Foreclosure information
Mortgage Industry Update: Rates, News & More
November 7, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update November 6, 2009***
First time homebuyer tax credit update: Earlier today the President signed the bill extending and modifying the tax credit. The credit will be extended and cover purchase contracts signed by April 30, 2010 and closed by June 30, 2010. The first time buyer credit will remain the same with maximum of $8,000 for a couple but the income limit has been increased to $225,000. In addition, current home owners who have owned a home for 5 of the last 8 years can be eligible for a credit up to $6,500 for a couple and the income limit is $225,000. The maximum price on the home is $800,000.
Interest Rates
The Fed program to purchase MBS to keep rates low is at $977 Billion out of $1.25 Trillion and going forward they will average buying $12-13 Billion per week well below the past average weekly purchases of $20 to 25 Billion. We continue to experience very low, stable mortgage rates but the day of reckoning is approaching.
|
When |
Rate |
|
This Week |
4.98 |
|
1 Month Ago |
4.87 |
|
1 Year Ago |
6.20 |
|
2 Years Ago |
6.24 |
Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.
Mortgage Industry Update
· On December 12 Fannie Mae’s latest automated underwriting system (AUS) software upgrade Version 8.0 will set the maximum debt to income ratio at 45% with the possibility of going to 50% with compensating factors. Currently the maximum debt ratio with compensating factors is 55%.
· Fannie Mae announced its Deed for Lease program as another way to slow down foreclosures. The program is for homeowners who cannot qualify for a loan modification (or it’s taking forever) and allows them to rent their home for fair rental value not to exceed 31% of family income. No details were available at this writing. Fannie Mae’s delinquency on it $750+ Billion portfolio was 4.45% in September.
· The Senate approved a one year extension of the loan limits in “high cost” areas up to 125% of the local median home prices. This does not impact Maricopa County as the conventional limits of $417,000 and FHA limit of $346,250 will not change.
Good News
· ISM manufacturing index rose to 55.7 forecast was 53.0.
· Pending home sales were up 6.1% and have increased for eight consecutive months.
· The Commerce Department said factory orders rose .9% in September the fifth increase in the last six months.
· Wholesale inventories fell 1% in September the 13th consecutive monthly decline.
· Retail sales increased 1.8% in October just below forecast of 2% says Thomson Reuters.
Statistics of Interest/Concern
· ISM services index slipped to 50.6 in October from 50.9 in September forecast was for 51.5.
· Appraisal fraud was up 46% from a year ago according to Interthink.
· At the end of the third quarter $26.64 Billion in CMBS loans were 60 days or more delinquent and the default rate rose to 4.52% from .8% one year ago says REIS Inc. The firm also said that delinquency may hit 6% by end of the year.
· Productivity rose in the third quarter by 9.5% well above forecast of 6.5%.
· Personal bankruptcies increased 9% in October and we are on target for 1.4 million this year according to the American Bankruptcy Institute. Also, there was a 7% increase in business bankruptcies.
Foreclosure Headlines
· Credit Sights says accelerating shift from interest only to fully amortized loans (Arm re-sets) will increase payments and contribute to mortgage delinquency in the months ahead. For example, in the past year only 2% of Alt A interest only Arms re-set but in the next 15 months 20% are scheduled to re-set.
Job Market Headlines (correction: last week we reported initial weekly jobless claims were at 350,000 when in fact they were 530,000. We apologize for this error.)
· October unemployment rate came in at 10.2% up from 9.8% in September. At least 16 million cannot find full time work according to the Labor Department.
· Job losses in October were 190,000 less than revised September number of 219,000. October was the 22nd consecutive month of job losses the longest streak in 70 years.
· Initial weekly jobless claims were 512,000 below expectations of 522,000.
· Four week moving average of weekly claims was 523,750.
· Continuing claims came in at 5.749 million just below forecast of 5.75 million.
· Planned job cuts announced by U.S. employers fell to 55,679 in October down 16% from September according to Challenger, Gray & Christmas Inc.
Commentary/Observations
The Labor Department said that the number of workers without jobs for more than six months is at the highest level in 50 years.
CIT Financial filed bankruptcy this week at a cost of $2.3 Billion in TARP money that will not get paid back to the government. Also, GMAC is looking for a third bailout from the government.
Thru October 134 active duty soldiers have committed suicide compared with the one year record of 140. If you know a veteran reach out to them and let them know we care!
Satellite pictures taken on April 26 and October 13 indicate that Iran has increased production at a Uranium mine. This discovery underscores the need for widespread inspection to determine if Iran is trying to build a nuclear reactor.
If you have any mortgage or related questions I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
October 26, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update October 23, 2009***
First time homebuyer tax credit update: Well the battle rages on in D.C. on this controversial topic. The rhetoric heated up late this week with the Inspector General for Tax Administration reporting that nearly 74,000 individuals who claimed the credit do not appear to qualify. Can you say fraud? The IRS said that they have opened 107,000 civil claims and have identified 167 “criminal schemes”. So far the number of tax payers that have filed to take the credit is estimated at 1.4 million. Next the Brookings Institute reported that the $8000 credit will cost the government $43,000 for each person taking the credit. They estimate that only 15% of those applying for the credit purchased because of the credit and that the remaining 85% would have purchased without it. Really?
Finally, if you are trying to close a loan before the existing deadline to get the credit you may want to have your complete loan file submitted by November 30th at the absolute latest. Remember we have a big holiday at the end of November.
HVCC Update: The House Finance Committee has included an amendment to HR 3126 that would effectively KILL this disaster of government think by allowing lenders, loan originators, etc to order appraisals again. Anyone ordering an appraisal would have to be a licensed mortgage professional under new SAFE guidelines.
Interest Rates
Interest rates for the week remained essentially flat but change is a coming. The Treasury Department announced that next week it will auction off a record $123 Billion in Notes to fund the country’s operation. Note that this amount will only last two weeks! The upward pressure on rates will increase as government Treasuries compete with Mortgage Backed Securities (MBS) for investor dollars. If Treasury yields move higher MBS will have to follow to be competitive thus pushing mortgage rates upward. Also, long term Treasuries are growing weaker as the Fed buying program winds down this month. We should see a similar situation in the MBS world as the Fed slows it purchases of MBS. Also, as if this was not enough Moody’s said Thursday that the U.S. needs to get its deficit reduced in the next 3-4 years or risk its triple A rating. This is a big one folks and with the deficit in the trillions of dollars and the economy struggling to recover a reduction in this rating will raise our costs to finance government spending resulting in………..you guessed it higher rates. All of this combined means higher rates are on the horizon.
|
When |
Rate |
|
This Week |
5.00 |
|
1 Month Ago |
5.04 |
|
1 Year Ago |
6.09 |
|
2 Years Ago |
6.33 |
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
· John Burns Real Estate Consulting survey said that of all NEW homes purchased 59% were FHA, VA or Rural all loans requiring 3.5% or less for down payment. The FHA disputes the report and says that about 75% of FHA buyers put more than the minimum 3.5% down. Really?
· Freddie Mac reported it September delinquency increased to 3.33% up from August 3.13% and much higher than September 2008 1.22%.
Good News
· September sales of existing homes were up 9.4% in September and the inventory declined to 7.8 months the lowest level since March 2007.
· The median home price for September was $174,900 down 8.5% from a year ago and down from August $177,300.
· September housing starts were up .5% in September which was in line with forecast.
· The Labor Department reported that the Producer Price Index (PPI) fell .6% in September which was on target with the forecast.
· Leading economic indicators rose for the sixth consecutive month according to the Conference Board a private research firm.
Statistics of Interest/Concern
· The National Association of Home Builders (NAHB) housing index expressing builder sentiment fell to 18. Forecast was for 20. This is first decline in 3 months.
· Construction permits declined 1.2% in September which was below forecast.
Foreclosure Headlines
· In testimony before the House Oversight Committee a Treasury official confirmed that they were developing a plan for foreclosure alternatives using TARP funds. The plan would be called the Foreclosure Alternatives Program and would include incentives for short sales and deeds in lieu of foreclosure. No timing was discussed.
· Fiserv a financial information and analysis firm predicts that home prices nationally will decline another 11.3% by June 2010. They forecast for the Phoenix area the decline will be 23.4% by June 2010 with a slowing decline of 5% in 2011.
· The charts below illustrate a couple of things we probably already know. First, the more expensive homes are not selling. Second, homes priced under $150,000 are where the action is at. [Data from ARMLS]
Job Market Headlines
· Weekly initial jobless claims rose to 531,000 up from previous week revised number of 520,000.
· The four week moving average of initial jobless claims came in at 532,000 which is flat from previous week.
· Continuing claims fell to 5.9 million from the previous weeks 6.0 million. Note that some observers think the decline is due to those no longer looking for work and/or whose benefits have expired.
Commentary/Observations
The focus this week is on the commercial market since it is likely the next big financial challenge that we will face. There are at least three signs to watch for that could indicate the collapse of the commercial market. First, an increase in activity at so called “special servicers” who handle troubled loans. From April to August these special servicers saw their volume double to $50 billion according to Trepp a firm that tracks the commercial market. Second, the failure of big projects involving big dollars. For example, the Stuyvestant Town project in East Manhattan we discussed previously has lost a court case where they would have been able to raise rents. This is just another step toward default on the projects multi-billion dollar debt. Third, the performance of community banks as they manage their portfolio of commercial loans.
As part of this potential crisis the President announced this week that the administration will start using left over bailout funds to help community banks by incenting them to lend to small businesses. Not surprisingly the National Federation of Independent Business said they would prefer lower taxes and less government intervention. And a final thought on coming commercial loan crisis. In 2006 the FDIC failed to enforce its own guidelines to control excessive commercial lending by 20 banks that, you guessed it, ultimately failed according to the FDIC’s own Office of Inspector General. Are you thinking what I’m thinking?
If you have any mortgage or related questions please contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
October 17, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update October 16, 2009***
Interest Rates
Rates moved up slightly during the week between .125% and .250% but were still at 5.00% when the week ended. I don’t mean to be redundant but if possible take advantage of these rates before they go up.
|
When |
Rate |
|
This Week |
4.92 |
|
1 Month Ago |
5.04 |
|
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 Treasury Department issued its monthly report on the status of loan modifications this week. There are 487,081 Trial Modifications in progress (this is where a homeowner is given a new payment for 3 or 4 months depending on their situation). To date only 1711 homeowners have had their loans formally modified under the President’s plan. Selected lender statistics for percentages of loan modifications in progress thru September are shown below;
1. Saxon 41%
2. Citi 33%
3. Aurora 33%
4. Nationstar 28%
5. Chase 27%
6. GMAC 26%
7. Wells 20%
8. Bank of America 11%
9. National City 9%
· FHA boss David Stevens said this week he is against increasing the down payment to 5%.
Good News
· NAR says the number of existing homes for sale in August was 3.6 million down from 4.3 million a year ago.
· The National Association of Business Economists (NABE) survey reported that 80% of its economists said that the recession is over after four consecutive quarters of negative growth. The September survey predicted the economy would grow about 2.6% in 2010 compared to contraction of 2.5% in 2009.
· Industrial production was up .7% in September which was .1% above forecast.
· New York Manufacturing Index rose to 34.57 well above forecast of 17.25 and the highest number in five years.
Statistics of Interest/Concern
· Venture capital fund raising dropped to its lowest level in six years during the third quarter according to the National Venture Capital Association.
· Retail sales for September were down 1.5% compared to forecast of down 2.1% said the Commerce Department.
· Moody’s Delinquency Ticker (DT) for September shows U.S. Commercial Mortgage Backed Securities (CMBS) delinquency at 3.64% a 310 basis point increase from a year ago. This means that the delinquency a year ago was .24%.
· Major credit card companies reported defaults fell in September but delinquency climbed at all the major card issuers. Bank of America is the worst performer with a default rate of 14.25% and delinquency of 7.53%.
· Consumer Price Index (CPI) rose .2% in September said the Labor Department. Consumer prices have been falling on an annual basis since March of this year.
· Consumer sentiment for September came in at 69.4 below forecast of 73.5.
Foreclosure Headlines
· According to Zillo 30% of the foreclosures in June involved the top one third in home values (price) this is a 16% increase from three years ago. At the lower end of value (price) one third of the homes had 36% of the foreclosures down 55% from three years ago. In other words, the more expensive homes are foreclosing at a faster rate and the lower priced homes the foreclosure rate appears to be slowing down.
· RealtyTrac reported that in August there were 358,471 foreclosure filings. This number includes default notices, auction sales notices and bank repo’s). They also reported the third quarter was the WORST ever for foreclosures with 937,840 filings!
· A report from W.O. Carey School of business at ASU said that two thirds of the homes sold in Arizona thru September were either foreclosures or the resale of home recently foreclosed.
Job Market Headlines
· Initial weekly jobless claims were 514,000 below forecast of 520,000.
· Continuing jobless claims were 5.99 million the lowest level since March.
· The last time the unemployment rate reached 9.8% was the period from July 1982 thru June 1983.
Commentary/Observations
The Federal government finished fiscal year 2009 with a $1.42 TRILLION deficit the largest since WWII. The OMB estimates that the deficit will hit $9 TRILLION in the next ten years which would mean that the debt held by the public would be 82% of GDP up from a previous record set in 2008 of 43%. For you non economists out there GDP (Gross Domestic Product) is the total output of our ENTIRE economy. This is not good news.
The Dow index reached 10,000 during the week which was the same level it was at in 1999.
The Administration announced Thursday that $16 Billion in Stimulus money had been contracted out to firms and $2.2 Billion of that had actually been paid out creating 30,383 new jobs. Friday it was disclosed that there appears to be some reporting errors in the data.
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
October 10, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update October 9, 2009***
Interest Rates
The historic rate train just keeps chugging along as rates were essentially flat for the week. However, on Thursday night Fed Chairman Bernake made remarks that suggested the Fed was closer than previously thought to raising short term interest rates. This led to higher Treasury yields Friday and a slight increase in mortgage rates. The last time the Federal Reserve raised short term interest rates was June 2006! During the week Australia became the first major economy to raise its interest rates. The country has a 5.8% unemployment rate and its economy is doing fairly well compared to many others.
|
When |
Rate |
|
This Week |
4.87 |
|
1 Month Ago |
5.08 |
|
1 Year Ago |
5.94 |
|
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
· Representative Scott Garrett of New Jersey introduced HR 3706 which raises the FHA minimum down payment from 3.5 % to 5% AND eliminates financing closing costs. Fed Chairman Bernake supports the legislation.
· Fannie Mae and Freddie Mac are prepared to introduce a program to help independent mortgage bankers acquire short term credit. This is good news as it will allow more competition for mortgages.
Good News
· The ISM Services Index expanded for the first time since September 2008 to 50.9 up from August’s 48.4. Anything over 50 indicates expansion in the service sector.
· Retailers on E-Bay saw sales increase in August and September which were the first increases since July 2008.
· Wholesale inventories fell 1.3% in August which was the 12th consecutive monthly decline and below the 1.0% that was forecast.
· Retail sales rose for the first time in 13 months in September by 1.1%.
Statistics of Interest/Concern
· 61% of the Mortgage Backed Securities (MBS) between 2005 and 2007 that were rated AAA by Standard & Poor’s have been downgraded to BBB or lower.
· Total U.S. consumer debt fell by $11.98 Billion in August much more than was expected according to the Federal Reserve. This was the seventh consecutive month of declining consumer debt.
· U.S. office vacancy rose to five year high of 16.5% said REIS Inc. a property research firm.
Foreclosure Headlines
· According to the Center for Responsible Lending there are 6600 foreclosure filings per day. I did the math and that’s 2.4 million foreclosures in a year.
Job Market Headlines
· Initial weekly jobless claims came in at 521,000 which is the lowest since January and was below expectations of 540,000.
· Continuing jobless claims were 6.04 million down 72,000 from the previous week.
· The four week moving average of weekly claims was 539,750 down slightly from the previous week.
· 1.4 million is still the forecast number of people who will lose their unemployment benefits by the end of 2009 unless emergency legislation extending benefits is passed.
· 26% of employers who have laid off employees in the past year reported they are planning on bringing some workers back according to a Career Builder/USA survey.
Commentary/Observations
The UN Development Program announced its annual Human Development Index (best countries to live in) and the winner was Norway. Australia was second and the U.S. came in 13th. Niger on the African continent finished last at 182nd.
As of September 30th in California more than 300 hotels were in foreclosure or in default on their loans. This is a fivefold increase since January.
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
October 4, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update October 2, 2009***
Interest Rates
Our good fortune on rates continues as they declined slightly during the week to below 5.00%! These rates cannot last forever so I urge you to take advantage of them while you can. The Fed has been purchasing MBS every week but starting now will buy every other week so with this rationing expect volatility in rates (translation: expect rates to move up as Treasuries will have to stand on their own more than in the past few months).
|
When |
Rate |
|
This Week |
4.94 |
|
1 Month Ago |
5.08 |
|
1 Year Ago |
6.10 |
|
2 Years Ago |
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
· Fannie Mae announced it has raised its minimum credit score to 620 on all loans it guaranty’s or insures including VA and FHA. The new guideline is effective November 1 for manually underwritten loans and December 12 for Automated Underwriting System (AUS) reviewed loans.
· Delinquency on Freddie Mac loans hit record high in August reaching 3.13%. In August 2008 the delinquency rate was 1.11%.
Good News
· Pending home sales increased 6.4% in August the seventh consecutive monthly increase and way above expectations of a 1.0% increase.
· S&P Case-Shiller home price index rose 1.6% in July from June and the year over year decline was 13.3% which was lower than forecast of 14.2%.
· The Commerce Department said construction spending increased .8% in September but inside this number residential construction was up 4.7% the biggest monthly increase since November 1993.
Statistics of Interest/Concern
· Conference Board’s Consumer Confidence Index fell to 53.1 for September from an upwardly revised 54.5 in August and was below forecast of 57.
· The Chicago Purchasing Managers index for September fell to 46.1 which was below forecast of 52 and down from August’s 50.
· Second quarter GDP was revised upwards from -1.0% to -.7% according to the Commerce Department.
· The ISM Manufacturing Index for September was 52.6 down slightly from August 52.9.
· The IMF World Economic Outlook is now forecasting a world output of 3.1% for 2010 compared to its forecast of 2.4% back in July.
· Bankruptcy filings for the year passed one million in September. September filings were up 4% from August and up 41% for September 2008.
Foreclosure Headlines
· HOPE Now reports that foreclosures starts were down 21% to 224,000 in August.
· Bank of America suspended its current commitments to ACORN housing this week. They had worked together on foreclosure prevention.
· In their second quarter 10 Q reports Fannie Mae and Freddie Mac had a combined REO inventory of 100,000.
Job Market Headlines
· September unemployment rate was 9.8% the highest since July 1983. The economy lost 263,000 jobs in September compared to 201,000 lost in August and above forecast of 180,000. There are now 15.1 million out of work.
· Initial weekly jobless claims jumped to 551,000 versus expectations of 530,000. The four week moving average declined to 548,000 the lowest number since January of this year.
· Continuing jobless claims remained above 6 million at 6.09 million which was down from previous week’s revised number of 6.16 million.
· The number of metropolitan areas with unemployment rates at or above 10% declined in August from 139 to 129 according to the Labor Department.
· The Business Roundtable CEO Economic Outlook index rose to 44.9 in the third quarter up from 18.5 in the second quarter. Note that the first quarter number was 5. Anything above 50 indicates growth. The roundtable survey of CEO’s found that 40% are expected to cut jobs in the next six months.
· Some fun facts from the Bureau of Labor Statistics: Permanent layoffs reached a record 53.9% of the unemployed in August; 33% have been out of work for 27 weeks or more; 59.2% of Americans are employed the lowest number in 25 years; since 2001 the private sector has lost 839,000 jobs. Or so says the Bureau of Labor Statistics.
Commentary/Observations
In a Bloomberg story this week it was noted that the city of Phoenix commercial loan delinquency has increased five times since March of this year. The area has the second highest commercial delinquency in the country behind Detroit. The vacancy rate including leased space that is not occupied may exceed 30%. Finally, the Congressional Oversight Panel says that in the U.S. commercial and construction loan losses could reach $80 BILLION.
Five months ago as part of swine flu prevention Egyptian President Mubarak ordered 300,000 pigs destroyed. Since then the organic waste the pigs devoured has been piling up on Cairo’s streets. The city produces 14,000 TONS of trash each day. The problem has been compounded because International Environmental Services suspended its contract to collect trash a month ago. Now there is no one to haul away any waste in large parts of the city whose population is 17 million.
The non partisan Tax Policy Center estimates that in 2009 47% of households will not owe any Federal income taxes.
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
September 19, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update September 18, 2009***
First time home buyer tax credit update: There are at least six bills currently in Congress to extend and/or expand the credit. See below for some more detail. According to the IRS 1.4 million taxpayers have claimed the credit so far.
Interest Rates
Mortgage rates ended the week about where they started right at 5.00%. We continue to be blessed with excellent rates. How long will this last? In a Reuter’s story this week a statement was made that “market strategists widely expect the Fed to extend the time for these purchases (Fed has been buying Mortgage Backed Securities) into 2010 to ease the markets into an absence of a major buyer”. If true this is good news bad news stuff. The good news is that if this happens mortgage rates will stay artificially lower a little longer. The bad news is the shift from a supported mortgage market to a normal market will be postponed. The question then is are we better off with artificially lower rates today or would we be better off taking our medicine now and returning to the more normal market pricing sooner rather than later?
|
When |
Rate |
|
This Week |
5.04 |
|
1 Month Ago |
5.12 |
|
1 Year Ago |
5.78 |
|
2 Years Ago |
6.34 |
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 dialogue on extending the First Time Homebuyer Tax Credit of $8,000 or do something bigger is heating up in D.C. The $8,000 program may cost $15 Billion when it expires but the NAR and others (home builders in particular) want to keep the current credit or, better yet, expand it to $15,000 at an estimated cost of $50-100 Billion. The number of homes purchased under the existing credit is somewhere between 350,000 and 400,000.
· FHA cash reserves have fallen to below mandated minimum levels and this is causing the agency to make some policy changes. Among the changes will be an increase of credit scores and the likely lowering of acceptable debt to income (DTI) ratios. These and other steps are being taken to minimize defaults in the future.
Good News
· Retail sales in August were up 2.7% double forecast and excluding autos (Cash for Clunkers) were still up 1.1%.
· New York state manufacturing index for September was 18.8 up from 12.8 in August and the highest since late 2007.
· Business inventories declined 1.0% in July according to the Commerce Department.
· Professional Global Confidence Index was 58.54 in august anything above 50 indicates a positive outlook for the economy.
· Housing starts were up 1.5% in August which was in line with forecast and biggest increase since November 2008.
· Building permits were also up in August by 2.7%.
· Starts of single family homes were down 3% in August the first decline in six months. Also, the inventory of homes under construction fell to a record low.
Statistics of Interest/Concern
· Producer Price Index (PPI) in August was up 1.7% or double forecast with much of the increase due to increased gas prices according to the Labor Department.
· Consumer Price Index (CPI) rose .4% in August with a year over year decline of 1.5% the Labor Department said.
· August credit card defaults rose led by Bank of America with charge offs rate of 14.54% followed by Citi Group at 12.14%, chase at 8.73% and American Express at 8.5%. Charge offs are for a loan where the lender does not expect repayment.
· Current national debt ceiling limit is $12.1 TRILLION but is expected to be increased in October.
· Industrial production rose .8% in August which was just above forecast of .6% according to the Federal Reserve. Also, the July number was revised upward to 1.0%.
Foreclosure Headlines
· Some interesting information on the Phoenix condo market as of September 11, 2009.
Active listings 5775 REO/pre foreclosure 1997 (35%)
Under contract 1993 REO/pre foreclosure 1520 (75%)
Sold within 30 days 860 REO/pre foreclosure 528 (67%)
Median price of condo/townhouse July 2005 $170,000
Median price of condo/townhouse July 2009 $96,000
Source: ARMLS
· We have previously pointed the impending problem for Option Arm loans. This week a group of states attorney generals met with Treasury Department officials to discuss the situation. According to Terry Goddard Arizona Attorney General 128,000 Option Arms are starting to reset this month and he expects many of them to wind up as foreclosures.
Job Market Headlines
· For August 5 states had unemployment rate over 10% led by Michigan with 15.2%. Nevada was second with 13.2%, Rhode Island was next at 12.8% and California was at 12.2% tied with Oregon for fourth place.
· Initial weekly jobless claims were down slightly to 545,000.
· Continuing jobless claims were up 129,000 to 6.23 million which was above forecast of 6.1 million.
· At the end of August there were 14.9 million unemployed Americans plus another 9.1 million working part time jobs because they could not find full time work.
· The Paris based Organization for Economic Cooperation and Development said this week in its annual report that between end of 2007 and July 2009 15 million jobs were lost. The group said they expect another 10 million lost jobs by end of 2010. Most industrialized countries were included except for China and India.
Commentary/Observations
U.S. household net worth increased in the second quarter of 2009 by $2 TRILLION to $53.1 TRILLION according to the Federal Reserve. It was the first increase since the recession began in 2007 when the household net worth was $63.9 TRILLION.
The Federal Reserve is reviewing commercial real estate exposure at the nation’s largest regional banks.
Wells Fargo fired the employee who was using the Malibu beach mansion for personal use.
If you have any mortgage or related questions please contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
September 12, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update September 11, 2009***
A Day to Remember: September 11, 2001 is without question a day to remember. It does not matter what your politics are as long as you view yourself as an American we must remember this day. To not remember allows those evil persons responsible for the event to win and we cannot allow that! God bless America!
Interest Rates
Another great week for mortgage rates as 30 year fixed rates were stuck in a narrow range of just below 5% to 5%. One reason may be that yields on mortgage bonds dropped to a 3 month low which could also suggest slightly lower rates in the near term. However, unless the Fed decides to continue its support of lower rates look for rates to increase later this year.
|
When |
Rate |
|
This Week |
5.07 |
|
1 Month Ago |
5.29 |
|
1 Year Ago |
5.93 |
|
2 Years Ago |
6.31 |
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 Treasury Department issued its August report on loan modifications and only 12% of those eligible have been modified. The report went on to say that “millions more foreclosures are coming”. Department analysts estimated that six million homeowners will lose their homes to foreclosure in the next three years. See below for the performance of selected lenders.
Saxon 39%
GMAC 26%
Chase 25%
Citi 23%
Aurora 22%
Wells Fargo 11%
Bank of America 7%
National City 3%
Good News
· The markets finished Thursday up for the year. The Dow was up 9.7%, S & P up 15.6% and NASDAQ up 32.15%. The markets backed up a little on Friday as the Dow was off 22, S & P slipped 1.4 and the NASDAQ was down 3. Still, the year to date number’s are impressive.
· Reuters/University of Michigan consumer sentiment index for September was 70.2 up from August 65.0 and exceed expectations.
· Wholesale inventories declined for the 11th straight month.
Statistics of Interest/Concern
· Mandatory spending for Social Security, Medicare and Medicaid will be 37% of the FY 2009 budget. By 2012 they will be 47% according to the Office of Management and Budget (OMB).
· The OMB said this week that the FY 2009 budget deficit is estimated to be $1.58 TRILLION. From 1789-1985 (197 years) the TOTAL combined deficit was $1.5 TRILLION.
· Total U.S. consumer credit declined by $21.6 Billion in July. This was the sixth consecutive monthly decline according to the Federal Reserve.
· The U.S. poverty rate was 13.2% in 2008 the highest in 11 years according to the Census Bureau.
Foreclosure Headlines
· August foreclosure filings fell .5% in July to 358,471 which was an increase of 18% from July 2008. Also, this was the sixth consecutive month of 300,000 or more according to RealtyTrac.
· Rumors are floating around that the Treasury Department may issue guidelines later this month for short sales and deed-in-lieu of foreclosure in order to accelerate the time frame for doing these types of transactions.
Job Market Headlines
· The President’s Council of Economic Advisors said Thursday that the stimulus package created or saved one million jobs.
· Weekly initial jobless claims were 550,000 compared to forecast of 560,000.
· Continuing jobless claims were down slightly to 6.09 million. According to the Department of Labor the “Exhaustion Rate” for July was 50.7% the highest rate since 1972.
Commentary/Observations
· The biggest real estate deal in U.S. history may go bust soon according to the NY Times. Three years ago the biggest commercial real estate deal ever was completed for $5.4 Billion. The property is the Stuyvesant Town & Peter Cooper Village in Manhattan just off the East river. The project includes 110 buildings with 11,227 apartments. Currently valued at less than half of the purchase price and with $4.4 Billion in loans apparently the rental income is only covering half of the debt payments. Some believe the risk of default is so high that the property owners will be lucky to hang on until February.
· A Wells Fargo executive for commercial property foreclosures in southern California has apparently taken up residence in a $12 million mansion in Malibu. The property’s previous owner was caught up in the Bernie Madoff scheme. Wells had no comment except to say it handles these types of things internally. Really? Last time I checked Wells Fargo was a public company with a greater responsibility to the public than to one irresponsible employee.
· Iran rejected any compromise with the west over its nuclear program as the administration expressed concern in its strongest language yet. The President had said September was the deadline for Iran to start negotiating in “good faith”.
Finally, the purpose of this update is to provide some specific information so that you, gentle reader, can draw your own conclusions from the week’s events, data points and so forth. Rarely do I offer my opinion on anything as that would turn this into an editorial and that is not the goal. However, today I would like to digress from the format and offer an opinion. Am I the only person who thinks the Federal Reserve’s support of mortgage rates, the first time home buyers tax credit, cash for clunkers, and the coming program for appliances is artificially supporting the market and when, not if, these supports are over we will have only postponed the required pain for markets to correct themselves?
If you have any mortgage or related questions please contact me at (602) 803-9660 or by e-mail at burt@gosfm.com.
If you prefer not to receive e-mails please reply to this message with unsubscribe.
Foreclosure information
Mortgage Industry Update: Rates, News & More
September 4, 2009 by · Leave a Comment
***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.
Foreclosure information
Mortgage Industry Update: Rates, News & More
August 29, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update August 28, 2009***
Reminder: The first time home buyer tax credit is currently scheduled to end December 1, 2009. Buyers wanting to take advantage of the credit must close by then.
Interest Rates
Rates moved down slightly from the start of the week to finish at just above 5.00% for both FHA and conventional. These are SMOKIN rates and along with the first time buyer credit says to me buyers need to get in the game before it’s too late. While there has been some discussion about extending or re working the tax credit it is almost certain rates will be higher at the end of the year. This is a wonderful window of opportunity for home buyers so let’s get the word out!
|
When |
Rate |
|
This Week |
5.14 |
|
1 Month Ago |
5.25 |
|
1 Year Ago |
6.40 |
|
2 Years Ago |
6.45 |
Note that actual market rates vary geographically and by lender, credit score and Loan to Value.
Source: Federal Reserve Statistical H.15.
Mortgage Industry Update
· The below chart shows the volume of Option Arms/Pick a Pay plan and Alt A loans that are scheduled to adjust in 2010-2011. With housing values being low, unemployment high and the possibility of the Fed raising rates as the economy starts to recover there could be many more foreclosures.
· FHA has said NO to HVCC implementation according to an FHA commissioner. Now if we could only get the HVCC moratorium (HR 3044) for 18 months approved.
· Jumbo loans are still available but require at least 20% down (sometimes 25%), very good credit scores and good debt to income ratios. 30 year fixed rate and Arm financing is available but the rates are much higher than conventional loans. Fixed rates were mid to high 6%’s and Arm’s in low to mid 6%’s for primary residences.
Good News
· New home sales surged 9.6% in July and exceeded forecast according to HUD and the Census Bureau.
· Median home price in July was $211,000 and continued to decline although at a slower rate than in the past.
· New home inventory was 7.5 months in July down from 8.8 months in June. Also, new homes available for sale were at the lowest level in 16 years.
· Case-Shiller Home Price Index rose 1.2% in July. Also, second quarter prices were up 2.9% which was the first quarterly increase in three years. However, prices are still down 15% from last July.
· University of Michigan Index of consumer confidence was 65.7 in August slightly lower than July’s 66.0. While not really good news it’s not bad either as confidence seems to have stabilized for now.
· Second quarter GDP was revised to -1.0% from -1.5%.
Statistics of Interest/Concern
· Housing Market Index (measures home builder’s confidence) was 18 in July. Anything below 50 indicates business conditions are poor.
· In 1989 589 banks failed so far this year 81 have failed and 150 or so are expected to fail in the next 12 months. Three of the six biggest bank failures EVER have taken place in the last 14 months says the FDIC (see Commentary below for more).
· CMBS (Commercial Mortgage Backed Securities) 30 day or more delinquency was at $30 Billion in July and still increasing according to RealPoint. Also, 90 day+, foreclosure and REO’s were up for the 20th straight month to $2.15 Billion from June.
· The LA Times says California tax officials are reporting that the state’s property values fell 2.4% in the last fiscal year which is the largest drop in 76 years.
· In a Monster.com poll of 16,000 taken in mid July 34% of the respondents said they had only one week’s worth of savings. Another 16% said they had 2-4 weeks savings.
Foreclosure Headlines
· Wednesday HUD launched a $50 million effort to help state and local government address the foreclosure issue. HUD will grant money to national and local organizations to buy, rehab and then sell foreclosed property.
· Not exactly a foreclosure story but the Treasury Department is providing $309 Million to fund affordable housing projects that have been halted by the lack of capital in today’s marketplace. The money will be used to fund projects of a variety of sizes in seven states including Arizona.
Job Market Headlines
· Initial weekly jobless claims for the week ending August 22 came in at 570,000.
· Continuing jobless claims fell to 6.133 million from 6.252 million.
· A top Federal Reserve official Dennis Lockhart has said that his forecast calls for a slow recovery and protracted unemployment.
· By the end of the year 1.5 million people will have exhausted their unemployment benefits. Earlier this month a bill was introduced to extend the Federal benefits 13 weeks in states with 3 months unemployment rate of 9.5% or greater. This would include about 20 states. Congress is expected to revisit the issue after its summer recess.
· Cash for Clunkers saved or created 21,000 jobs says the White House (see more below).
Commentary/Observations
The White House and CBO project this year’s Federal budget deficit will be $1.6 TRILLION compared to 2008 deficit of $455 Billion. The five biggest monthly Federal budget deficits ever have occurred this year says the Treasury Department. The projected deficit for the next few years is anywhere from $7 to $10+ TRILLION and we still have no health care legislation. Is it just me but are we trying to swallow a bit too much?
In a report released by the FDIC on the status of the nation’s banks it was noted that in the second quarter of 2009 they lost $3.9 Billion, bad loans were growing faster than they could set aside reserves, total lending had declined and the list of troubled banks rose to 416. Analysts say that the coming consolidation will impact primarily small banks.
A Manhattan Chief District Court judge has ordered the Federal Reserve to identify banks and other firms that have been loaned money by the Fed under a variety of programs. The Fed has fought this on the grounds the disclosure of this information might cause a “run” on some of the banks named.
According to the government the Cash for Clunkers program resulted in 690,114 sales. Toyota had the most sales with 19% and GM was second with 17.6%. Also, 84% of the clunkers were trucks, vans & SUV’s. The White House says 21,000 jobs were saved or created by the program.
If you have any mortgage or related questinos I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.
Foreclosure information
Mortgage Industry Update: Rates, News & More
August 23, 2009 by · Leave a Comment
***Smart Financial Weekly Mortgage Update August 21, 2009***
Interest Rates
Mortgage rates declined about .25% for the week as Treasury Bonds declined about the same. Then today rates moved up on better than expected housing news which pushed equities higher and Fed Chairman Bernake’s comments on the economy. The Treasury is selling $109 Billion in Bonds next week which is close to the weekly record of $115 Billion sold in July. Remember depending on the success of these sales mortgage rates could be impacted.
|
When |
Rate |
|
This Week |
5.12 |
|
1 Month Ago |
5.20 |
|
1 Year Ago |
6.47 |
|
2 Years Ago |
6.52 |
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
· There was a very good story by CNBC this week on the problems associated with the new Home Valuation Code of Conduct (HVCC) for appraisals. I think we all know that this process is not good for the housing business. It hurts everyone including consumers, Realtors, lenders and appraisers. If you are interested in reading the article please let me know and I will forward it to you. Also, there is legislation (HR 3044) that has been proposed placing a moratorium on HVCC for 18 months that has 54 co sponsors in Congress. However, the more support the better. If you would like me to forward the link to sign the petition please let me know.
· Mortgages 60 days or more delinquent increased for the 10th straight quarter and is now at 5.81% which is an all time high according to Trans Union. The good news is the rate of increase is declining.
· Mortgages 30 days or more delinquent were at 9.24% at the end of the second quarter said the Mortgage Bankers Association (MBA). This is the highest rate since they started keeping such records in 1972.
Good News
· The NAR said for July existing home sales increased 7.2% the biggest monthly increase in 10 years! July was also the fourth straight month of increases. The existing home inventory was 9.4 months. Also, about one third of sales nationwide were foreclosures or distressed property sales.
· Home builder confidence rose to 18 for August which is the highest since June 2008. Anything above 50 reflects a positive view of the market. April 2006 was the last time the number was 50 or greater.
· PPI (Producer Price Index) fell .9% in July. For the last 12 months the PPI has declined 6.8% the biggest one year decline since 1947.
· The leading economic indicators index was up .6% in July for the fourth straight month.
Statistics of Interest/Concern
· Credit card delinquency showed signs of stabilization in July as major issuers reported a slight decline in delinquency.
· With two months left in the fiscal year that ends September 30th the government has spent $4 TRILLION dollars.
· Commercial real estate defaults are at $2 BILLION and could hit three billion by the end of this year says Fitch Ratings Financial Times.
· July housing starts came in at 581,000 versus forecast of 599,000.
· Building permits in July were at 560,000 versus forecast of 577,000.
Foreclosure Headlines
· While not a foreclosure headline First American Core Logic report shows about one third or 15 million homeowners are upside down in their homes. In addition their report says another 2.5 million are very close. Obviously this can lead to more foreclosures.
· About half of all negative equity is in Florida, Nevada and Arizona.
· The percentage of loans in foreclosure increased to 4.30% in the second quarter from 3.85% in the first quarter according to the MBA.
· The MBA also said the percentage of loans in which foreclosure action was started dipped in the second quarter to 1.36% from a record high of 1.37% in the first quarter.
Job Market Headlines
· Initial weekly jobless claims were 576,000 which was slightly higher than the expected 550,000.
· The four week moving average of weekly jobless claims was 570,000 slightly more than the forecast of 566,000.
· The Labor Department said in July 17 states had a reduction in unemployment compared to only five states in June.
Commentary/Observations
The IMF said this week that the global recovery has started but that it will not be simple or easy.
As many of you are aware Twittering is the current rage in communicating. A group called Pearl Analytics is reporting based on their work that 40% of twittering is “pointless babble”.
Readers Digest put its U.S. operations into bankruptcy this week.
The Colorado minimum wage is set to decline next year. Colorado is one of ten states with the minimum wage tied to inflation. Wage earners are expected to lose about three cents per hour.
If you have any questions about mortgages or related I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.