FEDERAL HOUSING FINANCE AGENCY News Release: 10/24/11

What to Subcribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin

Links below are for any additional information you may need.

Complete schedules of FHA mortgage limits for all areas for forward mortgages will be available through the downloadable file links found at https://entp.hud.gov/idapp/html/hicostlook.cfm The website also provides a current look-up tool that will have the capability

Market Analysis Brief: http://portal.hud.gov/hudportal/documents/huddoc?id=FHA_Loan_Limits_HERA.pdf

FHA publications at HudClips: http://www.hud.gov/offices/adm/hudclips/index.cfm  Order hardcopies at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/dds

 FHA forms: http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/hudclips/forms

 FHA Homeownership Centers: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hoc/hsghocs

 Events & Training Calendar: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/events/events

 Contracting Opportunities: http://portal.hud.gov/portal/page/portal/HUD/program_offices/cpo

 Career opportunities: http://www.usajobs.opm.gov/

 Grant opportunities: http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/grants/fundsavail

 Presidentially Declared Disaster Areas: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/nsc/disaster

 Foreclosure Assistance: http://portal.hud.gov/hudportal/HUD?src=/i_want_to/talk_to_a_housing_counselor

 Making Home Affordable: http://www.makinghomeaffordable.gov/pages/default.aspx 

This list does not provide HudHome property listings. To see the latest list of all HudHomes nationwide please visit: http://hudhomestore.com/HudHome/Index.aspx

 This list will often provide training opportunities and event announcements for non-profit and local government HUD partners. HUD does not endorse the organizations sponsoring linked websites, and do not endorse the views they express or the products/services they or their community/business partners offer. For more information on HUD’s web policies please visit: http://www.hud.gov/assist/webpolicies.cfm

Danny Salas on Real Estate Today Radio Explains why now is the most affordable time to buy.

The National Association of Realtors’ Housing Affordability Index recently shed light on something quite exciting:  A forty-year record level reading! 

The index has been reporting data, on housing, since 1970, and it’s never been more affordable to purchase a new home.  If you want to purchase a home, keep in mind I’m only speaking statistically; this is the time to buy! It’s imperative that you study your financial strength with a competent financial advisor, and mortgage banking specialist, to determine if you’re ready to buy.  Do you have your financing in order, or your housing budget at a comfortable level?  If you’re considering around a five-year, seven-year, or longer, investment, than it just might not get any better than the present.

The Composite Index of Housing Affordability read at 182.7.  This is, again, the highest level in the forty-one years of reporting the data.  In 1981, the index was the lowest it has ever been, at 68.9  Interest rates were at approximately 18%.  Think about that…it’s more than two and a half times more affordable to buy a home, than it was in 1981. 

Some of the data that is considered, regarding the Housing Affordability Index is the Median Sales Price, Interest Rates, monthly payments, and qualifying income.  Obviously, sales price and interest rates, determine payments, but what’s interesting is qualifying income.  With unemployment levels so low, nationally and locally, the surprising statistic might be qualifying income, however, bear in mind that with prices SO low, and interest rates SO low, as well…income simply doesn’t HAVE to be as high, to qualify for that median priced home.  Very exciting news! 

You will want to take somewhat of an urgent move, if you’ve positioned yourself structurally sound to buy.  Keep in mind that if rates move just one percent upwardly, home values would have to fall OVER ten percent in order for you to keep the same monthly payment.  If the United States’ debt ceiling issue creates more panic, in the markets, like Lehman Brothers’ panic, post mortgage credit crisis, and rates move to 7.5%, then you’ll need values to drop over THIRTY PERCENT, in order to keep your payments at the same levels.  This index is not going to stay at these level forever!  I did write about this, on my blog-page, back in November of 2009.  Even then, most experts felt that rates will steadily increase over that next twelve months, however, as European Countries struggled financially, mortgage-backed securities, and other bonds, were a safe-haven for investors, keeping our rates low.  This, also, will not last forever, and if you’ve determined that you’re ready to buy…BUY! 

Check out the Blog Article at:  http://accessloans.net/2009/11/11/why-buy-now-why-rate-outweights-price/

Where Are Interest Rates Going?

 First of all, QE II has ended.  There are mixed feelings regarding how this effected The United States.  First, you cannot ignore that since the announcement of QE II, Stocks have increased an average of 34%.  So, while QE I was primarily designed to purchase bonds, and keep interest rates low, QE II focused on pumping more money into Stocks and other commodities.  This is generally, not good for interest rates, however, again, with European concerns, bonds and Mortgage-Backed Securities remained a healthy, safe investment, for foreign markets, keeping our rates low.  The effect of QE II, on the economy, is also argumentatively, positive.  When you lift the market, you lift the spirit of investors.  When investors’ spirits are up, they spend.  However, it hasn’t done much for employment, or eighty, or more percent, of the nation.  So, the help in the economy really came indirectly.  QE III?  Perhaps.  If they announce another plan to print money, and buy stocks, or US Treasuries, Bonds, etc., it might just scare the market too much, and the value of the dollar could plummet.  So, the QE III plan, might just be a statement from the Federal Reserve that they are, “interested in keeping the markets moving, by a structured, secure purchasing plan of Stocks, Bonds, AND Commodities.”  Who knows?  If there isn’t a release of QE III, expect higher rates, to gradually occur, if there’s a release of QE III…and they print more money…expect higher rates when the result of more printed money, is inflation (interest rates’ worst enemy).

One of the only factors that could keep rates lower, would be if the economy starts to heat up, enough, for investors, and banks, to start purchasing the US Treasuries that our government has already purchased…to keep the market moving.  When and if that ever happens…rates will stay low.  My money’s on one of the earlier comments, as when have you seen Banks come to the rescue of the United States?  Or, is that an oxymoron?

 

PMI Distressed Markets Policy – Effective 4.25.11

Encouraging news! Market conditions have improved sufficiently to enable PMI to expand LTV
and Minimum Credit Score requirements. The new criteria apply to conforming loan amounts in
PMI Distressed Markets.

The PMI Distressed Markets Policy will change as follows:

• LTV eligibility expanded to 95% for Purchase and Rate/Term Refinance transactions
• Minimum Credit Score lowered to 680 for LTVs less than or equal to 90%
• High-Balance loans remain unchanged

PMI Distressed Markets List – Effective 4.25.11

In addition, the following 4 MSAs* will be removed from PMI’s Distressed Markets List:

PMI Distressed Markets List – Effective 7.1.11

The entire states of Arizona and Florida will be added to the PMI Distressed Markets List effective 7.1.11. Attached housing remains ineligible in the state of Florida.

For complete information, please review the updated PMI Distressed Markets Policy, the
PMI Distressed Markets List, and Guidelines at a Glance.

What to Subcribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin

Retail sales continue to improve and reinforce that the economy is recovering.  In March Retail Sales increased a strong .4% which piggy backs on the prior two months of strong increases of 1.1% in February and .8% in January.  Consumers are definitely returning to the stores and buying items not considered necessities.

Industrial Production once again is fueling the recovery with another strong increase of .8% from the prior month.  This report exceeded analyst expectations.

One of the significant challenges facing consumers and the economy is the rapidly increasing gas prices.  With the national average for a gallon of regular gasoline at $3.85 per gallon, we are starting to see a change in consumers spending and driving habits which will most likely show up in the next round of economic reports next month.  Additionally, although the national average is $3.85 for a gallon of regular gas, the reality is that many major cities across the country are pricing gasoline $4.10 to $4.30 per gallon.

The Producer Price Index showed that prices on the wholesale level are rising rapidly.  In March we saw and increase of .7% which followed a very large 1.6% increase in February.  The rapidly rising prices of oil are the main contributor to the jump in wholesale prices.  On the retail side, the Consumer Price Index increased .5% which was in line with economist expectations.  However when you exclude volatile energy and food prices, the core inflation rate on the consumer level is only .1%.

It is this mixed message about inflation that is creating even more division within the Fed regarding monetary policy.  The stimulus plan currently in place and some members want to start rolling it back while others believe the economy is still too fragile to do so.

Well…now we have a mixed inflation report to make things worse.  Some Fed members believe that the gross wholesale and consumer prices are the figures that should be used to dictate monetary policy.  However other members believe that only the core inflation numbers matter because energy prices will always be very volatile. 

Reports due out next week are:

• Monday April 18^th – Housing Market Index
• Tuesday April 19^th – Housing Starts
• Wednesday April 20^th – MBA Mortgage Applications & Existing Home Sales
• Thursday April 21^st – First Time Jobless Claims and FHFA House Price Index
• Friday April 22^nd – Markets Closed for Good Friday

What to Subcribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin

Not So Great

First let me get the bad news out of the way. Existing Home Sales which were expected to rise by 2.7% in February, actually plummeted 9.6%. As for the experts that predictedsales to rise, I have to wonder where they get their information from. I know that it certainly does not come from anyone in the real estate or the mortgage business. If these so called experts bothered to ask anyone who actually writes mortgage loans or sells real estate they would have known that home sales were way off last month.

The Federal Housing Finance Agency announced that housing prices on a national basis dropped .3% in January from the prior month. Additionally, December’s numbers which originally showed a decline of only .3% actually were revised up to show a decline of 1%. It is my expectation that January’s numbers will also be revised upward and the report will actually be worse.

The final piece of housing that just completes the Trifecta of bad news is that New Home Sales reached the lowest point on record dropping another 16.9% in February. New Home Sales are at the lowest point on record and they are currently 13.9% lower than a year ago.

It was reported this week that distressed sales, which are made up of foreclosures and short sales, represented 39% of all houses sold in the prior month. Additionally, 33% of all sales in the prior month were all cash purchases which may explain why mortgage volume continues to be down in the dumps for many mortgage lenders. (I promise you there is some good news on the horizon for housing, just keep reading)

If you are in the market to purchase a home you love the housing reports because it means you can purchase a home for less. If you own a home, then you hate this report. However, I did promise you in the beginning some good housing news.

Not To Ruin Your Friday

I have spoken with at least two dozen mortgage loan officers and real estate agents around the country, and everyone one of them, yes every single one of them, told me that in the last week they have seen an increase in the number of inquiries for home purchases. Real estate agents are receiving more calls on their listing signs and loan officers are finding that more and more of their pre-approved buyers are starting to locate homes.

It is my feeling that spring fever is finally starting. Mortgage rates have dropped back down again and housing prices are incredibly affordable. Bank foreclosure filings are slowing slightly as well as loan delinquencies. Additionally we have been seeing a slight improvement in the job markets as first time unemployment claims have definitely stabilized and are even beginning to drop. When you put all of these factors together, it does fall right into the sweet spot for housing to start improving. “I believe, I believe, I believe”.

Reports due out next week are:

• Monday March 28th – Pending Home Sales
• Tuesday March 29th – Consumer Confidence and Case-Shiller House Value Index
• Wednesday March 30th – MBA Mortgage Applications and ADP Employment Report
• Thursday March 31st – First Time Jobless Claims
• Friday April 1st – Employment Situation (National Unemployment figures are released)

What to Subcribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin

Interest Rates Continue to Climb

Why Are Rates Skyrocketing?

There are a couple of things occurring.  QEII is taking effect on the market, and deflating the value of the dollar, worldwide.  The U.S. is doing the exact same thing, it has ridiculed other countries of doing, in the past.  Quatitative Easing II is the government’s stimulus program to actually cause inflation (interest rates’ worst nemesis), in order to spur economic life, into an increasingly dead economy.

The second main issue is, again, Europe.  This time, it is Ireland.  Ireland’s financial banking system is at the brink of complete collapse.  Therefore, as we’ve seen in the past with other European Countries, the European Central Bank (ECU) and the International Monetary Fund (IMF), have stepped in and offered a deal to Ireland, that they may not be able to refuse.

Why would Ireland Refuse Help?

Pride!  Simply, put…Pride, Austerity, and higher taxes.  Ireland has the lowest tax rate of any European country.  And the concern is, that if they accept this assistance, they’ll have to raise taxes and perhaps cause the unrest that Greece had to endure, through their financial fiasco.  In economics, austerity is when a government reduces its spending and/or increases user fees to pay back creditors.  Austerity is usually required when a government’s fiscal deficit spending is felt to be unsustainable.

Safe-Haven Treasuries, Not As Safe

Investors Moving Money

During the uncertainty in Europe, investors tend to move their money into the safe-haven of U.S. Bonds, Treasuries, and Mortgage-Backed Securities.  However, with a plan on the table to revitalize Ireland’s financial stability, that safe haven is less attractive, and therefore, money pours out of these places, and into Stocks, Bonds, Gold, Oil, etc.  This causes rates to increase.

Hold Your Horses

Europe is still not out of trouble.  Greece, Portugal, Spain, and Italy, are all beginning to show signs, again, of financial trouble.  Their banking systems may need more bailout help, as they already have experienced.  If this rears its ugly head again, we could see these same investors shuffle money back into the safe-haven of U.S. Bonds and Mortgage-Backed Securities…causing rates to move downwardly again.

Watch Europe Carefully…Rates Could Benefit

Locking In

If you haven’t done so, already.  You’re not working with the right mortgage banker.  However, if you or your client, just had your application taken…I’d hold out and watch what happens with Greece, Portugal, Spain, and Italy.  We may have a small rebound, after suffering HUGE losses, this past two weeks.

Related Must Reads

Past European Troubles
Greece’s 1st Financial Rescue Program
Portugal’s Past Troubles

What to Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin

Rates On The Rise

Government Stimulus Causing Rate Increases

For the most part, you have probably seen mortgage interest rates start to rise over the past few business days.  The new government stimulus program is getting ready to roll out, in November.  This will, most likely, cause interest rates to rise.

Inflation TOO LOW!

The reason sounds simple, however, you generally read that inflation will cause rates to increase.  On the opposite extreme, there is deflation.  I’ve written about this, in the past, however, the government has been announcing that they are very concerned that the level of inflation in the country is uncomfortably low.

What does this mean?

In order for an economy to grow, there must be inflation.  Inflation, in the U.S., is virtually non-existent, and we are now approaching a point where deflation is becoming a major concern, and a real threat to the economy.  The government has stated that they are committed to preventing this from happening, and they are stepping in with a new round of stimulus.

How This Differs From The $1.25 Trillion Stimulus

The initial stimulus program, when the government pumped $1.25 Trillion into buying Mortgage-Backed Securities, to keep interest rates low, was to also enable businesses and consumers to borrow money.  This round of stimulus, launcing in November, is particularly focused on increasing prices at the Wholesale and Retail Level, forcing items to cost more, and therefore, eluding a downward spiraling ecomomic distaster, by preventing deflation from occuring!

Is This Gonna Work?

What is critical for you, as a consumer and professional Realtor to understand, is that inflation is the nemisis of bonds and Mortgage-Backed Securities.  Mortgage-Backed Securities are the determining factor regarding interest rates, and if the government is committed to increasing inflation, then mortgage rates have nowhere to go, but up.

The Writing’s On The Wall

I’ve written before that many times, speculation will have an impact on interest rates, more so than actual economic statistics.  The government stimulus package will start in November, yet we have already seen an increase in over 50 basis points, for a loan’s cost.  That translates to approximately, 1/2 Point on a real estate loan.  And this is just in the past two weeks!

What Should You Do?

I am urging you to please contact me right away.  I can provide you updated financing information, on your particular situation, or your buyers’, so you all can make an educated decision on what your next step should be.  I just want to be certain that you are kept up to date on what is happening, and that you understand how the changing rates will impact you today, or in the future.

Related Must Reads

Deflation Concerns, One Year Ago
Rates Were Expected To Go Up A Long Time Ago…When I Was Wrong

What to Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin

Mortgage rates are hitting record lows and with the prospect of more government stimulus, the expectation is that rates will fall even further.  As of last week the national average for the 30 year fixed rate was 4.21%.  Mortgage applications for last week saw a surprising decline of 8.5% fir purchase applications.  No real explanation has been offered as to the cause of the slowdown however some people speculate that the barrage of news regarding the suspensions of foreclosures may have pushed buyers to the sidelines.  Additionally, some transactions that were started were also halted due to the foreclosure filing mess.  Refinance applications are going strong as they represent 83% of all mortgage applications for the past week.

Economic reports outside of housing continue to show no real direction for the economy.  The positive news reported this week was that inflation on the wholesale and retail levels are not a concern at all.  On the flip side however is that talk is starting to surface that the level of inflation is becoming almost to low which can be an indication that we may enter a deflationary economy.

On the surface some may say, “Hey if prices are going to drop, that is great news for me”.  However what happens in a deflationary economy is that if consumers recognize that prices are falling, then they will start to keep their money in their wallets and wait for lower prices.  If people start to hold off on purchases, then the whole recession cycle starts all over again.

Before anyone reading this begins to panic, it is important for you to know that last month retail sales came in higher than expected.  So at least for right now, consumers are spending money and that concerns about deflation, at least on the consumer level does not exist.

Employment still continues to be a drag on the economy.  First time jobless claims came in higher than expected and actually rose by 13,000 from the previous week.  This is the first increase in jobless claims in a month.  Continuing jobless claims continue to drop and some government officials are trying to leverage this news for political gain.  The truth of the matter is that the only reason why continuing jobless claims are declining is because more and more people are dropping off the unemployment rolls as their benefits run out and that no more extensions are available.

One of the ironic reports this week is Consumer Sentiment.  This report came in worse than expected and showed that people are becoming more concerned about the future of the economy.  The irony is in that Retail Sales continue to improve which is not what one would expect to occur if people are not optimistic.

What to Subscribe To:

Get Our Twitter Updates
Get Our Blog Blast
Become A Fan On Facebook
Connect With Us On Linkedin