The US Department of Housing and Urban Development (HUD) launched a web-based mapping tool that displays the geographic location of all foreclosed properties owned by the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac. The foreclosures owned by these organizations account for nearly half for all real estate owned (REO) properties in the country. According to HUD, this tool will be particularly important to communities participating in the Neighborhood Stabilization Program (NSP). Users can search a specific address or neighborhood and obtain an estimated delinquency count based on HUD analysis for local NSP program activities.
In addition to mapping individual properties, the portal provides consolidated listing for user-defined neighborhoods with details such as list date, price, number of bedrooms, and bathrooms. It also includes links to Fannie Mae’s Homepath, Freddie Mac’s Homesteps, and the HUD Homestore to connect potential buyers to the acquisition process. The REO Portal makes it easier for buyers to find and make offers on foreclosed properties. It also helps FHA, Fannie Mae, and Freddie Mac stabilize neighborhoods and recover local housing markets where abandoned and vacant homes are prevalent. Buyers also benefit since many of these areas have reduced property taxes and lower-cost loan programs.
The REO Portal is a consolidated neighborhood listing and mapping tool to assist neighborhood stabilizers in identifying Real-Estate Owned (REO)properties from Fannie Mae, Freddie Mac and FHA in targeted geographies. The portal supports more efficient disposition of REO properties to support the stabilization of neighborhoods and recovery of local housing markets by enabling a neighborhood-focused strategic approach to acquisition. Users employing HUD's Neighborhood Stabilization Program (NSP) or other resources in the targeted acquisition, rehabilitation and/or demolition of REO properties can use the REOPortal to define target geographies and receive recent listings from Fannie Mae, Freddie Mac and FHA.
Example: How To Use The Mapping Tool
I wondered how many FHA, Fannie Mae, and Freddie Mac properties were close to my area in Cobb County. I started the tool and it displayed a map of USA. I positioned the cursor on Georgia and clicked. The display zoomed to Georgia. Next, I zoomed to the Northwest corner of Georgia for Cobb County. After 11 zooms I was able to display the properties that interested me (all those green boxes) - in Cobb and nearby Fulton and Cherokee counties. Note - the actual display uses the entire screen. This image has simply been reduced to fit.
Look at all these bargain opportunities !
Tags: HUD Unveils REO Portal, Web-Based Mapping Tool, Neighborhood Stability Program, FHA, Fannie Mae, Freddie Mac, HUD Homestore, HomePath, HomeSteps, homes with lower-cost loan programs, homes with lower-property taxes, ATLShortSales.com.
On April 13, 2011, while our nation and its elected Representatives were reeling from the effects of an overdose of passing a 2011 Budget compromise, an enterprising Congressman - Bill Posey - from Rockledge, Florida submitted bill (H.R.1526 — Housing Recovery Act of 2011) to Congress. The proposed law would allow buyers to use funds (a distribution) from their 401(K)s and IRAs to buy foreclosed homes that have been foreclosed for a year or more. Caveat: this legislation has not been ratified and signed, so no victory lap - yet. However, the Bill has been sent to the Committee on Ways and Means for review, comment, sword-fighting, bickering, and name calling. Let's hope it survives the Committee and makes it onto the floor for a vote.
The key features of the bill are:
Who wins if this Bill passes? :
Here is the actual bill:
H.R.1526 — Housing Recovery Act of 2011 (Introduced in House – IH) HR 1526 IH 112th CONGRESS 1st Session H. R. 1526 To amend the Internal Revenue Code of 1986 to except from the early distribution penalty certain qualified retirement plan distributions used to purchase a residence that has been in foreclosure for a year or more. IN THE HOUSE OF REPRESENTATIVES April 13, 2011 Mr. POSEY introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to except from the early distribution penalty certain qualified retirement plan distributions used to purchase a residence that has been in foreclosure for a year or more. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the `Housing Recovery Act of 2011'. SEC. 2. EXCEPTION TO EARLY DISTRIBUTION PENALTY FOR DISTRIBUTION TO BUY A RESIDENCE IN FORECLOSURE. (a) In General- Paragraph (2) of section 72(t) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: `(H) HOME FORECLOSURE DISTRIBUTION- `(i) IN GENERAL- Any distribution to an individual to the extent such distribution is used by the individual before the close of the 120th day after the day on which such distribution is received to pay the cost of acquiring (within the meaning of paragraph (8)(C)) a residence which has been in foreclosure for the entire 1-year period ending on the date of such acquisition. `(ii) REQUIRED 2-YEAR HOLDING PERIOD- If during the 2 year-period beginning on the date of such acquisition the individual disposes of such residence, then the individual shall be treated as having distributed from a qualified retirement plan the amount to which clause (i) applied with respect to such residence in the taxable year of such disposition. `(iii) INTEREST- Any increase in tax under paragraph (1) by reason of clause (ii) shall include interest at the underpayment rate established under section 6621 on such increase for the period beginning on the due date for filing the return for the taxable year for which clause (i) applied with respect to such residence.’. (b) Conforming Amendment- Clause (i) of section 401(k)(2)(B) of such Code is amended by striking `or’ at the end of subclause (IV), by striking `and’ at the end of subclause (V) and inserting `or’, and by inserting after subclause (V) the following new subclause: `(VI) as provided in section 72(t)(2)(H), and’. (c) Effective Date- The amendment made by this section shall apply to distributions made after the date of the enactment of this Act.
H.R.1526 — Housing Recovery Act of 2011 (Introduced in House – IH)
HR 1526 IH
112th CONGRESS
1st Session
H. R. 1526
To amend the Internal Revenue Code of 1986 to except from the early distribution penalty certain qualified retirement plan distributions used to purchase a residence that has been in foreclosure for a year or more.
IN THE HOUSE OF REPRESENTATIVES
Mr. POSEY introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
Tags: H.R.1526 — Housing Recovery Act of 2011, Congressman Bill Posey, foreclosures, using 401(k)s and IRAs to purchase foreclosed homes, no flipping for two years, no IRS early withdrawal penalties, qualified retirement plan distributions used to purchase a residence that has been in foreclosure for a year or more, blighted neighborhoods, toxic assets on lender's books, ATLShortSales.com.
First: The SUNSHINE - Fewer Americans fall behind on their mortgage payments !
Hopeful signs at last. The Mortgage Bankers Association (MBA) reported in its 4th quarter survey that fewer Americans fell behind on their mortgage payments - the fewest in two years. Mortgages just one payment past due (30 days) fell to their lowest level since just before the recession began. If you're a cynic, you might attribute the improvement to the "Robo Signing" fiasco and short-term foreclosure moratorium due to mishandling of foreclosure filings and the foreclosure servicing scandal. No, says the Mortgage Bankers Association - this rebound is due to an improving overall economy - job growth, low interest rates, successes in modifying mortgages, and borrowers taking the initiative to keep their loans current.
Counterpoint: Still Partly Cloudy - A Glimmer of Hope
Other real estate and mortgage observers scoff that the good news obscures the real issue. They claim it is premature to declare victory over the foreclosure epidemic because the biggest issue is not new delinquencies. Rather, it is the record high number of homes in the foreclosure process. This is at 4.63 percent for 4Q 2010 - which ties the record high for homes in foreclosure. The "Robo Signing" fiasco delayed the timely processing of foreclosures, resulting in the immense backlog. Now, some states, like Florida, find that nearly one quarter of all mortgages are either delinquent or in foreclosure.
MBA spokesman, Michael Fratantoni, remarked “With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter".When these foreclosures have been completed, they will add a significant amount of additional inventory to homes on the market. This inventory will continue to depress home prices until buyers absorb the excess inventory. Outlook: The decline in new delinquencies raises a glimmer of hope that the long dark night of the real estate bubble, mortgage meltdown, and credit crunch may end soon. This new personal financial responsibility and frugality may actually be the light at the end of the tunnel.Homebuyers - What To Do NOWMortgage rates are still low. Affordability has improved. Inventory and choice are very good and should continue to improve in your favor. Wells Fargo and Quicken Loans have reduced their FHA credit score requirements to 580 and minimum down payments to 3.5 percent. Other lenders may follow. BUY NOW ! Home Sellers - What To Do NOW Mortgage rates are still low so more buyers can qualify to buy your home.. Affordability has improved so more buyers can qualify to buy your home. Inventory and choice are good now and should be very good in the future. This means that time is working against you. Better to be on the market and selling now than to wait and find you have more competition and lower prices.Some lenders have relaxed their loan criteria so more buyers can qualify for your home and your price now. SELL NOW ! Tags:Green Shoots - Fewer Homeowners Fall Behind On Payments, Mortgage Bankers Association 4th Quarter 2010, FHA, HUD, Wells Fargo, Quicken Loans, foreclosure backlog tsunami, mortgage meltdown, fewer Americans fall behind on their mortgage payments, Michael Fratantoni, real estate bubble, decline in new delinquencies, mortgage rates are still low, housing affordability has improved, Robo Signing, Homebuyers advice, Home Sellers advice, ATLShortSales.com.
MBA spokesman, Michael Fratantoni, remarked “With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter".
When these foreclosures have been completed, they will add a significant amount of additional inventory to homes on the market. This inventory will continue to depress home prices until buyers absorb the excess inventory.
Outlook:
The decline in new delinquencies raises a glimmer of hope that the long dark night of the real estate bubble, mortgage meltdown, and credit crunch may end soon. This new personal financial responsibility and frugality may actually be the light at the end of the tunnel.
Mortgage rates are still low.
Affordability has improved.
Inventory and choice are very good and should continue to improve in your favor.
Wells Fargo and Quicken Loans have reduced their FHA credit score requirements to 580 and minimum down payments to 3.5 percent. Other lenders may follow.
BUY NOW !
Mortgage rates are still low so more buyers can qualify to buy your home..
Affordability has improved so more buyers can qualify to buy your home.
Inventory and choice are good now and should be very good in the future. This means that time is working against you. Better to be on the market and selling now than to wait and find you have more competition and lower prices.
Some lenders have relaxed their loan criteria so more buyers can qualify for your home and your price now.
SELL NOW !
Tags:
Green Shoots - Fewer Homeowners Fall Behind On Payments, Mortgage Bankers Association 4th Quarter 2010, FHA, HUD, Wells Fargo, Quicken Loans, foreclosure backlog tsunami, mortgage meltdown, fewer Americans fall behind on their mortgage payments, Michael Fratantoni, real estate bubble, decline in new delinquencies, mortgage rates are still low, housing affordability has improved, Robo Signing, Homebuyers advice, Home Sellers advice, ATLShortSales.com.
When GOOD NEWS Means BAD NEWS (Jobs Report)
OR
The Bureau of Labor Statistics Jobs Report, released on Friday, 2/4, caught economy watchers by surprise.
CAUTION : Fed Fund Futures, which forecasts rate hikes, has moved from a Monday reading of a 52% chance that the Federal Reserve Open Market Committee will hike, to a Friday reading of a 100% chance of a Fed Funds rate hike at future meetings.
Buyers: Get off the fence and buy now. Rates have a greater chance to rise than they do to fall.
Tags: Bureau of Labor Statistics, January's Unemployment Report: Snow Job, Larry Kudlow, homebuyer advice, Federal Reserve Open Market Committee, homeseller advice, Jobs Report, impact of winter storms on employment, Mortgage bonds sell-off, Fed Funds Futures rise, Fed Funds rate, time to buy, ATLShortSales.com.
Friday, 1/7/2011
Enter the INFLATION DRAGON
China's report of record exports for the month of November sent stock prices higher. The news sent mortgage bonds lower Friday and bonds have given up Thursday's late afternoon gains.
In response to the trade surplus, The People's Bank of China (PBC) tightened bank lending requirements for the third time in five weeks. China currently has a $23B trade surplus and that money is entering a financial system already flush with cash. The problem? Inflation occurs when too much money chases too few goods, so China's good fortune contributes to China's looming problem - INFLATION. In China, INFLATION is growing, and growing fast. Once inflation starts, it can be very hard to control.
How will this impact YOU? It's a "global world" so bonds all over the world move lower on news of inflation. That's because bonds offer a guaranteed fixed rate of return. Inflation, on the other hand, is not capped, so it can surpass the return offered by a bond. In times of rising inflation, it is better to buy things NOW because they will be more expensive later. That's why owners/traders in bonds sell them when inflation rises. Currently, bonds remain very oversold and are trying to find a bottom. The consequence for you as a homebuyer are that China's trade surplus and tighter lending requirements could negatively impact bonds on Monday. That means higher lending costs for homebuyers.
Tags: China reports record trade surplus, People's Bank of China tightens lending requirements, mortgage bonds fall, China's inflation problem, locking loan rates, Spring homebuyer market, sell now, buy now, failing to qualify for a loan, homebuyer advice, home seller advice, ATLShortSales.com.
October " is the cruelest month" if you are following the housing market (apologies to T. S. Eliot, The Waste Land). It was more "trick" than "treat".
When interviewed by the press, David Blitzer of Standard & Poors commented on the latest S&P/Case-Shiller housing data for October. The S&P/Case-Shiller tracks housing value changes in the 20 largest standard metropolitan statistical areas (large cities in the U.S. to you and me).
The 10 city sub-index ROSE 0.2%
The TOTAL 20 city index FELL 0.8%
Though the Metro Atlanta market also declined, it fared better in comparison to most other areas. Atlanta home values declined on average by 2.9% from September to October. Year-over-year Atlanta home values declined by 6.2 %.
Tags: S&P/Case-Shiller report, David Blitzer, double dip recession is very possible, housing values fall, housing recovery has stalled, first-time homebuyer tax credit, ATLShortSales.com.
The Shadow Inventory of Foreclosures does exist, even if there are questions over its size, how it affects buyers and sellers in our individual market areas, and how long it will take to liquidate it.
Steve Harney, President of Steve Harney, Inc. <http://www.facebook.com/steve.harney1> is a former broker owner of a real estate company. He offers a useful analogy to explain the Shadow Inventory of foreclosures. He describes the dynamics of the Shadow Inventory as holding foreclosures behind a dam on a Raging River.
Imagine the Shadow Inventory of Foreclosures as a river. Also, imagine that this Shadow Inventory River runs through your town and that the Lenders in your town have built a dam across the river to control the river's flow. From your town, the river runs to a downstream valley below the dam.
Nearly all lenders have a glut of homes that are flowing into foreclosure -"the river". Since lenders understand the economic impact of supply and demand, they realize that dumping all foreclosures on the market at the same time would create a huge supply/inventory problem. The result would be to depress prices because of the glut of homes on the market. This is the situation when there is too great a supply of homes for sale and not enough ready, willing, and able buyers to buy them. The lenders realize it is foolish to release all the foreclosure inventory on the market at one time, so they hold some homes off the market. They control the flow of foreclosures on the market by their dam across the river.
Temporarily, the lenders restrict the flow of the Shadow Inventory river. When the lenders believe that the market can accept the added foreclosure homes for sale without unduly depressing prices, they raise the gates on the dam and release more foreclosed properties for sale.
In the past few months, some lenders have had a moratorium on releasing the flow of the river. When lenders were caught using Robo-signers to improperly handle the documents for foreclosures, many states stopped or delayed the foreclosure process. The result was that even more of the Shadow Inventory river had to be held behind the dam. One result of the Robo-signing fiasco was that current Sheriff sales / foreclosures on the courthouse steps were temporarily suspended so that even more inventory was trapped behind the dam. Meanwhile, new foreclosures continued unabated. The lenders realized that opening the flood gates to release all the foreclosed homes above the dam would flood the market with a raging river of Shadow Inventory. This would resemble an actual flood of the entire area - and would destroy homes in your town's downstream valley - the homes that are alongside the banks of the river. The resulting flood would destroy everything - the real estate market and the prices of all homes in the market, not just the foreclosures. So the lenders have been forced to withhold the mass of Shadow Inventory river temporarily behind the dam. Their hope seems to be that, as the market absorbs some sales, that they will be able to let more of the foreclosures through the dam without jeopardizing the entire market. They have been managing the foreclosure volume and protecting the neighborhoods down river while reducing the risk of radically reducing home values.
So, it sounds like Shadow Inventory is benign or even a good thing, right? Well, remember that lenders/investors may be required by banking regulators or government mandates to release the Shadow Inventory river sooner or later. The lenders/investors cannot and will not sit on those bad mortgages or vacant homes forever. Nor will they halt foreclosures forever.
How much Shadow Inventory is there? Some estimates range from 6.5 million to 13 million properties. Current annual sales rates for all homes are 4.5 million properties per year. That means there is a glut of one and a half to 3 years additional inventory sitting on the sidelines that could potentially CRUSH home values.
Your property is worth more now than it may be later. The longer you wait to sell, the more likely you could be the victim of a rapid decline in your property's price. This is the price of doing nothing.
There may soon be a glut of "new" inventory to evaluate. This will make deciding on just the "right property" harder. You may try to look at all the inventory and find yourself unable to decide on what to buy. Interest rates have not been this low since President Eisenhower. Continued turmoil in the European debt markets are making U.S. Treasury bonds more attractive (flight to quality). This raises our bond prices and lowers their yields. That means interest/mortgage rates could remain at historic lows for awhile. This means that homes will be more affordable for a buyer.
Conversely, if the economy improves and inflation rises, interest/mortgage rates could rise. Some homebuyers would have higher mortgage rates and lenders could require higher credit scores to qualify for a loan. Buyers could find that their most desired homes were priced out of reach.
Contact me to discuss your situation and timing and to chart a course of action that makes sense for you.
Tags: Shadow Inventory of foreclosures, Steve Harney, foreclosures, mortgage rates, economic recovery, inflation, Robo-signer fiasco, Sheriff sales, courthouse steps, dam across raging river of foreclosures, homebuyer, home seller, inventory glut, annual sale rates, European debt market, real estate market, U.S. Treasury bonds, historically low interest rates, mortgage rates, home price declines, higher credit scores, ATLShortSales.com
A recent report by analysts of the Amherst Securities Group LP reported that, if governmental policy on foreclosure prevention does not change, 11.5 million borrowers are in danger of losing their homes by the end of the year. The firm’s analysts say, the bottom line is that 20 out of every 100 U.S. first lien residential mortgages are already impaired: - Nine are seriously behind in their payments. - Six have been behind and are classified as what Amherst calls "dirty current" because they have been modified. But the firm says these loans are re-defaulting at an eye-popping rate of 50 percent. - Five are underwater by more than 20 percent of their current value and are defaulting at a 20 percent per-year-pace.
Additionally, another study by the Center for Housing Policy of the 100 largest metropolitan areas showed 10 percent of mortgages as seriously delinquent (90-plus days late or in the foreclosure process). In some areas, this percentage was as high as 1 in 4 mortgages.
So how can the administration fix deficiencies in its loan modification program and keep the mortgage default rate from hitting the menacing 20 percent mark? Amherst analysts say the answer lies in cutting borrowers’ principal balances. They argue that the success rate on mortgage modifications can be raised by making greater use of principal reductions. Amherst says this approach would help to address the phenomenon of strategic default, which is becoming increasingly acceptable among frustrated borrowers.
Policymakers must first recognize that the inclination to walk-away from one’s mortgage has become an economic issue, not a moral one, according to Amherst. In addition, the costs of default must be made explicit, and the second lien issue must also be addressed. Unfortunately, it is unlikely that these foreclosure-prevention policy changes will be sufficient to address the housing crisis, according to Amherst. The firm says additional government intervention is needed to boost housing demand. Amherst recommends that the government provide leverage for investors to buy real estate, ideally through its federal housing agencies - the Federal Housing Administration (FHA), Fannie Mae, or Freddie Mac. Currently, Fannie and Freddie credit availability for investor properties is very limited, requiring large down payments and pristine credit, while FHA is for owner-occupied homes only. Amherst says just when the market needs to increase demand for homes, demand is actually contracting due to credit availability issues. The firm’s analysts say new financing channels should be opened up to investors, noting that investors are currently purchasing a disproportionate share of foreclosed properties for cash. In addition, Amherst recommends increasing credit availability on prudent terms to borrowers with less than pristine credit. The large numbers of borrowers who have defaulted or will default on existing mortgages will, under present programs, be locked out of owning a home for years, but the company’s analysts say this setback can be addressed by re-qualifying borrowers who are in a home they can’t afford into one that better fits their financial situation.
Tags: 20% face foreclosure, walking away from the mortgage, strategicdefault, principal reduction, restricted credit availability, loan modification, boost housing demand, FHA, Fannie Mae, Freddie Mac, Amherst Securities Group LP, Center for Housing Policy, ATLShortSales.com.
Freddie Mac reported in their latest Primary Mortgage Market Survey that mortgage rates rose for the second consecutive week.
The 30-year fixed-rate mortgage (FRM) averaged 4.35 percent with an average 0.7 point for the week ending September 9, 2010, up from last week when it averaged 4.32 percent.
A year ago at this time, the 30-year FRM averaged 5.07 percent. Rates continue to hover at historic lows.
Tags: Freddie Mac, Primary Mortgage Market Survey, mortgage rates rise for 2nd consecutive week, rates at historic lows, ATLShortSale.com
The Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009 in an attempt to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisals. HVCC was a controversial regulation, leading to an increase in demand for appraisal management companies (AMCs) and complaints from independent appraisers who claim they’re being cut out of the market.
HVCC was intended to curb mortgage fraud and inflated valuations by putting appraisers arms-length from any outside influence. Sharing important information with an appraiser about a home, such as, other comparative values in the area or special features of a property that are unique, were completely forbidden.
Homeowners of short sales complained that, in the valuation backlash of HVCC, that their homes values were unduly lowered in value. HVCC has also been unpopular with agents and homeowners since the appraisers were chosen from a blind pool. Some agents reported that appraisers were "chosen from outside of the area" and were not familiar with valuations in the areas they were chosen to appraise.
Before Congress passed the bill, a congressional conference took place to reconcile versions from the House and Senate. Lawmakers put a new set of “appraisal independence standards” into the bill to replace the HVCC.
Tags: Home Valuation Code of Conduct, HVCC, appraisal rules, Federal Housing Finance Agency, (FHFA), Dodd-Frank Act, Fannie Mae, Freddie Mac, short sales, financial market reform, mortgage fraud, inflated valuations, appraisal independence standards, ATLShortSales.com.
Congress returns the week of September 13th with elections coming and an ailing economy. Some say we are bumping along the bottom in an L-shaped recovery. Others claim it's the start of a double-dip recession. Fearless forecasters say that the glass is half full and soon we'll be enjoying an V-shaped recovery. Our cunning legislators - not wishing to miss a beat or a chance to take credit - are already conjuring some new form of housing stimulus.
Clearly, the last housing stimulus put more money in motion. In July, the IRS reported to the House Ways and Means Subcommittee that the home buyer tax credit cost $23.5 billion - $16.2 billion for the first time and move-up credits and $7.3 billion for interest-free loans. Starting in January, these homeowners will begin repaying these loans.
Similarly, the Department of Housing and Urban Development has also allocated an outlay of nearly $6 billion for the Neighborhood Stabilization Program (NSP). NSP is intended to provide funds to state and local governments and non-profit housing developers for community redevelopment. The funds are earmarked for acquiring property and demolishing or rehabilitating foreclosures. They may also provide assistance funding to low- to middle-income homebuyers for downpayments and closing costs. Soon NSP will gain an additional $1 billion in funding. Unlike other programs, the emphasis of NSP is to increase owner-occupied properties. To reduce the number of vacant and foreclosed homes, NSP provides a first right of refusal for those grantees who buy foreclosures versus investors.
Price sells homes - regardless of whether the lower prices come from government stimulus or oversupply. Currently inventories are at 9+ month levels. For housing to recover, these record-high inventories need to come down, so some pundits hope that the new housing stimulus will target short sale and foreclosure buyers. They claim that getting this glut sold may begin to stabilize prices and trim the excess inventory.
Government stimulus is temporary and both buyers and sellers understand that. It's like trying to build your children's muscles by giving them candy. While we welcome and encourage stimulus to help get the housing market moving, stimulus alone won't produce jobs and help our citizens recover confidence in their economic futures. It's about JOBS - NOT HANDOUTS!
Tags: Another Homebuyer Tax Credit, short sales, foreclosures, home inventories, vacant and foreclosed homes, owner-occupied properties, housing oversupply, NSP, Neighborhood Stabilization Program, JOBS Not Handouts, ATLShortSales.com.
This morning's release of stronger than expected employment news caused the bond market to open well into negative territory. Good news for the economy implies that fixed income investments might not do as well as the economy overall. That means that bonds are less valuable as investments and so they fall in price, causing their yields to rise (i.e., interest rates rise!). The bond market is currently down 26/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discount point. (Buyers: this increases your monthly mortgage payment!)
The stock markets are reacting favorably to the data with the Dow up 61 points and the Nasdaq up 21 points. Since it is a holiday weekend and stocks are prone to rise ahead of a holiday, that's not too surprising. This morning's key economic data came from the Labor Department who gave us August's Employment report. It showed that the U.S. unemployment report rose to 9.6% as expected. The bad news came in the other two primary readings that the markets follow. The data showed that only 54,000 jobs were lost last month when analysts were expecting to see a loss of 120,000. Also, the average hourly earnings reading rose 0.3% when forecasts called for a 0.1% increase.The fewer job loss number indicates a stronger employment sector than many had thought. The stronger earnings also raises concern for the bond market because it gives consumers more money to spend. Therefore, this report was not good for bonds and mortgage rates and is the cause of this morning's selling.Next week brings us the release of little economic data to drive bond trading and mortgage rates. There are also a couple of relevant Treasury auctions schedule in addition to the Fed Beige Book. The financial markets will be closed Monday in observance of the Labor Day holiday and will reopen Tuesday morning. There are no important events on tap for Tuesday, but look for details on next week's events in Sunday's weekly preview.If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock 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: August Employment report, U.S. Department of Labor, mortgage rates rise, unemployment at 9.6% as expected, average hourly wages rose, fewer job losses, ATLShortSales.com.
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.
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