Archive for Uncategorized
Home Values rise!
Posted by: | CommentsHome values rose 3.1 percent in the second quarter of 2010 compared with the first quarter, but declined 0.2 percent compared with a year earlier, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI).
Home values rose in all nine Census Divisions, marking the first time since the second quarter of 2009 that all Census Divisions experienced positive changes in home values. In the Pacific Division, which includes California, home values rose 3.1 percent in the second quarter of 2010. Over the last 12 months, home values increased 4.2 percent, and during the last five years, home values have decreased 14.7 percent, according to Freddie Mac.
More info. http://www.freddiemac.com/news/archives/rates/2010/2qhpi10.html
HAMP “redefaults” approaching 50%
Posted by: | CommentsNearly half of the 1.3 million homeowners who have accepted loan modifications under the Home Affordable Modification Program have washed out of the program, according to the latest report from the Treasury Department.
At the end of July, there were 421,804 homeowners enrolled in permanent HAMP loan modifications, and another 255,934 borrowers in active trial loan modifications.
All told, a total of 677,738 homeowners were in permanent or trial HAMP modifications. But almost as many borrowers had already washed out of the program — 629,751.
Many analysts expect that more than half of HAMP loan mods will end up redefaulting. With fewer homeowners entering the HAMP pipeline — only 24,577 new trial modifications were reported in July — it’s considered unlikely that the program will meet its initial goal of helping up to 3 million borrowers avoid foreclosure.
In releasing its “Housing Scorecard” for August, the Obama administration nevertheless offered a positive outlook on the overall housing picture, saying the HAMP program represented “just one, targeted piece of the administration’s larger efforts on housing.”
From April 2009 through the end of June 2010, the Federal Housing Administration (FHA) has also entered into 472,000 loss mitigation and early delinquency interventions, and loan servicers modified 1.4 million mortgages outside of the HAMP process, the scorecard noted.
The 3.15 million mortgages modifications started during the period was more than double the 1.24 million completed foreclosures.
After 30 straight months of decline, home prices have leveled off in the past year, although the overall housing outlook measures remain mixed, the scorecard said.
By Inman News, Tuesday, August 24, 2010.
Watching the Bubbles Will Prevent a ‘Lost Decade’
Posted by: | CommentsWe’re starting to hear more talk about the United States entering a long-term slow economy that lasts for many years, much like Japan’s “Lost Decade” of the 1990s.
The talk is heating up because the assumed automatic recovery in the U.S. economy is slowing down and wasn’t all that strong to begin with.
The reason a lost decade can’t happen in the United States is that we have a very large multibubble economy.
In such a multibubble economy, the bubbles either continue to grow or they pop. If one bubble starts to pop, it puts pressure on the others.
If the government chooses to inflate one of the bubbles — such as the government debt bubble (through massive deficit spending) or the dollar bubble (through massive printing of money), it can keep the other bubbles from popping for a while.
But once they start to pop, it is very hard for the bubbles to simply reach a happy median between growth and popping.
If we had only one or two bubbles — just real estate or stock markets — it would be easier to reach that happy median.
But with numerous bubbles (real estate, stock, private credit, consumer spending, government debt and dollar), it is nearly impossible to keep the pressure of one popping bubble from popping others.
Even the maintenance of the bubbles by the massive pumping up of the stock-market and real-estate bubbles by the government ultimately puts more pressure on the government bubbles, which means they will pop much faster than otherwise.
Again, this isn’t a recipe for a long-term, slow growth economy.
It’s a recipe for a bigger bubble pop.
It might be comforting to think that we could avoid a major popping of all of our bubbles and simply have a slow-growth decade, but its not economically feasible at this point. The bubbles are too big and too hard to keep in equilibrium.
It’s akin to thinking that the government debt is our children’s problem.
Comforting to us, but not at all realistic when you look at the realities of the economics of a massive government debt that is growing at a very rapid rate — and that borrowing is only possible if the money supply is also growing at a very massive rate. Again, not a recipe for slow growth, but a recipe for a massive bubble pop.
As I’ve mentioned in an earlier blog, the stock market is the key bubble in the short term. As that bubble pops, it will take the other bubbles down further.
The Fed will react by pumping up the other bubbles, but in the end that just makes those bubbles pop faster.
When the stock-market bubble pops, expect the other bubbles to come under more pressure and expect talk of a long-term slow economy to pop along with the stock market.
About the Author: Robert Wiedemer
Robert Wiedemer is president of the Foresight Group, a macroeconomic forecasting firm that customizes its forecasts for specific businesses and investment funds. He is a regular contributor to Financial Intelligence Report, the flagship investment newsletter of Newsmax Media. Click Here to read more of his articles.
Fed rolls out new rules on loan disclosure
Posted by: | Comments
The Federal Reserve Board on 08/16/10 issued an interim rule that revises the disclosure requirements for closed-end mortgage loans under Regulation Z (Truth in Lending). The interim rule implements provisions of the Mortgage Disclosure Improvement Act (MDIA) that require lenders to disclose how borrowers’ regular mortgage payments can change over time.
The MDIA, which amended the Truth in Lending Act, seeks to ensure that mortgage borrowers are alerted to the risks of payment increases before they take out mortgage loans with variable rates or payments. Accordingly, under the interim rule, lenders’ cost disclosures must include a payment summary in the form of a table, stating the following:
The initial interest rate together with the corresponding monthly payment;
For adjustable-rate or step-rate loans, the maximum interest rate and payment that can occur during the first five years and a “worst case” example showing the maximum rate and payment possible over the life of the loan; and
The fact that consumers might not be able to avoid increased payments by refinancing their loans.
The interim rule also requires lenders to disclose certain features, such as balloon payments, or options to make only minimum payments that will cause loan amounts to increase. All of the disclosures required in the interim rule were developed through several rounds of qualitative consumer testing, including one-on-one interviews with consumers around the country.
Lenders must comply with the interim rule for applications they receive on or after January 30, 2011, as specified in the MDIA. Lenders have the option, however, of providing disclosures that comply with the interim rule before that date. The Board is also soliciting comment on the interim rule for 60 days after publication in the Federal Register before considering the adoption of a permanent rule. The Board’s notice is attached.
Ways to “improve your credit score”
Posted by: | CommentsHealthy credit scores have never been more important. As banks tighten their lending standards, it’s important to have your score as high as possible.
A FICO score is a number, in general from 300 to 850, that is formulated from your payment history, including such things as amounts of money owed, length of your credit history, new credit accounts open, and how you have used your credit. Age, salary, race, education, and religion do not affect your score. You can’t buy a good score; you can only build one over time by demonstrating that you are a responsible borrower.
To improve your credit score, start with these steps.
1. Pay your bills on time. This seems like a simple enough feat, but in hard economic times, more and more borrowers are finding themselves hard-pressed with the decision of what bill to pay. If you find yourself having a hard time paying bills, be sure to talk with the lender or company you owe. They may have programs or suggestions that will help you avoid having your bill sent to collections.
2. Don’t let items go to collections. Once an item is sent to collections, your credit report will suffer. This ding will stay on your report for seven years.
3. Don’t open other new credit lines when applying for a home loan. You may want the new car or living room set, but the home buying process is not the time to open multiple new accounts. This is a sure-fire way to temporarily reduce your credit score. If you do this before finalizing your mortgage, you many find yourself stuck with a higher interest rate.
4. Monitor your report on a regular basis for errors and cases of identity theft. Errors do happen. To get them corrected quickly, be sure to contact both the organization that provided the erroneous information, as well as the credit bureau. Identity theft happens. And it is your responsibility to identify it and address it!
5. Pay down credit cards. Carrying high balances on credit cards can severely affect your credit score. Think of it this way. If you have a grand total of $10,000 worth of credit limits available, but you owe $5,000 on all of your cards put together, you are using half of your available credit!
The best loans and mortgages are available to borrowers with FICO scores 700 and above. Experian, one of the major credit reporting agencies, reports that the average credit score is 693.
For a look at your credit report, visit the government sponsored site, myannualcreditreport.com. You may access your report three times a year free of charge.
Great information from Ken Calhoon, Real Estate Broker
What the “new consumer protection bureau” will do for home buyers
Posted by: | CommentsPart of the financial reform bill signed into law by President Obama includes the creation of a Consumer Financial Protection Bureau, which will write new rules and monitor problems and abuses in areas such as residential real estate settlements, credit scores, “truth in lending,” and equal credit opportunity.
KEEP THIS IN MIND
• Before the Bureau can begin implementing new laws to assist consumers, the president must nominate a director for the Bureau and the Senate must confirm the nominee. While this may take time, mortgage industry leaders say some of the core changes promised by the legislation either already are in effect or should be soon.
• Treasury Secretary Timothy F. Geithner has until Sept. 19 to designate a transfer date when key legal and regulator authorities shift from agencies such as the Federal Trade Commission and the Dept. of Housing and Urban Development (HUD), to the new consumer bureau. Once that takes place, the Bureau will begin implementing the new laws.
• One of the earliest and most widely anticipated changes expected to take effect impact home appraisals. By law, the agency must create new interim rules on appraisal accuracy and independence to replace the Home Valuation Code of Conduct (HVCC) rules imposed by Fannie Mae and Freddie Mac in 2009. Many in the real estate industry, as well as home buyers and sellers, report HVCC standards led to low home valuations that, in some instances, derailed home sales transactions.
• A national hotline system also will be developed that will allow aggrieved mortgage borrowers and others to issue complaints and alert the Bureau to unfair and deceptive practices.
• Rules requiring mortgage loan officers to verify mortgage applicants possess the ability to repay the loans they’re seeking also is high on the list.
To read the full story, please click here:
http://www.latimes.com/business/realestate/la-fi-0801-harney-20100801,0,821975.story
Greenspan Flip-Flops on Tax Cuts
Posted by: | CommentsAlan Greenspan, the former Federal Reserve chairman who oversaw the two largest asset bubble’s in world history and dismissed signs of their impending implosions, now has become a deficit hawk and says tax cuts “don’t work.”
Recently, Greenspan has come out for allowing all the Bush tax cuts to expire at the end of this year.
On Sunday’s “Meet the Press,” David Gregory asked Greenspan: “You don’t agree with Republican leaders who say tax cuts pay for themselves?”
“They do not,” Greenspan responded.
But that was not the tune Greenspan was singing in 2001 when he testified before Congress about the proposed Bush tax cuts.
Though Greenspan suggested tax cuts are not the best way to immediately jump-start an economy, he strongly favored the Bush tax cuts and suggested they would add, not deduct, revenues to the federal coffers.
In his 2001 testimony, Greenspan said he concurred with Bush administration revenue projections based on the implementation of the tax cuts.
He then added: “And should current economic weakness spread beyond what now appears likely, having a tax cut in place may, in fact, do noticeable good.”
In a recent interview with Bloomberg, Greenspan admitted that letting the tax cuts expire “probably will” slow economic growth.
Nevertheless, Greenspan said the deficit should be the prime concern for policymakers.
California “June sales and price report”
Posted by: | CommentsHome sales decreased 4.2 percent in June in California compared with the same period a year ago, while the median price of an existing home rose 13.6 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reportedJuly 22, 2010 .
“Buyers who scrambled to close escrow in May to take advantage of federal and state tax credits before they expired impacted the number of homes sold last month,” said C.A.R. President Steve Goddard. “Although we expect sales to be lower in the second half of the year because of the absence of the government stimulus, they should remain above the long-run average and be significantly higher than the trough in 2007, when sales bottomed out.
“Although the tax credits are no longer available, it’s important to keep in mind that home prices are substantially below their peaks and interest rates remain at historic lows, making this a very affordable time for many first-time buyers to purchase a home of their own,” he said.
Closed escrow sales of existing, single-family detached homes in California totaled 492,800 in June at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity decreased 4.2 percent from the revised 514,230 sales pace recorded in June 2009. Sales in June 2010 decreased 11.1 percent compared with the previous month.
Video of report at: http://videos.car.org/mediavault.html?menuID=1&flvID=8
Lowest Interest Rates since 1971, per new Freddie Mac “Market Survey”
Posted by: | Commentsreleased the results of its Primary Mortgage Market Survey showing the 30-year and 15-year fixed-rate mortgages reaching the lowest interest rates since the national survey began back in 1971.
30-year fixed-rate mortgage (FRM) averaged 4.56 percent with an average 0.7 point for the week ending July 22, 2010, down from the previous week when it averaged 4.57 percent. Last year at this time, the 30-year FRM averaged 5.20 percent.
15-year FRM this week averaged a record low of 4.03 percent with an average 0.7 point, down from last week when it averaged 4.06 percent. A year ago at this time, the 15-year FRM averaged 4.68 percent.
Frank Nothaft, vice president and chief economist, Freddie Mac, notes: “The decline in mortgages rates over the past few weeks echoes the recent signs of weakening confidence in the strength of the economy, particularly the housing and consumer sectors. For example, homebuilder confidence declined in July to lows not seen since April 2009, as measured by the NAHB/Wells Fargo Housing Market Index, following the large drop in housing starts reported for June.”
Fannie Mae to prohibit lenders from changing home appraisals
Posted by: | CommentsTo comply with the stricter lending guidelines of Fannie Mae and Freddie Mac, and to avoid accusations that the loans sold to Fannie and Freddie are based on inflated appraisals, some real estate professionals have reported lenders lowering home values on appraisals submitted to them. However, effective Sept. 1, Fannie Mae is prohibiting the purchase of loans from lenders who change appraisers’ numbers.
KEEP THIS IN MIND!
• Generally, lenders order a low-cost electronic valuation—based on publicly available statistical data—to review the accuracy of the information submitted by the appraiser. If there is a discrepancy between the electronic valuation and the appraiser’s report, the lender’s underwriters may reduce the appraisal figure.
• In some instances, real estate agents and consumers have reported that reduced appraisals have led to the derailment of home sales transactions, as some buyers refuse to pay more for a house than the appraisal says it is worth.
• This industry practice may soon change. In guidelines issued June 30, Fannie Mae said lenders must contact appraisers to resolve discrepancies between the valuations, rather than simply reducing the appraisal. If it is not possible to contact the appraiser, the lender should order a second appraisal.
• Borrowers and/or sellers who believe a home valuation is too low may appeal the valuation or request a second option. It’s important to note that the second valuation must be more than five percent higher than the first—anything less is considered an acceptable difference.
To read the full story, please click here:
http://www.latimes.com/business/realestate/la-fi-harney-20100718,0,7456241.story