Hanley Wood Market Intelligence’s Builder Market Health Index was released earlier this month, ranking the 100 largest housing markets by health. The index was formulated using projections for employment, household formation, income and home values.

The good news is that no California market was ranked in the Bottom 10 Coolest Housing Markets, which included:

1. Pittsburgh, PA
2. New Orleans, LA
3. Tallahassee, FL
4. Syracuse, NY
5. Cleveland, OH
6. Jacksonville, FL
7. Miami, FL
8. Detroit, MI
9. Tampa, FL
10. Lakeland, FL

The bad news is that California wasn’t in the Top 10 Hottest Housing Markets either (the highest ranked California housing market was San Diego at #25):

1. Austin, TX
2. Raleigh, NC
3. Charlotte, NC
4. San Antonio, TX
5. Charleston, SC
6. Denver, CO
7. Huntsville, AL
8. Washington, DC
9. Durham, NC
10. Eugene, OR

See the full report here.

Two former senior executives with Fannie Mae appeared at a hearing before the Congressional Financial Crisis Inquiry Commission earlier this month and used an argument well-known to naughty children everywhere trying to explain away bad behavior: everyone else was doing it.

From the USA Today coverage of the hearing:

Just before the housing bust, executives at the Washington-based mortgage company worried about losing relevance as Wall Street companies issued mortgage securities and stole market share, according to a July 2005 internal presentation disclosed by the panel.

While executives were aware of “growing concern about housing bubbles,” the presentation said, they also feared the company could come a “niche player” amid competition from Wall Street.

“Could we really sit out?” Levin told the panel. “Would we be permitted to sit out? That’s what we were grappling with.”

Short-term concerns ultimately prevailed, and Fannie dived increasingly into riskier loans, like those that didn’t require proof of income.

Then, as the market turned down, Mudd noted “virtually every other housing sector investor fled the market.” Fannie and sibling company Freddie Mac “were specifically required to take up the slack.”

Members of the panel blasted the executives for failing to plan for a drop in home prices, and Mudd conceded that the company was consistently surprised as prices fell.

If you’ve attended any of our Short Sales presentations, you know this, because we talk about it a lot…but just in case you missed it, Freddie Mac is now making it clear that they are aware of and are taking steps to prevent Short Sales fraud.

From an April 12 press release on their website:

There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.

• A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
• The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
• The lender/investor accepts the offer for $70,000.
• The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
• Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.

At first glance, this may look like a legitimate short payoff. However, in this example, the fraud is the failure to disclose the second, higher offer. The facilitator is willfully withholding important information the same way a scam artist would, and the lender does not realize they are walking into a premeditated short payoff fraud scheme. Because the facilitator is deliberately withholding the higher offer, Freddie Mac also experiences a larger than necessary loss on this sale.

An analysis released last week by financial services technology provider Fiserv, Inc. says that residential real estate markets in California, Arizona, Nevada and Florida won’t be back for another 15 years or later.

For Sacramento, make that 29+ years. Fiserv says that Sacramento home prices peaked in the fourth quarter of 2005 and are expected to reach bottom at the end of June of this year. They are not expected to return to peak 2005 levels until after 2039.

From the Fiserv press release on their latest home price report:

“Nationally, Fiserv Case-Shiller data points to a further seven percent decline in home prices through the end of this year, with a prolonged recovery beginning early in 2011. In many markets, the emphasis is on the word ‘prolonged,’” said David Stiff, Chief Economist, Fiserv. “We see several powerful forces in the market that will severely hinder the housing recoveries of many metro areas, particularly in the hard-hit states of California, Florida, Arizona and Nevada. It will take these markets 15 or more years before home prices climb back to their peaks.”

While the bubble markets have received the greatest attention, there are other dynamics affecting the pace of home price recovery in other regions. High levels of unemployment associated with the recession and the steep decline in manufacturing jobs has reduced housing demand and prices in many metro areas in the industrial Midwest, including Michigan, Indiana and Ohio. Such markets, at the epicenter of job losses in manufacturing, are not expected to return to peak levels for at least five years, and potentially more than a decade.”

The owners of Foreclosure Freedom, a loan relief company in Fresno and Orange County, have been sentenced to a year in jail and four years of probation after pleading guilty to grand theft, conspiracy and unlawful foreclosure consulting.

The two women – Marianne Curtis of Costa Mesa and Mary Alice Yraceburu of Riverside — must also repay three dozen victims over $32,000, or more if additional victims come forward.

The women preyed on distressed homeowners, telling them they could renegotiate their mortgages and charging each $1,800 in advance to do so. Evidence showed that the women never renegotiated any mortgages, and many of the victims lost their homes to foreclosure or had to file bankruptcy.

The median price of a home in the Bay Area was up 31% in March from the same month one year ago, and now stands at $380,000.

According to a report by MDA DataQuick, Bay area home sales also saw a spike in March, up over 40% from last month and 10% from March 2009.

Foreclosure sales accounted for almost 32% of existing Bay area home sales in March, down from last month and one year ago. However, there are signs that foreclosure resales will increase again in the near future because of a predicted rise in homeowners failing to qualify for loan modifications.

Statewide, March home sales were up almost 33% from last month, and up 3% from one year ago. The median price for a California home sale in March was $255,000, up 2.4% from one month ago.

For the Bay Area report, go here. For the report on statewide March home sales, go here.

And you thought April 15 couldn’t get any worse…add RealtyTrac’s U.S. Foreclosure Market Report out last Thursday that shows a 7% increase in foreclosure filings for the first quarter of 2010.

March filings were up almost 19% over the previous month and up 8% from March of 2009. Nevada, Arizona and Florida were the top three states for foreclosure filings in the first quarter, and California came in at #4, even though the state’s foreclosure rate dropped 6% from the same period last year.

And California still accounts for 23% of the nation’s total foreclosure activity all by itself.

From the April 15 report:

“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.

“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”

Talk about chickens coming home to roost….

On Friday, Goldman Sachs – the most profitable Wall Street firm in history — was charged with fraud by the U.S. Securities and Exchange Commission in the structuring and marketing of a debt product tied to subprime mortgages.

The SEC complaint named Goldman VP Fabrice Touree as the principal architect of a synthetic collateralized debt obligation (CDO) – called ABACUS — that relied on the performance of subprime residential mortgage-backed securities, costing investors more than $1 billion. Touree has also been charged with fraud.

The SEC says that Goldman didn’t tell investors “vital information” about ABACUS, including that a major hedge fund – Paulson & Co. – was involved in choosing the securities that made up part of the portfolio, and had taken a short position against the CDO, betting its value would fall.

Read the text of the SEC’s complaint against Goldman Sachs here.

BusinessWeek came out recently with a feature on The 50 Most Powerful People in U.S. Real Estate.

The list is a blend of economists, policymakers, industry organizations, homebuilders, bankers, brokers, insurers, developers, investors and property owners, and is not ranked.

There are only two women on the list: NAR president Vicki Cox Golder and Bank of America Home Loans & Insurance president Barbara J. Desoer.

Ted Turner is on the list as the largest individual landowner in North America. He has a scant two million acres.

For the complete list and report, go here.

HUD announced this week that it is changing how it defines foreclosed and abandoned properties.

At HUD, foreclosed used to apply only to properties that had completed the foreclosure process. Now, foreclosed at HUD also encompasses properties in default.

The agency used abandoned to define property that had been foreclosed on and had been vacant for at least 90 days. Now, abandoned includes homes with lingering code violations and those where mortgage or tax payments are more than 90 days overdue.

From DSNews.com:

HUD officials say the new wordsmith-ing will help communities acquire, rehabilitate, and re-sell foreclosed and abandoned properties more quickly under the Neighborhood Stabilization Program (NSP) and help prevent further decline in hard-hit neighborhoods.

The changes come just as reports are surfacing that states and local municipalities have spent less than half of the $4 billion available through the NSP initiative to buy up distressed properties in their communities.

For the complete report, go here.