This Week’s Real Estate News
Not as much news as last week, but it all seemed to occur on Wednesday 11/21:
House Passes Anti-Predatory Lending Measure: The House of Representatives has approved a controversial bill intended to help combat predatory lending practices, widely considered a central cause of the nation's credit crunch and rising foreclosure rates. HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007, calls for the establishment of a national licensing program for all mortgage loan originators, and would force lenders to ensure a borrower's reasonable ability to repay the loan, among other requirements. (CAR, 11/21)
Mortgage Rates Continue to Fall: Mortgage rates continued to fall as the weak housing market remained a drag on the economy, Freddie Mac reported Wednesday. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan fell to 6.20 percent for the week ended Nov. 21 from 6.24 percent the prior week. At this time last year, the 30-year FRM averaged 6.18 percent. The 30-year rate has not been lower since the week ending May 10, 2007, when it averaged 6.15 percent, Freddie Mac said. Freddie Mac said rates on 15-year fixed-rate loans averaged 5.83 percent, down from 5.88 percent last week. A year ago, the 15-year rate averaged 5.91 percent. The 15-year rate has not been lower since the week ending February 2, 2006, when it averaged 5.81 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.88 percent this week, down from 5.96 percent last week. A year ago, the five-year ARM averaged 5.99 percent. One-year Treasury indexed ARMs averaged 5.42 percent this week, from 5.50 percent last week. At this time last year, the one-year ARM averaged 5.49 percent. (Freddie Mac, CNNMoney.com, 11/21)
Refi’s Prefer Fixed-Rate Mortgages in the 3rd Quarter: More borrowers who refinanced during the third quarter replaced their 15-year fixed-rate mortgages with traditional 30-year, fixed-rate loans, and 85 percent of borrowers with a one-year adjustable rate mortgage loan who refinanced selected fixed-rate loans, according to a recent report from Freddie Mac. (CAR, 11/21)
Mortgage Apps Decline: Mortgage application volume declined 3.6 percent during the week ending Nov. 16, according to the trade group Mortgage Bankers Association's weekly application survey. Refinance volume declined 5 percent during the week, while purchase volume fell 2 percent. Refinance applications accounted for 50.3 percent of total mortgage applications during the week. Application volume declined while interest rates barely moved. (AP, 11/21)
Housing Price Drops in 3rd Quarter: Housing price drops, driven by soaring foreclosure rates, accelerated during the three months ended September 30, according to the latest data from the National Association of Realtors (NAR). The median single-family house price in the United States fell to $220,800, which was down 2 percent from a year ago. Condo prices showed some resiliency: At $226,900, they rose 2 percent compared with 12 months ago. In Los Angeles-Long Beach-Santa Ana area, median home prices increased 1.1% to $588.400. (NAR, CNNMoney.com, 11/21)
Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger. Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate. The voluntary program is designed to stem a huge wave of foreclosures. Half a million homeowners in the state have subprime mortgages that are scheduled to jump higher within the next two years after their introductory period elapses. Such loan resets, in combination with a slumping real estate market, already have led to a record number of foreclosures across California and the nation. (SF Gate, 11/21)
Sources: California Association of REALTORS (CAR), CNNMoney, AP, National Association of REALTORS (NAR), and SF Gate. Real
Sunday, November 25, 2007
Sunday, November 18, 2007
Lots of Real Estate News, 11/12 to 11/18
With Thanksgiving this week, the holiday shopping season is here too. Economists are cautiously optimistic, not knowing how the housing slump and its effects on the home equity accounts of buyers, where most wealth lies, will affect holiday shopping sales. Most are saying that it will stay stable or rise very slightly versus last year. Here are some real estate and economic headlines from the past week:
Big news of the week came from RealtyTrac, which is known for tracking foreclosures nationwide: No slowdown yet in foreclosure filings. Hardest hit cities are on coasts and in Rust Belt. Three states, California, Florida and Ohio, continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter. During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months. The report shows seven cities in California (Stokton, Riverside, Sacramento, Bakersfield, and Oakland among others) and five each in Florida and Ohio were among the top 25 metro areas with the highest foreclosure rates. Nevada has the worst rate with one filing in every 61 households, while the nationwide rate is one filing for every 196 households. Riverside-San Bernardino also accounted for the most foreclosure filings in the U.S. during the quarter. According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes. Stockton may top the list of states with the highest foreclosure rates, but mortgage defaults in the city are generating business for REALTORS® in an otherwise stalled market. Cleveland is a city that is noted for being hit especially hard. (RealtyTrac.com, AP, Reuters, 11/14; Stockton Record, 11/15)
Home loan demands at 1-year high as rates stay low – it increased 5.5% for the week ending Nov. 9. Mixed signals keep mortgage rates flat: Fixed 30-year rate holds steady at 6.24 percent as consumer confidence declines and third-quarter productivity grows. Mortgage rates were flat following mixed economic signals. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan remained at 6.24 percent for the week ended Nov. 15. The 30-year rate has not been lower since the week ending May 17, 2007, when it averaged 6.21 percent, Freddie Mac said. At this time last year, 30-year mortgage rates also averaged 6.24 percent. Freddie Mac said rates on 15-year fixed-rate loans averaged 5.88 percent, down from 5.90 percent last week. A year ago, the 15-year rate averaged 5.94 percent. The 15-year rate has not been lower since the week ending May 10, when it averaged 5.87 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.96 percent this week, up from 5.89 percent last week. A year ago, the 5-year ARM averaged 6.04 percent. One-year ARMs averaged 5.50 percent this week, unchanged from last week. At this time last year, the 1-year ARM averaged 5.53 percent. (CNNmoney.com, Mortgage Bankers Association, 11/15)
Mortgage bonds remain in a long-term uptrend in its rates with multiple support floors beneath present levels – translation: mortgage rates will more likely rise from here on and not fall in the short term forecast. And in this week's planned economic releases, any scent of inflation in the reports will be very bad news for Bonds - which deliver a fixed return that is eroded by the effects of inflation - so that would spell bad news for home loan rates as well. (Mortgage Market Guide, LLC, 11/13)
Fact Facts from the California Association of Realtors (11/15):
* Calif. median home price - September 07: $530,830(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region September 07: Santa Barbara So. Coast $1,667,500(Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region September 07: High Desert $271,940(Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 11/08: 30-yr. fixed: 6.24%; Fees/points: 0.4% 15-yr. fixed: 5.90%; Fees/points: 0.5% 1-yr. adjustable: 5.50%; Fees/points: 0.6% (Source: Freddie Mac)
Despite declining home prices as recently reflected in an S&P/Case-Shiller home price statistics survey, on average, the nation's top markets have experienced price appreciation by as much as 50 percent over the past five years, according to comparable data from the National Association of Home Builders (NAHB). "It's important to keep things in perspective," said NAHB President Brian Catalde. "The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest." According to the NAHB's comparable data tables, home prices in Los Angeles dipped 5.7 percent in the last year, but have appreciated by 88.9 percent since 2002. San Francisco home prices have declined 4.2 percent in the last year, but have seen appreciation of 46.7 percent since 2002. Home prices in San Diego have fallen by 8.3 percent in the last year, but have appreciated 54 percent since 2002, according to the report. (CAR, 11/14)
Fannie Mae changed the way the company calculates losses on home loans in its earnings releases, fueling speculation it is hiding the number of bad loans it holds to downplay its potential losses. (AP, Moody’s Economist.com, 11/16)
A ruling by a federal judge in Ohio could lead to a shift of longstanding policies regarding mortgage pools, possibly offering homeowners facing foreclosure some bargaining power. (NY Times, 11/15)
Online lender E-Loan announced it intends to cut more than 400 jobs from its Pleasanton, CA (San Francisco-area) headquarters as part of a large-scale restructuring plan. (Oakland Tribune, 11/13)
Countrywide Financial Corp. reported that October loan volume fell 48 percent from a year earlier, but said its reduction of high-risk home loans is producing credit stabilization. (Reuters, 11/13)
US business confidence remains moribund. Sentiment has not changed appreciably since plunging in August during the height of the subprime financial shock, and it remains consistent with an economy that is expanding very slowly. (Moody’s Economy.com, undated but estimated to be around 11/9)
Office of Management and Budget Director Jim Nussle offered a note of caution on how an economic slowdown could affect government finances - Nussle did not offer a specific projection for the deficit, though. (Christian Science Monitor, 11/15)
There has been a fair amount of sobering news on the economy lately. Last week, Federal Reserve Chairman Ben Bernanke said the US economy will slow "noticeably" in the final three months of the year. And this week, Augustine Faucher, an economist with Moody's Economy.com, told the Associated Press that he expected the federal budget deficit for the current budget year to rise to about $200 billion. (Moody's Economy.com, 11/15)
The West isn’t the only area reacting poorly in the housing market. Boston Globe noted Northeast economy is not projected to grow slowly through 2011 (11/14)
A perfect storm is brewing that threatens the entire mortgage lending industry. We believe that state and federal law enforcement and regulatory agencies will feel pressure to prosecute even inadvertent instances of regulatory noncompliance. Similarly, either through desperation or in an attempt to profit from public fear over what the media calls the "mortgage crisis," we believe that defaulting and troubled borrowers will increasingly take aggressive postures by challenging foreclosures through affirmative consumer claims (Bracewell & Giuliani LLP through Moody’s Economy.com, 11/13)
Goldman Sachs sees risk of recession as subprime reduces lending by $2 trillion - The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a "substantial recession'' in the U.S., according to Goldman Sachs Group Inc. (Moody’s Economy.com, 11/15)
Existing home sales seen hitting 5-year low: Sales numbers are expected to decline 12.7 percent this year, worse than expected - A modest recovery for existing-home sales is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability. Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. “The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership. Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year.” The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 0.2 percent to a reading of 85.7 from an index of 85.5 in August. It was 20.4 percent lower than the September 2006 level of 107.6. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,” Yun said. (National Association of Realtors and AP, 11/13)
National Association of Realtors’ 2007 National Housing Pulse Survey shows Americans are more concerned about obtaining a mortgage but remain convinced that buying a home is a good long-term investment. (NAR, 11/14)
National Association of Realtors survey shows consumers very satisfied with agent performance. Both buyers and sellers value the personal touch and services real estate professionals offer. (NAR, 11/13)
S&P reports mortgage turmoil to worsen in 2008 -- The chaos in the mortgage markets is only going to get worse in 2008 and will put a dent in U.S. mortgage bank earnings, according to a report released Tuesday by Standard & Poor's. Next year will be the worst for mortgage bank earnings since the 1990s, the ratings agency said. Loose lending standards, especially to people with shaky credit, are at the heart of the problem. (AP, Bloomberg, 11/14)
The formerly obscure ABX index has become a closely watched gauge of just how bad the market for subprime securities is getting. (CNNMoney, 11/14)
Sources: AP, Bloomberg, National Association of Realtors, Moody’s Economy.com, Boston Herald, Boston Globe, Christian Science Monitor, Reuters, Oakland Tribune, NY Times, Freddie Mac, California Association of Realtors, Mortgage Market Guide, LLC, CNNmoney.com, Mortgage Bankers Association, RealtyTrac.com, Stockton Record
Big news of the week came from RealtyTrac, which is known for tracking foreclosures nationwide: No slowdown yet in foreclosure filings. Hardest hit cities are on coasts and in Rust Belt. Three states, California, Florida and Ohio, continue to dominate new foreclosure filings, as most of the nation saw increases in the third quarter. During the period ended Sept. 30, 77 out of the nation's 100 largest metropolitan areas reported rises in delinquencies compared with the previous three months. The report shows seven cities in California (Stokton, Riverside, Sacramento, Bakersfield, and Oakland among others) and five each in Florida and Ohio were among the top 25 metro areas with the highest foreclosure rates. Nevada has the worst rate with one filing in every 61 households, while the nationwide rate is one filing for every 196 households. Riverside-San Bernardino also accounted for the most foreclosure filings in the U.S. during the quarter. According to the Center for Responsible Lending, 7.2 million households have subprime mortgages, and more than 14 percent of those are in default. It projects that one of every five of those loans issued in 2005 and 2006 will end in foreclosure, with 2.2 million families losing their homes. Stockton may top the list of states with the highest foreclosure rates, but mortgage defaults in the city are generating business for REALTORS® in an otherwise stalled market. Cleveland is a city that is noted for being hit especially hard. (RealtyTrac.com, AP, Reuters, 11/14; Stockton Record, 11/15)
Home loan demands at 1-year high as rates stay low – it increased 5.5% for the week ending Nov. 9. Mixed signals keep mortgage rates flat: Fixed 30-year rate holds steady at 6.24 percent as consumer confidence declines and third-quarter productivity grows. Mortgage rates were flat following mixed economic signals. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan remained at 6.24 percent for the week ended Nov. 15. The 30-year rate has not been lower since the week ending May 17, 2007, when it averaged 6.21 percent, Freddie Mac said. At this time last year, 30-year mortgage rates also averaged 6.24 percent. Freddie Mac said rates on 15-year fixed-rate loans averaged 5.88 percent, down from 5.90 percent last week. A year ago, the 15-year rate averaged 5.94 percent. The 15-year rate has not been lower since the week ending May 10, when it averaged 5.87 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.96 percent this week, up from 5.89 percent last week. A year ago, the 5-year ARM averaged 6.04 percent. One-year ARMs averaged 5.50 percent this week, unchanged from last week. At this time last year, the 1-year ARM averaged 5.53 percent. (CNNmoney.com, Mortgage Bankers Association, 11/15)
Mortgage bonds remain in a long-term uptrend in its rates with multiple support floors beneath present levels – translation: mortgage rates will more likely rise from here on and not fall in the short term forecast. And in this week's planned economic releases, any scent of inflation in the reports will be very bad news for Bonds - which deliver a fixed return that is eroded by the effects of inflation - so that would spell bad news for home loan rates as well. (Mortgage Market Guide, LLC, 11/13)
Fact Facts from the California Association of Realtors (11/15):
* Calif. median home price - September 07: $530,830(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region September 07: Santa Barbara So. Coast $1,667,500(Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region September 07: High Desert $271,940(Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Second Quarter 07: 24 percent (Source: C.A.R.)
* Mortgage rates - week ending 11/08: 30-yr. fixed: 6.24%; Fees/points: 0.4% 15-yr. fixed: 5.90%; Fees/points: 0.5% 1-yr. adjustable: 5.50%; Fees/points: 0.6% (Source: Freddie Mac)
Despite declining home prices as recently reflected in an S&P/Case-Shiller home price statistics survey, on average, the nation's top markets have experienced price appreciation by as much as 50 percent over the past five years, according to comparable data from the National Association of Home Builders (NAHB). "It's important to keep things in perspective," said NAHB President Brian Catalde. "The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest." According to the NAHB's comparable data tables, home prices in Los Angeles dipped 5.7 percent in the last year, but have appreciated by 88.9 percent since 2002. San Francisco home prices have declined 4.2 percent in the last year, but have seen appreciation of 46.7 percent since 2002. Home prices in San Diego have fallen by 8.3 percent in the last year, but have appreciated 54 percent since 2002, according to the report. (CAR, 11/14)
Fannie Mae changed the way the company calculates losses on home loans in its earnings releases, fueling speculation it is hiding the number of bad loans it holds to downplay its potential losses. (AP, Moody’s Economist.com, 11/16)
A ruling by a federal judge in Ohio could lead to a shift of longstanding policies regarding mortgage pools, possibly offering homeowners facing foreclosure some bargaining power. (NY Times, 11/15)
Online lender E-Loan announced it intends to cut more than 400 jobs from its Pleasanton, CA (San Francisco-area) headquarters as part of a large-scale restructuring plan. (Oakland Tribune, 11/13)
Countrywide Financial Corp. reported that October loan volume fell 48 percent from a year earlier, but said its reduction of high-risk home loans is producing credit stabilization. (Reuters, 11/13)
US business confidence remains moribund. Sentiment has not changed appreciably since plunging in August during the height of the subprime financial shock, and it remains consistent with an economy that is expanding very slowly. (Moody’s Economy.com, undated but estimated to be around 11/9)
Office of Management and Budget Director Jim Nussle offered a note of caution on how an economic slowdown could affect government finances - Nussle did not offer a specific projection for the deficit, though. (Christian Science Monitor, 11/15)
There has been a fair amount of sobering news on the economy lately. Last week, Federal Reserve Chairman Ben Bernanke said the US economy will slow "noticeably" in the final three months of the year. And this week, Augustine Faucher, an economist with Moody's Economy.com, told the Associated Press that he expected the federal budget deficit for the current budget year to rise to about $200 billion. (Moody's Economy.com, 11/15)
The West isn’t the only area reacting poorly in the housing market. Boston Globe noted Northeast economy is not projected to grow slowly through 2011 (11/14)
A perfect storm is brewing that threatens the entire mortgage lending industry. We believe that state and federal law enforcement and regulatory agencies will feel pressure to prosecute even inadvertent instances of regulatory noncompliance. Similarly, either through desperation or in an attempt to profit from public fear over what the media calls the "mortgage crisis," we believe that defaulting and troubled borrowers will increasingly take aggressive postures by challenging foreclosures through affirmative consumer claims (Bracewell & Giuliani LLP through Moody’s Economy.com, 11/13)
Goldman Sachs sees risk of recession as subprime reduces lending by $2 trillion - The slump in global credit markets may force banks, brokerages and hedge funds to cut lending by $2 trillion and trigger a "substantial recession'' in the U.S., according to Goldman Sachs Group Inc. (Moody’s Economy.com, 11/15)
Existing home sales seen hitting 5-year low: Sales numbers are expected to decline 12.7 percent this year, worse than expected - A modest recovery for existing-home sales is expected in 2008 as the impact of the credit crunch subsides, while pending home sales indicate near-term stability. Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. “The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership. Over the near term, home sales are likely to be fairly flat as the lingering impact of the credit crunch filters through the system through the end of the year.” The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, rose 0.2 percent to a reading of 85.7 from an index of 85.5 in August. It was 20.4 percent lower than the September 2006 level of 107.6. “Even with relatively low fourth quarter sales, 2007 will be the fifth highest year on record for existing-home sales. The median existing-home price in 2007 will have fallen by less than 2 percent from an all-time high set in 2006,” Yun said. (National Association of Realtors and AP, 11/13)
National Association of Realtors’ 2007 National Housing Pulse Survey shows Americans are more concerned about obtaining a mortgage but remain convinced that buying a home is a good long-term investment. (NAR, 11/14)
National Association of Realtors survey shows consumers very satisfied with agent performance. Both buyers and sellers value the personal touch and services real estate professionals offer. (NAR, 11/13)
S&P reports mortgage turmoil to worsen in 2008 -- The chaos in the mortgage markets is only going to get worse in 2008 and will put a dent in U.S. mortgage bank earnings, according to a report released Tuesday by Standard & Poor's. Next year will be the worst for mortgage bank earnings since the 1990s, the ratings agency said. Loose lending standards, especially to people with shaky credit, are at the heart of the problem. (AP, Bloomberg, 11/14)
The formerly obscure ABX index has become a closely watched gauge of just how bad the market for subprime securities is getting. (CNNMoney, 11/14)
Sources: AP, Bloomberg, National Association of Realtors, Moody’s Economy.com, Boston Herald, Boston Globe, Christian Science Monitor, Reuters, Oakland Tribune, NY Times, Freddie Mac, California Association of Realtors, Mortgage Market Guide, LLC, CNNmoney.com, Mortgage Bankers Association, RealtyTrac.com, Stockton Record
Sunday, November 11, 2007
This Week’s Real Estate News, November 5-11
Overall news this week is still portrays that the current buyer's market will continue...
Dollar hit new lows. Partially due to the current reduction in Federal Funds rate last week. This is promoting higher oil prices worldwide, as the trade in oil is in U.S. Dollars. Gold, silver, platinum and other precious metals are hitting record highs or are at near record highs. An economic minister with China has stated that China should move investments from the United States Bond market to those that are based on other currencies. Supermodel Giselle is demanding to be paid in Euros instead of dollars. The dollar is now at near record lows against the Euro, British Pound and Canadian Dollar, among many other world currencies. (KNX-AM, 11/5/2007, 11/6/2007, 11/7/2007)
Top lenders such as Chase, Washington Mutual, Countrywide and Wells Fargo are having difficulty competing in the stated income loan arena. It is likely the other banks will follow Chase’s policy effective Monday 11/12 to eliminate all stated income programs. Those lenders that are surviving, at least for now, are saying that clients wanting stated income must contribute at least 10% to the purchase price and “the income has to make sense with what they do (W2 or self-employed).” (Wachovia email, 11/7/2007)
Mortgage Rates Continue to Slip: Mortgage rates eased in response to the Federal Reserve's decision to cut interest rates, Freddie Mac reported Thursday. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.24 percent for the week ended Nov. 8, down from 6.26 percent last week. The 30-year rate has not been this low since the week ending May 17, 2007. Last year at this time, 30-year mortgage rates averaged 6.33 percent. In its latest report, Freddie Mac said rates on 15-year fixed-rate loans averaged 5.90 percent in the latest week, down from 5.91 percent last week. A year ago, the 15-year rate averaged 6.04 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, down from 5.98 percent last week. A year ago, the 5-year ARM averaged 6.08 percent. One-year ARMs averaged 5.50 percent this week, down from 5.57 percent last week. They were at 5.55 percent this time last year. (CNNMoney, 11/8/2007)
Mortgage Reform Bill Progress: House Financial Services Committee Chairman Barney Frank, D-Mass., has secured two key Republican endorsements on his legislative plan to reform the mortgage industry, avoiding a potentially bruising political fight this week. Rep. Spencer Bachus, R-Ala., the panel's top Republican, and Rep. Judy Biggert, R-Ill., another high-ranking member, have both signed on as co-sponsors to an amended bill that Frank plans to introduce before a committee vote on Tuesday. Among the changes, the bipartisan amendment includes the Federal Reserve among the regulators that would be responsible for implementing the new law. Also, the bill clarifies new secondary market liability. Some Republicans have raised concerns that Frank's approach could cut off access to credit, but growing problems in the subprime mortgage market raised the proposal's profile. Once the bill clears Frank's committee, it is expected to go to a vote on the House floor within weeks. (Dow Jones/AP, 11/5/2007)
Most business-economic talk this week surrounded the ousting of Citibank’s CEO.
NY Attorney General Andrew Cuomo Probes Fannie Mae and Freddie Mac concerning mortgages they bought from banks. Cuomo said he wants to know about loans Fannie Mae and Freddie Mac purchased from banks, including Washington Mutual. The subpoenas also seek to find out how the government-sponsored companies handle appraisals. (AP, 11/8/2007)
A survey conducted by the Federal Reserve shows many banks reported tighter standards for traditional prime mortgages, nontraditional mortgages such as "interest only" loans and for subprime mortgages, those offered to borrowers with weak credit histories. The Fed survey, which was conducted in early October, found that 41 percent of banks responding said that they had tightened loan standards either "considerably" or "somewhat" for prime residential mortgages, those offered to borrowers with strong credit histories. The 41 percent figure was up from about 15 percent of banks who said they were tightening standards on prime mortgages in the last survey in July. The Fed's survey covered 49 banks, including many of the nation's largest. These banks account for about 75 percent of all residential real estate loans on the books of commercial banks. (AP, 11/5/2007)
Sources: California Association of REALTORS(R), Wachovia, Dow Jones, Associated Press, LA Times, Sacramento Bee, USA Today, Reuters, CNNmoney.com, KNX-AM Los Angeles
Dollar hit new lows. Partially due to the current reduction in Federal Funds rate last week. This is promoting higher oil prices worldwide, as the trade in oil is in U.S. Dollars. Gold, silver, platinum and other precious metals are hitting record highs or are at near record highs. An economic minister with China has stated that China should move investments from the United States Bond market to those that are based on other currencies. Supermodel Giselle is demanding to be paid in Euros instead of dollars. The dollar is now at near record lows against the Euro, British Pound and Canadian Dollar, among many other world currencies. (KNX-AM, 11/5/2007, 11/6/2007, 11/7/2007)
Top lenders such as Chase, Washington Mutual, Countrywide and Wells Fargo are having difficulty competing in the stated income loan arena. It is likely the other banks will follow Chase’s policy effective Monday 11/12 to eliminate all stated income programs. Those lenders that are surviving, at least for now, are saying that clients wanting stated income must contribute at least 10% to the purchase price and “the income has to make sense with what they do (W2 or self-employed).” (Wachovia email, 11/7/2007)
Mortgage Rates Continue to Slip: Mortgage rates eased in response to the Federal Reserve's decision to cut interest rates, Freddie Mac reported Thursday. The government-sponsored loan buyer said the rate on a 30-year fixed-rate loan averaged 6.24 percent for the week ended Nov. 8, down from 6.26 percent last week. The 30-year rate has not been this low since the week ending May 17, 2007. Last year at this time, 30-year mortgage rates averaged 6.33 percent. In its latest report, Freddie Mac said rates on 15-year fixed-rate loans averaged 5.90 percent in the latest week, down from 5.91 percent last week. A year ago, the 15-year rate averaged 6.04 percent. Five-year adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, down from 5.98 percent last week. A year ago, the 5-year ARM averaged 6.08 percent. One-year ARMs averaged 5.50 percent this week, down from 5.57 percent last week. They were at 5.55 percent this time last year. (CNNMoney, 11/8/2007)
Mortgage Reform Bill Progress: House Financial Services Committee Chairman Barney Frank, D-Mass., has secured two key Republican endorsements on his legislative plan to reform the mortgage industry, avoiding a potentially bruising political fight this week. Rep. Spencer Bachus, R-Ala., the panel's top Republican, and Rep. Judy Biggert, R-Ill., another high-ranking member, have both signed on as co-sponsors to an amended bill that Frank plans to introduce before a committee vote on Tuesday. Among the changes, the bipartisan amendment includes the Federal Reserve among the regulators that would be responsible for implementing the new law. Also, the bill clarifies new secondary market liability. Some Republicans have raised concerns that Frank's approach could cut off access to credit, but growing problems in the subprime mortgage market raised the proposal's profile. Once the bill clears Frank's committee, it is expected to go to a vote on the House floor within weeks. (Dow Jones/AP, 11/5/2007)
Most business-economic talk this week surrounded the ousting of Citibank’s CEO.
NY Attorney General Andrew Cuomo Probes Fannie Mae and Freddie Mac concerning mortgages they bought from banks. Cuomo said he wants to know about loans Fannie Mae and Freddie Mac purchased from banks, including Washington Mutual. The subpoenas also seek to find out how the government-sponsored companies handle appraisals. (AP, 11/8/2007)
A survey conducted by the Federal Reserve shows many banks reported tighter standards for traditional prime mortgages, nontraditional mortgages such as "interest only" loans and for subprime mortgages, those offered to borrowers with weak credit histories. The Fed survey, which was conducted in early October, found that 41 percent of banks responding said that they had tightened loan standards either "considerably" or "somewhat" for prime residential mortgages, those offered to borrowers with strong credit histories. The 41 percent figure was up from about 15 percent of banks who said they were tightening standards on prime mortgages in the last survey in July. The Fed's survey covered 49 banks, including many of the nation's largest. These banks account for about 75 percent of all residential real estate loans on the books of commercial banks. (AP, 11/5/2007)
Sources: California Association of REALTORS(R), Wachovia, Dow Jones, Associated Press, LA Times, Sacramento Bee, USA Today, Reuters, CNNmoney.com, KNX-AM Los Angeles
Sunday, November 4, 2007
Federal Funds Rate Reduced: Weekly News Summary 10/29 to 11/4
This article was published in my monthly newsletter. If you want to receive this newsletter, which is emailed to subscribers, please email me at changhomes@gmail.com.
Federal Reserve lowered Federal Funds Rate to 4.5%, citing concerns about weakness in the housing market. Statement also stated that it is also worried about inflation. 10/31/2007 (CNNmoney.com)
U.S. home prices down for 8th consecutive month; index of 10 large U.S. cties shows a price drop of 5% in August, the largest since 1991. 10/31/2007 (AP)
Foreclosure filings rise with more coming as interest rates jump on a record number of adjustable mortgages. 11/1/2007 (CNNmoney.com)
Mortgage rates fall to near a 6-month low –Fixed 30-year rate slips to 6.26% on weak consumer confidence and other economic worries, per Freddie Mac. 11/1/2007 (CNNmoney.com)
Mortgage applications surge as refinance volume drives 3.8% overall growth, according to the Mortgage Banker’s Association’s weekly application survey. 10/31/2007 (AP)
October federal jobs report is more than double of what was expected with a 166,000-job gain; unemployment remains steady at 4.7%. Some economists questioned the validity of gains in this report, which is subject to further revision. 11/2/2007 (CNNmoney.com)
Experts predict the wildfires in Southern California will further add to the region’s slowdown in housing sales, as buyers shy away from listings in and around burn areas. 11/2/2007 (Reuters)
Members of Congress applied more pressure on the Bush administration today to ramp up efforts to slow down foreclosure rates. 11/2/2007 (AP)
Home prices in Los Angeles and Orange counties saw steeper declines in August than most other major metropolitan areas. 10/31/2007 (LA Times)
Regulators and consumer advocates worry too many wildfire victims don’t have adequate insurance to rebuild. 11/1/2007 (USA Today)
U.S. Treasury Secretary Henry Paulson said Tuesday the U.S. economy is strong enough to overcome the housing downturn but added the recovery process could take longer than expected. 10/30/2007 (AP)
Mortgage lenders struggling to remain profitable in the wake of the mortgage meltdown are applying a heavy dose of marketing aimed at those with good credit and solid home equity. 10/29/2007 (LA Times)
Residential Construction declines 1.4% 11/1/2007 (CAR)
Consumer Confidence declined for the third straight month in October, indicating continued consumer skepticism about the economy, fueled largely by the housing and mortgage lending crisis. The Consumer Confidence Index now stands at 95.6, compared with 99.5 in September. 11/1/2007 (CAR)
Sources: California Association of REALTORS(R), Associated Press, LA Times, Reuters, CNNmoney.com, KNX-AM Los Angeles
Federal Reserve lowered Federal Funds Rate to 4.5%, citing concerns about weakness in the housing market. Statement also stated that it is also worried about inflation. 10/31/2007 (CNNmoney.com)
U.S. home prices down for 8th consecutive month; index of 10 large U.S. cties shows a price drop of 5% in August, the largest since 1991. 10/31/2007 (AP)
Foreclosure filings rise with more coming as interest rates jump on a record number of adjustable mortgages. 11/1/2007 (CNNmoney.com)
Mortgage rates fall to near a 6-month low –Fixed 30-year rate slips to 6.26% on weak consumer confidence and other economic worries, per Freddie Mac. 11/1/2007 (CNNmoney.com)
Mortgage applications surge as refinance volume drives 3.8% overall growth, according to the Mortgage Banker’s Association’s weekly application survey. 10/31/2007 (AP)
October federal jobs report is more than double of what was expected with a 166,000-job gain; unemployment remains steady at 4.7%. Some economists questioned the validity of gains in this report, which is subject to further revision. 11/2/2007 (CNNmoney.com)
Experts predict the wildfires in Southern California will further add to the region’s slowdown in housing sales, as buyers shy away from listings in and around burn areas. 11/2/2007 (Reuters)
Members of Congress applied more pressure on the Bush administration today to ramp up efforts to slow down foreclosure rates. 11/2/2007 (AP)
Home prices in Los Angeles and Orange counties saw steeper declines in August than most other major metropolitan areas. 10/31/2007 (LA Times)
Regulators and consumer advocates worry too many wildfire victims don’t have adequate insurance to rebuild. 11/1/2007 (USA Today)
U.S. Treasury Secretary Henry Paulson said Tuesday the U.S. economy is strong enough to overcome the housing downturn but added the recovery process could take longer than expected. 10/30/2007 (AP)
Mortgage lenders struggling to remain profitable in the wake of the mortgage meltdown are applying a heavy dose of marketing aimed at those with good credit and solid home equity. 10/29/2007 (LA Times)
Residential Construction declines 1.4% 11/1/2007 (CAR)
Consumer Confidence declined for the third straight month in October, indicating continued consumer skepticism about the economy, fueled largely by the housing and mortgage lending crisis. The Consumer Confidence Index now stands at 95.6, compared with 99.5 in September. 11/1/2007 (CAR)
Sources: California Association of REALTORS(R), Associated Press, LA Times, Reuters, CNNmoney.com, KNX-AM Los Angeles
Subscribe to:
Posts (Atom)
