Monthly Archives: February 2015

Seattle home prices jump as 2015 shapes up to be biggest market in 8 years

Planning to buy a house this year? You’re not alone.

This year is on track to be the biggest year for residential real estate since the 2008 recession, according to Seattle-based real estate listing site Redfin.com.

The company bases this prediction on the number of customers who have requested home tours, which is at its highest level since mid-2013.

Combine that with the fact that there are more homes on the market – up 6.3 percent in January, compared to the same period last year – and it’s looking like 2015 will be a good year for Realtors.

Unfortunately for Seattleites, the number of new homes listed for sale is 5,605 – only about a 2.6 month supply, Redfin says. A six-month supply is considered a “balanced market.”

That means homebuyers will pay more.

The median home price in Seattle has jumped 9.1 percent since this same time last year to $360,000 per year. The national average is a year-over-year increase of 3.8 percent.

Buyers in the greater Seattle area bought 2,150 new homes in January, a 35 percent drop from the previous month, but a slight increase in the number of homes purchased last year.

So basically, we’re paying more for the same number of homes, and the supply is dwindling. And if Redfin‘s predictions are correct, it’s only going to get more competitive from here.

Emily Parkhurst oversees all digital content for the Puget Sound Business Journal.

 

Local military families paid for foreclosure errors

Several large banks will pay $123.4 million to members of the military for violating a federal law that is to protect service members from foreclosures when they’re on active duty, the U.S. Department of Justice reported.

While Puget Sound area families were included, no official number was available.

The lenders have been accused of violating the Servicemembers Civil Relief Act, which prevents non-judicial foreclosures against service members who are on or recently left active duty. The foreclosures involved in the most recent settlement occurred between January 1, 2006, and April 4, 2012.

“Service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country,” said Acting Associate Attorney General Stuart Delery in a press release.

The U.S. Department of Justice said that 666 service members and their co-borrowers will receive $88 million from JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc., and Ally Financial Inc. Another 286 members have already received about $35 million under a 2011 settlement with Bank of America Corp., the government reports.

Service members with mortgages serviced by Wells Fargo, Citi, and GMAC Mortgage will each receive $125,000, as well as any lost equity in the home and interest on the equity, the DOJ reported.

The DOJ also said that JP Morgan Chase has agreed to provide any affected service member the property free of any debt or the cash equivalent of the full value of the home at the time of sale. The bank will also allow any service member to submit a claim for compensation for any additional harm suffered.

Attorney General’s lawsuit against Standard & Poor’s leads to $21.5 million recovery for Washington state

Key credit-rating firm acknowledges role in financial crisis in one of state’s largest consumer protection recoveries

SEATTLE — Attorney General Bob Ferguson today announced Standard & Poor’s Financial Services LLC will pay Washington state $21.5 million as a result of an investigation into the company’s misleading of investors when it rated structured finance securities in the lead-up to and the years following the 2007-08 financial crisis.

In addition to Washington, the credit rating agency will settle similar claims with the U.S. Department of Justice and the coalition of 18 other states and the District of Columbia that worked on the case. Washington played a key role in the matter, filing suit in Snohomish County Superior Court.

In total, S&P will pay $1.4 billion to the federal government and the coalition of states.  S&P will pay $687.5 million to the DOJ and another $687.5 million to the states. Washington’s share will be more than $21.5 million, one of the state’s largest ever consumer protection recoveries, which is due to the state in 30 days. The overall payment is expected to wipe out S&P’s operating profit for the year.

“To protect its own profits, S&P inflated the credit ratings of toxic, mortgage-backed assets, jeopardizing the financial future of millions of people who were invested in these securities,” Ferguson said. “My office is charged with ensuring that companies play by the rules, and this agreement, the result of nearly two years of hard-fought litigation, holds S&P accountable for its role in the financial crisis.”

In the agreement, S&P acknowledges its credit ratings of structured securities were not the objective, impartial risk assessments it claimed to offer the market. Rather, the ratings were improperly influenced by S&P’s considerations of revenue and market share.  

Structured finance securities backed by subprime and other mortgages were at the center of the 2007-08 financial crisis. These financial products, including residential mortgage backed securities (RMBS), commercial mortgage backed securities (CMBS), and collateralized debt obligations (CDOs), derive their value from monthly debt payments. Investors rely upon third-party debt rating agencies like S&P to provide a fair, impartial assessment of the risk profile of these instruments to assess their appropriateness for their portfolios.

The sudden implosion of many of these securities — backed in many cases by S&P’s solid AAA ratings — took many investors by surprise and rippled throughout the economy as whole. Retirement accounts, pension funds and other investments took heavy losses, which contributed significantly to the collapse of the financial markets, the foreclosure crisis, and the Great Recession.

S&P’s actions caused significant damage to Washington state’s economy, particularly in the form of lost tax revenue. For that reason, $18 million of the funds received will return to the state’s general fund. Another $3 million will be set aside to help victims of the mortgage and financial crisis. The remainder will repay the state’s costs and fees associated with the case.  

In February 2013, Washington, the Department of Justice, the District of Columbia and 15 additional states sued S&P. Connecticut, Mississippi, and Illinois had previously filed suit.

The federal and state complaints set forth a scheme in which, while repeatedly emphasizing its independence and objectivity to investors and regulators, S&P instead succumbed to the appeal of lucrative fees from its investment banking clients and vouched for the soundness of risky, complex financial instruments.

When the investments backed by subprime mortgages failed, investors suffered significant losses that contributed to the destabilization of the entire U.S. — and indeed global — financial system. Even those who had not invested in these financial products suffered as the result of a seizure in the debt markets, plunging equity values, falling home prices and high unemployment.

As part of the agreement, S&P will comply with all applicable state laws, including Washington’s Consumer Protection Act, and for five years will cooperate with any request for information from any state expressing concern over a possible violation of state law. Washington will file a consent decree in Snohomish County Superior Court to implement the terms of the settlement agreement and resolve its lawsuit.

In August 2014, the Securities and Exchange Commission adopted new requirements for credit rating agencies that address conflicts of interest and procedures to protect the integrity and transparency of rating methodologies. The ratings agencies were also required to certify credit ratings, attesting that they were not influenced by other business activities.

In addition to Washington, the states involved in today’s resolution include Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, and Tennessee, as well as the District of Columbia.

Ferguson especially thanks Connecticut Attorney General George Jepsen for his office’s exceptional leadership and partnership throughout this case.

Consumer Protection Division Chief Shannon Smith and Assistant Attorney General Benjamin J. Roesch are leads on this case for Washington.

The settlement documents and the statements of facts will be available later today at www.atg.wa.gov.

 

Obtain a quote

Discover your options by requesting a free note analysis

The only way to decide what is best for your situation is to know the options available.

When you request a free note analysis it reveals the current market value of your payments – similar to what a real estate appraisal provides for real property. Sometimes referred to as a “note appraisal” or “request for quote,” it lets you know how much your future payments are worth in cash dollars today!