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Fannie Mae sees housing upturn as ‘intact’

Sales could be ‘bumpy’ in first half of the year

BY INMAN NEWS, THURSDAY, MARCH 28, 2013.

Inman News®

Despite some bumps in the road, the housing upturn is “intact” and rising home prices are expected to boost household net worth and offset fiscal tightening, according to a monthly economic outlook released today by economists at Fannie Mae.

Tight inventories continue to restrain sales of existing homes. Although the number of homes on the marketgrew by nearly 10 percent from January to February, the 1.94 million homes for sale represented a 19.2 percent decline from the same time a year ago

Pending sales of existing homes dipped 0.4 percent from January to February, but remained at their second-highest level in nearly three years, according to the National Association of Realtors.

New-home sales also slipped from January to February and builder confidence was down for the second month in a row in March. But housing starts reached anear five-year high in February and new-home sales climbed 12.3 percent year-over-year.

Fannie Mae economists project that existing-home sales, which were up 9.4 percent last year, wlll grow by an additional 10.5 percent this year, to 5.15 million homes, and by 6.2 percent in 2014, to nearly 5.5 million homes. Sales of new single-family homes are expected to post even stronger growth — 15.1 percent this year and 44.1 percent in 2014.

The increases will be supported by a rebound in household formation, historically high housing affordability, improving sentiment toward the housing market, and continued strong demand from investors, Fannie Mae said.

“We expect home prices to firm further amid a durable housing recovery, continuing to boost household net worth, gradually diminishing the population of underwater borrowers, and reducing incentive for strategic defaults,” the Fannie Mae report said.

Potential headwinds to economic growth and housing headwinds include fallout from the ongoing European debt crisis, spending cuts by federal, state and local governments, and potential cutbacks in the Federal Reserve’s ongoing purchases of Treasurys and mortgage-backed securities, which have helped keep interest rates low.

Although concerns about Europe’s financial stability flared up this month, and tax increases and government spending cuts known as “sequestration” that could restrain growth took effect March 1, Fannie Mae economists said their forecast for housing remains little changed from last month.

The forecast still assumes that Congress will reach a compromise on sequestration, but warned that the failure to avert full sequestration could amount to a 0.5 percent drag on economic growth for the year.

Fannie Mae economists expect the Federal Reserve will continue buying up Treasurys and MBS through the end of the year, but that rates on 30-year fixed-rate mortgages will climb from an average of 3.5 percent during the first quarter to an average of 4 percent during the final three months of this year. Rates on 30-year fixed-rate mortgages are expected to continue climbing to an average of 4.5 percent during the fourth quarter of 2014.

Purchase mortgage applications fell in three out of four weeks in February and then rebounded strongly earlier this month, Fannie Mae economists said, “suggesting that the ongoing recovery in home sales could be bumpy during the first half of this year.”

Purchase loans are projected to rise by 16.8 percent this year, to $619 billion, and by 17.1 percent in 2014, to $725 billion. But expected declines in refinancings are expected to push total mortgage originations down by 14.5 percent this year, to $1.65 trillion, and by another 31.4 percent in 2014, to $1.13 trillion.

All in all, housing is providing a tailwind to the economy, the report said. Fannie Mae economists project the median price of an existing home to appreciate by 4 percent in 2013, to $184,000, and that the median price of a new home will increase 1.6 percent, to $249,000.

Fannie Mae economists expect unemployment will average 7.7 percent this year and 7.4 percent rate in 2014. After an upward revision, real gross domestic product growth clocked in at 1.6 percent for 2012. Fannie Mae economists predict 2.1 percent growth this year followed by 2.6 percent growth in 2014.

by Shannon Mullen

It’s official — as of March 20th, the spring real estate season is upon us.  And with record low interest rates, we’ve been hearing for months now that there’s never been a better time to buy a home.

Trouble is there’s not much to buy, with inventory at its lowest point in over a decade.  The hunt for listings has some realtors trying new tricks and even pulling out some old ones.

In Boston, one of the hottest addresses is the city’s Seaport District.  It’s full of trendy new restaurants and warehouses converted to office space and condos.  There are plenty of units to rent here, but places for sale are rare.  So when a loft opened up in a former bra factory,Realtor Ken Snyder jumped on the listing.

“It’s really huge, just shy of 1500 square feet,” Snyder says, showing off the unit.  “So you’ve got the concrete columns, concrete floors, double-height windows, and the exposed HVAC pipes. A lot of people kind of like that aesthetic.”

Snyder says the owners have been renting the loft but were not planning to sell until they saw a post on his Facebook page about the shortage of homes on the market and bidding wars over new listings.

“I’ve been posting kind of my war stories with buyers, saying ‘Hey, you know what, I’ve had six offers on this, seven offers on that, twenty-five offers on this one.  Sellers, hello?  Where are you?!’” Snyder says.  “There’s such little inventory that my joke is it’s like the last shrimp at the buffet at a cocktail party and everyone’s jumping on it to try and get to it.”

Other realtors in the area are holding classes for first-time home sellers, instead of buyers.  There are half as many homes on the market in Massachusetts this year as there were before the recession.  The National Association of Realtors (NAR) says across the country, inventory hasn’t been this low in 13 years.

“Many of the investors have come into the market, scooped up property at bargain prices hoping to rent it out,” says NAR Chief Economist Lawrence Yun.  “The second part is that home building activity has been greatly suppressed for the past 5 years.”

Yun says new home construction is at a 50-year low.  One silver lining for sellers — the inventory shortage is driving up home prices.  That’s good news for people whose homes lost value during the housing crisis and the spring market might move some of them to sell.

“There will be some temporary relief, but very temporary, because over the long haul, the true way to add inventory is through new home construction,” says Yun.

So until building picks up, the bottleneck continues.  In the suburbs of Boston, Realtor Gary Rogers estimates there are ten buyers for every seller, and to find new listings he’s using tactics that he hasn’t relied on for a decade.

“We’re writing letters to sellers,” he says.  “We’re actually going back to snail mail.  We used to have these huge mailing campaigns and I’d drop a thousand dollars a month on mail.  It used to be junk mail. Now nobody else is doing it, and all the sudden I’m getting calls.”

But there’s still one big problem…

Even when Rogers does find potential sellers, he says a lot of them are afraid to go live with their listings; with such low inventory on the market, they’d have no place to go if their homes sold.

Have you heard a lot about refinancing lately? Are you wondering if refinancing your own mortgage makes sense?

To figure this out, it’s a good idea to first understand what refinancing is. According to a mortgage refinancing guide published by the Federal Reserve System, the central bank of the United States, “When you refinance, you pay off your existing mortgage and create a new one.”

And there are many reasons to refinance, says Todd Huettner, a mortgage broker at Huettner Capital in Denver, Colorado.

“People refinance to lower their interest rate, obtain equity from their property, or go from an adjustable rate to a fixed rate,” Huettner says.

Think refinancing might be in the cards for you? Keep reading to learn about more smart reasons to refinance.

Reason #1: You Want a Lower Interest Rate

You may have heard that mortgage rates are at an all-time low. But what does this mean to you?

Potentially big savings, that’s what it means.

Just consider this: As of October 25th, 2012, the average 30-year fixed-rate mortgage had a 3.41 interest rate, according to a press release published by the Federal Home Loan Mortgage Corporation (also known as Freddie Mac).

[Want to lower your interest rate? Click to compare rates from multiple lenders now.]

And scoring a lower rate mortgage could add up to considerable savings over the life of your loan, according to Andrew Schrage, editor of the consumer savings site, MoneyCrashers.com.

Schrage offers this example to help illustrate the potential savings: “If you’re five years into your 30-year fixed mortgage, with a current loan balance of $200,000 at 5.5 percent, by refinancing to a 3.375 percent interest rate, you could lower your monthly payment by approximately $250,” he says.

Reason #2: You Can Afford a Higher Monthly Payment

Let’s say you just got a long-term job promotion and it came with a hefty pay increase. You could treat yourself to a new car or a new wardrobe, but why not invest that money in your home?

“The benefits of refinancing are not only for those looking to cut their monthly payment,” says Schrage. “If you can afford a slightly higher payment, you can save a bundle by refinancing to a 15-year fixed term.”

And refinancing from a 30-year fixed to 15-year fixed loan is a big, money-saving trend, says Huettner.

“People are extremely motivated to reduce debt,” Huettner says. “Far more people are shortening the term on their loans and trying to get out of debt as soon as possible.”

[Want to refinance to a shorter-term loan? Click to compare mortgage rates now.]

Shortening the term of your loan generally means you’ll have a lower interest rate, too, according to the Federal Reserve. And this could help you save a good chunk of change in the long run.

To highlight the potential savings, Schrage gives an example of someone who is five years into a 30-year fixed mortgage at 5.5 percent, with a current loan balance of $200,000.

“By switching to a 15-year fixed at 2.5 percent, your monthly payment goes up by $200, but you save almost $100,000 over the remainder of the mortgage,” he explains.

With this example, refinancing to pay a little extra month seems worth it, right?

Reason #3: You Plan to Stay in Your Home for the Long Term

How long do you plan to stay in your home? If your answer is “not much longer,” then it might not make sense for you to refinance.

Why? Because when you refinance your mortgage, it includes closing costs, which can amount to 3 to 6 percent of the loan, according to the Federal Reserve.

And if you decide to move soon after you refinance, then the refinancing costs may outweigh the savings.

[Think refinancing is right for you? Click to compare rates from multiple lenders now.]

On the other hand, if you plan to stay in your home for the long term, it could make sense to refinance into a low-interest rate loan, says Gloria Schulman, founder of Southern California mortgage lender, CenTek Capital Group.

“This could be an especially attractive option for young borrowers, who can lock themselves into a 30-year fixed mortgage at rates they may never see again in their lifetimes,” says Schulman.

Reason # 4: You Want to Get Out of Your Adjustable-Rate Mortgage (ARM)

If you have an adjustable-rate mortgage (ARM), your monthly payments fluctuate as the interest rate changes. “With this kind of mortgage, your payments could increase or decrease,” the Federal Reserve notes.

And if they go down, that’s great. But if they go up…well, your bank account could take a hit.

Now, if you’re not a fan of unpredictability, this type of loan could be a bit unnerving. And if you’re looking to get out of it – and lock in a low fixed-rate loan – refinancing your mortgage could help you do just that.

[Want to switch to a fixed mortgage rate? Click to compare rates from multiple lenders now.]

By Lisa Manterfield

Before you do this, however, one thing to consider is that ARMs “may start with lower monthly payments than fixed-rate mortgages,” notes the Federal Reserve’s handbook on ARMs.

With that in mind, refinancing to an ARM with better terms (like a lower interest rate), could be a good idea, “especially if you can pay off the house within 10 years,” says Schulman. “Rates for 5- to 7-year ARMs are at historic lows,” she says, “and no one is expecting rates to rise at all until at least 2014.”

Deciding on which mortgage type is right for you is a big financial decision, which is why the Federal Reserve recommends asking a lot questions about the loan features.

“And keep asking until you get clear and complete answers,” the Federal Reserve adds.

By Jennifer Karmon

Is your kitchen begging for an update? Does that green and purple tile make you cringe on every trip to the fridge? If so, now might be the time to explore the latest trends in kitchen remodeling.

According to the National Association of the Remodeling Industry’s website, planning out exactly what you want out of your kitchen remodel will help you set realistic budgets.

And if you’re still not sure what you want or even where to begin, don’t panic. Here are some ideas from our country-wide panel of design and contracting experts who agree these are the six hot kitchen remodel trends for 2013.

Trend #1: Refacing Kitchen Cabinets

Do you want a fresh look for your kitchen cabinets, but don’t want to go through the hassle of actually replacing them?

Good news: Kathleen Donohue, an award-winning designer with Neil Kelly Designs, says that refacing cabinets – not replacing – is in. Donohue says this trend is in because people are watching how they spend their money. And since refacing is the process of just changing cabinet doors while maintaining the original cabinet structure, it’s a much less expensive option.

And when it comes to cabinet refacing, think simple and sleek, says Donohue.

“When refacing cabinets, a clean, simple contemporary look is winning out, both from an updating standpoint, and a trend to eliminate unnecessary clutter and fussy details that equate to high maintenance and complicated living – both unpopular trends,” says Donohue.

Trend #2: Stone and Solid Countertops

Are you dreaming about a gleaming new countertop to spruce up your kitchen? Consider quartz countertops, which experts say will be the material of choice in 2013 due to its durability.

“Stone countertops are losing ground to quartz composite countertops that are no-maintenance and the closest thing to bullet-proof countertop materials available today,” says Donohue.

Florida-based kitchen and bath designer, Patricia Davis Brown, says another reason for quartz’s popularity is that it has less fussy patterning than granite.

But quartz isn’t the only trendy material for counters in 2013, according to Mark Fies, board of directors member for the Metro D.C. chapter of the National Association of the Remodeling Industry.

Fies says more homeowners are asking for concrete countertops to create a custom and eye catching look. “With concrete you have endless colors to choose from, the ability to shape the surface as you see fit, and you can even embed materials and/or designs right into the surface,” he says.

Trend #3: Hardwood Floors

Are you thinking about replacing your worn and ripped kitchen linoleum with gleaming hardwood floors?

Good, because our kitchen experts agree that hardwood floors remain a hot kitchen remodeling trend for 2013, with a few new developments.

For example, “I am starting to see lighter shades of wood floors again – something that hasn’t been seen in a while,” says Chappaqua New York interior designer, Cami Weinstein.

And Brown sees the same trend in Florida. “The washed wood floors are back but, with a twist – wider planks and hand scraping, giving a beachy feel,” she says.

But hardwood floors can be a lot of work in terms of both installation and maintenance. Luckily, there are some options to give you that classic wood floor look – without the hassle.

For example, Goldberg and Donohue are seeing a trend in hardwood-looking floors made from durable and easier-to-install materials, such as engineered wood flooring, which is made from a plywood base with a real hardwood veneer.

“Engineered wood continues to be popular, but so is porcelain tile that looks like wood, with less maintenance and better water tolerance,” says Goldberg.

Trend #4: Stylish Sink

Adding a stylish sink can drastically change the look of your kitchen. So what will be trending in 2013? Fies says the answer is deep bowl sinks.

“Deep bowls are still the rage,” he says. “Although there are endless possibilities with today’s sinks, our homeowners want large, deep sinks to accommodate their larger pots and pans. The debate between single or double bowl is still in full effect, but we tend to see homeowners choosing the one bowl option.”

After you’ve decided on the style, the next thing to consider is the material of the sink. And in terms of what will be trending for 2013, Weinstein believes stainless steel sinks will be hot due to their durability and flexibility.

“They just look great for a very long time and work with both modern and traditional cabinetry,” he says.

Trend #5: Appliances

If you’ve been thinking about investing in new appliances, this could be the year to justify buying that commercial stove. According to Weinstein, incorporating commercial-style stoves and other useful built-in appliances in kitchen remodeling projects is a hot trend for 2013.

“Commercial stoves and stainless steel appliances continue to be used and enjoyed,” she says. In addition, features that save homeowners time and space are becoming increasingly popular. “One of her favorites is a hot water dispenser. “They are great for a quick cup of tea, hot cocoa, or mixing with boullion cube for a stock,” she says.

Adding to that concept, Goldberg says kitchen features that do double-duty and save valuable kitchen space are also must-haves for 2013.

This includes microwaves that double as second ovens and warming drawers, and refrigerators with convertible drawers that can act as the fridge, freezer, or wine fridge.

“Multi-taskers that serve more than one need are hot,” says Goldberg.

Trend #6: Mixing Cabinet Colors

Is dark brown too bland, but red too vibrant? Will white cabinets turn a dull shade of gray after the kids put their hands on them? If you can’t decide on a color for your kitchen cabinets, never fear – our experts say it isn’t just one color that will be trending in 2013, but rather a combination of colors.

“Homeowners no longer need to choose between white, medium, or dark tone cabinetry,” says Fies. He adds that a variety of colors will provide visual interest, and can immediately give your kitchen an updated, modern look.

So what are some ways you could incorporate a combination of colors into your own kitchen?

“I am starting to see kitchen cabinetry painted in shades of cream, taupe and gray, often mixing in a darker wood for an island or the lower cabinets,” says Fies.

Well, it might be time to make some small updates. But be warned: Some remodeling projects could not only be huge money suckers, but they might also fail to add resale value to your home.

When deciding which projects are worth completing, you don’t want to over-invest your time and money. Expensive projects are rarely worth it if your goal is simply to sell the house.

“Beware of projects that could run into delays,” says Ben Bowen, a third-generation landscaper in Portland, OR. ”You don’t want to end up in a situation where you have to either put off listing the house or trying to sell it with an unfinished project going on.”

So, which projects are worth it and which aren’t? Here are three renovations to tackle and three to avoid before you put your house on the market.

Project-to-Avoid: Adding Unconventional Appliances or Features

A built-in wine fridge, custom closets, or a hot tub may sound like a dream addition to your home, but what happens if the buyer hates wine or thinks the hot tub is an eyesore?

“You are not going to get very much extra money for your wine cellar if the prospective buyer is looking at it as a great thing to tear out and replace with a home theatre,” says Jeff Moeslein, president of Legacy Remodeling, Inc., a specialty remodeling company in western Pennsylvania.

Adding unique features to your home makes sense if you like those things and are planning on enjoying them yourself, according to Moeslein. Just don’t expect to recover the total cost when you’re ready to sell.

Other contractors agree: “If you are considering adding a ‘special touch’ to your home to entice new buyers, save your money,” says Aja Covell, a certified general contractor and the owner of Investcove Properties, a residential development company.

Why? These personal touches – anything from funky kitchen tile to accent paint to wall decals – make it harder for other families to picture themselves living in the house.

Try This Instead: Middle-of-the-Road Kitchen Upgrades

Instead of adding unconventional touches to your home, consider updating different elements in your kitchen – like your cabinets, for example. Complete kitchen remodels can be complicated and costly, but small upgrades take less time, cost less, and can often be done without even hiring a contractor.

Erica Lugbill, the owner and lead designer of Lugbill Designs, a Chicago-based residential design firm, recommends focusing on small “face-lift” projects, such as painting your cabinets, switching out your hardware, installing a tile backsplash, or replacing the countertops.

And there are ways to make the latter project even more cost-efficient: “You can go to a stone remnant yard where there is often a large selection of discount pieces of granite or quartz that can be installed for a fraction of the cost,” says Lugbill.

If it’s going to take a little more than elbow grease to get your kitchen in shape, Moeslein recommends what he calls a “replacement kitchen.” This is a kitchen remodel in which the existing cabinets and countertops are replaced with new ones, but the layout of the kitchen is not changed.

“If you stick to moderately priced materials, a replacement kitchen is a smart investment for homeowners looking to sell,” he adds.

Project-to-Avoid: Room Additions

Want to increase the square footage of your home? A room addition might sound like a great idea, until you realize that doing so could cost you as much as $100,000.

In fact, according to Remodeling magazine’s 2011-2012 “Cost vs. Value Report,” a master suite could cost over $106,000, while adding a family room could run you around $83,000.

Large projects like additions, sunrooms, and master suites are also not worth pursuing because they typically stretch across a long period of time, according to Moeslein. “From planning to obtaining a permit to completion, a large addition may take six to nine months,” says Moeslein.

And Moeslein has another interesting insight about the drawbacks of room additions. “If you put a large addition on your home, you may help increase the value of the homes around you, but you won’t do anything for yourself, except make it harder to sell your house at the price you want.” After all, your house would look very similar to the ones around it, but you would have to charge a much higher price to recoup some of the investment.

Try This Instead: Roof Replacement

Rather than extending the size of the house, worry about making the outside look inviting.

And if your home has a leaking roof, you should absolutely talk to a contractor about having it repaired or replaced immediately. “A leaking roof will either push away prospective buyers or lead them to demand large price concessions,” says Moeslein. Not to mention the other problems a roof can lead to – drywall damage, mold, and eventually, structural issues – which a home inspector will undoubtedly look for if you have a leaky roof.

Fortunately, getting your roof ready for the market isn’t too difficult. “Correcting this problem will save you a lot money, as the repairs generally can be made for as little as a few hundred dollars,” adds Moeslein. “This is much less than the concession a potential buyer may expect if they are being saddled with this issue.”

[Is your roof looking a little worse for the wear? Click here to find a contractor who can help.]

An entire roof replacement will greatly improve the overall appearance of your home, according to Moeslein. Just make sure your roof is easily visible from the street so that potential buyers can take in its stunning beauty.

Project-to-Avoid: Major Bathroom Updates

Are you worried that your outdated bathroom will scare buyers away? A major bathroom remodel might be in order, but just remember that it will be expensive, and in the end it still might not suit the buyer’s tastes.

According to Moeslein, bathroom renovations typically cost about $250 per sq. ft. or more, which means a 5 x 8 ft. bathroom may cost upwards of $10,000.

Why so expensive? Well, a complete overhaul would typically require a contractor and replacement of the floors, walls, and fixtures in a bathroom. Depending on the specifics of the project, it may also involve relocating the plumbing in order to place the fixtures (shower, tub, sink, etc.) in a different location, says Moeslein.

And if the buyer doesn’t share your taste in grout, you’ll end up limiting your audience. Because bathrooms are a highly personal space, says Moeslein, some homeowners could be better off letting the buyers do the remodeling after purchasing the property.

Try This Instead: Fixing Up Bathroom Flooring and Walls

If bathroom renovations are necessary and time is limited, think small. A number of smaller improvements can improve the condition and look of the bathroom without digging too deep into your pocket.

You may be able to install a one-piece vinyl floor, or replace the vanity, sink, and faucet. These types of projects can often be completed by the handy DIYer for about $1,000 or less, according to Moeslein. Of course, if home improvement is not your forte, it’s best to consult a home contractor.

Along the same lines, a new coat of paint can do wonders, particularly in a bathroom environment where the humidity can cause paint to deteriorate faster than it might otherwise. If you do decide to paint prior to offering a home for sale, Moeslein says it’s important to stick with neutral colors that offer a wide appeal.

Moeslein adds these words of wisdom: “While you may think that new bright pink paint is awesome, it may not be for everyone.”

By Diana Bocco | Yahoo! Homes

As more investors vie for fewer foreclosed properties, prices are going up and great deals are getting scarce.

Buyers of bank-owned homes in September got a 7.7 percent discount versus the same home in a non-distressed sale, according to a new analysis by Zillow, an online real estate sales and information company. The discount fell from 9.1 percent a year ago and from a peak of 23.7 percent in August of 2009*.

The smallest discounts are now found in the markets which suffered the most in the housing crash but have now become ground zero for private capital, looking to take advantage of the newly hot single-family rental market.

Phoenix, where foreclosures accounted for more than half of all home sales during the worst of the housing crash, has largely been picked clean, so much so that there is now no discount on a distressed property. The same holds true for Las Vegas, according to Zillow [Z  26.36    0.08  (+0.3%)   ].

(Read More: Homeowners Hit by Sandy May Save Thousands of Dollars)

“The smallest foreclosure discount is found in places where competition for homes is so high, people there are willing to pay the same amount for a foreclosure re-sale that they would for a non-distressed home simply to take advantage of historic affordability,” said Zillow chief economist Stan Humphries in a release.

On the flip side, housing markets that have not garnered quite so much investor attention are showing the biggest foreclosure discounts: Pittsburgh (27.4 percent), Cleveland (25.8 percent), Cincinnati (20.1 percent) and Baltimore (20 percent).

While investors are certainly broadening their searches to a wider real estate market, some argue that while big discounts may be gone from hot investor markets, there is still good reason to be there.

“The sale price of the property is only one consideration; other factors include the cost of repairs needed to make the property rentable, and what the anticipated rental price of the home is,” notes Rick Sharga of Carrington Mortgage Holdings, a private equity fund investing in distressed homes and mortgages.

“It’s entirely possible that an investor can make a reasonable yield on a property even paying close to market price on a home, if the rental rates are attractive enough. If the investor believes that home prices in a given market are going to continue to rise over a longer period of time, this can also factor into a decision to continue to buy there even without a foreclosure discount,” according to Sharga.

(Read More: Home Prices Rise, but Analysts See Pressure Ahead)

Despite rising home values and a slowly improving jobs picture, many Americans are priced out of the home-buying market due to damaged credit. Others are simply not ready to take a bet on home ownership, after so many lost so much in the historic boom to bust of the last decade. There are now 6.7 million additional households renting, compared to the cyclical low of 2004, according to Census data analyzed by Paul Diggle of Capital Economics.

“The combination of rising house prices and an unchanged homeownership rate is a useful reminder that investor demand is a significant driver of this housing recovery,” notes Diggle. “Admittedly, a number of indicators, such as the National Association of Realtors’ breakdown of sales by type, have been pointing to a growing role among conventional owner-occupier buyers. But a return to more normal levels of activity among this group still seems some way off.”

Household formation is rising, as younger workers start to find jobs and move out of their parents’ homes, but they generally are not moving to home ownership. Until more Americans are able to qualify for today’s record low mortgage rates, the rental play, discount or not, appears to be a strong one.

(*Zillow compared the actual sale price of foreclosed homes nationwide to the estimated price of the same home were it to sell in a non-distressed transaction. Other analyses compare median home prices of non-distressed homes vs. distressed, but that does not take into account the differing sizes and characteristics of the homes. Distressed properties tend to be smaller and in less affluent neighborhoods, which a median comparison cannot incorporate.)

By: Diana Olick
CNBC Real Estate Reporter

As part of the sweeping national mortgage servicing settlement that went into effect in March, officials at Bank of America said they are halfway to fulfilling their mandate of providing $7.6 billion worth of consumer relief.  he bank [BAC  9.8343    0.0043  (+0.04%)   ], which took on the burden of Countrywide Financial’s mortgage ills when it bought the company, has completed or approved a total of $15.8 billion in consumer relief for about 164,000 homeowners as of Sept. 30 and is on track, according to officials, to meet its total financial obligations within the first year of the three-year agreement. (Read More: How ‘Fiscal Cliff’ Could Affect Mortgage Interest Deductions.)

The settlement, which was supposed to right the wrongs of so-called “robo-signing” and other fraudulent mortgage servicing activities, credits banks for principal reduction, short sales, and other consumer relief, but the credits are not dollar for dollar. That’s why Bank of America’s $15.8 billion in relief so far is only half-way to its required $7.6 billion under the settlement.

Borrowers received an average $150,000 reduction in their first lien loan balances, resulting in a 35 percent reduction in monthly mortgage payments, according to bank officials. On second liens, the average relief through loan extinguishment to about 43,000 customers is more than $56,000 per borrower.

While officials would not give an exact amount, they estimated that 60 percent of the loans that received principal reduction were owned by investors and serviced by Bank of America, while 40 percent were held on the banks own books. (Read More: Bank of America Posts Profit.)

As for other aspects of the settlement, like providing customers with a single point of contact for mortgage assistance, officials said each bank representative is primary contact for between 70 and 75 customers.

All of the five banks that signed the National Mortgage Settlement are required to submit quarterly progress reports to the participating state attorneys general and the federal program monitor.

—By CNBC’s Diana Olick

According to officials on a conference call with reporters, Bank of America has approved or completed first-lien modifications for 30,000 customers, providing $4.75 billion in principal reduction.

In addition, 45,000 customers got home equity loan relief, totaling $2.5 billion. Finally, more than 62,000 customers completed qualifying short sales or deeds-in-lieu of foreclosure, which adds up to $7.4 billion in relief from unpaid principal balances on the loans