Fannie Mae Halts Foreclosures for the Holidays

Fannie Mae says it will suspend evictions for single-family foreclosures and two- to four-unit properties during the holiday season, from Dec. 19 through Jan. 2, 2012.

“The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure,” Terry Edwards, executive vice president of Credit Portfolio Management for Fannie Mae, said in a statement. “No family should have to give up their home during this holiday season.”

While the holiday moratorium is in place, legal and administrative proceedings for evictions may continue, but “families living in foreclosed properties will be permitted to remain in the home,” Fannie Mae announced in a statement.

Source: Fannie Mae

 

Housing Market Is Terrific, If You Are Rich

Daily Real Estate News | Wednesday, September 28, 2011

In the past, both the luxury housing market and the low-end market moved in tandem, but these days, they're moving in opposite directions.

The luxury market is outperforming the rest of the market, with Zillow reporting a 0.7 percent gain since February in the prices of properties worth $1 million or more but more than a 1.5 percent decline in lower-priced homes.

At the lower end, houses sit on the market for months without receiving an offer, and most buyers are unable to qualify for financing despite record-low mortgage rates. In Miami, $1 million-plus condos are flying off the shelves, but two-bedroom condos in gated communities can be had for as little as $25,000.

Condo Vultures founder Peter Zalewski says, “In the 20 years that I have been in South Florida real estate, I have never seen a greater divide between those who have and those who have not.” Experts attribute the strength of the luxury market to international buyers, who view U.S. properties as undervalued assets and who can pay in cash. Home purchases by foreign buyers rose to $82 billion in 2010 from $66 billion in 2009; and they accounted for 33 percent of purchases in Florida, up from 10 percent four years ago.

Source: “Housing Market Is Terrific, If You Are Rich,” USA Today (09/25/11)

 

‘Jumbo’ Loans Set to Lower Oct. 1

Daily Real Estate News | Friday, September 30, 2011

 

Starting Saturday, many borrowers in pricey housing markets may find they’ll need a higher down payment or pay higher rates. The size of mortgages that the government will back in several high-priced regions is set to drop on Oct. 1, which some analysts expect will serve as another thorn to the housing market.

In 2008, Fannie Mae and Freddie Mac raised its cap on conforming loans up to $729,750 in some of the most expensive housing markets so that larger mortgages would be available to home buyers. But those caps are set to reset on Oct. 1, scaling back to a maximum of $625,500 in some areas of the country.

Housing analysts say the drop will make it more expensive and harder for some buyers to qualify for home purchases in expensive markets, particularly along the coasts.

“The down-payment issue is the most significant aspect form borrowers standpoint,” says Greg McBride, a senior financial analyst at Bankrate.com. “These changes will price some prospective borrowers out of the market.”

Source: “Big Borrowers Face Larger Down-Payments, Rates,” MarketWatch (Sept. 30, 2011) and “Big Mortgages: Harder to Get and More Expensive With Loan Caps,” CNNMoney (Sept. 30, 2011)

Read More:
On Loan Limit Drop, Middle Faces Hard Hit

House Fails to Vote on Extending Loan Limits

 

Potential future increases for PMI and guarantee fees

As part of the Administration’s plan to increase homebuyer use of private mortgage insurance (PMI) on mortgages underwritten or purchased by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency (FHFA) has proposed changes to shift the risk of loss on mortgage defaults and foreclosures from the U.S. Treasury to the private sector.

The two government sponsored enterprises (GSEs) currently require PMI or Federal Housing Administration (FHA)-provided insurance on some but not all mortgage loans with loan-to-value ratios (LTVs) over 80%. [For more on the comparative costs of PMI and MIP, see the first tuesday Market Chart, FHA, PMI, or neither?]

The FHFA now seeks to make GSE-based financing more comparable to financing independently provided by the private sector, partially in an effort to recoup losses sustained by Fannie and Freddie (and thus the U.S. Treasury) during the Great Recession and financial crisis. Fannie and Freddie have been repeatedly criticized since the collapse of the housing market for their loss-generating business practices and lack of “skin in the game.” [For other recent attempts to encourage private-style lending practices from GSEs, see the May 2011 first tuesday article, Fannie and Freddie show some skin.]

first tuesday take: Political ill will for Fannie and Freddie as they currently exist seems likely to succeed in the long run — either by making the GSEs fully-independent private entities or dissolving them altogether. Neither step, however, can take place successfully unless private mortgage bankers step up to the plate and deliver the loans it is their business function to make.

The federal government needs to quickly take the GSEs out of the lending business – especially by removing their government guarantees. Only then, when the playing field is leveled, will private mortgage bankers see they can achieve profitability through fully-regulated mortgage activity structured to prevent any hazardous competitive advantage in the market.

With luck, we can soon do away with both GSEs once and for all, and in the process be rid of their government-backed guarantees that have so badly misaligned mortgage funding and misallocated personal wealth in the real estate industry. With the removal of these agencies, and the simultaneous elimination of harmful mortgage interest tax deductions, it will finally be possible to achieve long-term stability in sales volume and prices. [For more on the flaws of mortgage tax deductions, see the June 2011 first tuesday article, Subsidizing the American dream.]

RE: “FHFA changes may boost private mortgage insurance”, from Housingwire.com

 

 

 

 

Loan Applications Rise for Refinancing, Home Purchases

Daily Real Estate News | Wednesday, September 28, 2011

 

Mortgage applications increased last week, with both refinancing and home purchase demand increasing, the Mortgage Bankers Association says in its weekly report.

Applications for U.S. home mortgages increased 9.3 percent for the week ending Sept. 23, according to MBA’s seasonally adjusted index.

Refinancing applications made up the biggest part of that increase, rising 11.2 percent last week. Loan requests for home purchases increased 2.6 percent.

Meanwhile, mortgage rates continue to hover near record lows, luring home owners and buyers who can qualify for the low rates.

“Mortgage rates declined last week, at least partially in response to the Fed’s announcement that they would shift their portfolio toward longer-term Treasury securities, and that they would resume buying mortgage-backed securities,” Mike Fratantoni, MBA’s vice president of research and cconomics, said in a statement.

Source: “Mortgage Applications Rose Last Week: MBA,” Reuters (Sept. 28, 2011)

Read More

Fed’s Latest Move May Send Rates Lower

Mortgage Rates Remain at Record Lows

 

S&P Lowers Fannie, Freddie Credit Rating

S&P Lowers Fannie, Freddie Credit Rating-Daily Real Estate News | Tuesday, August 09, 2011

Standard & Poor’s downgraded the credit rating of lenders backed by the federal

government on the heels of the first-ever lowering of the U.S.’s credit rating.

Fannie Mae, Freddie Mac, and other government-backed lenders were lowered one step from AAA to AA+, S&P reported in a statement issued Monday. Some analysts say the downgrade may force home buyers to pay higher mortgage rates.

“The downgrades of Fannie Mae and Freddie Mac reflect their direct reliance on the U.S. government,” S&P said in a statement. “Fannie Mae and Freddie Mac were placed into conservatorship in September 2008 and their ability to fund operations relies heavily on the U.S. government.”

The GSEs own or guarantee more than half of U.S. mortgage debt.

Freddie Mac said that the lower debt rating will cause “major disruptions” in its home-lending by possibly reducing the supply of mortgages it can purchase. It said in a Securities and Exchange Commission filing that the lower rating could hamper home prices and even lead to more home-loan defaults on mortgages it guarantees.

Meanwhile, the Federal Housing Finance Agency on Monday assured investors that securities issued by GSEs are sound. “The government commitment to ensure Fannie Mae and Freddie Mac have sufficient capital to meet their obligations, as provided for in the Treasury’s senior preferred stock purchase agreement with each enterprise, remains unaffected by the Standard & Poor’s action,” said Edward DeMarco, FHFA acting director.

Some analysts and lenders have said they don’t see the fallout from the S&P downgrade on the U.S. and other banks as having such a widespread affect. “It’s likely that once the storm passes, you’ll get an increase in mortgage rates because of this, but it won’t be significant,” says Anika Khan, a housing economist at Wells Fargo.

S&P also announced on Monday that it had lowered its credit ratings for 10 of 12 federal home loan banks and federal farm credit banks from AAA to AA+.

Source: “S&P Lowers Fannie, Freddie Citing Reliance on Government,” Bloomberg (Aug. 8, 2011); “S&P Downgrades Fannie and Freddie, Farm Lenders and Bank Debt Backed by U.S. Government,” Associated Press (Aug. 8, 2011); “Freddie Mac Reports $4.7B Loss, Says S&P Downgrade Will Disrupt Mortgage Market,” Associated Press (Aug. 8, 2011); and “FHFA Assures Investors After Fannie, Freddie Downgrade,” HousingWire (Aug. 8. 2011)

Read More:
Will the S&P Downgrade Affect Interest Rates?

 

Mortgage lending at lowest level since 1997

Despite near-record-low mortgage rates, a combination of factors is depressing the industry. Many people have simply decided homeownership isn’t for them.

 

• 

Despite the confluence of lower home prices and rates, new mortgages are… (Seth Perlman, Associated Press)

 

August 06, 2011|By E. Scott Reckard, Los Angeles Times

Despite near-record-low mortgage rates and the cheapest housing prices in eight years, home lending has slipped this year to the lowest level since 1997.The laggard loan market can be explained in part by the slow economy, numerous foreclosures and the proliferation of “underwater” loans, those that exceed the value of the properties they secure.

 

But other factors are compounding the problem, including so-called refi burnout — how many times, after all, can one refinance a home? — and a wave of people who have simply decided that homeownership isn’t what it was cracked up to be.

Weary of a noisy tenant on the other side of a common wall, Bruce and Deborah Dennis sold their Arcadia duplex in April, banked a $600,000 profit and went looking for a quieter place to spend their 60s.

Bruce’s boss, a property manager, urged them to buy another home, saying they’d never again see prices and mortgage rates so low at the same time. The couple searched seriously for two months, even bidding on a home. In the end, they opted to rent a house, leery of tying up capital and taking on the headaches of ownership with the housing market so shaky.

“We thought, ‘Is buying really what we want to do?’ I have no confidence that home prices are going back up any time soon,” Bruce Dennis said.

Opt-outs like the Dennises are one reason the mortgage business, which led the way into the Great Recession, is taking so long to come out of it.

Another factor is the slowing of the refinance market. Mortgage costs are near historical lows, with lenders offering 30-year fixed-rate loans at about 4.2% to Californians seeking $400,000 mortgages, online home-loan specialist Lending Tree said Thursday.

But most of the lucky homeowners who still have equity and solid finances have already refinanced once or more and have long since locked in annual rates of less than 5%.

In 2003, as the housing boom took hold and 30-year fixed mortgage rates fell below 6%, refinancings propelled home lending to four times the current volume. And as the rate tumbled toward 5% and then smashed that barrier in 2009 for the first time since 1956, there was twice as much mortgage lending as now.

“There is a burnout phenomenon,” said Mortgage Bankers Assn. economist Michael Fratantoni. In addition, many would-be refinancers have been stopped by the declines in home prices, now back at 2003 levels, which has left them owing far more than their homes are worth.

“Borrowers who couldn’t qualify for 4.5% mortgages last year for the most part still can’t qualify this year,” Fratantoni said.

And getting the purchase market up and running again would require “significant job growth,” he said, something that has failed to materialize in the sluggish recovery that is threatening to fall back into recession.

 

 

The result of all this: Despite the confluence of lower home prices and rates, new mortgages are down by a third compared with 2010. Lenders will write about $1 trillion in home loans this year, the smallest total since 1997, according to the Mortgage Bankers Assn., which projects that home lending will fall even lower in 2012.Some say the combination of falling home prices, tight credit in the aftermath of the financial crisis and the flood of foreclosure sales has undermined the traditional view of homeownership as the engine of financial success.

“The previous assumptions that housing is a good investment, or that home prices can only go up, or that all Americans should be able to buy a home, are being seriously challenged,” Morgan Stanley housing analysts wrote last month in a study titled “A Rentership Society.”

In the middle of the last decade, when the term “ownership society” was coined, the homeownership rate was nearly 70%, the report noted. If delinquent borrowers were excluded, it said, the current rate of 66.4% today would instead be 59.7%.

For those willing to take out mortgages despite all the grim news, the prospects are improving slightly. Lenders have eased certain terms for the first time since the mortgage meltdown took hold, and some on the front lines say banks are abandoning the scrutiny bordering on suspicion with which they had come to regard potential borrowers.

“All those granular issues we were beating people up about over the last three years seem to be going away,” Laguna Niguel mortgage broker Jeff Lazerson said. “The hassles over old credit inquiries. Having to explain every entry on a bank statement.”

Spokesmen for Wells Fargo & Co. and Bank of America Corp., the largest mortgage companies, said they recently eased standards slightly for loans backed by the Federal Housing Administration, which are attractive to first-time buyers because they require relatively small down payments.

However, among younger buyers, “there’s not much feeling that they need to buy right away,” Fratantoni said. “I expect that may change over the next couple of years, but certainly for the first-time buyer there’s less near-term demand.”

Older people can be ownership-averse as well, like the Dennises, who intend to work five more years before they retire.

“To buy another house, we were going to have to come up with a chunk of change for a down payment,” Bruce Dennis said. “Then there were property taxes, and of course maintenance — that gets expensive in a hurry.

“The glories of homeownership we no longer have to face.”

scott.reckard@latimes.com

 

Will the S&P Downgrade Affect Interest Rates?

Daily Real Estate News | Monday, August 08, 2011

 

Standard & Poor downgraded the U.S.’s credit rating on Friday, despite Congress reaching a deal in the final hours on the debt ceiling crisis last week. And now many of your customers may be asking: What does this mean for interest rates?“The impact on your wallet of the Standard & Poor’s downgrade of the nation’s credit rating is similar to what would happen if your own credit score declined: The cost of borrowing money is likely to go up,” the Washington Post explained in the aftermath of S&P’s decision.

S&P downgraded the U.S.’s top-notch AAA credit rating for the first time in history, moving it down one notch to AA+; the rating reflects a downgrade in S&P’s confidence in the U.S. government’s ability to repay its debts over time. It’s not clear, however, whether S&P’s downgrade will instantly effect rates, analysts say.

The 10-year Treasury note is considered the basis for all other interest rates. And “the downgrade could increase the yields on those bonds, forcing the government to spend more to borrow the same amount of money,” the Washington Post article notes. “Many consumer loans, such as mortgages, are linked to the yield on Treasurys and therefore would also rise.”

Watch this video with NAR Chief Economist Lawrence Yun for more information.

While consumers who have fixed interest rate mortgages will be immune to any changes in borrowing costs, home buyers shopping for a loan or those with mortgages that fluctuate may see a rise in rates later on, some analysts say.

Mark Vitner, senior economist at Wells Fargo Securities, told the Associated Press that he doesn’t expect the downgrade to drive up interest rates instantly since the economy is still weak and borrowers aren’t competing for money and driving rates higher. However, he expects in three to five years, loan demand will be much higher and then the downgraded credit rating might cause rates to rise.

Analysts are still waiting to see if the other rating agencies, Moody’s and Fitch, follows S&P’s lead in its downgrade of the U.S. credit rating. If so, the aftermath could be much worse, analysts say.

The debt deal reached by Congress last week was expected to save the U.S. from any credit rating downgrade. However, S&P said lawmakers fell short in its deal. Congress’ deal called for $2 trillion in U.S. deficit reduction over the next 10 years; S&P had called for $4 trillion.

Source: “5 Ways the Downgrade in the U.S. Credit Rating Affects You,” The Washington Post (Aug. 8, 2011); “Questions and Answers on Standard & Poor’s Downgrading of U.S. Federal Debt,” Associated Press (Aug. 6, 2011); and “S&P Downgrade Will Shake Consumer and Business Confidence at a Fragile Time, Economists Say,” Associated Press (Aug. 6, 2011)

Read More

Real Estate OK in Debt Deal But Risks Remain

 

Good news bears

Commodity prices

Good news bears

Aug 8th 2011, 13:39 by The Economist online

A fall in commodity prices offers some cheer among the market gloom

THE equity markets may be suffering again as investors worry about sovereign debts and a slowing global economy. But the sell-off has also extended into the commodity market, particularly in oil: West Texas intermediate is trading at around $84 a barrel. This is a bearish story that is good news for western consumers. High raw-materials prices acted as a tax rise in the first half of the year; now they are falling the effect will be akin to a tax cut. There is just one caveat. The working assumption is that the recent sharp fall in the oil prices is caused by concerns about a slowing US economy; if it is really due to a sharp slowdown in emerging markets as well, equity markets will really have cause to worry.

Related items

TOPIC: Economies »

• The ECB goes shopping: The reluctant rescuer
• Financial crisis: Negative reaction
• Europe’s debt crisis: The ECB presses “pause” on the crisis

TOPIC: U.S. Economy »

• America’s recovery: Good news, but is it good enough?
• America’s recovery: Sideways isn’t good enough
• Housing markets: Still struggling

TOPIC: Oil prices »

• Shrinking air fares: Only in Canada, you say? Pity
• Oil Prices: Speculators unburned
• Oil markets: Acting with reserves

TOPIC: United States »

• The war in Afghanistan: How to read the downing of the Chinook
• S&P’s credit-rating cut: Three examples of downgrade chutzpah
• American government debt: Theatre of the absurd

 

Readers’ comments

The Economist welcomes your views. Please stay on topic and be respectful of other readers. Review our comments policy.

 

Welcome back to Earth !

BRL, you better find a parachute for you…

Deflation, your time has finally come, after 2.5 years of delay

We called it:
http://seekingalpha.com/article/285619-the-debt-downgrade-and-the-summer…

We’re outperforming today as we did all of last week.

I remember in 2008 petroleum peaked in May for their highest price in history. The cause was never explained.

This price exceeded 2004 levels when the Gulf refineries were smashed by a series of Hurricanes notable Katrina and Rita. The prices exceeded the outbreaks of Gulf War 1 and 2 with Iraq and even the 9/11 attacks. The price of oil exceeded Supertankers being attacked by terrorist teams, Iran mining the critical choke point of the Strait of Hormuz where 40% of World travels, Putin’s energy cut offs, or raging piracy off the Somalian coasts.

I want to propose an actor and a plot. Follow the Money. Who has the Wealth and Power and the Means and Motive? The world’s largest exporter of oil is Saudi Arabia.

And in 2008 they saw an opportunity to influence the election of the most powerful office in the world. The Saudis grew tired of Bush and the Republicans. And the Republican Presidential Candidate McCain seem to want to open up a third war front on Iran. The other candidate was named Hussein and may prove to be a tribal brother.

And when your only tool is a hammer, every thing looks like a nail. By reducing oil imports by 5%, the Saudis can affect oil prices world wide instantly and to astonishing effect. The Saudis used their control over oil supply to jigger a shortage, which lead to price spikes 6 months before the election and precipitated the American Great Recession of 2008. John McCain argued their was no recession under Republican leadership and was soundly trounced in the election.

But this Recession snowballed into the Nov 2008 banking crisis, Lehman Bros downfall, the mortgage crisis, AIG insurance crisis, Automaker bankruptcy and the unemployment morass. All because of oil spikes.

An incumbent President’s greatest opponent is the state of the economy in an election year. And the Saudis are again using their hammer this time to LOWER the price of oil to brighten the American economy and re-elect President Obama. We are puppets on a string.

Unfortunately, the law of unintended consequence, the Recession they brought on in 2008 is still around and may be into a double dip. The Saudis are at it again doing their best to suppress the price of oil to promote a recovery.

Surprise, Money is Power! And Economic issues can influence Politics. Strange things happen in election years. Yes, even foreign actors can also pull some stringshmTzic3YT/

Your assertion that the Saudis influenced oil price to rout the Republicans in American presidential election is clever, but simply UNTRUE. The Saudis, or more accurately King Abdullah and the House of Saud, most likely WANTED warmongering hawks in the White House again, so that the US could wipe Iran and its nuclear programmes off the map. Wikileaks showed that King Abdullah, while posturing as an Islamic patriot who wanted the US to moderate its Mideast policies, privately encouraged GWB to attack Iran. This explains the confusion and the disorderliness with which the Saudi diplomatic corps to Washington D.C. have been conducting themselves vis-a-vis the Iranian issue.

And in this day and age, it is unwise to assume that the power to set the price of oil is centralized in Riyadh, Caracas or whatever. Thousands of traders tinker with the price of crude, and other governments can simply flood the market with their strategic oil reserves to drive the price down.

On this blog we publish a new chart or map every working day, highlight our interactive-data features and provide links to interesting sources of data around the we

 

 

This is a brief window of opportunity….and every opportunity has a “shelf life”!

This is a brief window of opportunity….and every opportunity has a “shelf life”!

 

Rates are amazing right!!!  

We are locking rates in between 4.375 and 4.5%…..on NO COST refinances and purchases…..up to loan amounts of $729,000! The jumbo conforming refi applications must be received no later than August 15^th….as jumbo conforming loan limits are being reduced to $625,000 come October 1^st. All loan amounts between $625,000 and $729,000 must fund by September 30^th to take advantage of the conforming rates and guidelines; after which time loans that fall into that category will be considered jumbo financing. FYI, the jumbo conforming 30 year fixed rates are about 1% lower than 30 year jumbo rates. That’s a BIG difference in a monthly mortgage payment of that size loan amount.

 

 

 

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