Cash for clunkers

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update October 30, 2009***

First time homebuyer tax credit update: The tax credit has been included as an amendment to a bill extending unemployment benefits. The proposed amendment will extend the credit thru April 30, 2010, reduce it to max of $6500 but expand it to more buyers and increase income limits. The Senate is expected to consider it early next week. 

 

Interest Rates

This week the Fed made its last purchase of $300 Billion in Treasuries as part of its effort to keep mortgage rates down. Rates were again fairly stable for the week but the impact of lack of Fed purchases is expected to be felt soon and reflected in higher rates.

 

When	Rate
This Week	5.03
1 Month Ago	4.94
1 Year Ago	6.46
2 Years Ago	6.26

 

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 recent speeches the Commissioner of the FHA has said that he expects ongoing changes to FHA underwriting policy. FHA has also indicated that it will revisit the two appraisal requirement.

·         Foresight Analytics estimates that the total delinquency for first mortgages increased to 11% in the third quarter final data will be released in late November.

·         On October 10^th in a Federal Bankruptcy court in the Southern District of New York a judge ruled that PHH Mortgage had not proved its claim of delinquency by the borrower and ordered the debt discharged……….wiped out.

 

Good News

·         Third quarter GDP grew 3.5% versus forecast of 3.2%. Housing contributed to growth for the first time in four years with +.53% growth. However, if you exclude autos driven by the Cash for Clunkers program GDP growth was actually 1.9%.

·         September durable goods up 1.0% which was in line with forecast.

·         Case-Shiller home price index declined in August 11.3% from a year ago but improved 1.2% from July.

·         Median home prices rose in September to $204,800 from $199,900 in August.

 

Statistics of Interest/Concern

·         Moody’s Investment Services said Monday that the bank charge off rate has exceeded the rate in the early years of the Great Depression. About $116 Billion has been written off so far.

·         Consumer confidence for September was 47.7 well below forecast of 53.5.

·         Oxford Analytics study suggests that home prices will fall another 10% nationally in 2010.

·         Consumer spending was down .5% in September.

·         New home sales fell 3.6% in September after five consecutive months of increases while months of inventory shrank to 7.5 months compared to 12.4 in January.

·         S&P has downgraded seven mortgage insurance companies including Radian and MGIC.

 

Foreclosure Headlines

·         The Census Department reported that in the third quarter 18.8 million homes were vacant up slightly from the second quarter.

 

Job Market Headlines

·         Initial weekly jobless claims came in at 350,000 flat from previous week.

·         The National Association of Business Economists forecast only 12,000 additional jobs per month in the first quarter of 2010.The economy needs at least 150,000 new jobs per month to keep up with population growth. The group estimates it will be 2012 before the economy reaches the 150,000 level. The consensus on unemployment was that it would peak in the summer of 2010.

 

 

Commentary/Observations

In Florida hundreds of complaints have been filed against Bank of America for loan modification related problems including lack of communication and other issues.

 

Auto analyst Edmunds.com has calculated that Cash for Clunkers cost to the tax payer per car sold was $24,000. They also added that there were few marginal sales. The government disputes the claim.

 

The Iranian regime has said it is unwilling to accept a deal that would have the country ship 70% of its enriched Uranium out of the country according to the International Atomic Energy Agency.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash for clunkers

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.