Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update November 25, 2009***

Interest Rates

Market rates continued to stay below 5% and make buying a home very affordable. We are fast approaching the one year anniversary of mortgage rate in the low 5% range which compared with rates from recent years is actually mind boggling. At least one member of the Federal Reserve Board of Governors thinks the Fed should keep supporting mortgage rates well into 2010. So far his view is a minority one. Stay tuned.

 

When	Rate
This Week	4.82
1 Month Ago	5.03
1 Year Ago	5.97
2 Years Ago	6.10

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

·         FHA is getting tougher on condos. Guidelines for condo projects have become more restrictive and ALL current approved condo projects will have to be reapproved and recertified every two years (unless they were approved after October 1, 2008).

·         Fannie Mae is rolling out its First Look initiative which was piloted in August. The program is designed to help ordinary home buyers compete with investors for Fannie Mae’s REO inventory. The program is available through a variety of national and local public organizations including Neighborhood Stabilization Plan (NSP) sources, HOME Investment Partnership Fund from HUD, Community Development Block Program, local housing trust funds and charitable foundation funds. First Looks offers lower deposits from potential owner occupants, an opportunity to renegotiate an accepted offer after getting an NSP appraisal and extra time for closing. To learn more contact publicentity_reosales@fanniemae.com or visit www.homepath.com.

·         The first time home buyer credit may be an issue for FHA. The reason is that at the lower prices buyers have no money invested in the property and the data shows these buyers are more likely to default. FHA’s current cash reserves are at .53% well below the statutory minimum of 2%. It is estimated that its portfolio will have grown to one TRILLION dollars by the end of 2010. FHA is currently financing about 20% of new home purchases.

·         Freddie Mac delinquency hit an all time high in third quarter of 3.54% on its $2.4 TRILLION single family portfolio.

 

Good News

·         For the first time in 10 years credit card debt delinquency of 90 days or more was lower in the third quarter than in the second quarter reported Transunion.

·         According to the NAR existing home sales for October increased 10.1% in October the biggest increase since February 2007.

·         The NAR also reported that the median home price declined 7.1% in October and the median home price was $173,100. This decline in price was the smallest in over a year.

·         Case Shiller survey results for third quarter showed housing prices up .3% short of forecast increase of .5%. This was fifth consecutive monthly increase. Year over year decline in value was 8.9%.

·         Conference Board said consumer confidence was up slightly in November to 49.5 forecast was 47.7. The Board says that a score of 90 indicates the economy is on “solid footing”.

·         Consumer spending was up .7% in October compared to down .6% in September.

·         University of Michigan consumer sentiment survey for November was 67.4 forecast was for 67.

 

Statistics of Interest/Concern

·         The National Association of Business Economists forecast GDP growth for 4^th quarter 2009 at 3% and 3.2% for 2010. The biggest concern of the economists is the Federal budget deficit followed by unemployment.

·         The government revised third quarter GDP downward from 3.5% to 2.8%.

·         Commerce Department said durable goods were down .6% in October compared to forecast of up .5%.

·         New home sales increased 6.2% in October while the median price declined by .5%. The number of homes available for sale declined for the fourth consecutive month to 6.7 months inventory.

 

Foreclosure Headlines

·         First American CoreLogic says 10.7 million homeowners are upside down in their homes and another 2.3 million are within 5% of being upside down. Nevada leads the nation with 65% of homeowners under water Arizona is at 48%.

 

Job Market Headlines

·         Weekly jobless claims declined to 466,000 the lowest level in 14 months and below forecast of 500,000.

·         Four week moving average of weekly claims was 496,500 down slightly from the previous week.

·         Continuing jobless claims were at 5.423 million down 190,000 from previous week.

 

 

Commentary/Observations

In its third quarter report the FDIC said the number of banks on its problem list increased to 552 the most since 1993. Also, the FDIC fund was $8.2 billion in the red the biggest deficit since 1991 (the number does include the $21.7 billion already set aside for anticipated failures). So far this year 124 banks have failed. Finally, loan balances at the nation’s banks declined 2.8% the largest decline since 1984.

 

According to ASU Realty Studies home prices in Scottsdale have declined 37% in October compared to a year ago and foreclosures were 28% of sales in the city with foreclosed condos at 33% of sales.

 

The Community Mortgage League of America warned in a letter to Congress that the risk retention provisions in the Restoring American Financial Stability Act will force many of their members out of business thereby increasing borrowing costs to consumers, limiting availability of affordable mortgages and reducing efforts to stabilize the housing market. They proposed less restrictive risk provisions.

If you have any mortgage or related questions 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 November 20, 2009***

Interest Rates

On December 18, 2008 the average 30 year fixed rate for the week was 5.19%. Since then the average rate has been below 5.25% except for the period between June 4 thru July 2 and the week of June 11 when it was 5.59%. This trend is likely to switch to an upward movement in rates as the Fed ends its support of long term rates. Also, the Fed heavily hinted this week that it would keep short term rates low for “an extended period”. Did you know that at the end of the eight month long recession in November 2001 it took the Fed two and one half years to raise short term rates?

 

When	Rate
This Week	4.83
1 Month Ago	5.00
1 Year Ago	6.04
2 Years Ago	6.20

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 Your Way Home Az program for the purchase of foreclosures is almost out of funds and I am told they are not taking any more applications.

·         Mortgage delinquency (60 days late or more) for the third quarter was 6.25% up from 3.96% a year ago. Nevada had the highest rate of 14.5% and Arizona was at 10.4%.

·         FHA delinquency for the third quarter was 8.2% plus another 3.32% in foreclosure. In other words one in six FHA loans is delinquent or worse.

 

Good News

·         Producer Price Index (PPI) for October came in at .3% compared to forecast of .5%.

·         Consumer Price Index (CPI) was up .3% in October slightly higher than expected.

·         Housing starts declined 10.6% in October to a seasonally adjusted rate of 592,000 lowest since April of this year. Building permits were also down by 4% in October.

·         Conference Board said its index of leading economic indicators rose by .3% in October just below forecast of .5%. In the last six months the indicators have grown 5.0%.

 

Statistics of Interest/Concern

·         In fiscal year 2009 (ended 9/30/09) the U.S. Postal Service lost $3.8 Billion. This AFTER reducing expenses by $6 Billion including eliminating 40,000 jobs. The Service is asking for authority to drop Saturday service thus saving an estimated $3.5 Billion in fiscal 2010.

·         Retail sales were up 1.4% in November compared to forecast of +.9%.

·         The Empire State Manufacturing Index was 23.5 in November forecast was for 30.

·         Defaults on credit cards fell in October but delinquencies rose across the board according to the credit card companies.

·         Industrial output in October was up .1% expectation was for increase of .4%.

 

Foreclosure Headlines

·         The Urban Institute said in a report that borrowers facing foreclosure were 60% more likely to keep their homes if they sought counseling and were saving an average of $454 per month if the got counseling for loan modification compared to those who did not seek counseling. Note that this counseling is free and provided thru NeighborWorks America.

·         Las Vegas again led the nation in percentage of homes underwater at 81.1%. Phoenix came in fifth at 63.5%.

 

Job Market Headlines

·         The Labor Department reported that 13 states have unemployment rates above 10.2% and jobless rates in 29 states increased in October. The states with the highest unemployment rates are Michigan 15.1%, Nevada 13%, Rhode Island 12.9%, California 12.5% and South Carolina at 12.1%. Arizona was not in the top ten.

·         Initial weekly jobless claims were 505,000 and in line with expectations.

·         The four week moving average for weekly claims fell to 514,000 also in line with expectations and the eleventh consecutive weekly decline.

·         Continuing claims were 5.61 million and in line with forecast.

 

Commentary/Observations

According to the government the “real” unemployment rate is 17.5%. This is referred to as the U-6 number which includes the U-3 number (commonly referred to as the unemployment rate which for October was 10.2%) plus those workers who have given up looking for work and those working part time who want to work full time.

 

It took nearly two years to consistently add jobs after the eight month long 2001 recession which ended in November 2001. It took another two years to recoup all of the jobs lost according to Moody’s Adversity Index report. The current recession is already much longer and more destructive than the 2001 recession.

 

The key to the economic recovery is job’s folks! When people work they can pay their mortgages and buy stuff. They feel good about themselves and their futures. The concept of a “jobless recovery” to me is non-sense. How does our economy recover without people working?

 

The following was borrowed from Rick Roper at GEM Corp. but I thought it makes a worthwhile point….

 

From time to time, news reporters have called the office and wanted comments about various mortgage news.  And invariably, they usually get the quotes wrong. Nothing like being misquoted and wanting the news organization to publish a retraction.  Or the news organization has a particular slant for how they want to present the news.  Recently a Harley Bike Club member told of the story of a Harley biker riding by a zoo in Washington, DC when he sees a little girl leaning into the lion’s cage. Suddenly, the lion grabs her by the cuff of her jacket and tries to pull her inside to slaughter her, under the eyes of her screaming parents. The biker jumps off his Harley, runs to the cage and hits the lion square on the nose with a powerful punch. Whimpering from the pain the lion jumps back letting go of the girl, and the biker brings her to her terrified parents, who thank him endlessly. A reporter has watched the whole event. The reporter addressing the Harley rider says, “Sir, this was the most gallant and brave thing I’ve seen a man do in my whole life.” The Harley rider replies, “Why, it was nothing, really, the lion was behind bars. I just saw this little kid in danger and acted as I felt right.” The reporter says, “Well, I’ll make sure this won’t go unnoticed. I’m a journalist, you know, and tomorrow’s paper will have this story on the front page… So, what do you do for a living and what political affiliation do you have?” The biker replies, “I’m a U.S. Marine and a Republican.” The journalist leaves. The following morning the biker buys the paper to see if it indeed brings news of his actions, and reads, on the front page:

“U.S. MARINE ASSAULTS AFRICAN IMMIGRANT AND STEALS HIS LUNCH”

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

 

 

 

 

 

 

 

 

 

 

 

 

 

HVCC Petition Update

On Wednesday 11/18/2009 the guys from Think Big Work Small, Frank Garay and Brian Stevens, will be joined by Martk Savitt, past president of the National Association of Mortgage Brokers to deliver the HVCC petition to Andrew Cuomo’s office in New York and will be covered by the media in an effort to change or eliminate the HVCC that has caused home values to drop, extended closing dates and basically cost consumers hundreds of thousands of dollars in lost equity, added appraisal fees and extended lock fees since it’s inception back in May 2009.

Be sure to tune into Fox and Friends on Wednesday morning for Mark Savitt’s interview to discuss HVCC and some of the many travesties that this law has caused even though it was designed to protect consumers.  It has stagnated our housing economy’s growth and has cost consumers hundreds even thousands of dollars each!

If you have not already signed the petition to get rid of HVCC please take the time to do so here:

www.HVCCPetition.com

Mortgage Industry Update: Rates, News & More

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

Interest Rates

This week Fed members were out saying that with the recovery likely to be weak expect the Fed to keep rates (short term rates) low. Typically the Fed starts raising rates about 12-18 months after unemployment peaks although some economists expect the Fed to start increasing rates next summer. Mortgage rates continued to be stable at around 5.00%.

 

 

When	Rate
This Week	4.91
1 Month Ago	4.92
1 Year Ago	6.46
2 Years Ago	6.40

 

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 reserves for FHA have shrunk to .53% which is well below the legal minimum set by the government at 2.00%. One year ago FHA reserves were at 3%. While there is some dispute about what happens next clearly the data points to assistance from the government at some point. However, Housing Secretary Donovan still does not believe a bailout will be needed. Hey, Mr. Secretary, what about that 14.42% delinquency at the end of the second quarter? By the way, the new Risk Executive at FHA is working on guideline changes to minimize future risk to FHA. He also has been quoted as saying that FHA should NOT be financing 30% of home purchases in the country.

·         The Treasury released its report on the progress of the home loan modification program this week. Thru October 650,994 3 month Trial modifications have been started. Saxon Mortgage Services continues to have the highest percentage of starts with 44% followed by Citi at 40%, GMAC at 35% and Wells Fargo at 29%. Bank of America is at 14%. 72 servicers are in the program and have received $27 billion in TARP funds for the program.

·         Wells Fargo announced this week that it is increasing its minimum score on FHA loans from 620 to 640 effective November 16^th.

 

Good News

·         The NAR report for third quarter showed national median home price up 7% from previous quarter to $177,900.

·         Fewer homeowners are upside down on their homes according to Zillow.com. In the third quarter 21% of homeowners were upside down compared to 23% in the previous quarter.

 

 

 

Statistics of Interest/Concern

·         Fannie Mae received a capital injection from the government of $15 billion this week and Freddie Mac received $5 billion dollars. They both also warned that they could face additional losses from the weakening of mortgage insurance companies. Last Monday Moody’s S&P warned of downgrades for seven mortgage insurers and actually downgraded MGIC the largest mortgage insurer for both Fannie and Freddie. As a side note Freddie Mac said its exposure to the failure (bankruptcy) of Taylor Bean a huge mortgage originator could be $500 million.

·         Consumer sentiment declined in October to 66 according to Reuters/University of Michigan survey. Forecast was for 71.

·         According to Jay Butler at ASU there were 3815 sales of foreclosed homes in October which was 38% of sales up from September when foreclosures were 32% of sales. Also, he points out that 6140 of October sales “had previously been in foreclosure”. The median price home in Phoenix for October was $140,000 with the median price of a foreclosure sale at $153,450.

 

Foreclosure Headlines

·         The foreclosure rate in October declined by 3% from September but there were still 332,292 foreclosure notices recorded up 18.9% from a year ago according to RealtyTrac. Nevada led the nation with 1/80 homes in foreclosure, California was second with 1/156 and Arizona was fourth with 1/200.

·         A company called Lender Processing Services said this week that 22% of all mortgages in Florida were in a non current status (either delinquent of foreclosure).

 

 

Job Market Headlines

·         Initial weekly jobless claims came in at 502,000 below forecast of 510,000.

·         Continuing jobless claims were 5.63 million down 139,000 from previous week.

·         The consensus of a survey of economists by Reuters was that unemployment would peak at 10.5% and that the Fed will start raising rates in the third quarter of 2010.

·         The Bureau of Labor Statistics reported that in the third quarter there were 1776 “extended mass layoffs” of 277,924 workers the most ever in a third quarter.

 

Commentary/Observations

The FDIC issued a clarification of its problem loan policy for its staff in the field regulating bank activity. In part the communication tells the employees not to classify loans as problems if the payments are current even though the underlying asset has a debt greater than the assets value.

 

More from the FDIC: According to an upcoming quarterly report banks are not lending because with their cost of funds near zero they are buying high yielding assets like stocks and commodities. This is known as the “carry trade”. Guess they can make more money doing this than lending money to consumers and businesses to help speed up the economic recovery.

 

Iran update: Iran’s Persian Gulf neighbors including Saudi Arabia and United Arab Emirates are leading a drive to upgrade their missile defense spending and naval and air forces. Spending by these nations could reach $40 billion in the next two to five years. Details could be discussed at the Dubai Air Show starting November 15. Happy Friday the 13^th!

If you have any mortgage or related questions 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 November 6, 2009***

First time homebuyer tax credit update: Earlier today the President signed the bill extending and modifying the tax credit. The credit will be extended and cover purchase contracts signed by April 30, 2010 and closed by June 30, 2010. The first time buyer credit will remain the same with maximum of $8,000 for a couple but the income limit has been increased to $225,000. In addition, current home owners who have owned a home for 5 of the last 8 years can be eligible for a credit up to $6,500 for a couple and the income limit is $225,000. The maximum price on the home is $800,000.

 

Interest Rates

The Fed program to purchase MBS to keep rates low is at $977 Billion out of $1.25 Trillion and going forward they will average buying $12-13 Billion per week well below the past average weekly purchases of $20 to 25 Billion. We continue to experience very low, stable mortgage rates but the day of reckoning is approaching.

 

 

When	Rate
This Week	4.98
1 Month Ago	4.87
1 Year Ago	6.20
2 Years Ago	6.24

 

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

·         On December 12 Fannie Mae’s latest automated underwriting system (AUS) software upgrade Version 8.0 will set the maximum debt to income ratio at 45% with the possibility of going to 50% with compensating factors. Currently the maximum debt ratio with compensating factors is 55%.

·         Fannie Mae announced its Deed for Lease program as another way to slow down foreclosures. The program is for homeowners who cannot qualify for a loan modification (or it’s taking forever) and allows them to rent their home for fair rental value not to exceed 31% of family income. No details were available at this writing. Fannie Mae’s delinquency on it $750+ Billion portfolio was 4.45% in September.

·         The Senate approved a one year extension of the loan limits in “high cost” areas up to 125% of the local median home prices. This does not impact Maricopa County as the conventional limits of $417,000 and FHA limit of $346,250 will not change.

 

Good News

·         ISM manufacturing index rose to 55.7 forecast was 53.0.

·         Pending home sales were up 6.1% and have increased for eight consecutive months.

·         The Commerce Department said factory orders rose .9% in September the fifth increase in the last six months.

·         Wholesale inventories fell 1% in September the 13^th consecutive monthly decline.

·         Retail sales increased 1.8% in October just below forecast of 2% says Thomson Reuters.

 

Statistics of Interest/Concern

·         ISM services index slipped to 50.6 in October from 50.9 in September forecast was for 51.5.

·         Appraisal fraud was up 46% from a year ago according to Interthink.

·         At the end of the third quarter $26.64 Billion in CMBS loans were 60 days or more delinquent and the default rate rose to 4.52% from .8% one year ago says REIS Inc. The firm also said that delinquency may hit 6% by end of the year.

·         Productivity rose in the third quarter by 9.5% well above forecast of 6.5%.

·         Personal bankruptcies increased 9% in October and we are on target for 1.4 million this year according to the American Bankruptcy Institute. Also, there was a 7% increase in business bankruptcies.

 

Foreclosure Headlines

·         Credit Sights says accelerating shift from interest only to fully amortized loans (Arm re-sets) will increase payments and contribute to mortgage delinquency in the months ahead. For example, in the past year only 2% of Alt A interest only Arms re-set but in the next 15 months 20% are scheduled to re-set.

 

Job Market Headlines (correction: last week we reported initial weekly jobless claims were at 350,000 when in fact they were 530,000. We apologize for this error.)

·         October unemployment rate came in at 10.2% up from 9.8% in September. At least 16 million cannot find full time work according to the Labor Department.

·         Job losses in October were 190,000 less than revised September number of 219,000. October was the 22^nd consecutive month of job losses the longest streak in 70 years.

·         Initial weekly jobless claims were 512,000 below expectations of 522,000.

·         Four week moving average of weekly claims was 523,750.

·         Continuing claims came in at 5.749 million just below forecast of 5.75 million.

·         Planned job cuts announced by U.S. employers fell to 55,679 in October down 16% from September according to Challenger, Gray & Christmas Inc.

 

Commentary/Observations

The Labor Department said that the number of workers without jobs for more than six months is at the highest level in 50 years.

 

CIT Financial filed bankruptcy this week at a cost of $2.3 Billion in TARP money that will not get paid back to the government. Also, GMAC is looking for a third bailout from the government.

 

Thru October 134 active duty soldiers have committed suicide compared with the one year record of 140. If you know a veteran reach out to them and let them know we care!

 

Satellite pictures taken on April 26 and October 13 indicate that Iran has increased production at a Uranium mine. This discovery underscores the need for widespread inspection to determine if Iran is trying to build a nuclear reactor.

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