Loan modification results

Mortgage Industry Update: Rates, News & More

***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 11^th 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.

 

 

 

 

 

 

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Loan modification results

Mortgage Industry Update: Rates, News & More

***Smart Financial Weekly Mortgage Update August 7, 2009***

Interest Rates

For the week rates rate’s moved up about .25% as the lower than expected jobs report helped move the stock market and Bond yields higher. On a historical note on September 30, 1981 the 10 year Treasury Yield was 15.84% last week it closed at 3.48% compared to this week’s close at 3.84%. Wednesday Treasury Yields moved up as the U.S. announced its plans to sell $75 Billion in Notes and Bonds next week plus Goldman Sachs raised its forecast for second half GDP from +1.00% to +3.00%.

 

When	Rate
This Week	5.22
1 Month Ago	5.32
1 Year Ago	6.52
2 Years Ago	6.68

 

Note that actual market rates vary geographically and by lender, credit score and Loan to Value.

Source: Federal Reserve Statistical H.15.

 

Mortgage Industry Update

·         Taylor Bean Whittaker Mortgage Corporation (TBW) the 12^th largest mortgage originator in the country for the first half of 2009 (mostly FHA) was ordered by the government to suspend its funding of FHA loans. This will likely result in loan backlogs building and processing times being extended. Only Bank of America and Wells Fargo have done more FHA loans this year.

·         The Treasury released a report on the progress of loan modifications under the President’s plan. Thru July only 9% of targeted loans had been modified. Among the best performers were Saxon, Aurora, GMAC and Chase all with 20% plus. The worst performers were Wells (6%), Bank of America/Countrywide (4%), Wachovia (2%) and PNC/National City ZERO! Of an estimated 2.7 million eligible homeowners only 235,000 modifications are actually in progress.

·         The government said details on second mortgage modification will be announced next week.

 

Good News

·         ISM index for manufacturing for June came in at 48.9 compared to forecast of 46.5.

·         Construction spending was up 3%.

·         Pending home sales for June rose 3.6% compared to expectations of .7% increase. This was fifth consecutive monthly increase.

·         Consumer spending was up in June .4%.

·         The number of homes listed for sale where the asking price was reduced fell in July by 2.8% according to Zip Realty in California. The average price reduction was 10% with Las Vegas the highest at over 25%.

 

Statistics of Interest/Concern

·         Core PCE (The Federal Reserve’s favorite gauge on inflation) was up 1.5% year over year in May.

·         ISM index for non manufacturing (service sector) for July came in 46.4 down from June’s 47.

·         Between June 2007 and December 2008 the U.S. lost 22.8% of personal wealth (adjusted for inflation) the largest loss on record.

 

 

Foreclosure Headlines

·         A CNN Money story Thursday about foreclosures addressed how the increasing demand and reduction in inventory has impacted the market. Citing stories from around the country of multiple full priced offers. Obviously a big factor is the rock bottom prices. In Sacramento, for example, there is less than 30 days of inventory. According to the California Association of Realtors inventory of homes at $300,000 or below has shrunk from 10 months a year ago to 3.5 months today. Nationally the bank owned inventory has shrunk 26% from June 2008. The bad news is that it looks like there will be another foreclosure wave starting in the fall according to foreclosure.com. One of the reasons given was the re defaults on loan modifications.

 

Job Market Headlines

·         July unemployment rate dipped to 9.4 from June’s 9.5.

·         July job losses came in at 247,000 down from previous month and well below forecast of 320,000. Also, May and June job losses were revised downward.

·         Initial weekly jobless claims were 550,000 down from previous week’s revised 580,000. The four week moving average was 555,250 down for the sixth consecutive week.

·         Continuing jobless claims for the week rose 63,000 to 6.3 million.

·         Global Insight estimates that in more than half of the states it will be 2013 before jobs are back to pre recession levels.

·         Challenger the outplacement firm said that in July firms plan on increasing job cuts 31%.

·          ADP report shows that thru June we have experienced 18 consecutive months decline in hiring by small business (50 employees or less).

 

Commentary

The Treasury will borrow less in fourth quarter 09 and first quarter 10 than expected but also expects to provide less assistance to Fannie Mae and Freddie Mac than previously forecast. The government announced it was looking into remaking these two entities probably splitting each into a good bank and a bad bank. The bad bank would hold all of the bad loans. Fannie Mae lost almost $15 Billion for the quarter ending June 30, 2009 while Freddie Mac posted its first profit in two years.

 

Look for Guaranty Bank in Texas to be seized soon by the FDIC says the Wall Street Journal. The cost to tax payers is expected to be $5.3 Billion and the bank is in such bad shape it cannot be sold.

 

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