Foreclosure information
Mortgage Industry Update: Rates, News & More
May 1, 2010 by · Leave a Comment
***Weekly Mortgage & Business Update April 30, 2010***
How I see it $: Another more contemporary Greek tragedy has played out this week and with any luck may be resolved by Monday. Early in the week the Greek financial rating was downgraded to below investment grade. The downgrade set off a series of events that will lead to severe austerity measures for Greek unions and the people at large. A bailout package of about $130 billion has been proposed which will keep Greece from defaulting on its debt. While this move will “save” Greece the unions are not too happy and promise to fight pay reductions and other elements being proposed. Further, in a Greek poll taken late this week two thirds of those responding said it was likely there would be civil unrest. You may want to keep an eye on further developments in Greece. Finally, how about those wacky guys from Goldman Sachs in their appearance before our beloved elected officials? While I cannot place all of the blame for our recent financial crisis entirely on them they certainly played a role and for them too not acknowledge it is amazing. Wonder if their tune will change when they get in front of a court and respond to the SEC charges? If you have any comments or thoughts please e-mail me at burt@gosfm.com. Finally, if you would like to view any of the articles I have written please go to http://www.examiner.com/x-39888-Phoenix-Real-Estate-Financing-Examiner.
Interest Rates
A month after the Fed stops buying MBS most observers expected rates to show some signs of moving up. Guess what? So far there has been little impact on rates as they have continued around the 5.00% range. How long this will last is anyone’s guess.
|
When |
Rate |
|
This Week |
5.06 |
|
Month Ago |
5.08 |
|
Year Ago |
4.78 |
|
2 Years ago |
6.06 |
Note that actual market rates vary geographically and by lender, credit score and Loan to Value. Source: Federal Reserve Statistical H.15. http://www.federalreserve.gov/releases/h15/data.htm
Mortgage Industry
· Fannie Mae announced Tuesday the extension of its incentive program to purchase its existing inventory through the Home Path program. The program will now expire on June 30, 2010. See http://www.homepath.com for program details.
· FHA loans that are 90 days or more delinquent dropped to 8.8% in March down from 9.2% in February. FHA now holds over six million mortgages with loan balances exceeding $800 Billion (FHA).
· If you have a 30 day late on your credit report your score can go down between 10 and 110 points, a 90 day late 70 to 135, a foreclosure, short sale or deed-in-lieu 130-240 and bankruptcy 130-240. These are of course educated guesses and each consumer’s situation may cause the reduction in score to be different (TBWS).
· An Arizona law professor argues that in Arizona (like most non-recourse states) lenders are charging all Arizona borrowers an additional $800 per $100,000 borrowed for the option to default on a purchase money loan without any recourse. There is no discussion on how the $800 was determined (Brent T. White, Law Professor, University of Arizona published in Arizona Republic on April 25, 2010).
Good News
· First quarter 2010 GDP grew at 3.2% less than fourth quarter 2009 which was 5.6% forecast was for 3.4% increase but still a solid number (Commerce Department).
· Consumer spending which accounts for about 70% of GDP grew 3.6% in the first quarter of 2010 compared to 1.6% in fourth quarter 2009 (Commerce Department).
· Consumer confidence increased in April to 57.9 up from 52.3 in March the highest level since September 2008 when Lehman Brothers collapsed (Conference Board).
· Home prices increased by .3% in February from the same month in 2009 the first increase in more than three years. However, it is expected that for February 2010 thru February 2011prices will decline by 3.4% (First American CoreLogic).
Statistics of Interest/Concern
· Consumer sentiment fell to 72.2 in April from 73.6 in March (Reuters Thomson/University of Michigan).
· U.S. home prices fell in February by .9% from previous month BUT were up year over year by .6% the first increase in more than three years (S& P Case-Shiller).
· Phoenix had the seventh most foreclosures in the first quarter of 2010 with one for every 38 homes. Las Vegas was first at one out of 28 homes (Realty Trac).
Foreclosure Headlines
· The Las Vegas metro area has the worst foreclosure rate in the nation at one in 28 homes while Phoenix metro is seventh at one in 38 (Realty Trac).
· Strategic defaults on home loans were at 12% in February up from an estimated 4% in mid 2007. The Treasury Department is expected to announce changes to HAMP (Loan mod program) by September to help homeowners who owe more than 115% of the home’s value reduce principal (Bloomberg).
· There could be another 1.6 million distressed sales in 2010 or about 30% of total sales and the same numbers are expected for 2011. The shadow inventory (homes at 90 days or more delinquent) is estimated at 4.6 million homes some of which will modify or work out the loan with their lender and some will be strategic defaults (Barclays Bank).
· Apparently the State of Arizona has decided how it is going to spend the $125 million from Washington. $90 million will be used to reduce loan balances on 3,000 “deeply underwater” mortgage’s, $12 million will subsidize unemployed borrowers mortgages, $7.5 million will buyout second mortgages and $10 million will be for counseling (WSJ). Some of you math wizards out there may have noticed the total is not $125 but $119.5 million. More government accounting?
Jobs Update
· Initial weekly jobless claims were down 11,000 to 456,000 (Department of Labor).
· Four week moving average for weekly jobless claims increased 1500 to 462,500 (Department of Labor).
· Continuing jobless claims declined 18,000 to 4.65 million (Department of Labor).
· Since December 2007 Congress has extended the length of unemployment benefits three times. Apparently neither party has any interest in extending them further thus the maximum length to receive benefits will remain at 99 weeks. In the coming months about one million people will see their benefits end. This fiscal year we will spend $200 Billion for unemployment benefits or about six times what it was before the recession began (Bloomberg).
· 44% of jobless people have been unemployed at least six months or more (Bureau of Labor statistics).
· At least 3.4 million people have been out of work at least one year (Pew Fiscal Analysis Initiative).
Key Indicators
|
Indicator |
4/23/10 |
4/30/10 |
Change |
|
Dow |
11,204 |
11,009 |
-195 |
|
10 year yield |
3.82% |
3.66% |
-.16% |
|
Crude oil |
85.11 |
86.18 |
+1.07 |
|
Dollar (vs Euro) |
1.3369 |
1.3296 |
-.0073 |
|
Gold |
1156.0 |
1179.4 |
+23.4 |
Source: www.cnbc.com/markets/commodities
Foreclosure information
Mortgage Industry Update: Rates, News & More
February 21, 2010 by · Leave a Comment
***Smart Financial Weekly Mortgage & Business Update February 19, 2010***
Editorial Comment: The purpose of this weekly update is to provide a snapshot of a variety of factors influencing both the mortgage and housing markets. As we all know our country is facing a host of financial challenges which need to be addressed and very soon. We need leaders with ideas who are willing to compromise to move us forward and that does not appear to be the case. So, because of what is being called “gridlock” in our nation’s capital, I am offering my views on the subject in the Comments/Observations section of this week’s update. I am not promoting any particular agenda other than taking positive action for the good of the country. I hope you find it informative.
Interest Rates
Retail mortgage were in a very narrow range for the week. The Treasury Department said Tuesday that foreign demand for U.S. Treasury Securities fell by the largest amount on record in January with China reducing its holdings by $34.2 Billion. This reduction if continued could force the government to make higher interest payments (rates would have to be increased to attract investors in our Treasuries) which will lead to higher mortgage rates. All of this at a time when we have a record budget deficit.
|
When |
Rate |
|
This week |
4.93 |
|
1 Month Ago |
4.99 |
|
1 Year Ago |
5.16 |
|
2 Years Ago |
5.72 |
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 Mortgage Banking Association (MBA) said this week that fourth quarter mortgage delinquency was 9.47% down from third quarter’s 9.64%.
· Mortgage insurer PMI Group Inc the third largest mortgage insurer reported its 10th consecutive quarter of unprofitability posting a $228.2 million loss. One market analyst said that PMI’s future claims are likely to offset future premiums. In a related move moody’s cut the firms rating from B2 to Ba3. PMI’s largest competitor MGIC Investment Corp. has a $280.1 million loss for the quarter. Look for mortgage insurance rates to increase and guidelines to become stricter in the coming months.
Good News
· New home construction was up 2.8% in January but building permits were down 4.9% according to the Commerce Department.
· U.S. industrial output rose .9% in January with December’s gains revised upwards slightly according to the Federal Reserve.
· The Conference Board’s index of leading economic indicators rose for the 10th consecutive month .3% in January following a gain of 1.2% in December.
· The Philly Fed economic survey/business index rose to 17.6 in February from 15.2 in January.
· The PPI (Producer Price Index) which measures wholesale activity was up 1.4% in January above the forecast of .9%.
· According to the NAHB/Wells Fargo Home Affordability Index (HOI) 70.8% of all new and existing homes sold in the fourth quarter of 2009 were affordable for families earning the national median income of $64,000.
· Thursday the yield curve steepened to a record 2.92%. A steepening yield curve is normally an indicator the economy is expanding. The steepness of the yield curve is the difference between the two year yield and the 10 year yield on Treasury Notes.
Statistics of Interest/Concern
· The Treasury Department reported that the government posted its 16th consecutive monthly deficit with a shortfall of $42.6 Billion in January.
· Capital One credit card defaults rose from 10.14% in December to 10.41% in January.
· Moody’s Investors Services reported that Commercial Mortgage Backed Securities (CMBS) specialty loan delinquency increased $3 Billion in February to $36 Billion and a 5.42% delinquency rate.
· The Consumer Price Index (CPI) for January was up .2% after December’s increase of .2%. The year over year increase in the CPI was 2.6%. Note that core prices (excluding food & energy) fell for the first time since 1982 according to the Labor Department.
Foreclosure Headlines
· Today the President announced a new program to address the foreclosure crisis in five states (CA, NV, AZ, FL & MI). The program will be funded with $1.5 Billion in returned TARP money and will include measures to assist unemployed borrowers, programs to assist underwater homeowners, programs that address challenges with second mortgages and other programs to encourage “sustainable and affordable homeownership”. The funding will go to the state Housing Finance Authorities and no timetable for implementation was given.
· Trans Union said that the mortgage delinquency rate for 60 day plus rose to 6.89% in the fourth quarter of 2009 marking the 12th consecutive quarterly increase. By comparison fourth quarter 2008 delinquency was 4.58%. They also said that the delinquency will peak between 7.5% and 8% mid-summer 2010.
Job Market Headlines
· Initial weekly jobless claims rose to 473,000 which were higher than the forecast of 438,000 and an increase of 31,000 from the previous week.
· The four week moving average of initial weekly claims was 467,000 down 1500 from previous week.
· Continuing jobless claims were 4.56 million unchanged from previous week. There were 5.8 million collecting “emergency” claims this week up 304,748 from the previous week!
· The Minneapolis head of the Federal Reserve said this week that growth will be slower than many think and that unemployment is unlikely to go below 9% in 2010 and 8% in 2011. He did say the Fed had kept inflation at good levels but careful policy choices are still critical.
· INS Global Insight, Moody’s and others now credit last years $787 Billion Stimulus package with adding between 1.6 and 1.8 million jobs since its passage. Also, the CBO (Congressional Budget Office) a non partisan group said it believes the estimates are too conservative.
Comments/Observations
Our nations elected decision makers are mired in gridlock. Fumbling around trying to find answers for historical problems. They are not volunteers they applied for the jobs they have. They took a sacred oath to act in our best interests. From the President down to the first year congressman they wanted those jobs. They need to get their act together!
Like most Americans I am aware that our country faces serious financial and other problems. Also, like most Americans, I am unhappy with what is going on in our nation’s capital. We have seen and been told for years that health care costs, budget expansion, Medicare, Medicaid, Social Security and more need serious attention. And yet today we appear no closer to solving these problems than a decade ago.
No one in government is without blame and it is high time, no PAST high time, that our elected officials set aside politics and face up to their responsibilities to themselves, to you and to me. End the bickering, back biting and B.S. and do the job you were elected to do and that is represent the people’s interests!
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
February 13, 2010 by · Leave a Comment
***Smart Financial Weekly Mortgage & Business Update February 12, 2010***
Interest Rates
Retail mortgage rates remained at or just below 5% again. Seems that there is a fairly vigorous debate over what rates will do at the end of March. This week the head of the St. Louis Federal Reserve James Bullard said that he did not expect to see a noticeable increase in mortgage rates when the Fed ends its MBS purchasing program in March. This comment is in contrast to many industry participants who believe that rates will increase .50% to .75%. Guess we’ll know pretty soon.
|
When |
Rate |
|
This week |
4.97 |
|
1 Month Ago |
5.06 |
|
1 Year Ago |
5.16 |
|
2 Years Ago |
5.72 |
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
· CitiMortgage is introducing a new foreclosure pilot program for homeowners. The program calls for the lender to take back the home and forgive the debt without a foreclosure (deed-in-lieu-of-foreclosure). It is aimed at homeowners who don’t want to keep their homes (Strategic Defaulters for example). The homeowner can stay in the home for six months as long as they pay the utilities and negotiate other costs (property taxes, insurance, HOA dues). At the end of six months they will get $1000 to help cover relocation expenses. Citi will also review other options for the homeowner including short sale and loan modification. Six states will participate in the pilot program and if successful it will be expanded. Arizona is not one of the six states.
Good News
· The National Federation of Independent Business said its January Index of Small Business Confidence was 89.3 the highest level since September 2008 but was the seventh consecutive quarter below 90 which is seen as minimally optimistic.
· Retail sales were up .5% in January which was higher than forecast and both November and December’s numbers were revised upward according to the Commerce Department (see below for results of Gallup Poll).
Statistics of Interest/Concern
· A Gallup Poll on consumer spending showed that in January spending was down 16.5% from December 2009 and 5.8% from January 2009.
· The rating agency Fitch said that jumbo loans seriously delinquent continued to increase for the 32nd consecutive month in January and rose to 9.6% from Decembers 9.2%.
· The University of Michigan Consumer Sentiment Index was down to 73.7 in February from January’s 74.4 but this compares favorably to a year ago when the number was 56.3.
· FY 2001 was the last year the government tax receipts ($2.0 TRILLION) exceeded spending ($1.9 TRILLION).
Foreclosure Headlines
· One solution to the foreclosure crisis has been the HAMP (loan modification). Missing from the loan mod program is a principal reduction component. Apparently there is a law/rule/guideline that says first mortgages cannot be written down before seconds. There is just over one TRILLION dollars in second mortgages outstanding and the majority is held by four banks (B of A, Chase, Citi & Wells). Last summer a loan mod program for second mortgages was introduced and has not gone very far. Only B of A has signed up. Hopefully Treasury is working on a way to address the principal reduction issue using whatever tools are available because many believe lowering loan balances is critical to resolving the foreclosure crisis.
· RealtyTrac reported for January foreclosures were down 9.7% from December but still at 315,716 for the month and the 11th consecutive month foreclosures exceeded 300,000.
· Zillow.com reports that 21.4% of homeowners in the fourth quarter of 2009 owed more than their homes than they were worth. This was a slight increase from third quarter’s 21.0%. They also said that home values declined 5% from the previous year and that they expected home values to bottom out in mid 2010.
Job Market Headlines
· Initial weekly jobless claims declined to 440,000 down 43,000 from previous week and below forecast of 465,000.
· The four week moving average of weekly claims was 468,500 down 1,000.
· Continuing jobless claims were 4.538 million down 79,000 from previous week and below forecast of 4.6 million.
· According to ADP the world’s largest payroll processor small business (500 or fewer employees) lost 3,000 jobs in January and has been reducing capital expenditures for several months. Small business growth has helped lead the economic recovery in the last four recessions.
Commentary/Observations
The Chairperson of the committee that oversees the TARP program in commenting about a committee report on the commercial real estate market said unless regulators start preparing now these loans could “go sour and wreck the economy”. Between 2010 and 2014 $1.4 TRILLION in commercial loans come due and at least half are “underwater”. The report predicts that unless appropriate actions are taken hundreds of small and medium size banks could fail.
The CEO of Pimco the world’s largest bond firm has expressed concerns about the massive U.S. debt and says he currently prefers to buy German government bonds over U.S. bonds. He went on to say that the Greek situation is a “massive wake-up call” especially given that our government’s debt is about 60% of total GDP.
Iran’s president claimed that his country will not be bullied by the west into halting its nuclear program just one day after the U.S. imposed new sanctions on the country.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
January 23, 2010 by · Leave a Comment
***Smart Financial Weekly Mortgage & Business Update January 22, 2010***
FHA Update Number 1: Changes: This week FHA announced the much anticipated changes to its lending policies. The changes include an increase in up front mortgage insurance from 1.75% to 2.25% of the loan amount, establishment of a minimum credit score of 580 for 3.5% down payment and requiring a 10% down for scores less than 580 and reducing the Seller Contributions from 6% to 3%. See Mortgage Update section below for more details.
FHA Update Number 2: Anti flipping rule waived: FHA has announced a new policy effective February 1, 2010 that temporarily waives its previous 90 day anti flipping rule. The new policy applies to HUD owned, bank owned and privately owned properties and will no longer require a 90 day waiting period from change of ownership before a buyer can use FHA financing. There are certain conditions that apply for the property to be eligible for the waiver. The new transaction must be an arm’s length one and there cannot be any identity of interest between the buyer, seller or any other parties to the transaction. In addition, if the new sales price exceeds the sellers acquisition cost by more than 20% the increase in value must be documented by the lender. Further, a property inspection may be required by the lender to strengthen the case for the excessive value. Finally, no pattern of previous flipping such as multiple sales in the past twelve months can exist.
Interest Rates
The PMI Group Housing & Mortgage Market Review has forecast that rates will gradually rise and average 6% by the end of 2010. Tuesday both India and the UK said they expect higher inflation in their countries and for the world economy as a whole. Typically as inflation heats up rates increase as well. Besides inflation rates usually increase as the economy grows and there is a more positive outlook for the economy. Offsetting the inflation news was the sharp decline in stocks this week which helped keep rates low. Retail rates for the week remained in the low 5% range and within a narrow range.
|
When |
Rate |
|
This week |
5.15 |
|
1 Month Ago |
5.05 |
|
1 Year Ago |
5.12 |
|
2 Years Ago |
5.48 |
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
· As mentioned above FHA has introduced some changes to its lending policies. Note that the increase in up front mortgage insurance will be effective April 5, 2010 and the credit score/down payment and Seller Contribution changes will be effective this summer. FHA took these steps because its share of the market has grown from 3% to over 35% with the resulting adverse impact on its reserves which have fallen to .53% well below the minimum of 2.00% required by Congress. Thru third quarter 2009 FHA delinquency was at 14.36% compared to 9.64% for all loans. Note that FHA is expected to ask Congress for authority to increase the annual mortgage insurance premium which if granted will result in the lowering of the up-front mortgage insurance payment. Typically a borrower pays a one-time up-front fee for mortgage insurance plus an annual insurance premium that is paid with the monthly payment.
· Loan modification update: The Treasury says that thru December 2009 there had been 66,465 permanent modifications up from 31,382 in November. There are another 46,056 homeowners whose permanent modifications are pending. In the same report Treasury noted that the best performing lenders were Citi, GMAC, Saxon and Chase while the worst performing were Bank of America, Litton, American home Mortgage Servicing and Wachovia.
Good News
· The Producer Price Index (PPI) rose for the third straight month in December by .2%. the annual rate in 2009 was an increase of 4.4% in line with forecasts.
· New housing permits increased by 10.9% in December to 653,000 the highest number since October 2008 yet for all of 2009 permits were down 36.9%.
· The Philly Fed report of manufacturing expanded in January for the fifth consecutive month although declining slightly from December.
· The Conference Board’s Index of Leading Economic Indicators rose for the ninth straight months suggesting a strong first half of 2010.
Statistics of Interest/Concern
· The Financial Times reports that 260 publically traded companies defaulted on their corporate bonds in 2009 the most ever recorded.
· The U.S. government collected $219 billion in revenue in December 2009 but had to pay out $311 billion. December was the 15th consecutive month in which a deficit was record a national record.
· New housing starts fell 4% in December to an annual rate of 557,000 the forecast was for 580,000.
· U.S. home builder sentiment fell to 15 in January down from 16 the previous month and the lowest level since June 2009.
Foreclosure Headlines
· First American Core Logic LLP says that about 12% of loans over $1,000,000 are late which is three times what it was a year ago.
· According to an ASU report lenders foreclosed on 41,000 single family detached homes in Arizona in 2009 the most in any year on record.
· Moody’s has revised its loss projections for jumbo loans originated between 2005 and 2008 saying it now expects higher delinquencies which will increase through 2010.
Job Market Headlines
· Initial weekly jobless claims increased to 482,000 from 446,000 the previous week.
· Four week moving average for initial jobless claims was 448,250 up 7500 from previous week.
· Continuing claims came in at 4.599 million down 18,000 from previous week.
· 43 states had an increase in the jobless rate in December according to the Labor Department. This was an increase over 36 states in November.
Commentary/Observations
The Treasury Department has been unable to get any lenders holding home equity debt (second mortgages) to participate in a program announced eight months ago. The lenders hold just over one TRILLION dollars in debt which may be nearly worthless. These second lien holders are not working toward solving the housing crisis according to the government. Frequently they delay or effectively cancel short sales and can be an additional hurdle in loan modification. It has been estimated that some of the big banks carry their second liens at more than $150 billion above the real value.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
January 17, 2010 by · Leave a Comment
***Smart Financial Weekly Mortgage & Business Update January 15, 2010***
First time home buyer tax credit SNAFU: Homeowners who closed on their purchases before November 6, 2009 file IRS Form 5405 to get the credit. However, so far the IRS has not issued a form for claims after November 6 when the tax credit extension became effective. A new form was expected in early January. It also looks like a buyer will now have to provide “proof” of the purchase and e-file will not be accepted. As always check with your tax professional for the latest details on getting the tax credit.
Interest Rates
So far we have not seen signs of the much anticipated increase in mortgage rates as retail rates remain in the low 5% range. Yes that is higher than the high 4% of recent times but still extraordinary by historical standards. We don’t want to be perceived as crying wolf on rates but folks trust in the markets rates are going to increase and fairly soon.
|
When |
Rate |
|
This week |
5.06 |
|
1 Month Ago |
4.94 |
|
1 Year Ago |
4.96 |
|
2 Years Ago |
5.69 |
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 Federal Housing Finance Agency (FHFA) reports that Fannie Mae and Freddie Mac delinquency for third quarter came in at 7.6% and that 1.6 million homeowners were 60 day’s or more behind on their mortgages.
· More Fannie Mae and Freddie Mac: One expert estimates that they could lose a combined $448 billion which is about 10% of value of their book of loans. Since September 2008 when the government took them over we have injected $112 billion which means the budget could take a $336 billion hit in the next few years.
· OK, last Fannie Mae and Freddie Mac: In July 2008 Barney Frank said they were fundamentally sound and “in good shape going forward”. In September the government seized control and committed $200 billion to cover future mortgage defaults. Then in February 2009 the government increased their support to a combined $400 billion. Last month with little publicity the government announced “unlimited” support for these two organizations thru 2012.
Good News
· The Bloomberg Professional Global Conference Index forecasts an increase in the 10 year note rate in the next six months and is optimistic on global recovery for the sixth consecutive month.
· Consumer Price Index (CPI) for December was up .1% less than forecast increase of up .2% but lower than last November’s increase of .4%. Note that 2008 CPI was up .1% and 2009 was up 2.7%.
· Industrial output was up .6% for December which was in line with forecast.
· University of Michigan Consumer Sentiment Index came in at 72.8 up slightly from 72.5 in December.
Statistics of Interest/Concern
· Rating service Fitch reported that Commercial Mortgage Backed Securities (CMBS) delinquency for 2009 finished at 4.71%. Fitch predicts that CMBS delinquency could go as high as 12% by 2012 as a large amount of loans come due with little hope of refinancing if credit is not more readily available.
· The Agriculture Department reports that 38 million people or one in eight received food stamps in October the most recent month data was available. This was an increase of 746,000 from the previous month the ninth record month in a row and the highest percentage ever recorded.
· KB Home posted its first quarterly profit since 2007 due to a tax gain of $191.7 million.
· The Commerce Department reported that December retail sales declined .3% forecast was for increase of .5%.
Foreclosure Headlines
· Several sources are estimating foreclosures in 2010 could be between 3 and 3.5 million exceeding 2009’s 2.8 million.
· Lender Processing Services LLP reports that delinquency on mortgages hit 13.2% or one out of every seven or so homeowners is in one form of delinquency or the other.
· Fitch says that 88% of Option Arms originated between 2004 and 2007 are going to adjust between now and 2012. Most if not all will carry increased payments and loan balances they said. Further, as rates increase the problem will only get worse.
· The delinquency (60 days or more late) on jumbo loans hit 9.2% in December an increase of 300% from December 2008.
· Realty Trac reports that even though there were 2.8 million foreclosure notices in 2009 only 871,000 homes were actually repossessed.
Job Market Headlines
· Initial weekly jobless claims rose by 14,000 to 444,000 forecast was for 436,000.
· Four week moving average for weekly jobless claims fell to 440,750 from 449,750 the lowest level since fall of 2008.
· Continuing claims came in at 4.596 million down 211,000 from previous week.
NOTE: The weekly and continuing claims data was “seasonally adjusted” without this adjustment initial claims would have been 156,000 more and continuing claims 504,000 more. It seems the government does not include the new unemployment benefits extension program in the data.
· The National Federation of Independent Business (NFIB) said that that small business optimism declined for the second consecutive month to 88. The NFIB also said that capital spending by small business rose to 18 barely above the 35 year record low.
· Global Insight says that a potential new wave of regulations and increased taxes may keep businesses from hiring. The Chamber of Commerce and NFIB both agree.
Commentary/Observations
The Committee on the Fiscal Future of the U.S. co chaired by the former head of the Congressional Budget Office (CBO) has said that if we do not raise taxes and/or reduce government spending to curb our debt we risk a “crippling dollar crisis”. Our national debt as percentage of GDP is above 40% and in 20 years could exceed 100% for the first time since the end of WW2.
States continue to struggle with budget problems. A report from State University in New York for third quarter 2009 showed 2009 state tax collections have had the sharpest decline in 46 years. At least 30 states have raised taxes an estimated $112 billion according to the Pew Center.
China increased the reserve requirement on its banks as a way to cool their fast growing economy as a credit boom threatens to create asset bubbles and introduce inflation.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
January 9, 2010 by · Leave a Comment
***Smart Financial Weekly Mortgage & Business Update January 8, 2010***
Something New! We decided to start the New Year by upgrading this publications name to be more in line with what we are trying to accomplish. So, please note our new name is Smart Financial Weekly Mortgage & Business Update. I hope you like it! Finally, there is a lot of jobs news below and as we have said before our view is jobs are the key to recovery not only for housing but also the economy as a whole.
Interest Rates
We start off the year with mortgage rates stable from 2009. The good news continues but as we have said before there are forces at play that will mean higher rates in the near term. Most observers believe that the Federal Reserve’s support of rates will end in late March as they have said recently. This will almost certainly mean an uptick in rates. However, a minority of observers think that if it is clear the housing market is not getting better the Fed may make a move to help. In the meantime you may want to watch the ten year Treasury yield as mortgage rates typically move with it. You can see it at www.cnnmoney.com/markets/bonds and you may want to add the link to your favorites. Note that the 10 year Treasury yield increased 1.62% in 2009 from 2.22% to 3.84% which was the highest yearly increase since 1999. The yield finished this week at just over 3.80%. Finally, Freddie Mac has reportedly said it believes that mortgage rates could be as high as 7%+ in the last half of 2010. I hope they are wrong!
|
When |
Rate |
|
This Week |
N/A |
|
1 Month Ago |
4.71 |
|
1 Year Ago |
5.10 |
|
2 Years Ago |
6.07 |
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
· According to MSN Money the administration is set to announce changes to FHA lending in late January that include an increase in the down payment, increase in the minimum credit score, increase in the mortgage insurance premium along with how it is paid and a reduction in what sellers can pay toward closing costs.
Good News
· The American Bankers Association (ABA) said late this week that delinquency in seven categories declined in the third quarter. Only home equity loans and mobile home loans increased and they increased to a record 4.3%. The ABA defines delinquency as 30 days or more. Also, home mortgages were not included in the report and are treated separately.
· ISM Manufacturing Index for December was the highest in four years rising to 55.9 from November’s 53.6.
· SBA (Small Business Administration) lending increased 37% in the fourth quarter from the previous year.
· The Commerce Department said that factory orders increased 1.1% in November which was much better than the forecast of .5%.
· ISM Services Index increased to 50.1 in December from 48.7 in November forecast was for 53. Anything over 50 suggests expansion.
Statistics of Interest/Concern
· Pay Net reported severe delinquency (180 days late or more) on business lending to small and mid-sized businesses rose in November for the 22nd consecutive month. These are loans, leases and lines of credit to run businesses.
· Pending home sales declined 16% in November much more than expected.
· Vacancies for strip malls hit an 18 year high in the fourth quarter at 10.6% and regional malls vacancy rates were at the highest level in 10 years.
· Business bankruptcies rose in 2009 to 89,402 up from 2008 64,584 according to Jupiter eSources LLC.
· According to the Federal Reserve consumer borrowing declined by $17.5 billion in November much more than the forecast of $5 billion. November was the 10th consecutive monthly decline in consumer borrowing and the decline is the lowest in decades.
Foreclosure Headlines
· Economy.com estimates 2.4 million homeowners will lose their homes to foreclosure in 2010.
· Silicon Valley is experiencing the biggest office glut since the dot com bust 5 years ago with more than 43 million square feet of commercial space vacant at the end of the third quarter according to CB Richard Ellis Group LLC. It is expected that foreclosures on commercial property will double in 2010.
· Commercial real estate loan losses pose the biggest threat to banks in 2010 said U.S. bank examiners. The losses will be “quite high by historic standards” and “hundreds of banks will fail” said Eugene Ludwig former head of the OCC. Most of the banks will be regional and local banks that made commercial and real estate loans in the last few years.
· The Office of the Comptroller of the Currency (OCC) reported on December 21st that prime mortgages 60 days or more delinquent more than doubled to 838,000 in the third quarter 2009 from the year before.
Job Market Headlines
· The Department of Labor reported 85,000 jobs lost in December compared to forecast for no gains or losses. The unemployment rate came in at 10% in line with forecast. For 2009 4.2 million jobs were lost. After the 2001 recession which lasted several months job losses continued for two years and resulted in 1.1 million job losses. The current recession started in late 2007 and ended in the third quarter of 2009.
· More December jobs data shows the November jobs loss number revised to PLUS 4,000 the first increase since December 2007. However, more distressing data shows 661,000 left the work force. These “discouraged workers” as defined by the Department of Labor have not looked for work in four weeks. In addition, the number of unemployed, discouraged workers and those working part time but looking for full time work was 17.3%. Finally, in the methodology used by the government is something called the “household survey” and it showed 589,000 jobs lost in December.
· Initial weekly jobless claims were 434,000 up only 1,000 from previous week for a 16 month low.
· Four week moving average for weekly jobless claims was 450,250 down 10,250 from previous week.
· Continuing jobless claims were 4.80 million down 179,000 from previous week. The peak for continuing claims was in June 2009 when they hit 6.9 million. Note that the number of emergency claims those for more than 26 weeks increased from 4.91 million to 5.1 million.
· The number of U.S. cities with unemployment rates above 15% increased in November to 17 up from October’s 15.
· Outplacement firm Challenger, Gray & Christmas Inc. reported 45,094 job cuts in December the lowest since December 2007.
Commentary/Observations
One definition of “shadow inventory” of homes has three elements. First, homes not listed for sale but likely to hit the market within a year (Arm re-sets on interest only loans and Option Arm’s for example). Second, bank owned homes that have not yet been listed. Third, homeowners who are waiting to sell but only at a price they feel good about. It is unclear how many homes this represents but some estimates have the number at 7 million. In estimating the shadow inventory first American Core Logic is assuming 68% of homeowners 90 days or more delinquent are “cured”. Cure means their default is fixed by either a short sale or loan modification for example. Many think the 68% is too high and as that percentage goes down the number of foreclosures goes up.
Thursday Lennar the third largest home builder released its fourth quarter earnings which showed a profit of $36 million. The problem is that the profit was driven by a $353 million tax gain. They and other companies (mostly home builders, auto industries and financial firms) will benefit from a change in how corporate losses are treated. The new change was part of the legislation extending the first time home buyers tax credit. This new change allows companies to apply losses in 2008 and 2009 to income earned in the previous five years up to 2007. The old law required the losses be applied to two years. Because of this tax benefit Lennar will get a $320 million tax refund this year. The National Bureau of Economic Research estimates that the total cost of the tax credit will be $53 billion.
During the week the yield curve steepened to its highest level since 1990 suggesting chances of a recession by the end of the year are slim and that the economy is expected to grow. The steepness of the yield curve is measured by the difference between the yields on the two year Treasury note compared to the ten year note.
If you have any mortgage or related questions I can be reched at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
December 19, 2009 by · 1 Comment
*** Smart Financial Weekly Mortgage Update December 18, 2009***
Reminder: If you or anyone you know is interested in getting FREE assistance with a loan modification please let me know or have them contact me.
Interest Rates
Retail mortgage rates maintained their sub 5% position for the week. In a statement after its meeting this week the Federal Reserve made it a point to reiterate that its MBS program (to support keeping mortgage rates low) will end as scheduled on March 31, 2010. There had been some chatter in the market that the Fed would extend the program and that does not seem to be the case. This came after Moody’s comments on Monday saying the sovereign debt risk is rising globally and especially in the U.S. They predicted long term rates will increase globally in 2010 and may increase more rapidly than expected. Moody’s added that the U.S. will have to put in place a “credible plan to address the problems of large debt”. Absent a strong policy response the U.S. triple A credit rating will be under threat in two to three years. So, gentle reader, as we have said for many weeks now the specter of increasing rates looms large on the horizon.
|
When |
Rate |
|
This Week |
4.94 |
|
1 Month Ago |
4.83 |
|
1 Year Ago |
5.19 |
|
2 Years Ago |
6.14 |
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
· Bloomberg reported this week that Fannie Mae and Freddie Mac are in discussions with the Treasury Department to increase their $400 billion lifeline before the end of the year. Between the two they represent the largest sources of mortgage financing in the country. They have used $111 billion of the $400 billion in less than a year.
Good News
· Conference Board index of leading economic indicators was up .9% in November above forecast of .7%.
· Industrial production rose .8% in November after being flat in October.
· Housing starts rose 8.9% in November the biggest increase in six months according to the Commerce Department.
Statistics of Interest/Concern
· FDIC head Shelia Baer said that in 2010 bank failures will peak.
· The Consumer Price Index (CPI) rose .4% in November after a .3% increase in October the Labor Department said.
· Producer Price Index (PPI) rose 1.8% in November up from an increase of .3% in October. Forecast was for increase of .8%. Note that the Labor Department said the year over year increase was 2.4%.
· The New York Empire State index of business conditions fell 2.55 in November.
· Capital One at 9.6% and Discovery at 8.98% reported charge off’s on credit cards rose in November. A charge off is debt that the creditor does not believe can be collected. Both reported 60 day plus delinquency near 6%.
· The National Association of Home Builders sentiment index declined slightly in November. The decline was mostly due to concerns about the weak job market.
Foreclosure Headlines
· In testimony before the House Financial Services Committee Laurie Goodman veteran MBS analyst and Senior Managing Director of Amherst Securities said that her analysis led her to conclude that negative equity was the biggest driver in foreclosures and that employment was a catalyst. Her research further caused her to conclude that reducing loan balances would be a more effective way to reduce foreclosures than reducing monthly payments.
Job Market Headlines
· The House approved a $155 billion job creation bill this week that the Senate is expected to consider shortly after the New Year begins. Among its provisions is an extension of unemployment benefits for an additional six months. In a separate but related action the House attached an extension of two months unemployment benefits to a mandatory military spending bill.
· Weekly initial jobless claims were 480,000 up 7.000 from the previous week and above forecast of 465,000.
· The four week moving average came in at 467,500 down 5250 from previous week.
· Continuing jobless claims were up slightly to 5,186 million.
· The Labor Department reported that in November more states had a decline in the unemployment rate than had an increase. Compared to October’s data which showed 29 states had an increase the November data is an improvement.
Commentary/Observations
Moody’s Delinquency Tracker of commercial mortgages (CMBS) reports that in November delinquency was 4.47% up .46% from October and that the total of delinquent loans was about $30 billion. This is considerably higher than the December 2008 total of $6.7 billion. Four states had delinquency above 10% one was Michigan another was…………………..Arizona.
According to a USA Today analysis of federal salary data the number of employees making $100,000 per year increased from 14% to 19% in the recession’s first 18 months. Also in the period from December 2007 until June 2009 the number of Defense Department employees making $150,000 per year increased from 1868 to 10,100. But wait there is more. At the Department of Transportation only one person was making $170,000 or more in late 2007 but in mid 2009 that number had increased to 1690. Finally, the average federal employee salary BEFORE overtime is now $71,206.
Iranian forces entered Iraqi territory yesterday at dawn. They occupied a well about 280 miles south of Baghdad. This could be part of the ongoing border dispute between the two countries or something else. Iranian officials were unavailable as Friday is a weekend day in Iran.
The Washington Post reported late this week that Citigroup will not have to pay billions in taxes as part of their deal to repay the TAPR money we provided to keep them from being broken up or worse.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt @gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
December 12, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update December 4, 2009***
Interest Rates
Retail mortgage rates closed the week about .25% higher than what we started the week with. Could this be the beginning of a more regular uptick in rates? Conventional wisdom has it that the rates will move higher but the move up will be bumpy. Stay tuned.
|
When |
Rate |
|
This Week |
4.81 |
|
1 Month Ago |
4.91 |
|
1 Year Ago |
5.47 |
|
2 Years Ago |
6.11 |
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
· An amendment to HR 4173 the Wall Street Reform and Consumer Protection Act allows bankruptcy judges to modify mortgages. These are a number of big time sponsors for this amendment which could light a fire under banks to move the loan modification process along more quickly. In the past the banking lobby has been able to get similar legislation defeated.
· A new Hope Now Alliance website lets HUD approved counseling agencies in certain markets submit loan modification applications on behalf of certain distressed borrowers. The program is called Hope Loan Port and GMAC, Chase, Sun Trust, PNC and Saxon Mortgage are part of the pilot program. In a related note Chase Bank says that it has been more successful with its own internal loan modification process than with the Making Home Affordable program. It said that 31% of homeowners offered Trial Modifications under the government plan never sent in a single payment.
· GMAC announced underwriting changes for buying a home after foreclosure. The timeframe is 5 years with a minimum down payment of 10% and minimum credit score of 680. The minimum timeframe from Chapter 7 bankruptcy is 4 years and Chapter 13 bankruptcy is 2 or 4 years depending on the disposition.
· Last week one of our sources AmTrust Bank was taken over by the FDIC then quietly but quickly acquired by New York Community Bancorp. So far this year 130 banks have failed compared to 25 in all of 2008.
Good News
· U.S, households wealth rose $2.7 Trillion in the third quarter the second quarterly increase in a row according to the Federal Reserve.
· Zillow says homeowners will lose about $500 billion in value this year a big improvement from 2008 when $3.6 Trillion was lost.
· The Business Roundtable said its CEO Economic Outlook Index moved strongly positive to 71.5 from 44.9 in the third quarter.
· Freddie Mac said that its Home Price Index increased .9% in the third quarter following a 2.0% increase in the second quarter.
· The Commerce Department reported that wholesale inventory increased by .3% in October the first increase in more than a year. The forecast was for decline of .5%.
· Retail sales were up 1.3% in November much higher than the forecast of .6%.
· University of Michigan consumer sentiment index for November increased to 73.4 from 67.4 in October the forecast was for 68.8.
Statistics of Interest/Concern
· Lender Processing Services reported that the combined delinquency and foreclosure rate for all loans thru October was 12.6%.
· Mortgage Bankers Association said this week that MBS (Mortgage Backed Securities) delinquency (30 days or more late) reached 4.06% in the third quarter.
· The FDIC said that on loans held by them the 90 day or more delinquency rate was 3.43% in the third quarter up by .51% from the second quarter.
· According to Real Estate Econometrics LLP unpaid loans on commercial property were 3.4% at the end of the third quarter and could go as high as 5.3% in two years. Of the 35 biggest regional lenders that got TARP money commercial construction loans are 37% of the group’s total loans outstanding.
· U.S. consumer spending fell by $3.5 billion in October according to the Federal Reserve. The decline was the ninth consecutive monthly decline.
· A Bloomberg national poll revealed that Americans have become gloomier about the direction of the nation than three months ago.
Foreclosure Headlines
· Foreclosure filings fell 8% in November to 306,627 (ninth consecutive month of 300,000+ filings) according to RealtyTrac. However, this was the fourth consecutive monthly decline in filings. RealtyTrac said they thought the decline was “artificially induced” due to mediation programs that likely postponed the inevitable. Nevada again led the nation with one filing per 119 households Arizona came in at one per 186 households. RealtyTrac said further it estimates a record 3.9 million foreclosures in 2009.
· According to a study by Experian 18% of foreclosures are “Strategic Defaults”. A Strategic Default is when a homeowner who is current on all of their debt but is upside down in their home walks away.
· The Treasury Department reported that thru November 30th Permanent Loan Modifications had increased to 30,650 from 2711 on September 1 this out of 697,026 homeowners in Trial Modification.
· This week Standard and Poor’s said that MBS (Mortgage Backed Securities) performance continued to deteriorate in October which they think means more foreclosures in the future.
· The U.S. Court reported that in fiscal year 2009 bankruptcy filings were up over 100% from 2007.
Job Market Headlines
· Initial weekly jobless claims increased by 17,000 to 474,000 while forecast was for 455,000.
· Four week moving average of weekly claims was 473,750 down slightly from previous week.
· Continuing jobless claims came in at 5.157 million down 303,000 from previous week.
· The labor Department reported that job openings in the second quarter were down 26% from a year ago and that layoffs were up slightly in October.
Commentary/Observations
Dr. Jay Butler of ASU said in November that previously foreclosed property accounted for 41% of the traditional sales. So I guess the question is are we just churning foreclosed property and if so what does that say about the housing recovery in Arizona?
In the November 4th minutes of the Federal Reserve’s last ten members believe it will be 5 to 6 years before the economy returns to growth, employment and inflation levels consistent with the Boards objectives.
In New York a new foreclosure tactic has been noticed. It seems that second mortgage holders are selling the debt to collection firms who are able to freeze bank accounts and/or garnish wages in their efforts to collect.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
November 22, 2009 by · Leave a Comment
***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.
Foreclosure information
Mortgage Industry Update: Rates, News & More
November 14, 2009 by · Leave a Comment
***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 16th.
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 13th!
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.