MORTGAGE REVIEW: RATES, NEWS AND MORE

***Smart Financial Weekly Mortgage Update May 22, 2009***

Interest Rates

On March 18, 2009 the 10 Year Treasury Yield was 2.50%. Today it closed at 3.45%. This is a significant increase in a very short period of time. At the last meeting of the Federal Reserve it was revealed in notes released Wednesday that several members are open to the Fed purchasing more Treasuries than previously announced to keep long term rates at current levels. On Thursday mortgage rates moved up as the Treasury announced the issuance of about $100 Billion in new debt. To offset this move the Fed will buy back some Treasuries.

Concept: The Treasury Department issues new debt to fund government spending and the Fed buys Treasuries to keep rates low.

Concern: How long will this strategy work before rates move upward?

Date	Rate
5/22/09	4.82
5/15/09	4.86
5/8/09	4.84
5/1/09	4.78
5/22/08	5.98
5/24/07	6.37

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

Mortgage Industry Update

· In yet another piece of legislation aimed at helping the housing market the President has signed the Helping Families Save their Homes Act of 2009. This legislation provides a “Safe Harbor” for loan servicing firms. The Safe Harbor protects the firms from investor lawsuits when they modify a loan as long as the modification is consistent with the revised (in this Act) Hope for Homeowners program.

· In recent weeks I have noticed that many FHA lenders have added risk adjustments for credit score and/or loan amount. If the purchase price is below $100,000 and the Buyers score is below 660 or so there will likely be adjustments which will increase the rate.

Good News

· First quarter 2009 homes were the most affordable in 18 years.

· Housing starts were down 12.8% to the lowest level since 1959.

· The number of housing starts in April was 458,000 down from forecast of 520,000.

· New building permits in April were 494,000 the lowest since 1960.

· Home builder sentiment improved for the second month in a row and was at the highest level since September 2008.

· The Leading Economic Indicators rose 1% (group of the 10 leading indicators) in April the first increase since June 2008. It was also the biggest monthly increase since November 2005.

· In April the unemployment rate declined in 21 states according to the government.

Statistics of Interest/Concern

· In 2007 the Social Security Trust fund was projected to have zero balance in 2041 but on May 12, 2009 the forecast was for zero balance in 2037.

· The Medi-Care Trust fund is forecast to have a zero balance in 2017.

· According to Real Capital Analytics $73 Billion in commercial real estate loans are in some level of distress and there are $271 Billion in commercial real estate loans due this year.

· Initial jobless claims for the week were 631,000 which was right on forecast.

· Continuing jobless claims increased to a record 6.662 million in April.

· The Congressional Budget Office (CBO) projects that the jobless rate could exceed 10%.

Commentary:

A sign of the times is that in Texas cattle rustling is on the rise and in fact has tripled from 2007 to 2008. Missouri has also had a sharp rise in cow thefts! Just thought you would like to know.

If you have any mortgage or related questions please feel free to contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.

Tax Credit Being Used For Down Payment

Tax Credit Being Used For Down Payment

 

Quick update on the $8,000 FHA Tax Credit Loans for down payment- the offer is off the table, for now, they took info off of the website. Now HUD has pulled/rescinded their Mortgagee Letter 9-15 which allowed tax credit loans. They are apparently analyzing the issues with it. “IMPORTANT REMINDER: Just because HUD or any other source puts information out there, doesn’t mean it will happen. Keep in mind that most lenders have overlays and can add to certain rules and or guidelines.  It has now been retracted, and the letter removed from the HUD site. There have been questions about FHA/HUD putting out mortgagee letter 2009-15.  At this point it’s no longer there.  Here is why….  In regards to FHA loans, a borrower can only obtain monies for their actual down payment of 3.5% by the following : Their own funds Up to 100% of a gift from a relative/family member From the Federal, state, and local governmental agencies and nonprofit instrumentalities of government FHA approved non-profits  Monies from their employer in a form of employee contribution Monies from secured borrowed funds… IE. borrowing equity from your home to buy another home or borrowing against your car that is free and clear or borrowing from your 401-k, etc, etc   Here is the major confusion that was put out:   Both HUD, NAR, and many realtors and loan officers that wrote about this.  In the body of the mortgagee letter, ML 09-15, at the bottom, it stated :   The Tax Credit: Short-Term Loan:  Entities that can offer the tax credit advance with short-term loans: Federal, state, and local governmental agencies and nonprofit instrumentalities of government, FHA-approved nonprofits, and FHA-approved mortgagees may provide short-term or “bridge loans” secured only by the anticipated tax credit due the homebuyer as collateral.     The confusion: It states, as collateral and not as a secured lien against the home, but as a secured loan against the collateral, which in this case would be the $8,000 tax credit, which would be secured against. Because of this, HUD does not allow for monies to be borrowed or given to in any form that wasn’t mention above, to be used for the down payment.  The reality of it all, basically everything that was stated in the mortgagee letter, that has been revoked for now, is old school FHA. When it comes to FHA loans / FHA mortgages, you could get monies for your down payment from the items that mentioned above. One caveat to all of this is that HUD was going to allow for lenders to secure a short term loan or bridge loan against the $8,000 to be used to purchase a home. But again, that can’t be used for the actual down payment, because it goes against the basic FHA guidelines of down payment monies of 3.5%.”  I hope this clears up any confusion for all of you.  If you find this information helpful, I always appreciate your referrals.

Spencer Anglin
Velocity Financial, LLC
Sr. Mortgage Planner
480-287-5719  Direct
602-705-6293  Cell
866-589-5742  Fax
Email: spencer@velocityfinancial.com
Website: www.spenceranglin.com
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“Whatever it takes…and then some.” 

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Getting a Home Inspection, Is it a Necessity?

With so many bank owned properties today sold in As-Is condition, some buyers are asking, “why bother with an inspection?” The reason? Some of these properties are damaged beyond a buyer’s visual view. Your inspector will climb on the roof, inspect the attic, check the plumbing, etc. Maybe the roof looks decent from ground level. Maybe the inspector discovers it needs to be replaced and that’s an additional $7000 you weren’t counting on. The inspection gives you understanding of the material issues that can affect your bottom line and your quality of life.

Give us a call with your questions or to schedule an inspection.

Kent Dean

Inspector Budget Home Inspection

6501 E. Greenway Pkwy, #103-243

Scottsdale, AZ 85254

480-718-5539

MORTGAGE REVIEW: RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update May 15, 2009***

Interest Rates

Can the recovery of the U.S. economy lead to higher interest rates? At least one economist thinks so (maybe more). According to a Wells Fargo Senior Economist it goes something like this. As the recovery moves forward the Federal Reserve will start “mopping away” all the excess liquidity it has injected into the economy. Early signs of this have been seen in the increase in the 10 Year Treasury Yields (although the 10 Year Treasury Yield finished the week at 3.13 down from last week). Fed Chairman Bernake has stated publicly that he sees an orderly process to the mopping away where the Wells Fargo economist is not so sure.

The problem for the Fed is as credit markets thaw and more money is available investors will look for investments with higher returns than U.S. Treasuries. This in turn will cause Treasury yields to increase to attract buyers so that we can fund Federal spending. So the Fed will have to decide between buying Mortgage Backed Securities (MBS) (to keep mortgage rates lower) and/or buying Treasuries to keep funds flowing into the Treasury. This is where the fun really starts! Because most of the President’s “fiscal package” spending is in the next few years the Fed will have to raise rates to prevent inflation from creeping into the economy or so the thinking goes.

Bottom Line: In the next few years some argue we will pay for low mortgage rates today and more government spending to jump start the economy with higher rates in the future. The only question is how long will it take this future to arrive and what will the rates look like?

Date	Rate
5/15/09	4.82
5/8/09	4.84
5/1/09	4.78
4/24/09	4.80
5/15/08	6.01
5/17/07	6.21

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

Mortgage Industry Update

· $8,000 First Time buyer Tax Credit Update: HUD Secretary Donovan said earlier this week that the FHA would allow approved lenders, non profits and state and local agencies to issue bridge loans to first time buyers using the tax credit. However, the Mortgagee Letter addressing this idea has been pulled from HUD’s website. I guess they are re-thinking the issue.

· Freddie Mac lost $9 Billion in Q1 2009 compared to $23.9 Billion loss in Q4 2008. This reduced the equity to minus $.6 Billion so they requested $6 Billion in equity from the government (remember we the tax payers own Freddie Mac and Fannie Mae).

· Wells Fargo in its quarterly report for March 31, 2009 noted that it has $115 Billion in Option Arms/Pick a Pay loans in its portfolio and that number is 107% of the estimated value of the properties! In addition, Wells said that 50% of the borrowers were paying the minimum payment or less than the interest. Finally, they said 70% of these loans are in California, Arizona and Florida and Wells estimated that 61% of these loans will not be paid. Can you say foreclosure crisis continues?

Good News

· As of March 31, 2009 there were 3.7 million homes existing for sale compared to 4.7 million in July 2008 according to the National Association of Realtors (NAR).

· Consumer sentiment for April was 67.9 the highest level since September 2008.

· New York State Empire Mfg Index was -4.55 for April beating forecast of -14 and up from March’s -14.

Statistics of Interest/Concern

· Initial jobless claims were 637,000 versus forecast of 610,000.

· Producer Price Index (PPI) was up .3% versus forecast of .2%.

· Consumer Price Index (CPI) was flat in April and down .7% for the last 12 months the sharpest decline in 54 years.

· Household debt grew from 69% of Gross Domestic Product (GDP) in 1998 to 100% of GDP in 2008.

· Median home price for single family residences was down 14% to 169,000 the biggest drop on record.

· Foreclosure filings were up 32% in April.

· Retail sales were down .4% compared to forecast of ZERO (eighth decline in last 10 months).

· Credit card defaults rose to an all time high in April.

Commentary:

As you can see there was somewhat more bad news than good for the week. However, most analysts do think the economy is headed in the right direction and that we are in the early stages of recovery.

For more information about the mortgage industry or loan programs please contact Burt Carlson at (602) 803-9660 or by e-mail at burt@gosfm.com.

Washington Report: Appraisal System

I’ve warned of this before and so it begins…Higher appraisal costs are already here.  Be sure to explain to your buyers that this increased cost and the required up front payment for services not yet rendered will probably be required on most all of your purchases.  And this is NOT an added cost that lenders are just arbitrarily adding to their GFEs.  Our elected officials have found yet another way to increase the cost of doing business while simultaneously reducing the level of customer service to our clients across the nation.

How long will it be before our government tells us where we can get title services or credit reporting?  Then we can all look forward to paying 5 or even 10 percent in closing costs one day.  Hooray for us…NOT!

Washington Report: Appraisal System
Last week saw the official kickoff of Fannie Mae’s and Freddie Mac’s mandatory new system of appraisals nationwide, and some mortgage and appraisal groups are up in arms over sharply higher costs for consumers.

Roy de Loach, CEO of the brokers group, cited one member’s experience — where total appraisal fees for a routine FHA cash-out refi ballooned to $1,068 to the consumer.

Home buyers and realty professionals need to be aware of these sharply escalating fees — and their controversial use on FHA loans that are supposed to be exempt from the Fannie-Freddie code.   (Watch out for these guys! – Spencer)

Full Story: http://realtytimes.com/rtpages/20090511_washingtonreport.htm

Spencer Anglin
Velocity Financial, LLC
Sr. Mortgage Planner
480.287.5719  Direct
602.705.6293  Cell
866.589.5742  eFax
Email: spencer@velocityfinancial.com
Website: www.spenceranglin.com

MORTGAGE REVIEW:RATES,NEWS AND MORE.

***Smart Financial Weekly Mortgage Update May 8, 2009***

Interest Rates

It was another great week for rates even though they moved up slightly. 30 year fixed rates continue to be at historic lows. The reason for this is, as mentioned previously, the Fed is buying Mortgage Backed Securities (MBS) as part of its ongoing commitment to keep mortgage rates low. However, a key point gentle reader’s is that 99% of these purchases have been intended to keep rates at today’s levels not lower! So, do not look for significantly lower rates if the Fed continues its present pattern of buying MBS. Also, the 10 Year Treasury Yield finished the week at 3.29 up from last week.

Date	Rate
5/8/09	4.84
5/1/09	4.78
4/24/09	4.80
4/17/09	4.82
5/8/08	6.05
5/10/07	6.15

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

Mortgage Industry Update

We all know that the government is stepping up to help the mortgage industry by supporting FHA, Fannie Mae and Freddie Mac. I thought I would share some data with you to help put that support in some kind of perspective.

· FHA is asking Congress for $798 Million to help meet its reserve requirement.

· One in eight FHA loans is delinquent and 7.5% are 90 days or more delinquent according to the Mortgage Bankers Association.

· Fannie Mae lost $23 Billion in first quarter 2009 following $25 Billion loss in fourth quarter 2008.

· Fannie Mae has requested $19 Billion from the government for its capital structure.

· The Treasury has doubled its commitment to Fannie Mae to $200 Billion.

· Fannie Mae took over 21,000 foreclosed homes (single family) in fourth quarter 2008 and 25,000 in first quarter 2009.

No matter how you look at it these are big numbers!

Good News

· Pending home sales up 3.2% in April.

· Construction spending in March was up .3% forecast was for decline of 1-1.5%. This was first increase in 6 months!

· Initial jobless claims were 601,000 which was better than forecast of 635,000. Lowest number in 14 weeks!

· First quarter productivity was up .8% compared to forecast of .6%.

· Jobs report for April was 539,000 jobs lost in April compared to forecast of 610,000.

Statistics of Interest/Concern

· 30 day delinquency on prime loans was up slightly in April.

· Credit card delinquency in April increased 36% over March.

· Commercial delinquency in April was 2.45% compared to 1.00% a year ago.

· April unemployment rate increased to 8.9% in April from 8.5% in March.

· Consumer credit declined in March by $11 Billion more than three times the forecast.

· According to AP 4 million homes have been vacant for more than 90 days.

Commentary:

In testimony before a Congressional committee this week the Chairman of the Federal Reserve Ben Bernake said that he expected recovery later this year and that the economy will grow slowly going forward. He also said that he thought housing may be near a bottom. More and more of the data are pointing toward a recovery sooner rather than later albeit a slow one. Finally, if you believe as I do that it is all about jobs then you will take heart in Challenger, Gray and Christmas Inc. report that layoffs were down for the third consecutive month in April.

If you have any questions or want to get a rate quote please give Burt Carlson a call at (602) 803-9660 or e-mail me at burt@gosfm.com.

Why design an energy efficient home?

Look at your last electric bill, say July of 2008, you live in the metro Phoenix area and the it was $350 or more. Look at your March bill when you were not cooling your home, $85. So it cost you $270 to cool your home and most of that was peak time, at the really high rates. Now think 2012. Lets say a 25% per year increase puts your electric bill just under $800. Most of this $800 is cooling costs. This is only 4 years from now. Do the math for 8 years.  Design now for the most energy efficient home you can. Your future financial well being depends on being smart, Now!!

Cleaning & Chickens

Think About It…

When doing research into possible markets for home cleaning, there were several rather odd coincidences that seem to appear and seemed to be somehow linked.

1. The home being professionally cleaned
2. The presence of chickens

Here are the facts and you can draw your own conclusions –

1. If a home is professionally cleaned it usually sells for a lot more money and quicker.
2. If the home has chickens, it usually doesn’t sell at all.

1. If a home is professionally cleaned there is a 95% chance that the owners won’t be abducted by aliens.
2. If a home has chickens there’s a 50/50 chance they already have been (chicken attract aliens like a moth to a flame).

1. 95% of celebrities have their homes professionally cleaned. Now are they celebrities because they have their homes cleaned or do they have them cleaned because they’re celebrities.
2. 99% of celebrities have no chickens (however a small percentage of celebrities that are allergic to small dogs travel with their chickens).

1. Homes that sell for $500,000 or more usually have been professionally cleaned
2. 99.9% of homes selling for that much have few or no chickens

So if you’re going to sell your home, OR if your going to have family and friends over and don’t want Martians popping in unexpectedly, OR if you’re a celebrity or thinking of becoming one
1. Have us clean your home
2. Don’t have chickens

Final Touch Detailing
3744 E. Emerald Ave Mesa, AZ 85206

Specializing In Estates/Foreclosures
Cleaning/Windows/Carpets
Donation Preparation
Trash Removal
No Occupied Homes

Brenda 480-890-1221
East Valley

The preferred service areas are Scottsdale, Mesa, Tempe, Gilbert, Queen Creek, Chandler, AJ, Ahwatukee, Sun Lakes, Fountain Hills and SE Phoenix.

Clean Homes Sell Faster For More Money

It’s true. And as a Realtor, it’s the reason I started Toadally Clean. I had experienced it as a listing agent specilizing in expired listings. It was not uncommon for me to list a home that simply needed a good cleaning and have it sell a short time later, after having been on the market for 3-6 months with another agent.

It’s even more critical in today’s tough market. A seller must use every advantage available. And one of the best is a home that looks and smells clean. Believe me, it will stand out. And it will put more money in the sellers pocket.

I bet many of you have been in a home that you could not wait to get out of. I know I have.  Don’t let that happen to one of your listings. It takes some gumption to tell your seller that they have to get their home cleaned before you will put it on the market. But they will appreciate it on the way to the closing. When their neighbor’s home is still sitting there.

We clean valley wide. I pay my employees very well. I expect their best. So can you!

Call Michael Manning for a free quote.

602-738-8236

www.toadallyclean.com

$8,000 First Time Buyer Tax Credit

***Smart Financial Weekly Mortgage Update March 13, 2009***

 

Interest Rates

Rates continue to remain in a narrow range hovering just above the historical low (see Historical Note below). Earlier in the week the Mortgage Bankers Association VP of Economic Forecasting said that 30 year fixed rates should stay in the 5% range for the “foreseeable future”. She also observed that it was likely the Fed would step in and “buy more loans” to keep rates low. There does not seem to be much expectation for lowers rates so waiting may not be prudent whether purchasing or refinancing.

 

Historical Note: On January 15, 2009 the average rate was 4.96 the lowest since 1971 when they started tracking rates.

 

Note that actual market rates vary geographically, lender, credit score and loan to value.

Date	Rate
3/13/09	5.03
3/6/09	5.15
2/27/09	5.07
2/20/09	5.04
3/13/08	6.13
3/15/07	6.14

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

I was asked recently by an Agent about the $8,000 tax credit for first time home buyers. After doing some research on it I thought it a good topic for my weekly newsletter. The credit is part of The American Recovery and Investment Act of 2009 more commonly known as “The Stimulus Act”. The Act authorizes a tax credit of 10% of the purchase price up to a maximum of $8,000 for first time home buyers who purchase homes between January 1, 2009 and December 1, 2009. The credit does NOT have to be repaid. Single tax payers can earn up to $75,000 and married couples up to $150,000. There are some other points worth noting;

·         First time buyer defined as someone who has not owned a principal residence during the 3 years prior to the new purchase.

·         If a buyer owns a vacation home or rental property not used as principal residence they may still qualify for the credit.

·         Reduced credit is available for single buyers with income to $95,000 and married couples to $170,000.

·         The credit can be claimed by completing IRS Form 5405 (as with any tax issue we urge anyone interested in the credit to consult with an appropriate, qualified tax advisor).

·         Any home that qualifies as a principal residence for tax purposes qualifies for the credit (single- family detached, attached homes like townhouses and condos, manufactured homes and even houseboats).

·         The tax credit is refundable which means a buyer can claim the credit even if there is no Federal tax liability. In fact, the buyer would likely get a check from the IRS in this instance!

·         I am not aware of any mechanism where a buyer could access the credit in the form of cash for the down payment today. Buyers can decrease their withholding to accumulate cash over a period of time. Again, consult with a tax professional for advice on this. Note that in some states the state housing finance agency has a program for advancing the funds for a down payment. The person I spoke with at the Arizona State Housing Finance Agency said they did not have such a plan.

 If you have any questions please let me know or go to www.federalhousingtaxcredit.com for additional information.

 

Good News

·         The Omnibus Spending Bill recently passed includes a provision that prohibits banks from getting into the real estate business (except for mortgages).

·         The Term Asset-Backed Securities Loan Facility (TALF) providing for $200 Billion to support auto, credit card and student loan financing was launched this week. The TALF’s goal is to help make more money available for auto loans, credit card financing and student loans. Down the road it is also expected to do the same for commercial real estate.

·         February retail sales were down only .1% versus forecast of down .5% plus the January numbers were revised from up 1.0% to up 1.8%. It is unclear if this is a trend but we will take what we can get.

·         Remember Smart Financial’s FREE appraisal offer for any HomeSmart Agent’s first loan with us!

 

For more information contact Burt Carlson at (602) 803-9660 or by e-mail at burt@gosfm.com.

 

 

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