FHA loans

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update September 4, 2009***

Patriotic thought: This Labor Day is a great holiday to relax, enjoy the American Way of life and maybe take a minute to consider the plight of many of our citizens who find themselves out of work this weekend. I hope you all have a wonderful weekend and display your American flag. Also, don’t forget that next Friday is the eighth anniversary of the September 11 attacks on our country. Let’s show our support for those in harm’s way by flying our flags that day as well.

 

Interest Rates

Rate held at near historic lows for the week with both conventional and FHA 30 year fixed rates at 5.00% or so. The minutes from the last Federal Reserve Board meeting revealed that some members discussed extending the current Fed support for mortgage rates into 2010. While this would be good news for the housing industry it simply puts off the inevitable increase in rates to control inflation.

 

 

When	Rate
This Week	5.08
1 Month Ago	5.22
1 Year Ago	6.35
2 Years Ago	6.46

 

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

·         This week a couple of our FHA lenders increased their minimum score to 640. While 620 is still the standard minimum score to qualify for FHA we may see more of these increases in the months ahead.

·         FHA share of the mortgage market increased to 23% in the second quarter up from 8% a year ago. The Mortgage Brokers Association (MBA) says FHA 90 day+ delinquency increased to 7.8%.

·         Delinquency (30 day late or worse) for prime borrowers who make up 80% of all mortgages reached 9.24% in the second quarter according to the MBA.

·         Your Way Home AZ program update: I called both of the approved Home Buyer Counseling offices and was told by Neighborhood Services that the waiting time for an appointment was 10-14 days and Genesis voicemail said leave a name, phone number and e-mail.

 

Good News

·         Chicago Purchasing Index for August was 50 up from July 43.4. Anything above 50 indicates economic expansion.

·         Pending home sales were up 3.2% in July double the forecast and sixth consecutive increase.

·         ISM manufacturing index for August came in at 52.9 versus forecast of 50.2. First time above 50 since January 2008.

·         Factory orders were up 1.3% in July for fourth consecutive monthly increase according to the Commerce Department.

·         Worker productivity grew 6.6% in the second quarter compared to .3% in the first quarter according to the Labor Department.

·         ISM services index rose to 48.4 in August from July’s 46.4. Any score above 50 indicates an expansion in services activity.

 

Statistics of Interest/Concern

·         The commercial real estate market is poised for implosion. CMBS (Commercial Mortgage Backed Securities) delinquency rose to 4% in August according to Trepps. A Deutsch Bank analyst said this week “we are between first and second inning” in dealing with commercial market distress. Sound familiar? Fitch recently reported that $36 Billion in loans were transferred to a “special servicer” that handles problem loans. They estimate the amount this special servicer will be handling by end of this year at $100 Billion. Fitch also observed that banks have $1.3 TRILLION in commercial mortgages plus another $535 Billion in construction and development loans. Real Capital Analytics has identified $124 Billion worth of distressed properties and less than 10% have been resolved thru loan modification or sale. Those are some pretty big numbers folks.

 

Foreclosure Headlines

·         RealtyTrac said that 67% of foreclosure filings as of July are in seven states. Arizona is one of those states.

·         LPS (Lender Processing Services) said this week that foreclosure starts in July were up 7.1% from June (second biggest increase) while foreclosure inventory increased 4.2%. The rate of loans rolling into final foreclosure stage is however slowing and approaching the mid 2006 level.

·         HOPE NOW said that in July foreclosure starts were up to 283,682 from June’s 251,340. Also, in July 60 day+ delinquency was at 5.9% or 3.1 million homeowners were at least 60 days behind on their mortgages.

 

Job Market Headlines

·         August unemployment rate increased to 9.7% a 26 year high compared to forecast of 9.5%. Monthly job losses were at 216,000 down sharply from July number of 276,000. Note that the underemployment rate (unemployed + workers who have given up looking + part time) was 16.8%. The highest since 1994 when this statistic was created.

·         Initial weekly jobless claims came in at 570,000 just above forecast of 564,000 and down slightly from the previous week. The four week moving average rose to 571,250.

·         Continuing jobless claims were up 92,000 to 6.23 million.

·         Challenger, Gray & Christmas Inc the outplacement firm said that planned U.S. layoffs in August fell by 21%.

 

Commentary/Observations

Joe Califano former Secretary of Health, Education and Welfare said this week that 30% of all health care spending is the result of smoking or excessive drinking. He did not define excessive drinking.

 

The Maui Prince Hotel will close next month according to Prince Resorts Hawaii who plans to terminate its management contract on the property. Employees have been told the resort will close on September 16. Apparently Wells Fargo has filed a lawsuit as the property has defaulted on $193 Million loan. A Wells attorney said they will try to find a way to keep the property open.

 

In a story appearing in the LA Times the Congressional Budget Office (CBO) is looking at ways for the government to raise revenue. One idea getting a lot of attention is to either reduce mortgage deductions OR impose a flat rate of 15% on all income. Other ideas include eliminating write offs for state and local property taxes and placing a 15% cap on all itemized deductions.

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

 

 

 

 

FHA loans

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.

 

 

 

FHA loans

MORTGAGE REVIEW:RATES, NEWS & MORE

***Smart Financial Weekly Mortgage Update June 12, 2009***

Interest Rates

Holy cow! Mortgage rates have moved up sharply again in recent days (albeit moderating as I write this) as indicated by the chart below. The reasons for this have been discussed in my past two Newsletters but the same issues are at play: huge budget deficits and government spending requiring the government to raise record sums of money to finance the spending. The Wall Street Journal observes that the Fed is not likely to increase its buying of Bonds and Mortgage Backed Securities (MBS) but may discuss possible adjustments at its meeting June 23 and 24. The Fed’s actions have kept long term rates artificially low. The Fed continues to be threading a very fine needle with whatever they decide being potentially harmful to the recovery. You may want to check out media reports on the results of the Fed meeting but if you cannot not to worry as we will update you.

Date	Rate
6/12/09	5.59
6/5/09	5.29
5/29/09	4.91
5/22/09	4.82
6/12/08	6.32
6/14/07	6.74

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

· Today legislation was introduced in the Senate to expand the first time buyer’s tax credit. Among the proposed changes are 1) increase the credit from $8,000 to $15,000, 2) have the credit apply to any home buyer, 3) eliminate income caps, 4) allow tax deductibility in 2009 for homes purchased in 2010 and 5) extend the credit one year from the date of enactment. Now THIS is what we need from our elected leaders! A number of Senators and the NAR are supporting the legislation.

· FHA Update: More concern about the financial viability of FHA were expressed this week as some Senators think it is going to “explode” and harm communities, tax payers and homeowners if not managed correctly. The Congressional Budget Office (CBO) says FHA may break even this year while the head of HUD thinks they will make money. My money is on the CBO forecast.

Good News

· Consumer confidence hit 9 month high for June up slightly from May.

· IAS 360 says that in April home prices were down 13% from a year ago but that the decline may have leveled off.

· Wholesale inventories for April were down 1.4% from forecast of down 1.15. April was the eighth consecutive month inventories declined.

· The Federal Reserve Beige Book suggests that the worst of the recession may have passed.

Statistics of Interest/Concern

· Credit card delinquency increased 11% in 1Q 2009 to 1.32% accounts over 90 days delinquent.

· About 750,000 Option Arms are scheduled to re-set in 2010 and 2011 with 54,000 in August 2011 alone according to Bloomberg. California will likely suffer the most from the fallout of these re-sets.

Commentary

Since I believe strongly in all homeowners exploring loan modification I just wanted to remind you that if your loan is held or guaranteed by Fannie Mae or Freddie Mac OR your lender has received money from the government under the TARP they are REQUIRED by law to consider your loan for a modification.

For mortgage and related information please contact Burt Carlson at (602) 803-9660 or by e-mail at burt@gosfm.com.

FHA loans

MORTGAGE REVIEW: RATES, NEWS AND MORE

***Smart Financial Weekly Mortgage Update May 22, 2009***

Interest Rates

On March 18, 2009 the 10 Year Treasury Yield was 2.50%. Today it closed at 3.45%. This is a significant increase in a very short period of time. At the last meeting of the Federal Reserve it was revealed in notes released Wednesday that several members are open to the Fed purchasing more Treasuries than previously announced to keep long term rates at current levels. On Thursday mortgage rates moved up as the Treasury announced the issuance of about $100 Billion in new debt. To offset this move the Fed will buy back some Treasuries.

Concept: The Treasury Department issues new debt to fund government spending and the Fed buys Treasuries to keep rates low.

Concern: How long will this strategy work before rates move upward?

Date	Rate
5/22/09	4.82
5/15/09	4.86
5/8/09	4.84
5/1/09	4.78
5/22/08	5.98
5/24/07	6.37

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 yet another piece of legislation aimed at helping the housing market the President has signed the Helping Families Save their Homes Act of 2009. This legislation provides a “Safe Harbor” for loan servicing firms. The Safe Harbor protects the firms from investor lawsuits when they modify a loan as long as the modification is consistent with the revised (in this Act) Hope for Homeowners program.

· In recent weeks I have noticed that many FHA lenders have added risk adjustments for credit score and/or loan amount. If the purchase price is below $100,000 and the Buyers score is below 660 or so there will likely be adjustments which will increase the rate.

Good News

· First quarter 2009 homes were the most affordable in 18 years.

· Housing starts were down 12.8% to the lowest level since 1959.

· The number of housing starts in April was 458,000 down from forecast of 520,000.

· New building permits in April were 494,000 the lowest since 1960.

· Home builder sentiment improved for the second month in a row and was at the highest level since September 2008.

· The Leading Economic Indicators rose 1% (group of the 10 leading indicators) in April the first increase since June 2008. It was also the biggest monthly increase since November 2005.

· In April the unemployment rate declined in 21 states according to the government.

Statistics of Interest/Concern

· In 2007 the Social Security Trust fund was projected to have zero balance in 2041 but on May 12, 2009 the forecast was for zero balance in 2037.

· The Medi-Care Trust fund is forecast to have a zero balance in 2017.

· According to Real Capital Analytics $73 Billion in commercial real estate loans are in some level of distress and there are $271 Billion in commercial real estate loans due this year.

· Initial jobless claims for the week were 631,000 which was right on forecast.

· Continuing jobless claims increased to a record 6.662 million in April.

· The Congressional Budget Office (CBO) projects that the jobless rate could exceed 10%.

Commentary:

A sign of the times is that in Texas cattle rustling is on the rise and in fact has tripled from 2007 to 2008. Missouri has also had a sharp rise in cow thefts! Just thought you would like to know.

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