Home Valuation Code of Conduct (HVCC)

Mortgage Industry update: Rates, news & more

***Smart Financial Weekly Mortgage Update July 24, 2009***

Interest Rates

Rates moved up by the end of the week driven by the stock market (hit 9,000 on Thursday), some good economic news (profits and jobs) and Treasury auction activity (Next week’s record auction will include $115 Billion in Notes and $90 Billion in T Bills).

 

When	Rate
This Week	5.20
1 Month Ago	5.42
1 Year Ago	6.63
2 Years Ago	6.69

 

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

·        I borrowed the following from a TBWS (Think Big Work Small) e-mail regarding the Home Valuation Code of Conduct (HVCC) and the need to support pending legislation to suspend it and future legislation to eliminate it. As you may know the HVCC requires that appraisals be done by a third party clearinghouse and so far the process has been a disaster.

 

HVCC Continues to devastate home values across the US. We fear that with higher Fannie and Freddie loan limits it will carry through to our former “jumbo” markets, leading the country even further into recession. As we’ve shared, Representatives Childers (D-MS) and Miller (R-CA) introduced legislation (H.R. 3044) requesting an 18 month moratorium on the Home Valuation Code of Conduct (HVCC). H.R. 3044 now has 22 co-sponsors and now is the time to forward our petition to every person you know and every representative in the country. Read some of the comments in the petition and you will soon understand the harmful nature of this horribly misguided code.

ThinkBigWorkSmall applauds the introduction of H.R. 3044 and would like to thank Representative Childers (D-MS) and Representative Miller (R-CA) for their continued efforts and leadership on this issue but it is not enough. Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule. HVCC needs to be permanently reversed in order to restore lower costs to the consumer and to protect the thousands of real estate transactions stalled by this horribly misguided code.

Please sign and forward the following petition and forward to everyone you know in the industry and ask them to forward to their representatives: www.hvccpetition.com

Good News

·         U.S. home prices had the smallest annual decline in 10 months in May as prices only declined 5.6% year over year. In addition, prices actually rose .9% from April to May.

·         Median U.S. home price for June was $181,800 down 15.4% from year earlier. The downward trend appears to be moderating.

·         Existing home sales in June rose 3.6%.

·         Existing home inventory declined to 9.4 months in June down from 9.4 months in May.

·         U.S. home vacancy rate fell to 2.5% in the second quarter down from 2.5% in the previous quarter.

 

 

Statistics of Interest/Concern

·         Credit card charge off rate rose to a record 10.76% in June according to Moody’s. They also said that the rate could go to 12-13% by mid 2010. Moody’s also expects this trend to continue upward until the job market gets better. Finally, estimated losses by card issuers will be about $70 billion.

·         According to a CNN Money story Fannie Mae and Freddie Mac total costs to fix the housing mess could be as high as $100 Billion.

·         University of Michigan consumer confidence survey fell to 66 in July from 70 in June although the July number was in line with expectations.

 

Foreclosure Headlines

·         The Making Home Affordable loan modification program while off to a slow start is picking up speed and is the most successful of the programs so far. While the process is very labor, documentation and analytically intense about 325,000 trial modifications are in process and 160,000 have been completed since late April according to the Treasury Department. Starting in August Treasury will be producing a monthly report that should be helpful in understanding how the program is doing. It also sounds like loan servicers are slowly figuring out that balance reductions may not be such a bad thing after all. We’ll see if these reductions get any serious play. So far 27 servicers are on board including Chase, Citi, Wells Fargo and Bank of America. The one criticism of the program is that to be modified the loan must be owned or guaranteed by Fannie Mae or Freddie Mac. Finally, the administration is implementing an audit process for those loan modifications that have been declined. This will give homeowners the ability to appeal a servicer’s decision. No timetable has been mentioned.

·         On July 14, 2009 a New Jersey court dismissed a foreclosure filed by Deutsche Bank because they “refused to produce documents demanded by the borrowers” identifying the “true owner and holder of the Note”. The bank was given several opportunities to produce the documents but declined each time. They now have to produce ALL of the requested documents before the court will reconsider the foreclosure. Unbelievable!

 

 

Job Market Headlines

·         650,000 people will lose their unemployment benefits by September and 4.4 million will see this 26 week benefit expire by early next year.

·         Initial jobless claims were 554,000 up 30,000 from previous month.

·         Continuing jobless claims declined to 6.22 million from 6.8 million last month. Note that this number does NOT include those workers whose benefits have expired.

·         The four week moving average of new jobless claims fell to 566,000 from 588,000 the previous week. This was the fourth consecutive weekly decline.

 

 

Commentary

Guaranty Financial Group the second largest publicly traded bank in Texas with $16 Billion in assets is likely to fail shortly. The bank is unable to raise capital and thus not eligible for government assistance. If it does fail it will be the largest so far this year. The bank is 17% owned by Carl Ichan.

 

Last Friday some of us from Smart Financial had a meeting with an FBI Agent from the Arizona Mortgage Fraud Task Force. They are focusing on illegal cash back transactions, property stripping and loan modifications. Based on what we were told the Task Force is very active in the valley and if you see any hint of impropriety be very, very careful.

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

 

 

Home Valuation Code of Conduct (HVCC)

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update July 2, 2009***

Interest Rates

Mortgage rates remained within a narrow range with a slight downward bias as the short week ended. While it continues to be unlikely that we will see sub 5% rates any time soon if ever recent rates in the mid to low 5%’s should be attractive to home buyers.

 

 

When	Rate
This Week	5.32
1 Month Ago	5.29
1 Year Ago	6.35
2 Years Ago	6.63

 

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

·         HR 3044 is the proposed legislation that directs the Federal Housing Finance Agency (FHFA) to suspend the Home Valuation Code of Conduct (HVCC) for 18 months. It was proposed late last week and is in Committee as I write this. The HVCC has caused Realtors, lenders, home buyers and appraisers a lot of grief not to mention the loss money. It needs to be suspended then eliminated. If you agree contact your local Congressman and let him/her know how you feel.

·         Freddie Mac received $6.1 Billion from the Treasury Department Wednesday in an effort to keep the company technically solvent. So far they have received $51.7 Billion and have another $149.3 Billion available from Treasury. For the first quarter ending March 31, 2009 Freddie Mac lost $9.9 Billion.

·         On Wednesday the Obama Administration announced it was increasing the Making Home Affordable refinancing program’s LTV from 105% to 125%. This program is only for Fannie Mae and Freddie Mac loans.

·         Option Arm Story: According to Yahoo Finance United Western Bancorp a Denver based holding company whose primary subsidiary is a community bank called Western Bank sold $47.3 Million in Mortgage Backed Securities (MBS) to an unrelated third party for $378,000! The primary asset was Option Arm loans.

 

Good News

·         The ISM report on Midwest business activity in June rose to 39.9 up from May’s 34.9. Below 50 indicates economic contraction.

·         Case-Shiller home price index declined in April .6% a slower rate of decline than in March which was -2.2%.

·         The ISM manufacturing index was 49.8 in June up from May’s 42.8. Below 50 indicates economic contraction.

·         Pending home sales were up .1% in May.

 

Statistics of Interest/Concern

·         June jobs report showed 467,000 more people out of work this number much higher than forecast of 365,000.

·         June unemployment rate of 9.5% was up from May’s 9.4%. The 9.5% was the highest since August 1983.

·         Prime mortgage delinquency of 60 days or more has increased from 1.1% in March 2008 to 2.9% in March 2009.

·         May was the third consecutive month that new foreclosures were at 300,000.

·         Defaults on loans with Mortgage Insurance rose in May following 3 consecutive months of decline.

·         Consumer confidence fell to 49.3 in June below the expectation of 55.

·         According to Zillow 20 million of the nation’s 93 million homes (includes condos, multi units, etc) are upside down.

·         U.S. construction spending was down .9% in May the lowest rate in 5 years.

 

Commentary

This month’s job report included a number that does not get much publicity. That number is the Underemployment rate. This is the number of workers who are working part time because they cannot find full time work. In addition, the Underemployment number includes those who have stopped looking for work. The June Underemployment rate was a record 16.5%!

 

We want to wish all of you a happy Fourth of July! Please remember to fly your flag and if you don’t have one go buy one. The celebration of our county’s independence is a good time to remember how lucky we are to live here. It also gives us a chance to honor those who have paid the ultimate price for our independence and freedom! Just last month we were reminded again about the price to be paid for freely expressing your views. God bless America!

For more information on mortgages and related I can be reached at (602) 803-9660 or by e-mail at burt@gosfm.com.

Burt Carlson