Fred Kreger (661) 505-4311
May
16
New York Times: Needy States Use Housing Aid Cash to Plug Budgets
May 16, 2012 | Consumer Information, Government Regulation and Legislation | Leave a Comment
May 15, 2012
New York Times: Needy States Use Housing Aid Cash to Plug Budgets
By SHAILA DEWAN
Hundreds of millions of dollars meant to provide a little relief to the nation’s struggling homeowners is being diverted to plug state budget gaps.
In a budget proposed this week, California joined more than a dozen states that want to help close gaping shortfalls using money paid by the nation’s biggest banks and earmarked for foreclosure prevention, investigations of financial fraud and blunting the ill effects of the housing crisis. California was awarded more than $400 million from the banks, and Gov. Jerry Brown has proposed using the bulk of that sum to pay the state’s debts.
The money was part of a national settlement valued at $25 billion and negotiated with five big banks over abuses in their mortgage and foreclosure processes.
The settlement, reached in February after a year of talks and intervention by the Obama administration, was the second-largest in history involving the states, trailing the tobacco industry settlement, and represented the first large-scale commitment by banks to provide direct aid to borrowers.
As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure surge. But critics complained that this was the only cash the banks were required to pay — the rest comes in the form of “credits” for reducing mortgage debt and other activities. Even that relatively small amount has proved too great a temptation for lawmakers.
Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes.
In Texas, $125 million went straight to the general fund. Missouri will use its $40 million to soften cuts to higher education. Indiana is spending more than half its allotment to pay energy bills for low-income families, while Virginia will use most of its $67 million to help revenue-starved local governments.
Like California, some other states with outsize problems from the housing bust are spending the money for something other than homeowner relief. Georgia, where home prices are still falling, will use its $99 million to lure companies to the state.
“The governor has decided to use the discretionary money for economic development,” said a spokesman for Nathan Deal, Georgia’s governor, a Republican. “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”
Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”
The $2.5 billion was intended to be under the control of the state attorneys general, who negotiated the settlement with the five banks — Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and Ally. But there is enough wiggle room in the agreement, as well as in separate terms agreed to by each state, to give legislatures and governors wide latitude. The money can, for example, be counted as a “civil penalty” won by the state, and some leaders have argued that states are entitled to the money because the housing crash decimated tax collections.
Shaun Donovan, the federal housing secretary, has been privately urging state officials to spend the money as intended. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” he said Tuesday.
Some attorneys general have complied quietly with requests to repurpose the money, while others have protested. Lisa Madigan, the Democratic attorney general of Illinois, said she would oppose any effort to divert the funds. Tom Horne, the Republican attorney general of Arizona, said he disagreed with the state’s move to take about half its $97 million, which officials initially said was needed for prisons.
But Mr. Horne said he would not oppose the shift because the governor and the Legislature had authority over budgetary matters. The Arizona Center for Law in the Public Interest has said it will sue to stop Mr. Horne from transferring the money.
In California, Attorney General Kamala D. Harris had played hardball in the settlement negotiations, holding out until the very end for a deal guaranteeing that a large share of the benefits would go to California, and then trumpeting her success in a news conference and a flurry of interviews with national news outlets. So Mr. Brown’s revised budget put her in an awkward position.
“While the state is undeniably facing a difficult budget gap,” she said in a statement, “these funds should be used to help Californians stay in their homes.” Both officials are Democrats.
When asked if Mr. Brown could legally appropriate the money, which is supposed to be held in a special fund “for the benefit of California homeowners affected by the mortgage/foreclosure crisis,” a spokesman for Ms. Harris declined to comment.
Just last week, Ms. Harris announced plans to give about half the money to groups that provide housing counseling and legal assistance to homeowners — groups whose budgets have shrunk while demand for their services grows. The other half would be used primarily for investigation of mortgage-related crime.
States using some or all of their money for housing have designated it for a wide variety of programs, like a small fund for low-interest loans to build housing in low-income neighborhoods, in Virginia, and Ohio’s sweeping plan to demolish abandoned property.
In New York, Attorney General Eric T. Schneiderman stepped in with $15 million in settlement money for housing counseling and legal assistance when state support ran out last month, and plans to spend the bulk of its $130 million on similar programs. North Dakota will use its tiny allotment, $1.9 million, to provide housing to police officers and emergency responders in its booming oil-field counties, where shelter is scarce.
Using the money for other purposes is shortsighted, housing advocates warn. “If you leave homeowners hanging out there to dry, then in the short term maybe you help to meet the budget gap this year,” said Maeve Elise Brown, the executive director of Housing and Economic Rights Advocates, based in Oakland. “But in the long term the more people we have going through foreclosure, the worse it’s going to be for our economy as a whole.”
In some states, redirecting the money could have a racially discriminatory effect, said Alan Jenkins, the executive director of the Opportunity Agenda, which supports homeownership, because in some cities black homeowners disproportionately lost their homes, Mr. Jenkins said.
“If you dump all of these funds into the general coffers, the African-American homeowners are not going to benefit in any real way because they represent such a small percentage of the larger state,” Mr. Jenkins said.
Robbie Brown contributed reporting.
May
14
The Credit Union Difference from Fred Kreger & Fred Arnold
May 14, 2012 | Consumer Information, Mortgage Lending | Leave a Comment
Fred Kreger, Branch Manager of American Family Funding talks with Fred Arnold on the differences and benefits of being a member of a Credit Union vs a bank. Credit Unions are not for profit financial institutions offering many of the same products and services as big banks.
May
11
Weekend Mortgage Commentary – May 7, 2012
May 11, 2012 | Consumer Information, Mortgage Lending | Leave a Comment
Mortgage rates continue to remain at record lows and buyers seem to be responding to it. The Mortgage Bankers Association reported this week a nice increase of 3.4% in purchase activity. Refinances increased a smaller 1.3%.
Sentiment in many real estate markets around the country is that the combination of low home prices with incredibly affordable mortgage rates is making the time perfect to act on purchasing. In addition, many markets around the country are beginning to see housing inventories drop, which is creating upward pressure on home prices in certain areas. Ever since the banks had to revamp their foreclosure practices, the amount of foreclosed homes coming on the market has dropped significantly, which can further affect home prices. Fewer inventories create more demand.
The stock market has been taking it hard this week in that many investors are becoming more concerned about more financial trouble in Europe. The stock averages have been declining throughout the week however, the losses have not been overwhelming indicating that although there is concern, and panic has not set in.
Gas prices have dropped approximately 20 cents in the last 30 days giving drivers a reprieve at the pumps. What is exceptionally gratifying is that typically gas prices will peak in late May just as the country is heading into the summer driving season.
Inflation on the wholesale level remained unchanged this past month indicating that inflation remains completely in control. The financial uncertainty in Europe combined with concerns about corporate profits here in the U.S. continue to keep many investors on the sidelines and others putting their money into government bonds which is what is keeping mortgage rates amazingly low.
This week was a quiet week for economic data. Next week we may see more volatility as we begin to receive the first of many housing reports to be released in the next week and a half. I have predicted in the past that we would see housing numbers improve however; I am giving up my predictions for the time being. Simple reason, is because my predictions have not been very accurate, and I can find so many other ways to embarrass myself, I do not need to do it by making bad predictions or bets.
Reports for next week are:
- Tuesday May 15th – Consumer Price Index and Retail Sales
- Wednesday May 16th – MBA Applications, Housing Starts, Industrial Production and FOMC Minutes
- Thursday May 10th – First Time Jobless Claims
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can.
Fred Kreger, CMC
Certified Mortgage Consultant
American Family Funding
A Division of American Pacific Mortgage – A Direct Lender
President Elect & Vice President, Government Affairs
California Association of Mortgage Professionals (CAMP)
“Excellence and Integrity in Lending”
28368 Constellation Road
Ste 398
Santa Clarita, CA 91355
Phone: (661) 505-4311
Fax: (661) 705-8339
DRE License # 01371184 / 01215943
NMLS License# 214640 / 1850
Check out my blog site: www.fredkreger.com
May
9
Real Estate Season Heats Up Just In Time For Summer: What’s Driving the Hot Market?
May 9, 2012 | Consumer Information, Mortgage Lending | Leave a Comment
My mother has always told me to be patient when it comes to making financial decisions but, when the time is right, I should invest aggressively. Two decades in my real estate financing and investing career have proven her advice to be sound time and again. I have to say that as far as the eye can see, right now is the right time to invest in real estate.
Make no mistake, just in time for summer, the real estate market is hot, hot, hot. But what’s driving this boom? Why are homes flying off the market so quickly? Well, as far as I can tell, the boom in home sales can be attributed to five major factors. Here’s a look at what’s making this the hottest time to buy a home in years.
- Pent-up Demand
After the housing bubble burst, many people postponed their plans to buy a home. They’ve spent that time tracking the market and patiently waiting for the right opportunity to present itself, which it has now done. Home values appear to have bottomed out and, in some areas, values are even beginning to slowly rebound. In addition, interest rates are at a generation low. As a result of this increased affordability, those who have been sitting on the sidelines for years are now in the market, unleashing a pent-up demand for homes.
- Investors Are Flooding Back Into The Market
Historically low interest rates, coupled with affordable pricing have made this the best real estate investment market in years. Investors are pouring in to capitalize on once in a generation interest rates, which can be locked in for as many as thirty years. Because the only constant in the real estate market is change, the opportunity to invest and lock in at these rates (guaranteeing stability in payments) has investors eager, excited and aggressive about buying homes in this market.
- Rents Are On The Rise
Rental prices are beginning to rise, which propels a lot of people into buying. Many use a rent increase notice as the friendly nudge they need to make the shift to home ownership so that their money will no longer be applied toward someone else’s investment. With rates low and values low, many renters are finding that they can purchase their own home for about the same amount in monthly payments as a rental. With 3% down programs available to so many, this has brought many first time home buyers into the market.
- Affordability Is Way Up, Rates Are Way Down
The cost of the dollar is down. Values are at their bottom. Interest rates will almost certainly not go any lower. All of this equates to affordability being at an all time high for this generation.
- People Who Lost Their Homes Early On Are Coming Back Into The Market
Over the last five years, many people lost their homes to foreclosure or short sales. Of those, many have rebuilt their credit, saved money and are now, once again, eligible for new loans and are coming back into the real estate market in force.
I certainly don’t advocate rushing into buying a home. A financial investment of this magnitude needs to be carefully weighed and considered. However, I’d be remiss if I didn’t encourage anyone who is considering buying a home to begin to take action now. This summer is going to prove to be one of the best times in recent memory (and probably the foreseeable future) to buy a home. So get on the phone with your trusted mortgage professional and get in touch with an experienced REALTOR® today. There’s no cost to you whatsoever, unless you buy a home, so it can’t hurt to have a couple of conversations. That way you’ll be able to see for yourself if the time is right for you to buy a home.
May
8
Are you training and passionate about what you to on a daily basis?
May 8, 2012 | Uncategorized | Leave a Comment
Michael Phelps Swimming Workout Training Routine Eating 12000 …
25 year old Michael Phelps became one of the most decorated Olympic athletes of all time after winning 16 Olympic medals- six gold and two bronze at Athens in 2004, and eight gold in Beijing in 2008. Phelps surpassed Mark Spitz’s record of most gold medals won at a single Olympics, surpassing Spitz’s seven gold medal performance at Munich in 1972. Phelps says he plans to compete in the 2012 Summer Olympics in London.
Michael Phelps swimming workout and 12,000 calorie diet are one of the most physically demanding around. His training routine and meal plan are astonishing for someone who is only 6’4 and weighs 165 lbs.
In peak training phases, Phelps swims minimum 80,000 meters a week, which is nearly 50 miles. He practices twice a day, sometimes more if he’s training at altitude. Phelps trains for around five to six hours a day at six days a week.
To give himself some additional entertainment in the water, Phelps listens to music during his long workouts with waterproof headphones. Swimming in the water, especially that long, can be pretty boring. Listening to music can provide that extra spark to your workout
Phelps does long swims to improve his endurance. However, he does other drills to improve his swimming speed and form. He does a lot of vertical kicking and underwater kicking. To maintain his feel for the water, Phelps does sculling, which is a stroke in which you move your arms back and forth in small figure eights. Phelps uses numerous training gear in the water, such as kickboards, pull buoys, training paddles, and snorkels. These types of training equipment can put more emphasis on your legs, glutes, upper body and abs in the pool, in addition to providing a great way for injury rehabilitation.
Phelps recently added a weightlifting regimen to his dry-land work, which is evident by his ripped six pack abs and body. He lifts weights 3 days a week, preferably on Monday, Wednesday and Friday. However, Phelps prefers bodyweight exercises like pushups and weighted pull-ups for muscular strength and endurance. These bodyweight exercises won’t bulk Phelps up like if he were doing more compound based weight exercises (squats, deadlifts, bench press, etc.). Weight training should be done but should not be a basis. Phelps keeps a great balance between bodyweight exercises and weight exercises. Relying more on bodyweight exercises will keep Phelps lean and will not add too much additional weight where it could affect his swimming speed and movement in the water. The less weight you have to drag in the water, the quicker you can swim.
Phelps was born to be a swimmer. He has a 6 ft 7 inch arm reach, which is 3 inches longer than his height. He has short legs for his height, which gives him even more of an advantage in the pool. In addition, his knees are double-jointed and his feet can rotate 15 degrees more than average, allowing his feet to act more like flippers.
In terms of his diet, it has been reported that Phelps eats 12,000 calories a day, around 4,000 calories per meal. For breakfast, Phelps eats three fried-egg sandwiches with cheese, lettuce, tomatoes, fried onions, and mayonnaise. Then he drinks two cups of coffee and then consumes a five-egg omelet, a bowl of grits, three slices of French toast with powdered sugar and three chocolate-chip pancakes.
For lunch, Phelps eats a pound of pasta and two large ham and cheese sandwiches on white bread with mayo. He then drinks about 1,000 calories worth of energy drinks. For dinner, Phelps eats another pound of pasta and a full pizza followed by another 1,000 calories of energy drinks. You may think that this is overload and complete overeating. However, as mentioned above, Phelps trains five to six hours a day nearly every single day and is giving it his full effort most of the time. His body is burning thousands upon thousands of calories a day. Phelps probably has a very fast natural metabolism as well so this adds to even more reason why he needs to eat that much. The more calories you have, the more energy there is. This is all about energy for Phelps and these types of foods give him plenty of it. Try training that much and not eating thousands of calories a day. You wouldn’t be able to train effectively!
May
4
Weekend Mortgage Commentary – May 4, 2012
May 4, 2012 | Consumer Information, Mortgage Lending | Leave a Comment
There has been a lot of trepidation this week awaiting the latest jobless report. On Friday morning the government announced that the national unemployment rate dropped to 8.1%. However before you begin to believe that the employment sector is improving, you need to understand the real numbers.
The reason the unemployment figure dropped is because more workers dropped out of the workforce, not because the jobs market got better. It was announced this morning that only 115,000 jobs were created last month which is significantly lower than March’s 154,000 and February’s 259,000. The trend for hiring is heading in the wrong direction.
What is interesting regarding unemployment is that I read an article earlier this week that is disturbing in two ways. The first disturbing factor is that unemployment only includes non working individuals that have sought out locating a job in the last four weeks. Anyone who has either taken a break from looking for a job, or has given up entirely out of frustration is not included in the unemployment statistics.
The second even more disturbing fact is that when you count the number of people who fall into the category of not being counted, but are in fact truly unemployed, there are an additional 86 million people. Imagine what would happen to the national unemployment percentage if those people were counted?
Additional labor news is that the size of the national labor force is the smallest it has been since the 1980’s. Currently there is little optimism that enough jobs will be created to absorb the bulk of this uncounted group. Let me remind you that that we have seen that as technology continues to advance, employers can produce do more with less staffing, which ultimately reduces the need for hiring. I am not suggesting that these individuals in this uncounted labor population will never be re-employed. I am just making a point that there is more going on behind the scenes regarding the national employment picture than the average consumer understands.
The stock market continued its roller coaster ride this week hitting the highest point in 4 years on Wednesday only to drop back down to where the week began on Thursday. Overall there has been steady improvement in the markets however concerns about an economic slowdown are beginning to take hold once again. Additionally, trading volume continues to remain on the lighter side as many investors are sitting on the sidelines waiting to see what happens. With the poor jobs report, the market is down over 100 points on Friday mid-day.
Mortgage rates are once again flirting with all time lows and that is a direct result of investors continuing to place money into the safety of government bonds which drives down the yields which directly impacts mortgage rates. The near record borrowing rates continue to improve the fuel need to improve home purchasing. The MBA reported that applications for home purchases continued the improving trend by rising another 2.9% last week.
A report this week showed that homeownership has hit the lowest point in the last 15 years. Believe it or not, I see this news as a positive sign for housing in the future. As rental vacancy decreases, the cost to rents will increase. The continued decline in apartment vacancy combined with the rising rents will ultimately make home ownership less expensive than renting. This transition will drive buyers into the market. Additionally, qualifying for a mortgage is starting ever so slowly to ease. More creative mortgage programs are hitting the housing market which is opening up the door for more buyers to qualify for financing.
Economic reports on tap for next week are:
Wednesday May 9th – MBA Applications
- Thursday May 10th – First Time Jobless Claims
- Friday May 11th – Producer Price Index
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can.
Fred Kreger, CMC
Certified Mortgage Consultant
American Family Funding
A Division of American Pacific Mortgage – A Direct Lender
President Elect & Vice President, Government Affairs
California Association of Mortgage Professionals (CAMP)
“Excellence and Integrity in Lending”
28368 Constellation Road
Ste 398
Santa Clarita, CA 91355
Phone: (661) 505-4311
Fax: (661) 705-8339
DRE License # 01371184 / 01215943
NMLS License# 214640 / 1850
Check out my blog site: www.fredkreger.com
May
1
Banks Resume Tight Mortgage Lending Standards
May 1, 2012 | Consumer Information, Government Regulation and Legislation, Mortgage Lending | Leave a Comment
Banks Resume Tight Mortgage Lending Standards
04/30/2012 By: Mark Lieberman, Five Star Institute Economist
With an upsurge in demand, banks resumed tightening standards for residential mortgage loans, the Federal Reserve said Monday in a quarterly survey for bank lending standards.
According to the survey, a net 30.2 percent of bank surveyed in the Senior Loan Officer Opinion Survey saw increased demand in the first quarter for traditional mortgage loans compared with a net 3.8 percent reporting stronger demand in the fourth quarter.
The survey found that a net 1.9 percent of survey respondents also reported tightening loan standards, compared with the first quarter when a net 5.7 percent said they were easing standards.
A net 23.1 percent of respondents said demand for non-traditional residential mortgage loans went up during the first quarter, compared with the fourth quarter when a net 4.3 percent said demand was slowing.
The loans officers’ survey said a net 11.3 percent of respondents reported tightening lending standards for non-traditional residential loans in the first quarter compared with 4.3 percent who reported tightening standards for similar loans in the fourth quarter.
The net percentage tightening standards was far lower than in had been immediately after the onset of the recession when a net 52.9 percent of loan officers reported tightening standards on traditional residential loans and 84.2 percent reported tightening standards on non-traditional loans.
The loan officers surveyed reported easing standards on other types of lending:
• A net 6.9 percent said they were easing standards on commercial and industrial (C & I) loans to large and middle-market firms in the first quarter compared with a net 5.4 percent who were tightening standards in the fourth quarter
• A net 1.8 percent said they were easing standards on C & I to small firms in the first quarter; a net 1.9 percent reported tightening standards in the fourth quarter,
• Demand for loans in the first quarter increased 31 percent from large and middle-marker firms and 21.8 percent from small firms according to the survey.
• A net 11.6 percent of banks responding said they were easing standards on credit card loans in the first quarter, matching the resulting of the fourth quarter. A net 17.5 percent of respondents reported stronger demand for credit cards in the first quarter, up from 8.1 percent in the fourth quarter.
• A net 17.3 percent of respondents said they eased standards in the first quarter for auto loans compared with a net 14.0 percent who said they were easing standards in the fourth quarter. A net 35.3 percent of survey respondents reported stronger demand for auto loans in the first quarter, up from a net 14.3 percent in the fourth quarter.
The survey asks bankers whether demand is increasing, decreasing or remaining the same and similar questions for lending standards reporting the results by subtracting decreasing or unchanged demand from increasing and the percentage of respondents easing or not changing standards from those reporting tightening standards.
Apr
28
Short sellers seeking to avoid foreclosure will get faster replies from banks
April 28, 2012 | Consumer Information, Mortgage Lending | Leave a Comment
Short sellers seeking to avoid foreclosure will get faster replies from banks
http://wapo.st/Jhwyt2
By Kenneth R. Harney, Published: April 27
For the estimated 11 million homeowners burdened with an underwater mortgage, a federal policy change could be good news. Starting in June, if you decide to do a short sale to shed your mortgage debt load and avoid foreclosure, you may not have to wait for months to hear back from your bank after submitting an offer from a potential purchaser.
Instead, if your loan is owned or securitized by either of the dominant conventional mortgage market players, Fannie Mae or Freddie Mac, you can expect a response within 30 business days, with a final decision no later than 60 days. If you don’t hear back during the first 30 days, the bank will be required to send you weekly updates telling you precisely where the holdups are and when they are likely to be resolved.
None of this is typical of short-sale procedures today. Banks and servicers that don’t comply will face monetary and other penalties.
The mandatory timelines, which real estate and mortgage industry experts say should help speed up what traditionally has been a glacial process, are being imposed by the Federal Housing Finance Agency, the regulatory overseer of Fannie and Freddie in conservatorship. Short sales, an important alternative to foreclosure, involve the lender or loan servicer agreeing to accept less than the full amount owed by the borrower.
Though they can be complex and messy — and can take anywhere from several months to more than a year to complete — short sales are turning into a mainstay of the real estate market.
According to a report from the foreclosure data firm RealtyTrac, short sales jumped by 33 percent in January compared with the same month the year before. In 12 states — including California, Arizona, Colorado, Florida, New York and New Jersey — there were more short sales recorded during January than sales of foreclosed properties.
This trend is welcome, say regulators, but the time required to complete short sales is still far too long. The 30-day and 60-day mandates address just one of the key points of delay in the process, but regulators promise a series of additional steps in coming months to speed transactions. They include clearer guidelines on borrower eligibility, property valuations, compensation for lenders holding second liens and mortgage insurance issues. All of these are points of friction that can delay a short-sales agreement for weeks or months.
Realty agents who specialize in short sales say setting mandatory timelines is a step in the right direction but won’t solve all the problems. The new rules and promises of more “are great if they really happen,” said broker Erik Berry of Erik Berry and Associates in Sacramento, Calif. Short sales that his firm handles take an average of “about six months” from start to finish on Fannie-Freddie loans. But FHA transactions, which will not be affected by the new regulations, average much longer, and sometimes drag on for a year.
Berry also is skeptical that banks and servicers will be able to reform their staffing practices quickly enough to meet the compressed timelines, even if penalties are imposed.
In some cases, he said in an interview, banks switch personnel and negotiators five or six times over the course of a short sale. “You’re dealing with one person one day, and they say, ‘Don’t worry, everything’s fine,’ then suddenly they’re gone and you never hear from them again,” leaving the deal stalled for weeks.
Matt Battiata, whose Battiata Real Estate Group in Del Mar, Calif., handles hundreds of short sales a year, said a reliable, 60-day decision deadline for responses to offers will be helpful — 30 days better than the 90-day average he now sees from banks — but the whole process will still take longer than traditional sales. For clients seeking to do short sales today, Battiata estimates five to six months from offer to closing. After June, assuming the new federal rules and penalties work, the process might be shortened by only a month.
On top of this, some of the complications inherent in short sales are beyond the control of regulators or banks, he pointed out. For instance, buyers put in offers to purchase but then change their minds, forcing the sellers and brokers to come up with replacement offers, and causing the bank to reset the clock to analyze the new package.
The takeaway for potential short sellers: Be aware of the new moves afoot to streamline the process, but don’t expect miracles.
Ken Harney’s e-mail address is kenharney@earthlink.net.
Apr
27
Weekend Mortgage Commentary – April 27, 2012
April 27, 2012 | Consumer Information, Mortgage Lending | Leave a Comment
Every month the Fed meets to discuss economic policy, and every month they issue virtually the same report. We continue to hear that the economy is moderately improving and that the Fed plans on maintaining economic policy the same as it is. Simply put, this means that we are growing and recovering very slowly and that challenges to the economy will continue to remain both from the U.S. and from abroad.
Additionally the Fed has indicated that they stand ready to add more stimulus to help the economy if it is warranted, however their current plans and actions being taken will remain unchanged for now. By the way, the stock market seemed to like this news because we have had 4 straight days of upward numbers.
Quite a few pieces of real estate data were released this week. The real estate market continues to mend itself at a very slow pace. Don’t get me wrong, the trend is in the right direction, it is just taking much longer than anyone predicted and it is occurring at a slower pace than predicted. Many experts believed that housing would be in better shape than it is today.
The S&P Case-Shiller Home Value Index showed that home prices have ticked up .2% in the 20 major cities throughout the U.S. that they measure. In addition, the report shows that the rate of overall value decline may be slowing. In February the index showed that home prices were down 3.9% from the prior February. The latest report shows that values are down 3.5% from a year ago which indicates that the market may be stabilizing.
New Home Sales came in weaker than expected and that is what made big headlines early this week. However, as the media always does, they only report the headline and they didn’t report what is really happening which is much better than expected. March new home sales declined 25,000 which had people worried about the future of building. What mainstream media failed to announce is that the prior month’s numbers had been revised upward by 40,000 showing that in February there was huge gain in sales. The reality of the matter is that new homes sales are improving and more than likely there will be an upward revision to this week’s numbers as well.
Additional positive real estate data came in the report on Pending Home Sales which showed a 4.1% increase in contract signings from the prior month. This is another consecutive monthly increase that has occurred since September. Concern remains that there is a large gap between pending and existing home sales. The difference is attributed to the number of transactions that are being put together versus the number that are closing. All indications point to the continued tight lending guidelines that exist. The bright side is that more home buyers are hitting the market attempting to purchase real estate.
Mortgage rates continue to remain very low and home affordability is still at one of the highest points in history. The inventory of homes for sale is dropping slowly. The question remains now that the five biggest lenders in this country have settled with the government on their illegal practices of handling foreclosures, just how much will foreclosures increase in the coming months now that the banks are bank pursuing once again after the moratorium that lasted almost a year? We just have to wait and see what the real impact will be.
Economic reports on tap for next week are:
- Tuesday May 1st – ISM Manufacturing Index
- Wednesday May 2nd – MBA Applications and the ADP Employment Report
- Thursday May 3rd – First Time Jobless Claims
- Friday May 4th – National Unemployment
As your mortgage professional, I am happy to assist you with any information you may need regarding mortgage or real estate information. I welcome the opportunity to serve you in any way I possibly can.
Fred Kreger, CMC
Certified Mortgage Consultant
American Family Funding
A Division of American Pacific Mortgage – A Direct Lender
President Elect & Vice President, Government Affairs
California Association of Mortgage Professionals (CAMP)
“Excellence and Integrity in Lending”
28368 Constellation Road
Ste 398
Santa Clarita, CA 91355
Phone: (661) 505-4311
Fax: (661) 705-8339
DRE License # 01371184 / 01215943
NMLS License# 214640 / 1850
Check out my blog site: www.fredkreger.com
Apr
26
NAR: Pending home sales rise to highest level in 2 years
April 26, 2012 | Consumer Information | Leave a Comment
• April 26, 2012 • 9:53am
Pending home sales increased in March and are well above a year ago, according to the National Association of Realtors.
NAR’s pending home sales index, a forward-looking indicator based on contract signings, rose 4.1% to 101.4 in March from an upwardly revised 97.4 in February. It is 12.8% above March 2011 when it was 89.9. The data reflects contracts but not closings.
The index is now at the highest level since April 2010 when it reached 111.3.
Lawrence Yun, NAR chief economist, said 2012 is expected to be a year of recovery for housing. “First-quarter sales closings were the highest first-quarter sales in five years. The latest contract signing activity suggests the second quarter will be equally good,” he said.
“The housing market has clearly turned the corner,” Yun added. “Rising sales are bringing down inventory and creating much more balanced conditions … which means home prices will be rising in more areas as the year progresses.”
The index is based on a large national sample, typically representing about 20% of transactions for existing-home sales. An index of 100 is equal to the average level of contract activity during 2001, which was the first year of examination.
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