Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update August 28, 2009***

Reminder: The first time home buyer tax credit is currently scheduled to end December 1, 2009. Buyers wanting to take advantage of the credit must close by then.

 

Interest Rates

Rates moved down slightly from the start of the week to finish at just above 5.00% for both FHA and conventional. These are SMOKIN rates and along with the first time buyer credit says to me buyers need to get in the game before it’s too late. While there has been some discussion about extending or re working the tax credit it is almost certain rates will be higher at the end of the year. This is a wonderful window of opportunity for home buyers so let’s get the word out!

 

When	Rate
This Week	5.14
1 Month Ago	5.25
1 Year Ago	6.40
2 Years Ago	6.45

 

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

·         The below chart shows the volume of Option Arms/Pick a Pay plan and Alt A loans that are scheduled to adjust in 2010-2011. With housing values being low, unemployment high and the possibility of the Fed raising rates as the economy starts to recover there could be many more foreclosures.

 

·         FHA has said NO to HVCC implementation according to an FHA commissioner. Now if we could only get the HVCC moratorium (HR 3044) for 18 months approved.

·         Jumbo loans are still available but require at least 20% down (sometimes 25%), very good credit scores and good debt to income ratios. 30 year fixed rate and Arm financing is available but the rates are much higher than conventional loans. Fixed rates were mid to high 6%’s and Arm’s in low to mid 6%’s for primary residences.

 

Good News

·         New home sales surged 9.6% in July and exceeded forecast according to HUD and the Census Bureau.

 

 

·         Median home price in July was $211,000 and continued to decline although at a slower rate than in the past.

·         New home inventory was 7.5 months in July down from 8.8 months in June. Also, new homes available for sale were at the lowest level in 16 years.

·         Case-Shiller Home Price Index rose 1.2% in July. Also, second quarter prices were up 2.9% which was the first quarterly increase in three years. However, prices are still down 15% from last July.

·         University of Michigan Index of consumer confidence was 65.7 in August slightly lower than July’s 66.0. While not really good news it’s not bad either as confidence seems to have stabilized for now.

·         Second quarter GDP was revised to -1.0% from -1.5%.

 

Statistics of Interest/Concern

·         Housing Market Index (measures home builder’s confidence) was 18 in July. Anything below 50 indicates business conditions are poor.

·         In 1989 589 banks failed so far this year 81 have failed and 150 or so are expected to fail in the next 12 months. Three of the six biggest bank failures EVER have taken place in the last 14 months says the FDIC (see Commentary below for more).

·         CMBS (Commercial Mortgage Backed Securities) 30 day or more delinquency was at $30 Billion in July and still increasing according to RealPoint. Also, 90 day+, foreclosure and REO’s were up for the 20^th straight month to $2.15 Billion from June.

·         The LA Times says California tax officials are reporting that the state’s property values fell 2.4% in the last fiscal year which is the largest drop in 76 years.

·         In a Monster.com poll of 16,000 taken in mid July 34% of the respondents said they had only one week’s worth of savings. Another 16% said they had 2-4 weeks savings.

 

Foreclosure Headlines

·         Wednesday HUD launched a $50 million effort to help state and local government address the foreclosure issue. HUD will grant money to national and local organizations to buy, rehab and then sell foreclosed property.

·         Not exactly a foreclosure story but the Treasury Department is providing $309 Million to fund affordable housing projects that have been halted by the lack of capital in today’s marketplace. The money will be used to fund projects of a variety of sizes in seven states including Arizona.

 

Job Market Headlines

·         Initial weekly jobless claims for the week ending August 22 came in at 570,000.

·         Continuing jobless claims fell to 6.133 million from 6.252 million.

·         A top Federal Reserve official Dennis Lockhart has said that his forecast calls for a slow recovery and protracted unemployment.

·         By the end of the year 1.5 million people will have exhausted their unemployment benefits. Earlier this month a bill was introduced to extend the Federal benefits 13 weeks in states with 3 months unemployment rate of 9.5% or greater. This would include about 20 states. Congress is expected to revisit the issue after its summer recess.

·         Cash for Clunkers saved or created 21,000 jobs says the White House (see more below).

 

 

Commentary/Observations

The White House and CBO project this year’s Federal budget deficit will be $1.6 TRILLION compared to 2008 deficit of $455 Billion. The five biggest monthly Federal budget deficits ever have occurred this year says the Treasury Department. The projected deficit for the next few years is anywhere from $7 to $10+ TRILLION and we still have no health care legislation. Is it just me but are we trying to swallow a bit too much?

 

In a report released by the FDIC on the status of the nation’s banks it was noted that in the second quarter of 2009 they lost $3.9 Billion, bad loans were growing faster than they could set aside reserves, total lending had declined and the list of troubled banks rose to 416. Analysts say that the coming consolidation will impact primarily small banks.

 

A Manhattan Chief District Court judge has ordered the Federal Reserve to identify banks and other firms that have been loaned money by the Fed under a variety of programs. The Fed has fought this on the grounds the disclosure of this information might cause a “run” on some of the banks named.

 

According to the government the Cash for Clunkers program resulted in 690,114 sales. Toyota had the most sales with 19% and GM was second with 17.6%. Also, 84% of the clunkers were trucks, vans & SUV’s. The White House says 21,000 jobs were saved or created by the program.

If you have any mortgage or related questinos I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

 

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update August 21, 2009***

Interest Rates

Mortgage rates declined about .25% for the week as Treasury Bonds declined about the same. Then today rates moved up on better than expected housing news which pushed equities higher and Fed Chairman Bernake’s comments on the economy. The Treasury is selling $109 Billion in Bonds next week which is close to the weekly record of $115 Billion sold in July. Remember depending on the success of these sales mortgage rates could be impacted.

 

When	Rate
This Week	5.12
1 Month Ago	5.20
1 Year Ago	6.47
2 Years Ago	6.52

 

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 was a very good story by CNBC this week on the problems associated with the new Home Valuation Code of Conduct (HVCC) for appraisals. I think we all know that this process is not good for the housing business. It hurts everyone including consumers, Realtors, lenders and appraisers.  If you are interested in reading the article please let me know and I will forward it to you. Also, there is legislation (HR 3044) that has been proposed placing a moratorium on HVCC for 18 months that has 54 co sponsors in Congress. However, the more support the better. If you would like me to forward the link to sign the petition please let me know.

·         Mortgages 60 days or more delinquent increased for the 10^th straight quarter and is now at 5.81% which is an all time high according to Trans Union. The good news is the rate of increase is declining.

·         Mortgages 30 days or more delinquent were at 9.24% at the end of the second quarter said the Mortgage Bankers Association (MBA). This is the highest rate since they started keeping such records in 1972.

 

Good News

·         The NAR said for July existing home sales increased 7.2% the biggest monthly increase in 10 years! July was also the fourth straight month of increases. The existing home inventory was 9.4 months. Also, about one third of sales nationwide were foreclosures or distressed property sales.

·         Home builder confidence rose to 18 for August which is the highest since June 2008. Anything above 50 reflects a positive view of the market.  April 2006 was the last time the number was 50 or greater.

·         PPI (Producer Price Index) fell .9% in July. For the last 12 months the PPI has declined 6.8% the biggest one year decline since 1947.

·         The leading economic indicators index was up .6% in July for the fourth straight month. 

 

Statistics of Interest/Concern

·         Credit card delinquency showed signs of stabilization in July as major issuers reported a slight decline in delinquency.

·         With two months left in the fiscal year that ends September 30^th the government has spent $4 TRILLION dollars.

·         Commercial real estate defaults are at $2 BILLION and could hit three billion by the end of this year says Fitch Ratings Financial Times.

·         July housing starts came in at 581,000 versus forecast of 599,000.

·         Building permits in July were at 560,000 versus forecast of 577,000.

 

Foreclosure Headlines

·         While not a foreclosure headline First American Core Logic report shows about one third or 15 million homeowners are upside down in their homes. In addition their report says another 2.5 million are very close. Obviously this can lead to more foreclosures.

·         About half of all negative equity is in Florida, Nevada and Arizona.

·         The percentage of loans in foreclosure increased to 4.30% in the second quarter from 3.85% in the first quarter according to the MBA.

·         The MBA also said the percentage of loans in which foreclosure action was started dipped in the second quarter to 1.36% from a record high of 1.37% in the first quarter.

 

Job Market Headlines

·         Initial weekly jobless claims were 576,000 which was slightly higher than the expected 550,000.

·         The four week moving average of weekly jobless claims was 570,000 slightly more than the forecast of 566,000.

·         The Labor Department said in July 17 states had a reduction in unemployment compared to only five states in June.

 

Commentary/Observations

The IMF said this week that the global recovery has started but that it will not be simple or easy.

 

As many of you are aware Twittering is the current rage in communicating. A group called Pearl Analytics is reporting based on their work that 40% of twittering is “pointless babble”.

 

Readers Digest put its U.S. operations into bankruptcy this week.

 

The Colorado minimum wage is set to decline next year. Colorado is one of ten states with the minimum wage tied to inflation. Wage earners are expected to lose about three cents per hour.

If you have any questions about mortgages or related I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

 

 

 

 

 

 

 

 

 

 

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update August 14, 2009***

Your Way Home AZ Program update!

This is a great program for those interested in purchasing foreclosures. If you would like a summary of the program or the process please let me know.

 

Interest Rates

Mortgage rates improved about .25% during the week as we made up what we lost last week.

The Fed announced Wednesday it would delay shutting down its program to buy Treasuries from September to late October. It also said it would make no changes to its plan to buy $1.25 Trillion in Mortgage Backed Securities (MBS) from Fannie Mae or Freddie Mac by the end of this year. Folks, I remind you again all the signs point to rates moving up sometime in the fall. So be proactive in making your decision whether you are purchasing or refinancing.

 

By the way, in a Bloomberg story today the headline was 150 U.S. publically traded banks owned nonperforming assets equal to 5% or more of assets. This is more than double the number of banks from a year ago. Nonperforming assets are typically those where no payment has been made for 90 days or more. Also, the bank’s equity position does play a role in its survivability.

 

When	Rate
This Week	5.29
1 Month Ago	5.14
1 Year Ago	6.26
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

·         You may not have heard of Colonial BancGroup but its failure will cause loans to become harder to get and likely more expensive. Colonial provided about 25% of the warehouse financing available to mortgage bankers. The loans are short term and allow the bankers to fund their own loans which give them a lot of flexibility in delivering their service. The warehouse lending business has been hurt recently with the failure of National City (acquired by PNC) and the impending failure of Guaranty Bank.

·         In a story on the Huffington Post bankruptcy judges and the Department of Justice are being more critical of loan servicers. Judges have found that the major servicers regularly mess up basic accounting, improperly credit payments and charge unwarranted fees. Also, servicers commonly foreclose when they do not have the legal right, impose illegal fees and miscalculate how much is owed on the property according to Katherine Porter’s testimony given to Congress last year. The Department of Justice United States Trustee Program is a watchdog over the bankruptcy process and in its annual report said combating servicer abuse was a “top priority”. The Program has initiated action against 30 of the 38 companies signed up for the Making Home Affordable initiative. Note that the Trustee Program has sued Countrywide in at least six states.

 

Good News

·         Consumer debt fell again in June for the fifth consecutive month.

·         Worker productivity in the second quarter increased 6.4% compared to forecast of 5.5%. This is the fastest growth rate in 6 years.

·         Consumer confidence increased to 50.3 in August from 46.3 in July.

·         NAR says home prices increased 4% in second quarter from first quarter this year. Note that prices are still down about 16% from a year ago.

·         Confidence in the world economy was at 22 month high according to the Bloomberg Professional global Confidence Index which came in at 58.12.

·         Industrial production increased .5% in July higher than forecast of +.3% and better than June’s -.4%. This was first increase in 9 months.

 

Statistics of Interest/Concern

·         Banks will earn $38 Billion in overdraft fees this year says the Financial Times. The average fee is $26.

·         126,000 filed for bankruptcy in July up 34% from a year ago. The government still expects 1.4 million to file in 2009.

·         The U.S. budget deficit hit $1.27 Trillion thru the first ten months of the fiscal year which ends September 30^th. This is up (WAY up!) from this time last year when it was $388 Billion.

·         Retail sales were down .1% in July versus estimates of +.8%.

·         University of Michigan consumer sentiment survey for August was 63.2 down from July 66 and less than forecast of 69.

·         Consumer Price Index (CPI) was down 2.1% in July the biggest year over year decline since 1950.

 

Foreclosure Headlines

·         Zip Realty says worst is over for the housing industry and that “demand is in a good place” and mortgage rates are good. The company does see another foreclosure wave in the next few months but believes it will be shorter and with fewer homes than in the past and that those homes will be quickly absorbed.

·         Zillo says for second quarter 2009 23% of homeowners are upside down in their home homes while Deutsche Bank says it’s 26%. For 2010 Zillo projects 30% will be while Deutsche Bank forecasts a whopping 48%!

·         Foreclosure notices were up 7% from June to July says RealtyTrac. July was the third month in the last five that foreclosures were at record levels. In Arizona one in 135 homes got notices which made us number two in the country. California led the country with one in 123!

 

 

Job Market Headlines

·         Initial weekly jobless claims rose to 558,000 compared to forecast of 545,000.

·         Four week moving average of jobless claims as up slightly to 565,000.

·         Continuing claims were at 6.2 million down from the previous weeks 6.3 million.

 

 

 

Commentary

ING Group a very conservative lender says its Alt A portfolio delinquency hit 21% in the second quarter. Yikes!! What does that say for those lenders that were aggressive in the Alt A market?

 

Did you notice the consumer confidence/sentiment numbers? Consumer confidence was up in August and around the world it was at a 22 month high but the University of Michigan consumer sentiment number was down. Well, it may just come down to how the surveys are done, timing and who the survey participants are. One thing is for certain, the consumer accounts for about 70% of economic activity (GDP) and for the economy to thrive we need consumers spending. The problem is if you are worried about your job why would you spend more than you need to? My view is it is all about jobs because they help keep people in homes and provides money for them to spend…………………if they want to. 

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

 

 

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Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update August 7, 2009***

Interest Rates

For the week rates rate’s moved up about .25% as the lower than expected jobs report helped move the stock market and Bond yields higher. On a historical note on September 30, 1981 the 10 year Treasury Yield was 15.84% last week it closed at 3.48% compared to this week’s close at 3.84%. Wednesday Treasury Yields moved up as the U.S. announced its plans to sell $75 Billion in Notes and Bonds next week plus Goldman Sachs raised its forecast for second half GDP from +1.00% to +3.00%.

 

When	Rate
This Week	5.22
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

·         Taylor Bean Whittaker Mortgage Corporation (TBW) the 12^th largest mortgage originator in the country for the first half of 2009 (mostly FHA) was ordered by the government to suspend its funding of FHA loans. This will likely result in loan backlogs building and processing times being extended. Only Bank of America and Wells Fargo have done more FHA loans this year.

·         The Treasury released a report on the progress of loan modifications under the President’s plan. Thru July only 9% of targeted loans had been modified. Among the best performers were Saxon, Aurora, GMAC and Chase all with 20% plus. The worst performers were Wells (6%), Bank of America/Countrywide (4%), Wachovia (2%) and PNC/National City ZERO! Of an estimated 2.7 million eligible homeowners only 235,000 modifications are actually in progress.

·         The government said details on second mortgage modification will be announced next week.

 

Good News

·         ISM index for manufacturing for June came in at 48.9 compared to forecast of 46.5.

·         Construction spending was up 3%.

·         Pending home sales for June rose 3.6% compared to expectations of .7% increase. This was fifth consecutive monthly increase.

·         Consumer spending was up in June .4%.

·         The number of homes listed for sale where the asking price was reduced fell in July by 2.8% according to Zip Realty in California. The average price reduction was 10% with Las Vegas the highest at over 25%.

 

Statistics of Interest/Concern

·         Core PCE (The Federal Reserve’s favorite gauge on inflation) was up 1.5% year over year in May.

·         ISM index for non manufacturing (service sector) for July came in 46.4 down from June’s 47.

·         Between June 2007 and December 2008 the U.S. lost 22.8% of personal wealth (adjusted for inflation) the largest loss on record.

 

 

Foreclosure Headlines

·         A CNN Money story Thursday about foreclosures addressed how the increasing demand and reduction in inventory has impacted the market. Citing stories from around the country of multiple full priced offers. Obviously a big factor is the rock bottom prices. In Sacramento, for example, there is less than 30 days of inventory. According to the California Association of Realtors inventory of homes at $300,000 or below has shrunk from 10 months a year ago to 3.5 months today. Nationally the bank owned inventory has shrunk 26% from June 2008. The bad news is that it looks like there will be another foreclosure wave starting in the fall according to foreclosure.com. One of the reasons given was the re defaults on loan modifications.

 

Job Market Headlines

·         July unemployment rate dipped to 9.4 from June’s 9.5.

·         July job losses came in at 247,000 down from previous month and well below forecast of 320,000. Also, May and June job losses were revised downward.

·         Initial weekly jobless claims were 550,000 down from previous week’s revised 580,000. The four week moving average was 555,250 down for the sixth consecutive week.

·         Continuing jobless claims for the week rose 63,000 to 6.3 million.

·         Global Insight estimates that in more than half of the states it will be 2013 before jobs are back to pre recession levels.

·         Challenger the outplacement firm said that in July firms plan on increasing job cuts 31%.

·          ADP report shows that thru June we have experienced 18 consecutive months decline in hiring by small business (50 employees or less).

 

Commentary

The Treasury will borrow less in fourth quarter 09 and first quarter 10 than expected but also expects to provide less assistance to Fannie Mae and Freddie Mac than previously forecast. The government announced it was looking into remaking these two entities probably splitting each into a good bank and a bad bank. The bad bank would hold all of the bad loans. Fannie Mae lost almost $15 Billion for the quarter ending June 30, 2009 while Freddie Mac posted its first profit in two years.

 

Look for Guaranty Bank in Texas to be seized soon by the FDIC says the Wall Street Journal. The cost to tax payers is expected to be $5.3 Billion and the bank is in such bad shape it cannot be sold.

 

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

 

 

 

YourWayHomeAZ

YourWayHomeAZ

Arizona has received approximately $121 million in federal grant money that has been distributed to various cities in Maricopa and Pima counties.  Some of them are purchase assitance programs which are very different from some of the down payment assitance prgrams available as well.

Your Way Home AZ is the one-stop location for purchasing foreclosed homes through the state, county and local governments. Funding is available to qualified buyers who are interested in purchasing foreclosed homes in select areas throughout the state.

Because access to homeownership is fundamental to Arizona’s way of life, Your Way Home AZ is a financing tool that will make it easier for eligible, credit-worthy homebuyers to obtain mortgages.

Funding is made available through the U.S. Housing and Urban Development Neighborhood Stabilization Program (NSP). The state of Arizona and nine other counties and communities received more than $121 million to help stabilize our hardest hit neighborhoods through a variety of efforts.

Click here to see what the programs are each county or city: 
http://www.yourwayhomeaz.com/community.aspx 

Velocity Financial, LLC is one of the approved lenders authorized to facilitate this program.  Please contact me for information that you cannot view on the website.  Best regards,

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

 

Home Owners Associations

Homeowner’s Associations are a huge issue with short sales and REO properties. Many times escrow is presented with a contract, negotiations are complete on the short sale or the REO, escrow proceeds and closes – a few weeks/months later escrow is contacted by the new owner who has received a bill for delinquent dues and transfer fees. Owner wants to know who will pay. Sellers in both types of transactions have no money with which to pay these ‘after the fact’ bills. Short Sale sellers know if there is an HOA, so they need to be questioned about this subject. REO sellers, however, may or may not know if there is an association, so this is where the Realtor’s experience comes in. You may know the neighborhood, so, please, if you do know there is an HOA, mention it to escrow so the information can be followed up on.