How I see it $:  I am wondering if the incentives offered by the government are enough to entice lenders/servicers to do a loan mod or a short sale versus foreclosure. The HAMP program pays $1,000 for each loan mod plus, if the borrower stays current, an additional $1,000 per year for three years. Wow, $4,000 to do a loan mod! Under HAFA the new short sale program the servicers get $1500 for each short sale. Double wow! Is that kind of money motivation enough to offset what might be gained from a foreclosure? Hey, I am just asking the question. With 4.6 million mortgages 90 days or more late on their payments and some estimates for as many as 7 million foreclosures in the next three years somebody better think of something and fast.That is the way I see it if you have any comments or thoughts please e-mail me at mailto:burt@gosfm.com.  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

Retail mortgage rates remained flat for the week even as some Federal Reserve members are talking about the Fed selling some of its MBS. This of course would put upward pressure on mortgage rates.

When	Rate
This Week	5.07
Month Ago	4.99
Year Ago	4.80
2 Years ago	6.03

 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 a revised policy on the waiting periods following a foreclosure or short sale. Generally the new policy says a borrower must wait 2 years and put at least 20% down, or 4 years and put at least 10% down or 5-7 years requires borrower meet requirements of an “eligibility matrix”. The borrower also must meet other conditions reflected in Fannie Mae’s Automated Underwriting System (AUS). HUD guidelines for FHA/VA and other government loans are 3 years.

·        As of March there have been 227,922 permanent loan modifications and 108,212 approved but not accepted by the borrower. 780,951 Trial modifications are active and includes the approved but not accepted by borrowers total. Of the permanent loan modifications only 2879 have defaulted so far. The top performing major lenders as a percentage of “eligible” borrowers are; GMAC 48%, Citi 47%, Wells Fargo 38%, Chase 37% and U.S Bank and Bank of America at 26%. Eligible borrowers are at least 60 days delinquent on their first mortgage. Also, 6 million homeowners have missed at least two payments (Treasury Department).

Good News

·         New home sales in March rose 27% the biggest increase in 47 years and follows February’s record low number. The median sales price was $214,000 up 4% from a year ago (Commerce Department).

·         Existing home sales rose 6.8% in March with the median home price slightly higher than a year ago at $170,700 (NAR).

·         20% of sellers reduced prices in April by 10% on average compared to 27% a year ago (Trulia.com).

·         U.S. growth forecast for 2010 is 3.1% up from 2.7% in January (IMF).

·         U.S. leading economic indicators rose 1.4% in March the 12^th consecutive monthly increase (Conference Board).

Statistics of Interest/Concern

·         U.S. commercial real estate prices declined 2.6% in February the first monthly decline in four months (Moody’s/REAL Commercial Property Price Index).

·         The default rate on commercial loans will continue to rise in 2010 and is estimated to reach 11% by the end of the year. A big concern is the default of large loans (over $50 million). In 2008 there were five defaults but that number increased to 56 in 2009 (Fitch Ratings).

·         March Producer Price Index (PPI) rose .7% making the year over year increase a stout 6%. The main culprit was the 2.5% increase in wholesale food prices the largest increase in 26 years (Department of Labor).

·         Durable goods (excluding aviation) increased 2.8% in March the biggest increase since December 2007 (Commerce Department).

Foreclosure Headlines

·         The Arizona Department of Housing received $2 million from NeighborWorks America to support community revitalization and counseling families facing foreclosure. According to NeighborWorks 937,000 families have received assistance since January 2008 including loan modification assistance.

·         California mortgage defaults fell 4% in the first quarter of 2010. However, defaults in the $500,000 plus range increased 1.5%. First quarter 2009 defaults were 135,431 but declined to 81,054 in same quarter 2010 (Data Quick).

·         In March about 50% of home sales were distressed sales (Campbell Surveys).

Jobs Update

·         Initial weekly jobless claims were down 24,000 from previous week to 456,000 (Department of Labor).

·         Four week moving average for initial weekly jobless claims increased slightly to 460,250 (Department of Labor).

·         Continuing jobless claims were down 40,000 to 4.65 million (Department of Labor).

·         Twenty four states had an increase in their unemployment rates in March. Michigan at 14.1% led the nation with Nevada second at 13.4%. Arizona was stable at just under 10%.

Key Indicators

Indicator	4/16/10	4/23/10	Change
Dow	11,019	11,204	+185
10 year yield	3.77%	3.82%	+.05%
Crude oil	82.83	85.11	+2.23
Dollar (vs Euro)	1.3500	1.3369	-.01310
Gold	1136.9	1156.0	+19.1

Source: www.cnbc.com/markets/commodities