Fannie Mae

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.

 

 

 

Fannie Mae

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.