ethical issues around strategic defaults, lenders must account for this risk when they evaluate mortgage applications in declining markets. Many homeowners who find themselves upside down on mortgages in the future are likely to consider strategic default as an acceptable exit strategy.”

The lawmakers sent a letter to FHFA Acting Director Edward DeMarco saying such a program would increase the losses to taxpayers and the government-sponsored enterprises. 

The FHFA launched an REO sales program in February, in an attempt to unload the high inventory of foreclosures held by Fannie Mae and Freddie Mac through bulk sales to investors. California holds the highest number of Fannie Mae’s REO inventory, with nearly a quarter of its REOs located in that state alone. 

The California Association of REALTORS® applauded the lawmakers for speaking out against REO sales program. CAR has been a critic of the program, saying that housing inventory in the state is very low and demand is high. Such a program would do more harm than good, the association argues. According to CAR, REO homes have been attracting multiple offers and are closing in less than 60 days on average, and often above the list price. CAR officials argue a government intervention is not needed. 

“Carrying out this plan in California would potentially further delay a housing recovery and ultimately result in greater losses for the taxpayer,” says CAR President LeFrancis Arnold. 

Source: California Association of REALTORS®

The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.

Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).

Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.

The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.

Short-sale transactions are starting to outpace foreclosure sales, as more banks see it as a better option to curb high losses from foreclosures. More mortgage servicers are also trying to increase the pace of approving short sales, a process that is generally viewed as drawn-out and lengthy. 

Short sales increased 33 percent in the last year, according to January data released this week by RealtyTrac. Thirty-two states saw year-over-year increases in short sales. Lender Processing Services Inc., which also recently released its January housing data, showed that short sales accounted for 23.9 percent of home purchases in January while foreclosures made up 19.7 percent of sales — the first time that short sales have outnumbered foreclosures. 

"[We] believe 2012 could be a record year for short sales," says Daren Blomquist, vice president at RealtyTrac.

This week, the Federal Housing Finance Agency, the regulator to mortgage giants Fannie Mae and Freddie Mac, issued new rules to speed up the pace of short sales. Mortgage servicers will be required to respond to a short-sale request within 30 days and make a decision about short-sale offers within 60 days. The new rules go into effect June 1.

Source: “Short Sales Expected to Surge This Year,” CNNMoney (April 19, 2012) and “Short Sales Start to Outpace Foreclosures,” REALTOR® Magazine Daily News (April 19, 2012)

Starting Saturday, April 14, real estate professionals working with BofA will be required to submit five documents for short sales initiated with an offer:

• Purchase Contract including Buyer’s Acknowledgment and Disclosure
• HUD-1
• IRS Form 4506-T
• Bank of America Short Sale Addendum, which includes the Agent Certification form
• Bank of America Third-Party Authorization Form

The acknowledgement and disclosure form, short sale addendum, and the form for third-party authorization are available through the company’s online Agent Resource Center.

The third-party authorization form is a new standardized document developed specifically for BofA. Previously, the lender accepted third-party authorization forms in differing formats and from a variety of sources when transacting a short sale.

Bank of America says it recognized a need for greater compliance and consistency with this important document and has now created its own form to standardize the third-party authorization process. The two-page document requires signed acknowledgments from all borrowers and designated representatives in a short sale. Beginning April 14, BofA will accept only the official Bank of America Third-Party Authorization Form for short sales.

The bank’s new short sale process will enable real estate agents, brokers, attorneys, and other short sale specialists involved in pre-foreclosure transactions to complete tasks such as document collection, valuations, and underwriting simultaneously.

With these steps running concurrently, the timeline from initiation to closing is reduced. In fact, Bank of America says it will now be able to provide a decision on a short sale offer in 20 days. Typically, BofA’s short sale process has taken anywhere from 45 days upwards.

In continuing to streamline the decision process, should the buyer walk away from the sale, Bank of America is giving agents five days to submit a backup offer. Previously, the backup offer window was 14 days. Interested buyers are limited to two counteroffers and will receive a response from the lender within three days.

BofA notes that all email messaging between designated selling agents and their Bank of America short sale specialist will continue to occur within the Equator system. Agents will receive a standard notice via email to log into the system and retrieve their messages.

In order to implement the myriad of changes, BofA’s Equator platform will be down for 10-12 hours the night of Friday, April 13 into the early morning of Saturday, April 14.

Real estate agents and other short sale professionals are invited to review a Bank of America webinar outlining the coming changes. BofA is also offering task-by-task training on the new Equator process via a webinar to be aired on Thursday, April 19 from 4-5 p.m. (EST). Additional information can be found through the company’s online Agent Resource Center.

Bank of America’s short sale and REO executive Bob Hora says the company expects short sales to continue to increase and is taking steps to ensure it is providing decisions quickly and real estate agents are alerted of status as soon as possible.