Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update July 31, 2009***

News Flash!!!!!

From a July 27^th story in the Arizona Republic………………….

An amendment to the state’s foreclosure law (SB 1271) now makes some homeowners in foreclosure liable for the difference between their mortgage and what the lender can get when reselling the home. The new law would affect any Arizona homeowner in foreclosure who has not lived in the home for six consecutive months. This would impact owners of second homes as well as investors. In addition the new law would allow lenders to garnish wages and go after assets. The law is effective September 30, 2009. To correct this action a new bill must be written. However, the Legislature is in special session and the Governor would have to amend the purpose of the session (initially called to deal with the state’s budget crisis). The Realtors Association has asked the Governor to amend the current session but if that doesn’t work the changes to the new law could not be considered until next year.

 

 

Interest Rates

Mortgage rates improved from Monday and by Friday were down about .25%. The Federal government sold a record $200 Billion plus in Notes, Bills and TIPS this week to help finance government spending. The good news is that the instruments were sold and that eased some concerns about our ability to raise money to fund our spending. The bad news is that we continue to spend at a record pace and at some point long term interest rates have to go up.

 

 

 

 

When	Rate
This Week	5.25
1 Month Ago	5.32
1 Year Ago	6.52
2 Years Ago	6.68

 

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

·         There is more discussion in D.C. today about increasing the home buyer’s tax credit to $15,000. The Senate originally approved it but the House reduced it to $8,000. The larger credit would be available to all home buyer’s not just first timers. Apparently the issue will be revisited when Congress gets back from its August recess.

·         HUD announced Thursday that FHA will offer a new FHA Home Affordable Modification Program (FHA-HAMP) about mid August. Details will be available shortly.

 

Good News

·         Second quarter GDP came in at -1.0% lower than forecast -1.5% and suggests economy may have bottomed. First quarter number was revised downward from -5.5% to -6.4%. Note that this is the first time since 1947 we have had four consecutive quarters with negative GDP. This both good news (GDP has improved significantly) and bad news (GDP is still negative).

·         New home sales were up 11% in June and builders have an 8.8 month supply.

·         Median sales price declined year over year by 11% in June according to the government.

·         Home prices were up in May from April by .5% the first monthly increase in 3 years according to Case-Shiller.

·         Home prices declined year over year by 17% in May according to Case-Shiller. The fourth consecutive month where the year over year decline has been less than the previous month.

 

Statistics of Interest/Concern

·         Durable goods fell 2.5% in June the biggest decline since January. Forecast was for .6% decline.

·         Consumer confidence index fell to 46.6 for July from 49.3 in June. A reading of 90 indicates economy is on solid footing.

·         Commercial real estate looks to be the next big challenge for banks as delinquencies accelerate upward as shown in the chart below.

 

 Foreclosure Headlines

·         According to some economists banks and other lenders may have more financial incentive to let borrowers lose their homes rather than do some kind of loan workout. The reason is that foreclosure can be more profitable they say. There are three groups of borrowers. First, those that get their loans modified who without the modification would not be able to make the regular payment (borrowers like myself who is in the final stages of loan modification). Second, those who get modified but are likely to default later (lenders may not want to help because postponing foreclosure can be costly). Three, delinquent borrowers who somehow can keep up their payments without a loan modification (lenders have little incentive to help these folks). So, what to do? Senior Treasury and HUD officials summoned major lender representatives to a meeting to discuss how to step up the pace of foreclosure relief. Apparently there was not much progress at the meeting. My advice continues to be the same and that is every homeowner should be calling their lender and requesting a loan modification or refinancing.

·         The House passed a Foreclosure Rental bill this week. The Neighborhood Preservation Act of 2009 HR-2529 allows banks to lease its REO’s for up to five years. The program is voluntary and the decision to rent is up to the bank or investor.

·         According to Realty Trac California, Arizona, Nevada and Florida had 35 of 50 highest foreclosures rates for metro areas with populations of 200,000 or more.

·         For the first half of 2009 there were 1.5 million properties getting default or auction notices. Nevada had the highest foreclosure rate while Arizona was ninth.

 

Job Market Headlines

·         In June 18 metro areas in the U.S. had jobless rates in excess of 15% according to the Labor Department.

·         Initial weekly jobless claims were up slightly to 584,000 compared to forecast of 575,000. The four week moving average was down for the fifth straight week.

·         Continuing jobless claims dipped to 6.2 million the lowest level since January of this year. The issue here is how many workers have exhausted their unemployment benefits because when benefits are lost the worker is no longer counted.

·         Worker pay grew for the last 12 months ending in June at 1.8% the lowest rate on record.

 

Commentary

This week Countrywide Financial (now part of Bank of America) will send about $7.5 Million to homeowners in Texas as part of a $345 Million settlement stemming from a settlement between it and the Texas Attorney General. The settlement is based on the State’s allegation that between January 1, 2004 and December 31, 2007 Countrywide encouraged “borrowers to sign loans they could not afford, not disclosing risky loan terms and writing loans for unqualified borrowers”. The balance of the money $335 Million is intended to modify loans for 30,000 Texans.

 

The United States government is now the largest shareholder of Citigroup with a 34% interest in the banking giant.

For more information on mortgages or related please contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.

 

 

 

 

 

Mortgage Industry update: Rates, news & more

***Smart Financial Weekly Mortgage Update July 24, 2009***

Interest Rates

Rates moved up by the end of the week driven by the stock market (hit 9,000 on Thursday), some good economic news (profits and jobs) and Treasury auction activity (Next week’s record auction will include $115 Billion in Notes and $90 Billion in T Bills).

 

When	Rate
This Week	5.20
1 Month Ago	5.42
1 Year Ago	6.63
2 Years Ago	6.69

 

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

·        I borrowed the following from a TBWS (Think Big Work Small) e-mail regarding the Home Valuation Code of Conduct (HVCC) and the need to support pending legislation to suspend it and future legislation to eliminate it. As you may know the HVCC requires that appraisals be done by a third party clearinghouse and so far the process has been a disaster.

 

HVCC Continues to devastate home values across the US. We fear that with higher Fannie and Freddie loan limits it will carry through to our former “jumbo” markets, leading the country even further into recession. As we’ve shared, Representatives Childers (D-MS) and Miller (R-CA) introduced legislation (H.R. 3044) requesting an 18 month moratorium on the Home Valuation Code of Conduct (HVCC). H.R. 3044 now has 22 co-sponsors and now is the time to forward our petition to every person you know and every representative in the country. Read some of the comments in the petition and you will soon understand the harmful nature of this horribly misguided code.

ThinkBigWorkSmall applauds the introduction of H.R. 3044 and would like to thank Representative Childers (D-MS) and Representative Miller (R-CA) for their continued efforts and leadership on this issue but it is not enough. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule. HVCC needs to be permanently reversed in order to restore lower costs to the consumer and to protect the thousands of real estate transactions stalled by this horribly misguided code.

Please sign and forward the following petition and forward to everyone you know in the industry and ask them to forward to their representatives: www.hvccpetition.com

Good News

·         U.S. home prices had the smallest annual decline in 10 months in May as prices only declined 5.6% year over year. In addition, prices actually rose .9% from April to May.

·         Median U.S. home price for June was $181,800 down 15.4% from year earlier. The downward trend appears to be moderating.

·         Existing home sales in June rose 3.6%.

·         Existing home inventory declined to 9.4 months in June down from 9.4 months in May.

·         U.S. home vacancy rate fell to 2.5% in the second quarter down from 2.5% in the previous quarter.

 

 

Statistics of Interest/Concern

·         Credit card charge off rate rose to a record 10.76% in June according to Moody’s. They also said that the rate could go to 12-13% by mid 2010. Moody’s also expects this trend to continue upward until the job market gets better. Finally, estimated losses by card issuers will be about $70 billion.

·         According to a CNN Money story Fannie Mae and Freddie Mac total costs to fix the housing mess could be as high as $100 Billion.

·         University of Michigan consumer confidence survey fell to 66 in July from 70 in June although the July number was in line with expectations.

 

Foreclosure Headlines

·         The Making Home Affordable loan modification program while off to a slow start is picking up speed and is the most successful of the programs so far. While the process is very labor, documentation and analytically intense about 325,000 trial modifications are in process and 160,000 have been completed since late April according to the Treasury Department. Starting in August Treasury will be producing a monthly report that should be helpful in understanding how the program is doing. It also sounds like loan servicers are slowly figuring out that balance reductions may not be such a bad thing after all. We’ll see if these reductions get any serious play. So far 27 servicers are on board including Chase, Citi, Wells Fargo and Bank of America. The one criticism of the program is that to be modified the loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Finally, the administration is implementing an audit process for those loan modifications that have been declined. This will give homeowners the ability to appeal a servicer’s decision. No timetable has been mentioned.

·         On July 14, 2009 a New Jersey court dismissed a foreclosure filed by Deutsche Bank because they “refused to produce documents demanded by the borrowers” identifying the “true owner and holder of the Note”. The bank was given several opportunities to produce the documents but declined each time. They now have to produce ALL of the requested documents before the court will reconsider the foreclosure. Unbelievable!

 

 

Job Market Headlines

·         650,000 people will lose their unemployment benefits by September and 4.4 million will see this 26 week benefit expire by early next year.

·         Initial jobless claims were 554,000 up 30,000 from previous month.

·         Continuing jobless claims declined to 6.22 million from 6.8 million last month. Note that this number does NOT include those workers whose benefits have expired.

·         The four week moving average of new jobless claims fell to 566,000 from 588,000 the previous week. This was the fourth consecutive weekly decline.

 

 

Commentary

Guaranty Financial Group the second largest publicly traded bank in Texas with $16 Billion in assets is likely to fail shortly. The bank is unable to raise capital and thus not eligible for government assistance. If it does fail it will be the largest so far this year. The bank is 17% owned by Carl Ichan.

 

Last Friday some of us from Smart Financial had a meeting with an FBI Agent from the Arizona Mortgage Fraud Task Force. They are focusing on illegal cash back transactions, property stripping and loan modifications. Based on what we were told the Task Force is very active in the valley and if you see any hint of impropriety be very, very careful.

For more information on mortgages and related please contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.

 

 

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update July 17, 2009***

Format update! You will notice that two new topics have been added to the newsletter: Foreclosure Headlines and Job Market Headlines. This was done to emphasize the importance of and focus on both as they are critical to the economic recovery we all want so badly. The addition of two new topics will not diminish the emphasis on brevity. Toward that end also starting this week you will find in BOLD portions of the commentary. Hopefully if just the bold is read you will get the essence of the comment. As always if you have any feedback, comments, ideas or topics please let me know.

 

Interest Rates

Rates moved up early this week driven primarily by the stock market and some good earnings reports. However, by the end of the week rates had moved back down to last week’s levels. So where does that leave us? Since the first of the year mortgage rates have been in the mid to low 5.00% range and a few times below 5.00%. I would say it’s a reasonable guess that rates this low cannot continue forever. My advice is ACT NOW!

·         If you or anyone you know is thinking about buying a home call me and get Pre Qualified NOW.

·         If you or anyone you know wants or needs to refinance call me NOW. Remember, the new max Loan to Value(LTV) under the President’s housing plan has been increased to 125%.

·         Also, if you or anyone you know needs some help with a loan modification call your lender TODAY or call me with questions.

 

 

 

When	Rate
This Week	5.14
1 Month Ago	5.38
1 Year Ago	6.42
2 Years Ago	6.69

 

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

·         Chris Dodd and Barney Frank have sent a letter to bank regulators calling for action on second lien modifications. The problem they say is second lien holders refuse to participate in the Hope for Homeowners program because they believe those second liens may be worth more in reality.

·         The State of Massachusetts has introduced a program to loan first time buyers up to $8,000 toward the purchase of a home. The loan would be repaid from the Federal tax credit. There are several other states with similar programs.

·         The Century 21 FHA Housing Act of 2009 (HR 3146) would require HUD/FHA to review new mortgages that become 60 days delinquent within the first 90 days of origination. The goal is to identify lenders with a high delinquency rate. FHA is going to hire 90 people to administer this program if it becomes law.

·         As of April 37% of Option Arms are 60+ days delinquent and 19% are in foreclosure. Compare this to sub-prime loans which are 33% 60+ day delinquent and 14.5% are in foreclosure according to First American CoreLogic.

·          

 

Good News

·         Retail sales were up .6% in June which was higher than forecast. However, excluding autos and gas the number was fourth monthly decline in a row.

·         Inventories were down 1.0% for the month the ninth consecutive decline in a row.

·         Home prices were up nationally by 1.6% in May according to Integrated Asset Services. This was biggest monthly increase since July 2005.

·          Housing starts for June were up 3.8% and exceeded expectations.

 

Statistics of Interest/Concern

·         For the first 9 months of FY 2009 ended June 30 the U.S. Governments budget deficit was $1.09 Trillion compared to $285.9 Billion in June of 2008.

·         According to trulia.com one fourth of homes sold had price reductions of 10% or more. In Phoenix the average reduction was 13%.

·         Producer Price Index (PPI) was up 1.8% in June double the forecast.

·         Consumer Price Index was up .7% in June.

·         Commercial Mortgage Backed Securities (CMBS) could hit 5-6% delinquency by the end of 2009 according to Moody’s. The current delinquency rate is 2.67%.

 

Foreclosure Headlines

·         Foreclosure starts could be declining according to the Federal Housing Finance Agency (FIFA). April foreclosure starts were 85,938 down from the previous month’s total of 88,491.

·         Foreclosures rose 15% in the first half of 2009 impacting 1.5 million homes according to RealtyTrac. In addition foreclosures in June increased 5% from May. RealtyTrac also said June was the fourth consecutive month of 300,000+ foreclosure notices.

·         For the first half of 2009 Arizona was #2 in foreclosures behind Nevada.

 

Job Market Headlines

·         Initial jobless claims were down 47,000 to lower than expected 522,000 (the lowest level since January 2009).

·         Continuing jobless claims fell to 6.2 million.

·         Michigan unemployment rate hit 15% in June the highest rate for a state since early 1984.

·         Every quarter since March 2006 bankruptcies have increased. In the month of March 2008 there were 245,000 and a year later there were 330,000 in March.

 

Commentary

According to a report entitled “Red Light States-Who Buys Adult Entertainment” published in the Journal of Economic Perspective Utah was declared number one.

 

Under the category of OPPS! It seems that Wells Fargo has sold $600 million in Sub Prime loans to Arch Bay Capital for 35 cents on the dollar. This was a private sale so there is not much information available on it.

 

More on Sub Prime loans from Atlanta. During the fourth quarter 2008 and first quarter 2009 Sub Prime foreclosures in Atlanta sold at more than twice the rate of prime foreclosures says Data Intelligence. The reason is that the investors in those Sub Prime loans were more interested in moving the properties in bulk to reduce costs rather than modify the loans one at a time. Deutsche Bank estimates that these Sub Prime sales are yielding only 26% of the original loan amount.

 

For more information on mortgages or related contact me at (602) 803-9660 or burt@gosfm.com.

 

Burt Carlson

 

 

Mortgage Industry Update: Rates, News & More

                                           ***Smart Financial Weekly Mortgage Update July 10, 2009***

Interest Rates

Rates were down sharply mid week as the stock market weakened and demand for 10 Year Treasuries was higher than expected with some of our sources offering 30 year fixed rates just below 5.00%! In spite of an upward adjustment Thursday rates were back to just below 5.00% Friday. The head of Interest Rate Strategy for Morgan Stanley said this week that he expects the 10 Year Treasury Yield to “grind” lower by late September then finish the year at about 4.25%. Also this week a Wells Fargo economist predicted that the 10 Year Yield will be about 4.00% by the end of this year. The 10 Year Treasury Yield finished the week at 3.29%. If these predictions are true we can expect mortgage rates to increase about .50% or more by the end of 2009.

 

 

When	Rate
This Week	5.20
1 Month Ago	5.59
1 Year Ago	6.37
2 Years Ago	6.73

 

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

·         Late last week we received word that there had been a significant change in the Your Way Home AZ program. You may recall that this program is designed to help home buyers purchase foreclosures. The original guideline on appraised value required the Seller accept a 5% discount off of the appraised value if selling to a program participant. The new guideline has been reduced to 1%. For information on the program go to ww.yourwayhomeaz.com or contact me.

·         FHA/VA loan applications in June were 36% of total applications the highest level since 1990.

·         Making Home Affordable Update: In a report released by the Boston Federal Reserve this week the Fed said lenders are not modifying loans because they lose money on modifications. The report specifically said that the Making Home Affordable program is “not likely to work”. The report covered over 665,000 loans originated between 2005 and 2007 and followed 150,000 thru the end of 2008. The Treasury responded with a statement that more than 240,000 have had their loans modified under the President’s plan and that the pace of modifications was increasing. One of the co authors of the report who is a Senior Economist for the Boston Fed said that the government would be better off just giving the money directly to homeowners.

·         More Making home Affordable News: Today the government announced it would begin authorizing lenders to modify second mortgages specifically Home Equity Lines of Credit. The process could start as early as the end of this month!

 

Good News

·         Initial weekly jobless claims of 565,000 were below forecast and the lowest level since January this year.

·         ISM Services Index of which gauges the health of the service sector improved in June to 47 up from May’s 44.

 

Statistics of Interest/Concern

·         Continuing jobless claims were up 159,000 to 6.88 million a new record and almost double from a year ago.

·         New hiring level in May was the lowest level in 9 years. Since May 2008 the number of job openings has declined by 1.5 million!

·         $108 Billion in commercial loans as of June are now in default, foreclosure or bankruptcy according to Real Capital Analytics Inc. This represents 5315 properties double the number of properties from the end of 2008!

·         Home Equity Lines of Credit (HELOC) delinquency of 30 or more days past due for Q1 2009 rose to a record 3.52%.

·         Credit card delinquency of 30 days or more past due was 3.23% in Q1 2009 the highest since 1974.

·         Consumer Confidence for June was 64.6 down from May’s 70.8 and below forecast.

 

Commentary

Folks, it is all about jobs. Unless and until the job market gets better and people get back to work, or if they are working and not feeling good about their long term job security, the recovery is going to be slow. If you want to watch one statistic watch the continuing job claims number. When that number starts going down from 6.88 million for more than one month then we will see more good news. Here is an interesting job related stat. Did you know that from March 2008 thru March 2009 Phoenix metro lost as many jobs as Detroit metro? Yes it is true.  According to Arizona Magazine’s July edition each metro area lost 135,000 jobs in that period.

 

Finally, on an international note, late this week the Egyptian’s seized about 1500 pounds of explosives in a mountainous area near the Israeli border. Apparently the plan was to attack the Suez Canal and disrupt shipping through it. 26 people have been arrested so far. For more information on home loans and related I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

Burt Carlson

 

 

 

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update July 2, 2009***

Interest Rates

Mortgage rates remained within a narrow range with a slight downward bias as the short week ended. While it continues to be unlikely that we will see sub 5% rates any time soon if ever recent rates in the mid to low 5%’s should be attractive to home buyers.

 

 

When	Rate
This Week	5.32
1 Month Ago	5.29
1 Year Ago	6.35
2 Years Ago	6.63

 

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

·         HR 3044 is the proposed legislation that directs the Federal Housing Finance Agency (FHFA) to suspend the Home Valuation Code of Conduct (HVCC) for 18 months. It was proposed late last week and is in Committee as I write this. The HVCC has caused Realtors, lenders, home buyers and appraisers a lot of grief not to mention the loss money. It needs to be suspended then eliminated. If you agree contact your local Congressman and let him/her know how you feel.

·         Freddie Mac received $6.1 Billion from the Treasury Department Wednesday in an effort to keep the company technically solvent. So far they have received $51.7 Billion and have another $149.3 Billion available from Treasury. For the first quarter ending March 31, 2009 Freddie Mac lost $9.9 Billion.

·         On Wednesday the Obama Administration announced it was increasing the Making Home Affordable refinancing program’s LTV from 105% to 125%. This program is only for Fannie Mae and Freddie Mac loans.

·         Option Arm Story: According to Yahoo Finance United Western Bancorp a Denver based holding company whose primary subsidiary is a community bank called Western Bank sold $47.3 Million in Mortgage Backed Securities (MBS) to an unrelated third party for $378,000! The primary asset was Option Arm loans.

 

Good News

·         The ISM report on Midwest business activity in June rose to 39.9 up from May’s 34.9. Below 50 indicates economic contraction.

·         Case-Shiller home price index declined in April .6% a slower rate of decline than in March which was -2.2%.

·         The ISM manufacturing index was 49.8 in June up from May’s 42.8. Below 50 indicates economic contraction.

·         Pending home sales were up .1% in May.

 

Statistics of Interest/Concern

·         June jobs report showed 467,000 more people out of work this number much higher than forecast of 365,000.

·         June unemployment rate of 9.5% was up from May’s 9.4%. The 9.5% was the highest since August 1983.

·         Prime mortgage delinquency of 60 days or more has increased from 1.1% in March 2008 to 2.9% in March 2009.

·         May was the third consecutive month that new foreclosures were at 300,000.

·         Defaults on loans with Mortgage Insurance rose in May following 3 consecutive months of decline.

·         Consumer confidence fell to 49.3 in June below the expectation of 55.

·         According to Zillow 20 million of the nation’s 93 million homes (includes condos, multi units, etc) are upside down.

·         U.S. construction spending was down .9% in May the lowest rate in 5 years.

 

Commentary

This month’s job report included a number that does not get much publicity. That number is the Underemployment rate. This is the number of workers who are working part time because they cannot find full time work. In addition, the Underemployment number includes those who have stopped looking for work. The June Underemployment rate was a record 16.5%!

 

We want to wish all of you a happy Fourth of July! Please remember to fly your flag and if you don’t have one go buy one. The celebration of our county’s independence is a good time to remember how lucky we are to live here. It also gives us a chance to honor those who have paid the ultimate price for our independence and freedom! Just last month we were reminded again about the price to be paid for freely expressing your views. God bless America!

For more information on mortgages and related I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

Burt Carlson