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