Excess Inventory May Impede Housing Recovery: Fannie Mae
04/19/2010 By: Brittany Dunn
Although housing is beginning to stabilize, excess inventory and shadow supply may hinder continued recovery, according to the April 2010 Economic Outlook released Monday by Fannie Mae’s Economics & Mortgage Market Analysis Group.
Fannie Mae said recent major housing indicators have been harsh. Housing starts fell in February, led by a large drop in multifamily starts. In addition, single-family starts fell slightly and have basically moved sideways during the past 6 months. Hovering near an annualized level of 500,000, single-family starts remained well above their record low reached in February 2009 but are significantly below their record high of more than 1.8 million annualized rate recorded in February 2006.
According to the outlook, lackluster homebuilding activity is one of the reasons for a relatively modest recovery. However, given soft demand for new homes, a much-below trend level of activity is necessary to restore balance to the housing market. The fourth consecutive drop in new home sales in February brought sales to another record low.
Existing home sales posted their third consecutive drop in February, but Fannie Mae said the near-term outlook is brightening, as augured by improving leading indicators of home sales. Pending home sales, which measure contract signings of existing homes, surged in February, and purchase applications have risen nearly 25 percent in the last six weeks. As a result of these positive indicators, existing home sales are projected to strengthen substantially in the second quarter.
The homebuyer tax credit, set to expire later this month, is expected to pull sales forward into the first half of this year. As a result, Fannie Mae said sales will likely fall back in the third quarter. And if the labor market improves substantially in the fourth quarter as anticipated, home sales should rebound and begin a self-sustaining recovery without the help of a tax subsidy.
Even with an expected gain in March total home sales, sales for the first quarter are likely to be much lower than originally projected, causing Fannie Mae to downwardly revise the trajectory of sales going forward. For all of 2010, Fannie Mae projects a 6 percent increase in sales, down from a 9 percent increase forecast in the March outlook and a 12 percent increase projected in the February outlook.
As for home prices, Fannie Mae expects to see more moderate declines this year. However, the shadow inventory of homes continues to pose risks. In the minutes from the March Federal Open Market Committee meeting, committee members expressed concerns that the foreclosure rate could remain elevated or even surge higher in coming quarters. Consequently, this could potentially add supply to the already large inventory of vacant homes, posing downside risks to home prices.
However, Fannie Mae said two recent initiatives by the administration to address rising delinquencies and stem foreclosures, if successful, will help reduce shadow inventory. These include Federal Housing Administration financing of underwater mortgages and an enhancement to the Home Affordable Modification Program to address principal write-downs and unemployed borrowers.
It will be some time to determine how effective the programs will be in reducing strategic defaults and the shadow supply of housing, but Fannie Mae believes these measures will reduce downside risks to the housing market.
From: http://ping.fm/16Km2
Tuesday, April 20, 2010
Monday, April 19, 2010
Shadow Inventory about to See the Light
Shadow Inventory about to See the Light in Foreclosures
by Steve Harney on April 19, 2010
As Steve mentioned in a post earlier this month, 5 Keys to a Real Estate Recovery:
He believes both the increase of distressed properties and the timing of their release to the market will be the biggest real estate story of 2010 … Anytime the supply of an item increases and demand remains flat, pricing is adversely impacted. This supply will come at discounted prices. Its impact could be substantial.
There were four major news reports concerning foreclosures last week. None were good news to an anticipated housing recovery or to home values in 2010.
Let’s go over each news item:
RealtyTrac’s Foreclosure Market Report 1st Quarter 2010
RealtyTrac is one of the leading data resources for foreclosures in the country. Most main stream media see them as the major player when it comes to reporting on the foreclosure situation. In this quarter’s report, they stated:
Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.
“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”
… REOs also hit a record high for the report in the first quarter, with a total of 257,944 properties repossessed by the lender during the quarter.
A property is classified as REO after a bank forecloses and repossesses it. The banks are beginning to foreclose at greater rates and are actually taking possession of the houses. This is a sign that the banks are preparing larger foreclosure inventories to release to the market.
As a matter of fact it seems Bank of America is already beginning the process of releasing these properties in certain regions. The North Country Times reported last week:
Bank of America, the nation’s largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
The bank said the increased activity was a natural consequence of borrowers running out of options … Richard Simon, a Bank of America spokesman, wrote in an e-mail that he couldn’t speak to the sharp increase of notices in San Diego and Riverside counties, but that the bank has expected more foreclosure activity.
“We have reported recently that we anticipate a rise in foreclosure activity through the coming months as homeowners are unable to qualify for loan modifications, fall out of modification programs or go into delinquency due to the ongoing stress in the economy,” he said.
Analysts and real estate agents said the moves by the Charlotte, N.C., banking giant, which controls a large share of the Southern California mortgage market, could signal a final reckoning for homeowners who have been protected by government programs for months or even years.
Fannie & Freddie’s Foreclosure Report
In an article in Housing Wire, it was reported:
The government-sponsored enterprises Fannie Mae and Freddie Mac, like the banking industry, are preparing for a surge in foreclosures to hit already overloaded REO portfolios in 2010.
Freddie holds 45,000 real estate owned (REO) properties in its portfolio as of the end of 2009, according to a filing with a quarterly filing with the Securities and Exchange Commission (SEC). And while Freddie expects the number of REO to continue to grow in 2010, exactly how much will depend on the pace of the economic recovery, according a spokesperson at Freddie.
Fannie currently holds 86,000 REO properties in its inventory as of the end of 2009, according to its report to the SEC. That number has more than doubled the 33,729 at the end of 2007 and grown another 35% from 63,538 in 2008.
“Although we have expanded our loan workout initiatives to keep borrowers in their homes, we expect our foreclosures to increase in 2010 as a result of the adverse impact that the weak economy and high unemployment have had and are expected to have on the financial condition of borrowers,” according to the SEC filing by Fannie.
First American Core Logic’s Distressed Sales Report
This report qualified the number of distressed sales already coming to market and talks to their impact on a recovery and on home prices:
The report indicates that distressed home sales – such as short sales and real estate owned (REO) sales – accounted for 29 percent of all sales in the U.S. in January: the highest level since April 2009.
Distressed sales are non‐arms length transactions such as REO or short sales. Market sales are arms‐length transactions between a willing buyer and willing seller and they exclude distressed sales. Distressed sales have a very strong influence on home price trends and are an indicator of a housing market’s health.
Lending Processing Services Mortgage Monitor
This report showed the percentage of loans 6 months or more delinquent which have not had foreclosure procedures even started yet. This represents future inventory of foreclosures that will come to market.
What does this mean to you?
We have told every seller for months that we believe the best chance you have to maximize the price you will receive for your house is to sell it before the ‘shadow inventory’ of distressed properties comes to market. It appears this is about to happen.
From: http://kcmblog.com/2010/04/19/is-the-shadow-inventory-beginning-to-see-light/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
by Steve Harney on April 19, 2010
As Steve mentioned in a post earlier this month, 5 Keys to a Real Estate Recovery:
He believes both the increase of distressed properties and the timing of their release to the market will be the biggest real estate story of 2010 … Anytime the supply of an item increases and demand remains flat, pricing is adversely impacted. This supply will come at discounted prices. Its impact could be substantial.
There were four major news reports concerning foreclosures last week. None were good news to an anticipated housing recovery or to home values in 2010.
Let’s go over each news item:
RealtyTrac’s Foreclosure Market Report 1st Quarter 2010
RealtyTrac is one of the leading data resources for foreclosures in the country. Most main stream media see them as the major player when it comes to reporting on the foreclosure situation. In this quarter’s report, they stated:
Foreclosure filings were reported on 367,056 properties in March, an increase of nearly 19 percent from the previous month, an increase of nearly 8 percent from March 2009 and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” said James J. Saccacio, chief executive officer of RealtyTrac. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure, with REOs increasing 9 percent on a quarterly basis in the first quarter of 2010 compared to a 13 percent quarterly decrease in REOs in the first quarter of 2009.
“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs and processing delays slowed down the normal foreclosure timeline.”
… REOs also hit a record high for the report in the first quarter, with a total of 257,944 properties repossessed by the lender during the quarter.
A property is classified as REO after a bank forecloses and repossesses it. The banks are beginning to foreclose at greater rates and are actually taking possession of the houses. This is a sign that the banks are preparing larger foreclosure inventories to release to the market.
As a matter of fact it seems Bank of America is already beginning the process of releasing these properties in certain regions. The North Country Times reported last week:
Bank of America, the nation’s largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar.
The bank said the increased activity was a natural consequence of borrowers running out of options … Richard Simon, a Bank of America spokesman, wrote in an e-mail that he couldn’t speak to the sharp increase of notices in San Diego and Riverside counties, but that the bank has expected more foreclosure activity.
“We have reported recently that we anticipate a rise in foreclosure activity through the coming months as homeowners are unable to qualify for loan modifications, fall out of modification programs or go into delinquency due to the ongoing stress in the economy,” he said.
Analysts and real estate agents said the moves by the Charlotte, N.C., banking giant, which controls a large share of the Southern California mortgage market, could signal a final reckoning for homeowners who have been protected by government programs for months or even years.
Fannie & Freddie’s Foreclosure Report
In an article in Housing Wire, it was reported:
The government-sponsored enterprises Fannie Mae and Freddie Mac, like the banking industry, are preparing for a surge in foreclosures to hit already overloaded REO portfolios in 2010.
Freddie holds 45,000 real estate owned (REO) properties in its portfolio as of the end of 2009, according to a filing with a quarterly filing with the Securities and Exchange Commission (SEC). And while Freddie expects the number of REO to continue to grow in 2010, exactly how much will depend on the pace of the economic recovery, according a spokesperson at Freddie.
Fannie currently holds 86,000 REO properties in its inventory as of the end of 2009, according to its report to the SEC. That number has more than doubled the 33,729 at the end of 2007 and grown another 35% from 63,538 in 2008.
“Although we have expanded our loan workout initiatives to keep borrowers in their homes, we expect our foreclosures to increase in 2010 as a result of the adverse impact that the weak economy and high unemployment have had and are expected to have on the financial condition of borrowers,” according to the SEC filing by Fannie.
First American Core Logic’s Distressed Sales Report
This report qualified the number of distressed sales already coming to market and talks to their impact on a recovery and on home prices:
The report indicates that distressed home sales – such as short sales and real estate owned (REO) sales – accounted for 29 percent of all sales in the U.S. in January: the highest level since April 2009.
Distressed sales are non‐arms length transactions such as REO or short sales. Market sales are arms‐length transactions between a willing buyer and willing seller and they exclude distressed sales. Distressed sales have a very strong influence on home price trends and are an indicator of a housing market’s health.
Lending Processing Services Mortgage Monitor
This report showed the percentage of loans 6 months or more delinquent which have not had foreclosure procedures even started yet. This represents future inventory of foreclosures that will come to market.
What does this mean to you?
We have told every seller for months that we believe the best chance you have to maximize the price you will receive for your house is to sell it before the ‘shadow inventory’ of distressed properties comes to market. It appears this is about to happen.
From: http://kcmblog.com/2010/04/19/is-the-shadow-inventory-beginning-to-see-light/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
Fannie Updates Policies for Loan Eligibility After a Pre-Foreclosure Event
Fannie Updates Policies for Loan Eligibility After a Pre-Foreclosure Event
04/16/2010 By: Brittany Dunn
In an effort to support overall market stability and reinforce the importance of borrowers working with their servicers when they have difficulty repaying their
debt, Fannie Mae has updated several policies regarding borrowers’ future eligibility to obtain a new mortgage loan after experiencing a pre-foreclosure event, including a deed-in-lieu of foreclosure, pre-foreclosure sale, or short sale.
Under these new policies, Fannie Mae is changing the waiting period required for a borrower to be eligible for a mortgage loan after a pre-foreclosure event. The waiting period, which commences on the completion date of the pre-foreclosure event, may now vary on the loan-to-value (LTV) ratio for the transaction, occupancy of the property, and whether extenuating circumstances played a part in the borrower’s inability to pay his or her mortgage.
Current waiting-period requirements are four years for a deed-in-lieu of foreclosure, two years for a pre-foreclosure sale, and no policy currently exists specific to short sales. But under the new guidelines, waiting periods will be determined by LTV ratios, not the type of pre-foreclosure event.
Borrowers with 80 percent maximum LTV ratios will be required to wait two years to obtain a new mortgage, and
90 percent maximum LTV borrowers will have to wait four years. Borrowers with LTV ratios higher than 90 percent may have to wait seven years.
The new policies also include waiting-period exceptions for borrowers with extenuating circumstances. Borrowers with 90 percent maximum LTV ratios will only have to wait two years before becoming eligible to obtain a new mortgage if they can prove extenuating circumstances, such as loss of employment, contributed to their financial hardship.
In addition, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a pre-foreclosure event. Borrowers must meet three specific requirements before their credit will be considered re-established:
The waiting period and the related requirements must be met.
The loan must receive a recommendation from Desktop Underwriter (DU) that is acceptable for delivery to Fannie Mae or, if manually underwritten, meets the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.
The borrower must have traditional credit as outlined in Fannie Mae’s Selling Guide. Nontraditional credit or “thin files” will not be considered acceptable.
These policies are effective immediately. Fannie Mae’s DU will be updated in June to reflect the deed-in-lieu of foreclosure policy changes, but the new policies for pre-foreclosure sales and short sales will not be included, as they cannot be identified by DU at this time.
However, effective for loan application dates on or after July 1, 2010, lenders will be required to determine during their review of the credit report if there is a pre-foreclosure sale or short sale and must manually apply the new policies to all loan case files underwritten through DU.
From: http://ping.fm/2MjAf
04/16/2010 By: Brittany Dunn
In an effort to support overall market stability and reinforce the importance of borrowers working with their servicers when they have difficulty repaying their
debt, Fannie Mae has updated several policies regarding borrowers’ future eligibility to obtain a new mortgage loan after experiencing a pre-foreclosure event, including a deed-in-lieu of foreclosure, pre-foreclosure sale, or short sale.
Under these new policies, Fannie Mae is changing the waiting period required for a borrower to be eligible for a mortgage loan after a pre-foreclosure event. The waiting period, which commences on the completion date of the pre-foreclosure event, may now vary on the loan-to-value (LTV) ratio for the transaction, occupancy of the property, and whether extenuating circumstances played a part in the borrower’s inability to pay his or her mortgage.
Current waiting-period requirements are four years for a deed-in-lieu of foreclosure, two years for a pre-foreclosure sale, and no policy currently exists specific to short sales. But under the new guidelines, waiting periods will be determined by LTV ratios, not the type of pre-foreclosure event.
Borrowers with 80 percent maximum LTV ratios will be required to wait two years to obtain a new mortgage, and
90 percent maximum LTV borrowers will have to wait four years. Borrowers with LTV ratios higher than 90 percent may have to wait seven years.
The new policies also include waiting-period exceptions for borrowers with extenuating circumstances. Borrowers with 90 percent maximum LTV ratios will only have to wait two years before becoming eligible to obtain a new mortgage if they can prove extenuating circumstances, such as loss of employment, contributed to their financial hardship.
In addition, Fannie Mae is updating the requirements for determining that borrowers have re-established their credit after a pre-foreclosure event. Borrowers must meet three specific requirements before their credit will be considered re-established:
The waiting period and the related requirements must be met.
The loan must receive a recommendation from Desktop Underwriter (DU) that is acceptable for delivery to Fannie Mae or, if manually underwritten, meets the minimum credit score requirements based on the parameters of the loan and the established eligibility requirements.
The borrower must have traditional credit as outlined in Fannie Mae’s Selling Guide. Nontraditional credit or “thin files” will not be considered acceptable.
These policies are effective immediately. Fannie Mae’s DU will be updated in June to reflect the deed-in-lieu of foreclosure policy changes, but the new policies for pre-foreclosure sales and short sales will not be included, as they cannot be identified by DU at this time.
However, effective for loan application dates on or after July 1, 2010, lenders will be required to determine during their review of the credit report if there is a pre-foreclosure sale or short sale and must manually apply the new policies to all loan case files underwritten through DU.
From: http://ping.fm/2MjAf
Saturday, April 17, 2010
Mortgage Fraud Blog - Forty Indicted in Major East Texas Mortgage Fraud Scheme
Hmmmmmmm....
Please click on the link to view the article and let me know if you on this list!
Forty Indicted in Major East Texas Mortgage Fraud Scheme
40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering.
From: http://ping.fm/oHFZw
Please click on the link to view the article and let me know if you on this list!
Forty Indicted in Major East Texas Mortgage Fraud Scheme
40 individuals have been arrested and charged in connection with a major mortgage fraud scheme in the Eastern District of Texas. The 16-count indictment was returned by a federal grand jury on March 10, 2010, and includes one count of conspiracy to commit mail and wire fraud, 12 counts of mail fraud, and three counts of money laundering.
From: http://ping.fm/oHFZw
Wednesday, April 14, 2010
REALTOR® Magazine-Daily News-HAMP Applicants Risk Credit Score Reduction
Borrowers who apply for the government’s Making Home Affordable program are likely to have their credit scores drop about 100 points.
This can be a nasty surprise if they try to get a car loan or even apply for a job. “It’s a feeling of being duped,” says Kathy Conley, a housing counselor with the nonprofit credit counseling service GreenPath Inc.
Credit rating agencies defend the reduction, saying that borrowers wouldn’t be applying to participate in the program if they weren’t having financial troubles.
From: http://ping.fm/aFajr
This can be a nasty surprise if they try to get a car loan or even apply for a job. “It’s a feeling of being duped,” says Kathy Conley, a housing counselor with the nonprofit credit counseling service GreenPath Inc.
Credit rating agencies defend the reduction, saying that borrowers wouldn’t be applying to participate in the program if they weren’t having financial troubles.
From: http://ping.fm/aFajr
Tuesday, April 13, 2010
Foreclosures: Their Impact on Real Estate 2010
Steve Harney firmly believes the foreclosure situation will be the main story line in real estate for the rest of 2010. He says there will be other key factors (unemployment, government involvement, interest rates, etc.). However, no issue will have the same impact as the tidal wave of distressed properties about to come to market.
For purposes of his blog he considers distressed properties as those that fit into one of three categories:
1. Real Estate Owned (REOs) by banks currently
2. Houses that are in the process of foreclosure
3. Houses that are 90+ days delinquent on their mortgage payment (the reason we include this category is that recent studies have shown that less than 1% of the borrowers who fall 90 days behind ever catch up. That means that 99% of these homes will turn into distressed properties).
Click on the link to see the amazing graphs to which Steve refers...
From: http://kcmblog.com/2010/04/13/foreclosures-their-impact-on-real-estate-values/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
For purposes of his blog he considers distressed properties as those that fit into one of three categories:
1. Real Estate Owned (REOs) by banks currently
2. Houses that are in the process of foreclosure
3. Houses that are 90+ days delinquent on their mortgage payment (the reason we include this category is that recent studies have shown that less than 1% of the borrowers who fall 90 days behind ever catch up. That means that 99% of these homes will turn into distressed properties).
Click on the link to see the amazing graphs to which Steve refers...
From: http://kcmblog.com/2010/04/13/foreclosures-their-impact-on-real-estate-values/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+KeepingCurrentMatters+%28KCM+Blog%29
Monday, April 12, 2010
Economic View - Don't Bet on a Long Housing Recovery - NYTimes.com
A must-read article by THE Dr. Robert Shiller (Case-Shiller) from the New York Times
Don’t Bet the Farm on the Housing Recovery
By ROBERT J. SHILLER
Published: April 9, 2010
MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?
From: http://ping.fm/samGB
Don’t Bet the Farm on the Housing Recovery
By ROBERT J. SHILLER
Published: April 9, 2010
MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained?
From: http://ping.fm/samGB
Wednesday, April 7, 2010
Calculated Risk: Report: BofA to increase Foreclosures significantly in 2010
Irvine Renter at the Irvine Housing Blog writes: Bank of America to Increase Foreclosure Rate by 600% in 2010
[Irvine Renter] attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.
After his surprising statement, two questioners from the audience asked questions to verify the numbers.
Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.
This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.
From: http://www.calculatedriskblog.com/2010/04/report-bofa-to-increase-foreclosures.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
[Irvine Renter] attended a local Building Industry Association conference on Friday 26 March 2010. The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010.
After his surprising statement, two questioners from the audience asked questions to verify the numbers.
Bank of America is projecting a 600% increase in its already large number of monthly foreclosures.
This isn't unsubstantiated rumor; this comes straight from one of the most powerful men in Bank of America's OREO department (yes, that really is what they call it). It appears they have too many properties already.
From: http://www.calculatedriskblog.com/2010/04/report-bofa-to-increase-foreclosures.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
Monday, April 5, 2010
Calculated Risk: Rising Mortgage Rates: The End of the Refi mini-Boom?
The Ten Year treasury yield hit 4.0% this morning for the first time since Oct 2008. Mortgage rates are moving up too and that probably means that refinance activity will decline sharply.
Click on graph for larger image in new window.
Refinance activity picks up when mortgage rates fall (for obvious reasons), and this graph shows the monthly refinance activity (MBA refinance index) and the 30 year fixed mortgage rate and one year adjustable mortgage rate (both from the Freddie Mac Primary Mortgage Market Survey) - and the Fed Funds target rate since Jan 1990.
Notice that following the '90/'91 and '01 recessions, the Fed kept lowering the Fed Funds rate because of high unemployment rates. This spurred refinance activity. The Fed can't lower the Fed Funds rate now - and could only spur refinance activity if they restarted the MBS purchase program.
The second graph shows the weekly MBA refinance activity, and the Ten Year Treasury yield.
When the ten year yield drops sharply, usually refinance activity picks up. And when the yield increases, refinance activity declines.
With the yield on the Ten Year Treasury increasing to 4%, and the end of the Fed MBS purchase program last week, mortgage rates will probably rise and refinance activity will fall sharply.
From: http://www.calculatedriskblog.com/2010/04/rising-mortgage-rates-end-of-refi-mini.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
Click on graph for larger image in new window.
Refinance activity picks up when mortgage rates fall (for obvious reasons), and this graph shows the monthly refinance activity (MBA refinance index) and the 30 year fixed mortgage rate and one year adjustable mortgage rate (both from the Freddie Mac Primary Mortgage Market Survey) - and the Fed Funds target rate since Jan 1990.
Notice that following the '90/'91 and '01 recessions, the Fed kept lowering the Fed Funds rate because of high unemployment rates. This spurred refinance activity. The Fed can't lower the Fed Funds rate now - and could only spur refinance activity if they restarted the MBS purchase program.
The second graph shows the weekly MBA refinance activity, and the Ten Year Treasury yield.
When the ten year yield drops sharply, usually refinance activity picks up. And when the yield increases, refinance activity declines.
With the yield on the Ten Year Treasury increasing to 4%, and the end of the Fed MBS purchase program last week, mortgage rates will probably rise and refinance activity will fall sharply.
From: http://www.calculatedriskblog.com/2010/04/rising-mortgage-rates-end-of-refi-mini.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+CalculatedRisk+%28Calculated+Risk%29
Calculated Risk: CNBC'S Olick: Foreclosure Wave about to hit with "Thunderous roar"
From Diana Olick at CNBC: Let the Short Sales Begin
I'm ... starting to hear rumblings among the number crunchers that the wave of foreclosures we keep hearing about is about to hit with a thunderous roar.
Servicers are ramping up the mod process and pushing those who don't qualify out the door more quickly than ever.
I don't know about a "thunderous roar", but I do think we will see more distressed sales soon. Most trustee sales seem to be "postponed" each month, and perhaps the lenders were just waiting for the HAFA short sales program to begin. That program started today and anyone considering a short sale should ask their lender if they qualify.
From: http://ping.fm/St2tv
I'm ... starting to hear rumblings among the number crunchers that the wave of foreclosures we keep hearing about is about to hit with a thunderous roar.
Servicers are ramping up the mod process and pushing those who don't qualify out the door more quickly than ever.
I don't know about a "thunderous roar", but I do think we will see more distressed sales soon. Most trustee sales seem to be "postponed" each month, and perhaps the lenders were just waiting for the HAFA short sales program to begin. That program started today and anyone considering a short sale should ask their lender if they qualify.
From: http://ping.fm/St2tv
Real Estate: No Wonder We're All Screwed Up! - Great article by Steve Harney...
Whenever a market is evolving rapidly, the most difficult thing to do is keep up with the changes. A home seller or a home buyer in today’s real estate market must make sure that they understand what is happening and why it is happening. They can then guarantee that they are making an informed decision in regard to what is best for themselves and their families.
The Goal
Keeping abreast of what is happening in today’s real estate market is no easy task. You may feel that you are doing a good job of staying on top of market fluctuations. You may read all the pertinent data and stories from all the best media sources. However, it is not just having the information but also being able to analyze the information that truly matters. And that is not easy.
The Challenge
Let’s look at two headlines from last week and a quote from each article:
Home Price Index Edges Up – Wall Street Journal 3/30/2010
The seasonally adjusted ??? increased 0.3% in January from a month earlier, the eighth consecutive monthly increase. … The report “indicates that the worst of the declines are behind us and we can at least move forward from here,” said Adam York, an economist with Wells Fargo Securities.
Home Price Dip Extends to 4th Month – CNN Money 3/30/2010
After a five-month run-up in home
prices starting last spring, prices have now fallen for four consecutive months, according to ???, a gauge of market values, released Tuesday… The market seems to have pulled the rug out from under housing industry hopes for a sustained early recovery.
I purposely left out to which report each article was referring in order to make a point. Each article was using as the foundation of their headline and story the SAME REPORT – the S&P/Case-Shiller Home Price Index of 20 cities.
So here we have the Wall Street Journal and CNN Money reporting on the same exact news but coming up with widely opposite conclusions. One used the month-over-month numbers and one used the year-over-year numbers. Will most people understand the nuances and be able to determine what they mean?
The Solution
In today’s market, whether you are buying or selling, you need a dedicated professional to help you analyze the preponderance of information available.
You need someone that is willing to take the time to understand what is happening and why it is happening. They must also be willing to sit down and simply and effectively explain what it means to you and your family.
As Dave Ramsey, the personal finance guru, said:
“When getting help with money, whether it is insurance, real estate or investments you should always look for someone with the heart of a teacher, not the heart of a salesman. About eighty five percent (85%) of the people in the financial world know how to sell and tell you what to do. They don’t know how to teach you what you are doing. Stay away from them.”
What does this mean to you?
If you plan to buy or sell a home, get professional assistance and DEMAND that the person you are dealing with understands the market and, just as important, is willing to take the time to sit down and explain your options. This way you will be making the best decision possible.
From: http://kcmblog.com/2010/04/05/real-estate-no-wonder-we%e2%80%99re-all-screwed-up/
The Goal
Keeping abreast of what is happening in today’s real estate market is no easy task. You may feel that you are doing a good job of staying on top of market fluctuations. You may read all the pertinent data and stories from all the best media sources. However, it is not just having the information but also being able to analyze the information that truly matters. And that is not easy.
The Challenge
Let’s look at two headlines from last week and a quote from each article:
Home Price Index Edges Up – Wall Street Journal 3/30/2010
The seasonally adjusted ??? increased 0.3% in January from a month earlier, the eighth consecutive monthly increase. … The report “indicates that the worst of the declines are behind us and we can at least move forward from here,” said Adam York, an economist with Wells Fargo Securities.
Home Price Dip Extends to 4th Month – CNN Money 3/30/2010
After a five-month run-up in home
prices starting last spring, prices have now fallen for four consecutive months, according to ???, a gauge of market values, released Tuesday… The market seems to have pulled the rug out from under housing industry hopes for a sustained early recovery.
I purposely left out to which report each article was referring in order to make a point. Each article was using as the foundation of their headline and story the SAME REPORT – the S&P/Case-Shiller Home Price Index of 20 cities.
So here we have the Wall Street Journal and CNN Money reporting on the same exact news but coming up with widely opposite conclusions. One used the month-over-month numbers and one used the year-over-year numbers. Will most people understand the nuances and be able to determine what they mean?
The Solution
In today’s market, whether you are buying or selling, you need a dedicated professional to help you analyze the preponderance of information available.
You need someone that is willing to take the time to understand what is happening and why it is happening. They must also be willing to sit down and simply and effectively explain what it means to you and your family.
As Dave Ramsey, the personal finance guru, said:
“When getting help with money, whether it is insurance, real estate or investments you should always look for someone with the heart of a teacher, not the heart of a salesman. About eighty five percent (85%) of the people in the financial world know how to sell and tell you what to do. They don’t know how to teach you what you are doing. Stay away from them.”
What does this mean to you?
If you plan to buy or sell a home, get professional assistance and DEMAND that the person you are dealing with understands the market and, just as important, is willing to take the time to sit down and explain your options. This way you will be making the best decision possible.
From: http://kcmblog.com/2010/04/05/real-estate-no-wonder-we%e2%80%99re-all-screwed-up/
Sunday, April 4, 2010
Texas and the Housing Bubble
Only a dozen states have lower mortgage foreclosure and default rates [than Texas], and all of them are rural places such as Montana and South Dakota, where they couldn't have a real estate boom if they tried.
Texas's 3.1 million mortgage borrowers are a breed of their own among big states with big cities. Fewer than 6 percent of them are in or near foreclosure, according to the Mortgage Bankers Association; the national average is nearly 10 percent.
...
[T]here is a ... secret to Texas's success ... Across the nation, cash-outs became ubiquitous during the mortgage boom, as skyrocketing house prices made it possible for homeowners, even those with bad credit, to use their home equity like an ATM. But not in Texas. There, cash-outs and home-equity loans cannot total more than 80 percent of a home's appraised value. There's a 12-day cooling-off period after an application, during which the borrower can pull out. And when a borrower refinances a mortgage, it's illegal to get even a dollar back. Texas really means it: All these protections, and more, are in the state constitution. The Texas restrictions on mortgage borrowing date from the first days of statehood in 1845, when the constitution banned home loans.
"Delinquency and foreclosure rates are significantly lower in Texas," says Scott Norman of the Texas Mortgage Bankers Association. "The 80 percent loan-to-value limit -- that's the catalyst for a lot of this."
From: http://ping.fm/NkZ5O
Texas's 3.1 million mortgage borrowers are a breed of their own among big states with big cities. Fewer than 6 percent of them are in or near foreclosure, according to the Mortgage Bankers Association; the national average is nearly 10 percent.
...
[T]here is a ... secret to Texas's success ... Across the nation, cash-outs became ubiquitous during the mortgage boom, as skyrocketing house prices made it possible for homeowners, even those with bad credit, to use their home equity like an ATM. But not in Texas. There, cash-outs and home-equity loans cannot total more than 80 percent of a home's appraised value. There's a 12-day cooling-off period after an application, during which the borrower can pull out. And when a borrower refinances a mortgage, it's illegal to get even a dollar back. Texas really means it: All these protections, and more, are in the state constitution. The Texas restrictions on mortgage borrowing date from the first days of statehood in 1845, when the constitution banned home loans.
"Delinquency and foreclosure rates are significantly lower in Texas," says Scott Norman of the Texas Mortgage Bankers Association. "The 80 percent loan-to-value limit -- that's the catalyst for a lot of this."
From: http://ping.fm/NkZ5O
Thursday, April 1, 2010
No more extensions of tax credit for first-time home buyers - Los Angeles Times
Home buyers hoping to take advantage of a new or extended tax credit should not procrastinate: This third bite at the apple will be the last.
Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group's annual convention last month.
From: http://ping.fm/cRbP2
Proponents of the $8,000 credit for first-time buyers and the $6,500 credit for move-up buyers made it clear during the debate on Capitol Hill that the benefits would not be renewed when they expire. And a lobbyist for the National Assn. of Realtors confirmed that at the group's annual convention last month.
From: http://ping.fm/cRbP2
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