The National Association of Realtors (NAR) reported today that July pending home sales surprised to the upside today, up 0.1% from June. The forecast had been for a 1% decline based on the end of the homebuyer tax credit and weaker employment. Even better, the increase was in every region of the U.S.
With all the backslapping and glad handing, let's not forget the sobering fact that July represented a 19.1% decline from the previous year.
Perhaps the happiest news of the day was that 30 year fixed rate mortgages are now at their lowest rates ever!
Tags: All time low for 30 year fixed rate mortgages, pending home sales upside surprise, ATLShortSales.com.
New Home Sales unexpectedly dropped in July to the lowest level on record, signaling that despite lower prices and historically low mortgage rates that the housing market isdeclining. July new home sales fell 12 percent from June to an annual pace of 276,000. This is their lowest level since tracking began in 1963.
With the expiration of the housing tax credits, existing home sales also swooned by a record 27 percent in July. Continuing high unemployment continues to undermine the U.S. economic recovery and further dampens consumer confidence and outlook.
Purchases plummeted to a 3.83 million annual pace, the lowest in a decade of record keeping. The National Association of Realtors reported that the results were worse than even the most pessimistic forecast of economists surveyed by BloombergNews. Demand for single-family homes dropped to a 15-year low while the inventory of homes on the market grew from under 6 months supply to 9 months supply.
U.S. home prices fell 1.6 percent in the second quarter from a year earlier as record foreclosures added to the inventory of properties for sale. The Federal Housing Finance Agency also reported that the annual drop followed a 3.2 percent decline in the first quarter.
The bright spot: Congress is talking again about reviving some form of Tax Credit to stimulate housing demand once more. Stay Tuned.
Tags: foreclosures, housing market declines, July existing home sales, July new home sales, high unemployment, historically low mortgage rates, Tax Credit, Federal Housing Finance Agency, ATLShortSales.com.
Many homeowners owe more than their homes are worth and they are eager to know what options they have to avoid foreclosure. The government first established a mortgage loan modification program called HAMP to help homeowners and lenders find ways to keep existing homeowners in their homes. Sadly, only about 1 in 12 homeowners qualified for the program and the other 11 were declined. To remedy this situation, the government has created a follow on program called HAFA, Home Affordable Foreclosure Alternatives.
On November 30, 2009, the Treasury Department released guidelines and forms for the Home Affordable Foreclosure Alternatives Program (HAFA). HAFA is part of the Home Affordable Modification Program (HAMP). HAFA extends HAMP since it provides incentives for a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program. Servicers participating in HAMP are also required to comply with HAFA. To see a list of servicers participating in HAMP, click on the link - MakingHomeAffordable.gov.
HAFA applies to loans not owned or guaranteed by Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac have issued their own versions of HAFA.
HAFA has 43 pages of guidelines and forms. It is intended to simplify and streamline short sales and deeds-in-lieu of foreclosure.
The program became effective on April 5, 2010, but servicers were allowed to implement it before if they met certain requirements. The program sunsets on December 31, 2012.
When the comparison numbers came in for the month of June, 2010, many real estate industry watchers were elated at how much home sales had increased versus the prior year. They claimed that we must be in a major turnaround cycle => the great real estate recovery. Certainly the gains were impressive - it's rare to see positive comparisons with 20% or more growth.
In the stock market, when stock prices take a major fall, stock watchers look for a rebound in prices after the major fall. They call this a "Dead Cat Bounce". The phrase comes from the idea that "even a dead cat will bounce if it falls from a great height". The catchphrase has been used on Wall Street for many years.
Two trends converged to make the recent rally in home sales happen.
1) Those buyers who were under contract by April 30 had to close their sales by June 30th or lose the $8,000 or $6,500 tax credit. This windfall is over and Congress appears unwilling to create any new tax credit/incentive going forward. This is a one time blip.
2) The latest home sales numbers were compared to the anemic sales of the past year so this one time blip is also not likely to repeat.
That means Realtors will have to lead generate with even greater intensity going forward to find the homebuyers and homesellers who really are motivated to sell and homebuyers who are financially prepared to buy in this "new normal" real estate market.
Tags: June 2010 rebound in home sales, Housing Tax Credit, Congress, poor comparison data from previous year, homebuyers, homesellers, ATLShortSales.com.
In 1973 I was traveling with a regional mortgage banker whose bank was a major real estate investment trust (REIT). His bank had just become the unfortunate owner of an apartment development in Phoenix due to loan default and he was traveling to see the asset. He summarized the bank's position by saying,
"We've had all the cheese we want to eat. Now all we want to do is get out of the trap!"
Flashing forward 37 years, the American taxpayer has become the equally unhappy owner of 70% of the mortgage market due to our unwilling complicity in Fannie Mae and Freddie Mac.
There are some in Congress who feel that these two mortgage behemoths, Fannie Mae and Freddie Mac, should not be reformed. They claim that the housing and mortgage markets are simply too fragile right now. They wonder how our country and economy can weather a significant change.
Next Tuesday, the Treasury Department holds the first public forum on how and whether to reform these two mortgage giants. Both have been hemorrhaging cash, yet they still control 70 percent of today's mortgage market.
The Treasury Department began soliciting proposals last spring on how to reform these GSEs. The proposals collected - several hundred - range from totally privatizing them to fully nationalizing them.
Notable organizations, the Mortgage Bankers Association and the Financial Services Roundtable, have contributed similar ideas. They advocate new private companies where the mortgage-backed securities (MBS) themselves, not the companies that hold them, are backed by the federal government. Each has a series of safeguards for investors, mostly involving insurance funds and strict criteria for the types of mortgages allowed into the securities.
Regardless of the form a reform takes, it is apparent that loan standards must be tightened so that it takes more than the ability to fog a mirror when you exhale to get a loan.
For most citizens, our homes are our single largest asset, so speaking out about the overhaul matters. Far too many citizens have had their credit destroyed and homes foreclosed, and the carnage is far from over. Squabbles have already begun over who should control the overhaul. Community activists claim their voice is not being heard. Financial giants are threatening to leave the mortgage market if they don't get their way ("I'll take my ball and go home").
Let's be clear. The practices of Fannie Mae and Freddie Mac have cost taxpayers over $148 BILLION on paper. They have created irreparable, continuing and costly damage to consumer confidence in housing. They are not viable in their current state and must not exist long term. It is time to fix Fannie Mae and Freddie Mac before they cause still more damage.
As Sir Winston Churchill said, "It's not enough to say that you are doing your best, you must succeed at doing what is necessary".
Tags: Fannie Mae, Freddie Mac, government sponsored entities, GSEs, Treasury Department, reforming Fannie Mae and Freddie Mac, credit destroyed, foreclosure, short sales, totally privatized, totally nationalized, Mortgage Bankers Association, Financial Services Roundtable, mortgage backed securities, MBS, ATLShortSales.com.
TUESDAY AFTERNOON UPDATE:Courtesy of Mortgage Commentary
Today's FOMC meeting has adjourned with no change to key short-term interest rates. However, the post-meeting statement did give us a bit of a surprise that was quite favorable to the bond market and mortgage rates. In the statement the Fed indicated that they expect the economy to grow at a slower pace than estimated at the last FOMC meeting in late June. They renewed their "subdued" outlook for inflation, which is the key point for the bond market and the indication that they expect to keep key interest rates at their current level for an "extended period." That leads market participants to believe that the Fed is still concerned about the economy's ability to expand and maintain momentum.The surprise came from an announcement that the Fed will use funds from its holdings in mortgage bonds to buy more government debt. What this means is that the Fed is taking its interest payments and reinvesting them into the economic recovery. This will be a much smaller campaign than we saw from them last year and early this year, but it is still considered good news. The goal is to help keep long-term interest rates low, such as home mortgage rates and corporate bond rates, in an effort to spur more spending and economic activity. [ By buying government debt, the Fed creates additional demand for government debt, creating competition, and leading to higher prices for government bonds. Higher prices for government bonds means lower bond yields and lower mortgage interest rates! - continuing good news for homebuyers! ]. The general consensus is that the impact this will have on the economy is minimal, but it does show that the Fed is attentive to current conditions and is ready to take more measures if needed.The financial markets have rallied after the announcement was made, particularly bonds. The stock markets erased a good part of their earlier losses, while the bond market extended its morning gains. The Dow is currently down 38 points and the Nasdaq is down 22 points. The bond market is currently up 20/32, which should improve mortgage rates by approximately .125 - .250 of a discount point from this morning's rates.Second quarter Employee Productivity and Costs data was released early this morning. It revealed a surprising 0.9% decline in worker productivity. This means that employees were less productive during the quarter than many had thought. That can be considered bad news for bonds, but offsetting that surprise was a much smaller than expected increase in labor costs. They rose 0.2% compared to the 1.4% rise that was forecasted, which means that employer costs for wages rose at a slower pace than expected. That can be considered good news for the bond market and mortgage rates because rising costs translates into higher prices for products at the consumer level and gives workers more money to spend, fueling economic activity.Tomorrow's only data will be June's Trade Balance report at 8:30 AM ET. It gives us the size of the U.S. trade deficit but is the week's least important report and likely will have little impact on the bond market and mortgage rates. Analysts are expecting to see a $4 2.5 billion deficit, but it will take a wide variance to directly influence mortgage pricing.If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Tags: Federal Reserve Board, Federal Open Market Committee, FOMC, Fed, Fed will reinvest interest on mortgage-backed securities in government debt, homebuyers, ATLShortSales.com.
Courtesy of Mortgage Commentary
Tuesday's bond market has opened up slightly after this morning's economic news gave us mixed results. The stock markets are showing losses with the Dow down 84 points and the Nasdaq down 21 points. The bond market is currently up 2/32, which may improve this morning's mortgage rates by approximately .125 of a discount point. (Good news for home buyers!)Second quarter Employee Productivity and Costs data was released early this morning. It revealed a surprising 0.9% decline in worker productivity. This means that employees were less productive during the quarter than many had thought. That can be considered bad news for bonds, but offsetting that surprise was a much smaller than expected increase in labor costs. They rose 0.2% compared to the 1.4% rise that was forecasted, which means that employer costs for wages rose at a slower pace than expected. That can be considered good news for the bond market and mortgage rates because rising costs translates into higher prices for products at the consumer level and gives workers more money to spend, fueling economic activity. (Good news for home buyers!)Today also brings us another FOMC meeting. It is a single day meeting that will adjourn at 2:15 PM ET. There is practically no possibility of the Fed changing key short-term interest rates, but the markets will be watching the post-meeting statement very closely. Mr. Bernanke and some of his colleagues have indicated recently that the economy is not growing as quickly as previously thought and have renewed concerns about certain hurdles such as housing and unemployment. So, it would not be a surprise to see some minor adjustment to the statement that would hint a more cautious tone than previous statements. If this is the case, we may see bond prices rise and mortgage rates move lower during afternoon trading today. (Good news for home buyers!)Tomorrow's only data will be June's Trade Balance report at 8:30 AM ET. It gives us the size of the U.S. trade deficit but is the week's least important report and likely will have little impact on the bond market and mortgage rates. Analysts are expecting to see a $42.5 billion deficit, but it will take a wide variance to directly influence mortgage pricing.Look for an update to this report shortly after the markets have an opportunity to react to this afternoon's event.If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2010
Tags: 2Q10 Employee Productivity and Costs, Federal Open Market Committee, FOMC, June Trade Balance, projected trade deficit, homebuyers, ATLShortSales.com.
Tags: Federal Open Market Committee, FOMC, Retail Sales, Consumer Price Index, CPI, Treasury Auctions, 10 year notes, 30 year bonds, Consumer Sentiment, June Trade Balance, ATLShortSales.com
Daily Rate Lock Advisory - August 3, 2010
Courtesy, Mortgage Commentary
Tuesday's bond market has opened in positive territory after this morning's economic data showed weaker than expected results. The stock markets are helping to boost bonds with a negative opening that is giving back some of yesterday's strong gains. The Dow is currently down 55 points while the Nasdaq has fallen 11 points. The bond market is currently up 16/32, which will likely improve this morning's mortgage rates by approximately 0.250 of a discount point.There were two relevant economic reports posted this morning. The first was June's Personal Income and Outlays data that revealed no change in both the income and spending readings. Analysts were expecting to see the flat reading in spending, but were calling for a slight increase in spending. This data indicates that consumers had no more income to spend, nor did they spend more than they did in May. These can be considered favorable results for the bond market and mortgage rates because they show weaker than expected economic activity that make long-term securities, such as mortgage-related bonds, more attractive to investors.June's Factory Orders data was also posted this morning. It showed that new orders for both durable and non-durable goods fell 1.2% in June. That was more than twice the decline that was expected, indicating a weaker manufacturing sector than many had thought. This is also good news for bond and mortgage rates. However, this particular report is not one of the more important ones we see each month, so its impact on this morning's rates has been minimal.There is no relevant economic data scheduled for release tomorrow. This will allow the stock markets to take center stage as the diving force for the bond market, at least until we get to Friday's key data. [Mortgage rates may go up or down this week =>] If the major stock indexes show sizable losses tomorrow, expect to see bonds rise and mortgage rates to fall slightly. But if this morning's losses are reversed, we could see upward changes to mortgage rates in the morning.If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
Tags: weaker economy, mortgage rates lower, Personal Income and Outlays, Factory Orders data, weaker manufacturing, homebuyers, home sellers, ATLShortSales.com.
Courtesy: Haver Analytics
The Mortgage Bankers Association reported that mortgage applications jumped another 6.7% last week. The increase raised the level 14.6% versus June and by nearly one-half from July '09. Firm lending activity continued to reflect strong refinancings. Weekly applications for mortgage refinance jumped for the second consecutive week to the highest level since May of last year..
Applications to purchase a home remained weak and fell to near the lowest level since early-1997. During the last ten years there has been a 51% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales. The correlation has lessened recently.
The effective fixed interest rate on conventional 15-year mortgages nudged up to 4.34% last week. For 30-year mortgages the rate fell slightly to an average 4.85%, near the lowest since the early-1960s. Interest rates on fixed 15-year and 30-year mortgages are closely correlated (near-90%) with the rate on 10-year Treasury securities. Rates on adjustable one-year mortgages rose w/w to 7.26% from 6.74% at the end of last year.
The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site here. The figures for weekly mortgage applications are available in Haver's SURVEYW database.
(*) Trend for mortgage for purchase applications is declining
© 2010 HAVER ANALYTICS. All rights reserved
Tags: Mortgage Bankers Association weekly survey, MBA, Mortgage Loan Applications, Mortgage Loan Applications for Purchase, Adjustable Rate Loan Applications, Purchase Loan Apps lowest since 1997, Purchase Apps Sustain 13-Year Low, Mortgage Loan Applications Increase, 30 Year fixed mortgage rate lowest since the 1960s, refinancing, home buyers, home sellers, Haver Analytics, ATLShortSales.com.
Courtesy of Haver Analytics.
U.S. Existing Home Sales Slip
Sales of existing single-family home sales slipped following the expiration of a Federal home-buyer tax credit. Existing home sales fell 2.2% to 5.660M last month following April's little revised 8.0% increase according to the National Association of Realtors. May sales disappointed Consensus expectations for sales of 6.16M. Total sales include sales of condos and co-ops. Sales of existing single-family homes alone fell 1.6% from April to 4.980M. (These data have a longer history than the total sales series). Sales of condos and co-ops rose 32.6% from last year.
The median price of all existing homes rose in May to $179,600. Though prices remained off roughly 25% from the 2007 peak they have risen 9.1% from the February low. The price of a single-family home rose 4.0% to $179,400 (2.7% y/y). Earlier price weakness sharply raised home affordability -- by three-quarters from the 2006 low. This rise in home prices lowered homes' affordability by 9.5% versus one year ago. The median family income for existing home buyers was $60,498 and mortgage payments amounted to 14.9% of that total.
The number of unsold homes (single-family & co-ops) for sale slipped m/m but remained up 1.1% y/y. At the current sales rate there was an 8.3 months' supply of homes on the market. That was down from a high of 10.1 months during April of 2008. For single-family homes, the inventory fell m/m to a 7.8 months' supply.
The data on existing home sales, prices and affordability can be found in Haver's USECON database. The regional price, affordability and inventory data is available in the REALTOR database.
The Homeownership Gap from the Federal Reserve Bank of New York is available here.
By Tom Moeller
South leads the nation in sales growth
Tags: Existing Home Sales Slip, months of home inventory, seasonally adjusted, South leads the nation in sales growth, home affordability, condo sales bounce back, National Association of Realtors, NAR, ATLShortSales.com.
Outlook for Real Estate Investors Expect plenty of choice in lower priced properties. Demand for rentals should grow as more "under water" homeowners are forced into foreclosure. Outlook for Residential Home Buyers Expect plenty of choice in lower priced properties. The longer you wait to buy, the more likely that the "best value" properties will already be sold. Credit is likely to remain tight. Outlook for Residential Home Sellers The glut of additional foreclosures on the housing market should drive down prices. While homes may be worth more now, it seems unlikely that they will hold their current values. What's Happening With Mortgages and Delinquencies? (Excerpts from a recent Mortgage Bankers Association Press Release ….) The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 10.06 percent of all loans outstanding as of the end of the first quarter of 2010, an increase of 59 basis points from the fourth quarter of 2009, and up 94 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 106 basis points from 10.44 percent in the fourth quarter of 2009 to 9.38 percent this quarter. The percentage of loans on which foreclosure actions were started during the first quarter was 1.23 percent, up three basis points from last quarter but down 14 basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 4.63 percent, an increase of five basis points from the fourth quarter of 2009 and 78 basis points from one year ago. This represents another record high. The combined percentage of loans in foreclosure or at least one payment past due was 14.01 percent on a non-seasonally adjusted basis, a decline from 15.02 percent last quarter. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.54 percent, a decrease of 13 basis points from last quarter, but an increase of 230 basis points from the first quarter of last year. The seasonally adjusted delinquency rate increased for all loan types with the exception of FHA loans. On a seasonally adjusted basis, the delinquency rate stood at 6.17 percent for prime fixed loans, 13.52 percent for prime ARM loans, 25.69 percent for subprime fixed loans, 29.09 percent for subprime ARM loans, 13.15 percent for FHA loans, and 7.96 percent for VA loans. On a non-seasonally adjusted basis, the delinquency rate fell for all loan types. The foreclosure starts rate increased for all loan types with the exception of subprime loans. The foreclosure starts rate increased six basis points for prime fixed loans to 0.69 percent, 17 basis points for prime ARM loans to 2.29 percent, 18 basis points for FHA loans to 1.46 percent, and eight basis points for VA loans to 0.89 percent. For subprime fixed loans, the rate decreased nine basis points to 2.64 percent and for subprime ARM loans the rate decreased 39 basis points to 4.32 percent. Change from last year (first quarter of 2009) Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes. The non-seasonally adjusted delinquency rate increased 151 basis points for prime fixed loans, 172 basis points for prime ARM loans, 343 basis points for subprime fixed loans, and 244 basis points for subprime ARM loans from the first quarter of 2009. The delinquency rate was 48 basis points lower for FHA loans and 12 basis points for VA loans relative to the same quarter a year ago. The non-seasonally adjusted foreclosure starts rate increased eight basis points for prime fixed loans, 36 basis points for FHA loans and 17 basis points for VA loans compared to the first quarter of 2009. The rate decreased 22 basis points for prime ARM loans, 10 basis points for subprime fixed loans, and 259 basis points for subprime ARM loans on a year over year basis. About half of the states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Oregon, North Carolina and Maryland. The largest decreases were in Florida, Rhode Island and California. Almost all of the states saw year-over year decreases in subprime ARM foreclosure starts while almost all had increases in prime fixed-rate and FHA foreclosure starts. Tags: Mortgage Bankers Association, MBA, subprime ARM loans, subprime fixed rate loans, nearly 25% Of All Mortgages Delinquent, delinquent loans, foreclosure starts, prime fixed rate foreclosures, FHA foreclosure starts, National Delinquency Survey, tight credit, Outlook for Real Estate Investors, Outlook for Residential Home Buyers, Outlook for Residential Home Sellers, ATLShortSales.com.
Outlook for Real Estate Investors
Expect plenty of choice in lower priced properties. Demand for rentals should grow as more "under water" homeowners are forced into foreclosure.
Outlook for Residential Home Buyers
Expect plenty of choice in lower priced properties. The longer you wait to buy, the more likely that the "best value" properties will already be sold. Credit is likely to remain tight.
Outlook for Residential Home Sellers
The glut of additional foreclosures on the housing market should drive down prices. While homes may be worth more now, it seems unlikely that they will hold their current values.
What's Happening With Mortgages and Delinquencies?
(Excerpts from a recent Mortgage Bankers Association Press Release ….)
The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 10.06 percent of all loans outstanding as of the end of the first quarter of 2010, an increase of 59 basis points from the fourth quarter of 2009, and up 94 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 106 basis points from 10.44 percent in the fourth quarter of 2009 to 9.38 percent this quarter.
The percentage of loans on which foreclosure actions were started during the first quarter was 1.23 percent, up three basis points from last quarter but down 14 basis points from one year ago.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 4.63 percent, an increase of five basis points from the fourth quarter of 2009 and 78 basis points from one year ago. This represents another record high.
The combined percentage of loans in foreclosure or at least one payment past due was 14.01 percent on a non-seasonally adjusted basis, a decline from 15.02 percent last quarter.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.54 percent, a decrease of 13 basis points from last quarter, but an increase of 230 basis points from the first quarter of last year.
The seasonally adjusted delinquency rate increased for all loan types with the exception of FHA loans. On a seasonally adjusted basis, the delinquency rate stood at 6.17 percent for prime fixed loans, 13.52 percent for prime ARM loans, 25.69 percent for subprime fixed loans, 29.09 percent for subprime ARM loans, 13.15 percent for FHA loans, and 7.96 percent for VA loans. On a non-seasonally adjusted basis, the delinquency rate fell for all loan types.
The foreclosure starts rate increased for all loan types with the exception of subprime loans. The foreclosure starts rate increased six basis points for prime fixed loans to 0.69 percent, 17 basis points for prime ARM loans to 2.29 percent, 18 basis points for FHA loans to 1.46 percent, and eight basis points for VA loans to 0.89 percent. For subprime fixed loans, the rate decreased nine basis points to 2.64 percent and for subprime ARM loans the rate decreased 39 basis points to 4.32 percent.
Change from last year (first quarter of 2009)
Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes. The non-seasonally adjusted delinquency rate increased 151 basis points for prime fixed loans, 172 basis points for prime ARM loans, 343 basis points for subprime fixed loans, and 244 basis points for subprime ARM loans from the first quarter of 2009. The delinquency rate was 48 basis points lower for FHA loans and 12 basis points for VA loans relative to the same quarter a year ago.
The non-seasonally adjusted foreclosure starts rate increased eight basis points for prime fixed loans, 36 basis points for FHA loans and 17 basis points for VA loans compared to the first quarter of 2009. The rate decreased 22 basis points for prime ARM loans, 10 basis points for subprime fixed loans, and 259 basis points for subprime ARM loans on a year over year basis.
About half of the states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Oregon, North Carolina and Maryland. The largest decreases were in Florida, Rhode Island and California. Almost all of the states saw year-over year decreases in subprime ARM foreclosure starts while almost all had increases in prime fixed-rate and FHA foreclosure starts.
Tags: Mortgage Bankers Association, MBA, subprime ARM loans, subprime fixed rate loans, nearly 25% Of All Mortgages Delinquent, delinquent loans, foreclosure starts, prime fixed rate foreclosures, FHA foreclosure starts, National Delinquency Survey, tight credit, Outlook for Real Estate Investors, Outlook for Residential Home Buyers, Outlook for Residential Home Sellers, ATLShortSales.com.
June 1, 2010 marked the beginning of Fannie Mae’s “Loan Quality Initiative.”
One of the provisions in the initiative is “credit re-verification” on the day of funding. If your credit changes more than 2%, it’s back to underwriting for approval! Buyers can protect their financing by making smart moves between first and second verification. There are several other important considerations to the initiative as well.The following articles will help you wrap your head around Fannie Mae’s LQI:Fannie Mae’s loan quality initiative: another potential snag with financinghttp://bit.ly/cX5Y6P(BostonGlobe.com)Borrowers: Beware the Second Credit Reporthttp://bit.ly/c9hCI6(SmartMoney.com)Fannie Mae “Loan Quality Initiative” begins June 1, 2010. How will this affect home buyers?http://bit.ly/9cevT7(Amy Jones, RE/MAX Excalibur, Arizona)For the fine print, don’t miss Fannie Mae’s page dedicated to the initiative:https://www.efanniemae.com/sf/lqi/index.jsp
Tags: Fannie Mae Loan Quality Initiative, credit re-verification, limits on borrower credit changes, credit scores, loan underwriting, re-approval, ATLShortSales.com
WASHINGTON June 16 (Reuters) - The U.S. Senate voted on Wednesday, 6/16/2010 to give homebuyers another three months to settle on their contracts and take advantage of a popular tax credit that sparked a rush of activity in the housing market.
The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract.
The current deadline requires buyers to close by June 30 to get the $8,000 tax credit for first-time homebuyers. Existing homeowners buying a new primary residence are eligible for a $6,500 credit.
Reid offered the measure as an amendment to a bill that would extend some popular business tax breaks and extend unemployment insurance benefits for jobless workers.
The proposal would not have a significant impact on future home sales as the extension would be only for home buyers who already had a contract in hand by April 30.
The popularity of the tax credit has caused some anxiety because settlement offices are inundated with buyers trying to close on transactions by the end of this month to get the tax break
(Reporting by Donna Smith; Editing by John O'Callaghan)
Tags: Homebuyer tax credit closing extended, September 30 deadline, homebuyer, home seller, first-time homebuyers, existing homeowners, Housing Market, Democratic Leader Harry Reid, ATLShortSales.com.
The National Association of Realtors is presenting Jeff Lischer, NAR’s executive in charge of governmental affairs, this afternoon at 3:00pm EDT via webinar. Jeff is an expert on short sales and the HAFA (Home Affordable Foreclosure Alternatives) Guidelines.
Jeff will cover the new Treasury Department HAFA Guidelines and what they mean to homeowners and home buyers. Distressed home owners are crying for help in overcoming the crushing burden of foreclosure. Experts agree that this real estate market – a market dominated by distressed sellers, will continue for at least the next three to five years.
For example, in January 2010, 29% of ALL sales in the U.S. were distressed sales, including short sales. Many are predicting that by the end of 2010, the number of distressed sales will make up over half of all sales. This means that bank-owned properties (those having already been foreclosed) are likely to increase by 600% by 2011.
In addition, banks are trying to clear past foreclosures ("shadow inventory" homes) which have been held off the market. This "shadow inventory" is estimated at 13 million homes. Since the current sales rate for all homes is between 5 million and 6 million homes per year, this translates into dumping another 2+ years of inventory on the market. This will almost certainly depress the prices of all homes due to the increase in supply.
Sellers: List and sell your home as soon as you can, before this tsunami of "shadow inventory" starts.
Buyers: Take advantage of the tax credit for first time buyers and for move-up buyers. This expires on April 30.
HAFA helps distressed home owners gracefully exit from foreclosure.
No one wants this distressed market to drag on. The best way to help today’s housing market recover is by helping home owners one home at a time. Our goal as short sale agents is to turn this distressed market into a balanced market again. The HAFA guidelines provide one more tool to help our clients with distressed properties.
Visit http://ATLShortSales.com/HotLantaRE often for updates on the specifics of the HAFA guidelines.
Tags: Department of the Treasury, upside down, distressed properties, "shadow inventory", National Association of Realtors, NAR, Home Affordable Foreclosure Alternatives, HAFA, short sales, ATLShortSales.com.
Today's most important report was the initial reading of the 4th Quarter Gross Domestic Product (GDP). It revealed a 5.7% annual rate of growth during the last quarter of 2009. This was much better than expected and the fastest pace in six years, indicating that the economy is likely growing at a faster pace than many had thought. That creates a negative for bonds because once the economy begins to gain momentum, inflation concerns will rise in the markets. Since inflation is the number one nemesis of the bond market, bonds tend to suffer when inflation is strengthening, leading to higher mortgage rates.
Preventing a sizable sell-off in bonds was a much lower than expected inflation reading within the data. That inflation reading came in half of forecasts, meaning that inflation isn't a concern yet. However, many experienced traders and analysts firmly believe that it will follow shortly if economic activity continues to grow at a pace similar to what today's GDP reading showed. Therefore, we have seen some selling in bonds, but considering the headline GDP reading, we should be content with this morning's trading.
To cap off today's relevant economic data, the University of Michigan's Index of Consumer Sentiment for January was a higher than expected revision. This index measures consumer confidence, which is thought to indicate consumer willingness to spend. The 74.4 reading (Highest in 2 years) indicates that consumers were more optimistic about their own financial situation this month than many had thought. Strengthening confidence usually translates into more consumer spending, fueling economic growth. However, this report doesn't carry enough power to heavily influence the markets, especially following the initial GDP reading for the quarter.
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Q4 GDP Deflator + 0.6%
Q4 PCE Price Index + 2.7%
Q4 Business Investment + 2.9%
Q4 Housing Investment + 5.7%
Q4 Employment Cost Index + 0.5%
Q4 Software and Capital Expenditures + 13.3% (WOW)
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Tags:
Economy improved more than expected in Q4, 4th Quarter Gross Domestic Product(GDP), 4th Quarter Employment Cost Index (ECI), Consumer Sentiment, Inflation Risk, home buyer, home seller, University of Michigan, ATLShortSales.com
The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner.
Some conditions apply. The ones most relevant to investors are:
- All transactions must be arms length.
- The Seller holds title to the property.
- The waiver does not apply to Home Equity Conversion Mortgage (HECM) for Purchase program.
- No pattern exists of flipping the subject property within 12 months.
- The property was marketed openly and fairly via Multiple Listing Service, Auction, or For Sale By Owner.
IMPORTANT NOTE: The waiver states that any sales contracts that refer to an “assignment of contract for sale” may be a red flag, since this represents a special arrangement between seller and buyer)
- If the sale is 20% or more above the acquisition cost, additional lender requirements will apply as follows:
o Justify the increase with documentation of significant renovation to justify the increase OR a second appraisal, AND
o The lender orders an FHA approved inspection report and provides it to the Buyer
For a full description of the waiver and its specific language, click on:
http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf
The Red Flag language regarding “assignment of contract for sale” is an important consideration for investors flipping properties. Transactions involving an assignment are likely to receive extra scrutiny by the End-Buyer mortgage underwriters. However, use of Transactional Funding is a low-cost alternative by providing two stand-alone transactions allowing for the flip in less than ninety days. Additionally, the requirements to justify any sale price above 20% of acquisition cost are likely to receive scrutiny. However, at least the waiver allows for it with documented improvements and/or a second appraisal and an inspection.
The waiver is not directly intended to assist investors. Rather, it shows that FHA realizes that not restricting free market activities will help move REO (bank owned properties) property more quickly and will maximize the return to FHA. Abandoned homes and "dead" loans are bad for banks and FHA. First time buyers will naturally benefit since real estate investors may provide more low-cost homes to buyers. This may also help stabilize real estate prices by allowing the market to absorb more of the "shadow inventory" (estimated at 13 million in 2010) of foreclosed homes in bank inventories. Let's hope that Fannie Mae (FNMA) and Freddie Mac will also see the light and reduce their restrictions.
Tags: FHA, Federal Housing Administration, first time buyers, Fannie Mae, transactional funding, FHA, REO, real estate owned, FNMA, Freddie Mac, flipping, single family homes, Multiple Listing Service, MLS, property auction, HUD, assignment of contract for sale, red flag, HomeEquity Conversion Mortgage (HECM), FHA Waives 90 Day Flip Restriction, ATLShortSales.com
Fed makes record windfall off economic revival program, sends $46.1B to Treasury.
The Federal Reserve generated record profits last year, reflecting money made off its extraordinary efforts to rescue the country from the worst economic and financial crisis since the 1930s.
P.S., Don't start congratulating yourself yet on this windfall. The Fed's efforts to end the crisis are separate from the $700 billion taxpayer-funded financial bailout program authorized by Congress in 2008 and overseen by theTreasury Department.
For the full story, click here: http://bit.ly/5OK01C
Tags: Federal Reserve, Record Profits for 2009, The Fed, Treasury Department, economic recovery, Bear Stearns, American International Group, $700 billion taxpayer-funded financial bailout, Fannie Mae, Freddie Mac, General Motors, Chrysler, GMAC, government debt, ATLShortSales.com.
New Consumer Financial Protection Agency
Congress voted to terminate the controversial Home Valuation Code of Conduct (HVCC) once a new Consumer Financial Protection Agency begins operations.
The Home Valuation Code of Conduct has been highly unpopular with consumers, appraisers, and Realtors since its inception in May, 2009. HVCC rules were blamed for many "low-ball" appraisals which led to the cancellation of many home sales contracts.
The new agency would assume primary federal responsibility for equal opportunity in credit, real estate settlement procedures, financial disclosures to borrowers, plus unfair and deceptive marketing in mortgages and other financial products.
For the full story from Realty Times : http://bit.ly/51xkdz
Tags: Consumer Financial Protection Agency, CFPA, Home Valuation Code of Conduct, HVCC, home appraisals, low-ball appraisals, homebuyers, home sellers, ATLShortSales.com.
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