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Thursday, October 20, 2011
Friday, April 8, 2011
How Might a Government Shutdown Impact the Loan Process?
________________________________________
BY ADAM QUINONES
Congress needs to pass a "Continuing Resolution" by midnight on Friday, April 8th to avoid a government shutdown.
From Wikipedia: A continuing resolution is a type of appropriations legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year. The legislation takes the form of a joint resolution, and provides funding for existing federal programs at current or reduced levels.
Reuters Headlines...
RTRS-WHITE HOUSE SAYS PROCESSING OF SOME PAPER-FILED IRS TAX REFUNDS WILL BE SUSPENDED IF THE GOVERNMENT DOES HAVE TO SHUT DOWN
RTRS-WHITE HOUSE SAYS PROCESSING IRS TAX AUDITS WOULD ALSO BE IMPACTED BY A GOVERNMENT SHUTDOWN
RTRS-PROCESSING OF SMALL BUSINESS ADMIN LOANS WOULD BE AFFECTED IF GOVT SHUTS DOWN - U.S. OFFICIAL
RTRS-US OFFICIAL - GOVERNMENT SHUTDOWN WOULD IMPACT FHA, HAVE "SIGNIFICANT IMPACT" ON HOUSING MARKET IN PEAK HOME-BUYING SEASON
RTRS-US OFFICIAL-NUMBER OF FEDERAL WORKERS WHO WOULD BE IDLED COULD BE IN THE SAME VICINITY AS THE 800,000 IMPACTED IN LAST SHUTDOWN
RTRS-US OFFICIAL-ELECTRONIC FILING OF US TAX RETURNS WILL CONTINUE IN THE EVENT OF A GOVERNMENT SHUTDOWN
RTRS-SIGNIFICANT NUMBER OF PENTAGON CIVILIAN EMPLOYEES WOULD BE FURLOUGHED IF GOVT SHUT DOWN - U.S. OFFICIAL
RTRS-US OFFICIAL-MILITARY WILL BE PAID UP TO APRIL 8TH IF GOVT SHUTS, SALARIES WILL ACCRUE AFTER THEN BUT PAYMENTS WILL BE DELAYED
RTRS-OBAMA SAYS GOVERNMENT SHUTDOWN WOULD HURT U.S. ECONOMY RIGHT WHEN IT'S GAINING MOMENTUM
RTRS-OBAMA URGES DEMOCRATS AND REPUBLICANS TO MAKE COMPROMISES TO GET BUDGET DEAL, KEEP GOVERNMENT RUNNING
----------------------------------------
HOW WOULD A GOVERNMENT SHUT DOWN HAVE A "SIGNIFICANT IMPACT" ON THE HOUSING MARKET?
INITIAL THOUGHTS: The government's servers won't be taken off-line. The network will still be up and running. Essential staff will still be in place. FHA Connection is web-based but ordering FHA Case Numbers ASAP is advised. The IRS is an important part of the loan application process. Tax transcripts are generally accessible online but it seems like a safe move to get 4506-T's ordered now. One obvious thought is not being able to verfiy the employment status of borrowers with government jobs. Plus there could be a delay in getting current paystubs. FHA and Ginnie Mae aren't the only program offices within HUD though.
HERE IS A LIST OF HUD PROGRAMS THAT COULD BE IMPACTED.....
Community Planning and Development
* Community Development Block Grants (CDBG) (Entitlement)
* Community Development Block Grants (Non Entitlement) for States and Small Cities
* Community Development Block Grants (Section 108 Loan Guarantee)
* Community Development Block Grants (Disaster Recovery Assistance)
* Community Development Block Grants (Section 107)
* Community Development Block Grants for Insular Areas
* Community Development Block Grants (Rural Innovation Fund)
* The HOME Program: HOME Investment Partnerships
* Housing Trust Fund
* Shelter Plus Care (S+C)
* Emergency Shelter Grants (ESG) Program
* Surplus Property for Use to Assist the Homeless (Title V)
* Supportive Housing Program
* Continuum of Care Program
* Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) Program
* Rural Housing Stability Assistance Program
* Brownfields Economic Development Initiative (BEDI)
* Economic Development Initiative ("Competitive EDI") Grants
* Empowerment Zones
* Self-Help Homeownership Opportunity Program (SHOP)
* Capacity Building for Community Development and Affordable Housing
* Housing Opportunities for Persons With AIDS (HOPWA)
* Loan Guarantee Recovery Fund for Church Arson and Other Acts of Terrorism (Section 4)
Federal Housing Administration (FHA)
* Single Family Housing Programs
o One to Four Family Home Mortgage Insurance (Section 203(b))
o Mortgage Insurance for Disaster Victims (Section 203(h))
o Rehabilitation Loan Insurance (Section 203(k))
o Single Family Property Disposition Program (Section 204(g))
o Loss Mitigation
o FHA-Home Affordable Modification Program (FHA-HAMP)
o Graduated Payment Mortgage (GPM) (Section 245(a))
o Adjustable Rate Mortgages (ARMs) (Section 251)
o Home Equity Conversion Mortgage (HECM) Program (Section 255)
o Manufactured Homes Loan Insurance (Title I)
o Property Improvement Loan Insurance (Title I)
o Counseling for Homebuyers, Homeowners, and Tenants (Section 106)
o Good Neighbor Next Door
o Energy Efficient Mortgage Insurance
o Insured Mortgages on Hawaiian Home Lands (Section 247)
o Insured Mortgages on Indian Land (Section 248)
Risk Management and Regulatory Affairs
* Manufactured Home Construction and Safety Standards
Multifamily Housing Programs
* Supportive Housing for the Elderly (Section 202)
* Assisted-Living Conversion Program (ALCP)
* Emergency Capital Repairs Program
* Multifamily Housing Service Coordinators
* Manufactured Home Parks (Section 207)
* Cooperative Housing (Section 213)
* Mortgage and Major Home Improvement Loan Insurance for Urban Renewal Areas (Section 220)
* Multifamily Rental Housing for Moderate-Income Families (Section 221(d)(3) and (4))
* Existing Multifamily Rental Housing (Section 207/223(f))
* Mortgage Insurance for Housing for the Elderly (Section 231)
* Supplemental Loans for Multifamily Projects (Section 241)
* Supportive Housing for Persons with Disabilities (Section 811)
* Multifamily Mortgage Risk-Sharing Programs (Sections 542(b) and 542(c))
* Mark-to-Market Program
* Self-Help Housing Property Disposition
* Renewal of Section 8 Project-Based Rental Assistance
Healthcare Programs
* New Construction or Substantial Rehabilitation of Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities (Section 232); Purchase or Refinancing of Existing Facilities (Section 232/223(f))
* Hospitals (Section 242)
Public and Indian Housing
* Housing Choice Voucher Program
* Homeownership Voucher Assistance
* Project-Based Voucher Program
* Public Housing Operating Fund
* Public Housing Capital Fund
* Public Housing Neighborhood Networks (NN) Program
* Revitalization of Severely Distressed Public Housing (HOPE VI)
* Choice Neighborhoods
* Public Housing Homeownership (Section 32)
* Resident Opportunity and Self-Sufficiency (ROSS) Program
* Family Self-Sufficiency Program
* Indian Community Development Block Grant (ICDBG) Program
* Indian Housing Block Grant (IHBG) Program
* Federal Guarantees for Financing for Tribal Housing Activities (Title VI)
* Loan Guarantees for Indian Housing (Section 184)
* Native Hawaiian Housing Block Grant (NHHBG) Program
* Loan Guarantees for Native Hawaiian Housing (Section 184A)
Fair Housing and Equal Opportunity
* Fair Housing Act (Title VIII)
* Fair Housing Assistance Program (FHAP)
* Fair Housing Initiatives Program (FHIP)
* Equal Opportunity in HUD Assisted Programs (Title VI, Section 504, Americans with Disabilities Act, Section 109, Age Discrimination Act, and Title IX)
* Section 3 Program
* Voluntary Compliance
Policy Development and Research
* Policy Development and Research Initiatives
Government National Mortgage Association (Ginnie Mae)
* Ginnie Mae I Mortgage Backed Securities
* Ginnie Mae II Mortgage Backed Securities
* Ginnie Mae Multiclass Securities Program
* Ginnie Mae Platinum Securities Program
* Healthy Homes and Lead Hazard Control
* Office of Sustainable Communities
o Sustainable Communities Initiative
Temporary Programs
* Housing and Economic Recovery Act of 2008 (HERA) Programs
* HOPE for Homeowners
* Neighborhood Stabilization Program (NSP1)
* American Recovery and Reinvestment Act of 2009 (Recovery Act Programs)
o Neighborhood Stabilization Program 2
o Green Retrofit Program for Multifamily Housing
o Healthy Homes Demonstration Grant Program and Technical Studies Grants
o Homelessness Prevention and Rapid Re-Housing Program (HPRP)
o Lead-Based Paint Hazard Control Grant Program and Lead Hazard Reduction Demonstration Grant Program
o Indian Housing Block Grants (Formula)
o Indian Housing Block Grants (Competitive)
o Public Housing Capital Fund (Formula)
o Public Housing Capital Fund (Competitive)
o Tax Credit Assistance Program (TCAP)
* Dodd-Frank Wall Street Reform and Consumer Protection Act Programs
o Neighborhood Stabilization Program 3
o Emergency Homeowners Loan Program
Other Resources
* Neighborhood Reinvestment Corporation (NeighborWorks America)
* U.S. Interagency Council on Homelessness
-------------------------------------
We see this childish Congressional behavior as politics in their purest form. STANDARD OPERATING PROCEDURES ON CAPITOL HILL. Playing this game of chicken with the bond market carries massive consequences. We're cutting off our nose just to spite our face here. The last thing we want to do is put the U.S. credit rating in the global spotlight. We don't want bond vigilantes chasing after our debt like they are EU debt right now. A "bitter fight over budget cuts" unfortunately would do just that. I hope our so called leaders in Washington avoid that bitter fight. I hope they act like adults and avoid grand-standing and pandering. We don't need bickering. We need common ground. We need to develop a plan and make some moves to restore confidence in our country.
READ MORE: Budget Battle Looms. Bond Vigilantes Lurk
Besides the observations made above, we don't know exactly how a government shutdown would impact the housing market, we don't see anything positive coming from it though....mortgage rates certainly wouldn't react well!
WHAT ELSE ARE WE MISSING HERE?
Do Fannie and Freddie count as government or is that just an "implied" shutdown?
UPDATED AT 9:00 ON APRIL 7, 2011...
Suntrust sent this out last night:
News reports continue to develop regarding a potential government shutdown if budget agreements are not reached by Friday, April 8. Should this occur, there are several areas where our business could be impacted:
• Tax transcript: If the IRS is on furlough, we will not be able to obtain tax transcripts. If you have a registered/locked loan with us and have not already delivered it to the branch, please upload your completed and signed 4506T into eMagic TRIO now. Even though the TRIO folder will not contain a complete file, please upload your registration or lock confirmation and select "deliver to Underwriting." You will need to check the audit trail in TRIO to confirm receipt by SunTrust Mortgage. We will order the transcripts prior to the shutdown to minimize a potential delay when you deliver your loan file.
• Flood insurance: Borrowers may have difficulty obtaining flood insurance through FEMA during this period.
• FHA: We understand that HUD may not support FHA Connection during their hiatus, and therefore we will not be able to order case numbers or perform other functions in FHA Connection while they are on furlough.
• Rural Housing: We are not sure of the impact to GUS since that system was created since the last shutdown in 1995. However, we should anticipate the system will not be available. In addition we will not be able to get conditional commitments during the shutdown.
• VA: We should anticipate that the system by which VA appraisals are ordered will not be available
UPDATED AT 3:45 ON APRIL 8, 2011
An update from HUD: We know many of you are anxious about where things currently stand with regards to HUD’s Fiscal Year 2011 budget. As we are sure you are well aware, the continuing resolution (CR) under which HUD – along with the rest of the Federal Government – is currently operating, is set to expire tonight. Should the government shut down, most of HUD’s functions would cease.
Housing Counseling Agencies should be aware that:
• HCS - The Housing Counseling System (HCS) will not be available. Consequently, counseling agencies will be unable to update agency profile information, submit activity data, or otherwise utilize the functionality in HCS.
• Counseling Agency Search Functionality - The HUD.GOV website will be available in “Maintenance Mode” only. This means that HUD.GOV will be up but there will be no updates made to pages on the site. As a result, HUD’s website housing counseling search functionality, and similarly HUD’s toll free number to search for counseling services, will still be available to households seeking counseling services. However, with HCS down, the data behind the search functionality will not be updated.
• Grant Funds – While the LOCCS system should be functioning, there will be no GTRs to approve requests for disbursements. Consequently, no grant disbursements will occur during a shut down.
• Inquiries – Counseling agencies will not be able to reach HUD staff with inquiries. General inquiries about FHA programs can be directed to 1-800-CALL FHA (1-800-225-5342). However, this call center will have very limited information regarding the Housing Counseling Program and the issue covered in this message.
We hope this is helpful for you to make any preparations that may be necessary in the event that a shutdown does occur. We look forward to an FY 2011 appropriation and the resumption of services as soon as possible.
UPDATED AT 5:30 ON APRIL 8, 2011
Guidance from GMAC...
Pricing Impact
• GMACB will continue to accept new locks on FHA, VA and USDA loans. Clients should consider possible delays in government loan processing when locking in rates due to limited capacity of government processing systems such as: FHA Connection, TOTAL Scorecard, GUS and Veterans Information Portal.
• GMACB will accept lock extensions on FHA, VA and USDA loans.
• There is no impact to agency and Jumbo lock transactions.
Closing, Funding and Purchasing Impact
• GMACB Correspondent Funding will not purchase any FHA, VA or USDA loan with a Note date after April 8, 2011.
• GMACB Wholesale Operations will not close any FHA (Sponsored Originator) or VA loans after April 8, 2011.
Underwriting Impact
• 4506-T Processing: If the 4506-T cannot be processed by the IRS, personal income tax returns must be provided in lieu of the processed tax transcript based on the number of years required by AUS or by the Client Guide for manual or Jumbo underwriting. If a 2010 income tax return is provided, a 2009 income tax return must also be included. Signing the 4506-T at application and closing remains a GMACB policy. This applies to all products.
• Social Security Number Validation: For Fannie Mae loans, if Desktop Originator (DO) or Desktop Underwriter (DU) require validation of the borrower(s) social security number with the Social Security Administration, the loan file must contain evidence of the validation.
• Flood Insurance: It may be difficult to obtain flood insurance through FEMA during this period. Please note that GMACB requires evidence of flood insurance at time of purchase or closing.
GMACB will continue to provide updates regarding the government entities and the system and operational dependencies pertaining to the government shutdown.
________________________________________
BY ADAM QUINONES
Congress needs to pass a "Continuing Resolution" by midnight on Friday, April 8th to avoid a government shutdown.
From Wikipedia: A continuing resolution is a type of appropriations legislation used by the United States Congress to fund government agencies if a formal appropriations bill has not been signed into law by the end of the Congressional fiscal year. The legislation takes the form of a joint resolution, and provides funding for existing federal programs at current or reduced levels.
Reuters Headlines...
RTRS-WHITE HOUSE SAYS PROCESSING OF SOME PAPER-FILED IRS TAX REFUNDS WILL BE SUSPENDED IF THE GOVERNMENT DOES HAVE TO SHUT DOWN
RTRS-WHITE HOUSE SAYS PROCESSING IRS TAX AUDITS WOULD ALSO BE IMPACTED BY A GOVERNMENT SHUTDOWN
RTRS-PROCESSING OF SMALL BUSINESS ADMIN LOANS WOULD BE AFFECTED IF GOVT SHUTS DOWN - U.S. OFFICIAL
RTRS-US OFFICIAL - GOVERNMENT SHUTDOWN WOULD IMPACT FHA, HAVE "SIGNIFICANT IMPACT" ON HOUSING MARKET IN PEAK HOME-BUYING SEASON
RTRS-US OFFICIAL-NUMBER OF FEDERAL WORKERS WHO WOULD BE IDLED COULD BE IN THE SAME VICINITY AS THE 800,000 IMPACTED IN LAST SHUTDOWN
RTRS-US OFFICIAL-ELECTRONIC FILING OF US TAX RETURNS WILL CONTINUE IN THE EVENT OF A GOVERNMENT SHUTDOWN
RTRS-SIGNIFICANT NUMBER OF PENTAGON CIVILIAN EMPLOYEES WOULD BE FURLOUGHED IF GOVT SHUT DOWN - U.S. OFFICIAL
RTRS-US OFFICIAL-MILITARY WILL BE PAID UP TO APRIL 8TH IF GOVT SHUTS, SALARIES WILL ACCRUE AFTER THEN BUT PAYMENTS WILL BE DELAYED
RTRS-OBAMA SAYS GOVERNMENT SHUTDOWN WOULD HURT U.S. ECONOMY RIGHT WHEN IT'S GAINING MOMENTUM
RTRS-OBAMA URGES DEMOCRATS AND REPUBLICANS TO MAKE COMPROMISES TO GET BUDGET DEAL, KEEP GOVERNMENT RUNNING
----------------------------------------
HOW WOULD A GOVERNMENT SHUT DOWN HAVE A "SIGNIFICANT IMPACT" ON THE HOUSING MARKET?
INITIAL THOUGHTS: The government's servers won't be taken off-line. The network will still be up and running. Essential staff will still be in place. FHA Connection is web-based but ordering FHA Case Numbers ASAP is advised. The IRS is an important part of the loan application process. Tax transcripts are generally accessible online but it seems like a safe move to get 4506-T's ordered now. One obvious thought is not being able to verfiy the employment status of borrowers with government jobs. Plus there could be a delay in getting current paystubs. FHA and Ginnie Mae aren't the only program offices within HUD though.
HERE IS A LIST OF HUD PROGRAMS THAT COULD BE IMPACTED.....
Community Planning and Development
* Community Development Block Grants (CDBG) (Entitlement)
* Community Development Block Grants (Non Entitlement) for States and Small Cities
* Community Development Block Grants (Section 108 Loan Guarantee)
* Community Development Block Grants (Disaster Recovery Assistance)
* Community Development Block Grants (Section 107)
* Community Development Block Grants for Insular Areas
* Community Development Block Grants (Rural Innovation Fund)
* The HOME Program: HOME Investment Partnerships
* Housing Trust Fund
* Shelter Plus Care (S+C)
* Emergency Shelter Grants (ESG) Program
* Surplus Property for Use to Assist the Homeless (Title V)
* Supportive Housing Program
* Continuum of Care Program
* Section 8 Moderate Rehabilitation Single Room Occupancy (SRO) Program
* Rural Housing Stability Assistance Program
* Brownfields Economic Development Initiative (BEDI)
* Economic Development Initiative ("Competitive EDI") Grants
* Empowerment Zones
* Self-Help Homeownership Opportunity Program (SHOP)
* Capacity Building for Community Development and Affordable Housing
* Housing Opportunities for Persons With AIDS (HOPWA)
* Loan Guarantee Recovery Fund for Church Arson and Other Acts of Terrorism (Section 4)
Federal Housing Administration (FHA)
* Single Family Housing Programs
o One to Four Family Home Mortgage Insurance (Section 203(b))
o Mortgage Insurance for Disaster Victims (Section 203(h))
o Rehabilitation Loan Insurance (Section 203(k))
o Single Family Property Disposition Program (Section 204(g))
o Loss Mitigation
o FHA-Home Affordable Modification Program (FHA-HAMP)
o Graduated Payment Mortgage (GPM) (Section 245(a))
o Adjustable Rate Mortgages (ARMs) (Section 251)
o Home Equity Conversion Mortgage (HECM) Program (Section 255)
o Manufactured Homes Loan Insurance (Title I)
o Property Improvement Loan Insurance (Title I)
o Counseling for Homebuyers, Homeowners, and Tenants (Section 106)
o Good Neighbor Next Door
o Energy Efficient Mortgage Insurance
o Insured Mortgages on Hawaiian Home Lands (Section 247)
o Insured Mortgages on Indian Land (Section 248)
Risk Management and Regulatory Affairs
* Manufactured Home Construction and Safety Standards
Multifamily Housing Programs
* Supportive Housing for the Elderly (Section 202)
* Assisted-Living Conversion Program (ALCP)
* Emergency Capital Repairs Program
* Multifamily Housing Service Coordinators
* Manufactured Home Parks (Section 207)
* Cooperative Housing (Section 213)
* Mortgage and Major Home Improvement Loan Insurance for Urban Renewal Areas (Section 220)
* Multifamily Rental Housing for Moderate-Income Families (Section 221(d)(3) and (4))
* Existing Multifamily Rental Housing (Section 207/223(f))
* Mortgage Insurance for Housing for the Elderly (Section 231)
* Supplemental Loans for Multifamily Projects (Section 241)
* Supportive Housing for Persons with Disabilities (Section 811)
* Multifamily Mortgage Risk-Sharing Programs (Sections 542(b) and 542(c))
* Mark-to-Market Program
* Self-Help Housing Property Disposition
* Renewal of Section 8 Project-Based Rental Assistance
Healthcare Programs
* New Construction or Substantial Rehabilitation of Nursing Homes, Intermediate Care Facilities, Board and Care Homes, and Assisted Living Facilities (Section 232); Purchase or Refinancing of Existing Facilities (Section 232/223(f))
* Hospitals (Section 242)
Public and Indian Housing
* Housing Choice Voucher Program
* Homeownership Voucher Assistance
* Project-Based Voucher Program
* Public Housing Operating Fund
* Public Housing Capital Fund
* Public Housing Neighborhood Networks (NN) Program
* Revitalization of Severely Distressed Public Housing (HOPE VI)
* Choice Neighborhoods
* Public Housing Homeownership (Section 32)
* Resident Opportunity and Self-Sufficiency (ROSS) Program
* Family Self-Sufficiency Program
* Indian Community Development Block Grant (ICDBG) Program
* Indian Housing Block Grant (IHBG) Program
* Federal Guarantees for Financing for Tribal Housing Activities (Title VI)
* Loan Guarantees for Indian Housing (Section 184)
* Native Hawaiian Housing Block Grant (NHHBG) Program
* Loan Guarantees for Native Hawaiian Housing (Section 184A)
Fair Housing and Equal Opportunity
* Fair Housing Act (Title VIII)
* Fair Housing Assistance Program (FHAP)
* Fair Housing Initiatives Program (FHIP)
* Equal Opportunity in HUD Assisted Programs (Title VI, Section 504, Americans with Disabilities Act, Section 109, Age Discrimination Act, and Title IX)
* Section 3 Program
* Voluntary Compliance
Policy Development and Research
* Policy Development and Research Initiatives
Government National Mortgage Association (Ginnie Mae)
* Ginnie Mae I Mortgage Backed Securities
* Ginnie Mae II Mortgage Backed Securities
* Ginnie Mae Multiclass Securities Program
* Ginnie Mae Platinum Securities Program
* Healthy Homes and Lead Hazard Control
* Office of Sustainable Communities
o Sustainable Communities Initiative
Temporary Programs
* Housing and Economic Recovery Act of 2008 (HERA) Programs
* HOPE for Homeowners
* Neighborhood Stabilization Program (NSP1)
* American Recovery and Reinvestment Act of 2009 (Recovery Act Programs)
o Neighborhood Stabilization Program 2
o Green Retrofit Program for Multifamily Housing
o Healthy Homes Demonstration Grant Program and Technical Studies Grants
o Homelessness Prevention and Rapid Re-Housing Program (HPRP)
o Lead-Based Paint Hazard Control Grant Program and Lead Hazard Reduction Demonstration Grant Program
o Indian Housing Block Grants (Formula)
o Indian Housing Block Grants (Competitive)
o Public Housing Capital Fund (Formula)
o Public Housing Capital Fund (Competitive)
o Tax Credit Assistance Program (TCAP)
* Dodd-Frank Wall Street Reform and Consumer Protection Act Programs
o Neighborhood Stabilization Program 3
o Emergency Homeowners Loan Program
Other Resources
* Neighborhood Reinvestment Corporation (NeighborWorks America)
* U.S. Interagency Council on Homelessness
-------------------------------------
We see this childish Congressional behavior as politics in their purest form. STANDARD OPERATING PROCEDURES ON CAPITOL HILL. Playing this game of chicken with the bond market carries massive consequences. We're cutting off our nose just to spite our face here. The last thing we want to do is put the U.S. credit rating in the global spotlight. We don't want bond vigilantes chasing after our debt like they are EU debt right now. A "bitter fight over budget cuts" unfortunately would do just that. I hope our so called leaders in Washington avoid that bitter fight. I hope they act like adults and avoid grand-standing and pandering. We don't need bickering. We need common ground. We need to develop a plan and make some moves to restore confidence in our country.
READ MORE: Budget Battle Looms. Bond Vigilantes Lurk
Besides the observations made above, we don't know exactly how a government shutdown would impact the housing market, we don't see anything positive coming from it though....mortgage rates certainly wouldn't react well!
WHAT ELSE ARE WE MISSING HERE?
Do Fannie and Freddie count as government or is that just an "implied" shutdown?
UPDATED AT 9:00 ON APRIL 7, 2011...
Suntrust sent this out last night:
News reports continue to develop regarding a potential government shutdown if budget agreements are not reached by Friday, April 8. Should this occur, there are several areas where our business could be impacted:
• Tax transcript: If the IRS is on furlough, we will not be able to obtain tax transcripts. If you have a registered/locked loan with us and have not already delivered it to the branch, please upload your completed and signed 4506T into eMagic TRIO now. Even though the TRIO folder will not contain a complete file, please upload your registration or lock confirmation and select "deliver to Underwriting." You will need to check the audit trail in TRIO to confirm receipt by SunTrust Mortgage. We will order the transcripts prior to the shutdown to minimize a potential delay when you deliver your loan file.
• Flood insurance: Borrowers may have difficulty obtaining flood insurance through FEMA during this period.
• FHA: We understand that HUD may not support FHA Connection during their hiatus, and therefore we will not be able to order case numbers or perform other functions in FHA Connection while they are on furlough.
• Rural Housing: We are not sure of the impact to GUS since that system was created since the last shutdown in 1995. However, we should anticipate the system will not be available. In addition we will not be able to get conditional commitments during the shutdown.
• VA: We should anticipate that the system by which VA appraisals are ordered will not be available
UPDATED AT 3:45 ON APRIL 8, 2011
An update from HUD: We know many of you are anxious about where things currently stand with regards to HUD’s Fiscal Year 2011 budget. As we are sure you are well aware, the continuing resolution (CR) under which HUD – along with the rest of the Federal Government – is currently operating, is set to expire tonight. Should the government shut down, most of HUD’s functions would cease.
Housing Counseling Agencies should be aware that:
• HCS - The Housing Counseling System (HCS) will not be available. Consequently, counseling agencies will be unable to update agency profile information, submit activity data, or otherwise utilize the functionality in HCS.
• Counseling Agency Search Functionality - The HUD.GOV website will be available in “Maintenance Mode” only. This means that HUD.GOV will be up but there will be no updates made to pages on the site. As a result, HUD’s website housing counseling search functionality, and similarly HUD’s toll free number to search for counseling services, will still be available to households seeking counseling services. However, with HCS down, the data behind the search functionality will not be updated.
• Grant Funds – While the LOCCS system should be functioning, there will be no GTRs to approve requests for disbursements. Consequently, no grant disbursements will occur during a shut down.
• Inquiries – Counseling agencies will not be able to reach HUD staff with inquiries. General inquiries about FHA programs can be directed to 1-800-CALL FHA (1-800-225-5342). However, this call center will have very limited information regarding the Housing Counseling Program and the issue covered in this message.
We hope this is helpful for you to make any preparations that may be necessary in the event that a shutdown does occur. We look forward to an FY 2011 appropriation and the resumption of services as soon as possible.
UPDATED AT 5:30 ON APRIL 8, 2011
Guidance from GMAC...
Pricing Impact
• GMACB will continue to accept new locks on FHA, VA and USDA loans. Clients should consider possible delays in government loan processing when locking in rates due to limited capacity of government processing systems such as: FHA Connection, TOTAL Scorecard, GUS and Veterans Information Portal.
• GMACB will accept lock extensions on FHA, VA and USDA loans.
• There is no impact to agency and Jumbo lock transactions.
Closing, Funding and Purchasing Impact
• GMACB Correspondent Funding will not purchase any FHA, VA or USDA loan with a Note date after April 8, 2011.
• GMACB Wholesale Operations will not close any FHA (Sponsored Originator) or VA loans after April 8, 2011.
Underwriting Impact
• 4506-T Processing: If the 4506-T cannot be processed by the IRS, personal income tax returns must be provided in lieu of the processed tax transcript based on the number of years required by AUS or by the Client Guide for manual or Jumbo underwriting. If a 2010 income tax return is provided, a 2009 income tax return must also be included. Signing the 4506-T at application and closing remains a GMACB policy. This applies to all products.
• Social Security Number Validation: For Fannie Mae loans, if Desktop Originator (DO) or Desktop Underwriter (DU) require validation of the borrower(s) social security number with the Social Security Administration, the loan file must contain evidence of the validation.
• Flood Insurance: It may be difficult to obtain flood insurance through FEMA during this period. Please note that GMACB requires evidence of flood insurance at time of purchase or closing.
GMACB will continue to provide updates regarding the government entities and the system and operational dependencies pertaining to the government shutdown.
Monday, March 7, 2011
New Role Suggested for RE Agents
New Role Suggested For RE Agents
Monday, March 7, 2011
By Lew Sichelman
PARK CITY, UT—Among the numerous and often futile efforts to keep troubled borrowers in their homes, a former IndyMac Bank executive believes real estate agents represent a largely untapped resource.
Not agents who list and sell foreclosed properties, said Ray Mathoda, who now bills herself as a housing industry social entrepreneur.
Those professionals are “bank-facing” agents who work for investors.
Rather, consumer-centric agents who have much more to benefit by helping buyers and sellers, Mathoda said at the Midwinter Housing Conference here earlier this month.
Noting that borrower outreach has been pretty much a failure—even today, two out of every five owners who fall into foreclosure claim to have had no contact with their servicers—and that consumers are often poorly informed about their options, Mathoda said realty agents stand a good chance of reaching borrowers who are often “bombarded by a barrage” of confusing, uncoordinated array letters and phone calls.
At the very least, she added, agents can be used by servicers and investors to augment the efforts of overworked, understaffed housing counseling agencies.
Mathoda, who was chief administrative officer at IndyMac, has founded two socially responsible minority-owned businesses—AssetPlanUSA, a national provider of training and education solutions to the housing industry, and HausAngeles, a real estate management consulting firm and brokerage located in the Los Angeles area.
She has been an advocate for standardized, pro-consumer and pro-investor short sales since the start of the housing crisis, arguing that the primary goal of everyone should be financial stability, not home retention.
But noting that short sales aren’t the only viable option, for either the borrower or the investor, Mathoda said no one is in a better position to explain their choices to consumers than real estate agents.
She admitted that realty agents don’t always have the best reputations.
But she said that operating under their brokers’ supervision and an honor code of ethics, agents have the “good business sense” to help people decide what’s best for them.
In return, she added, an agent gets a referral source, if not a client, for life.
And perhaps even a listing or two along the way.
“Real estate agents are our only professional with a fiduciary obligation, yet we’re not taking advantage of that,” Mathoda said.
“If only half the nation’s one million agents sign on, that’s still just a 14-to-1 client-to-agent ratio.
“That compares extremely favorably to just 12 counselors in Los Angeles County.”
About 150 industry professionals attended the 2011 Midwinter Housing Finance Conference at the St. Regis Deer Crest Resort, which is situated in the lower Deer Valley here.
The conference is an annual event geared to the top executives from all facets of the housing and housing finance sectors, along with government regulators, economists and those that serve the business.
Monday, March 7, 2011
By Lew Sichelman
PARK CITY, UT—Among the numerous and often futile efforts to keep troubled borrowers in their homes, a former IndyMac Bank executive believes real estate agents represent a largely untapped resource.
Not agents who list and sell foreclosed properties, said Ray Mathoda, who now bills herself as a housing industry social entrepreneur.
Those professionals are “bank-facing” agents who work for investors.
Rather, consumer-centric agents who have much more to benefit by helping buyers and sellers, Mathoda said at the Midwinter Housing Conference here earlier this month.
Noting that borrower outreach has been pretty much a failure—even today, two out of every five owners who fall into foreclosure claim to have had no contact with their servicers—and that consumers are often poorly informed about their options, Mathoda said realty agents stand a good chance of reaching borrowers who are often “bombarded by a barrage” of confusing, uncoordinated array letters and phone calls.
At the very least, she added, agents can be used by servicers and investors to augment the efforts of overworked, understaffed housing counseling agencies.
Mathoda, who was chief administrative officer at IndyMac, has founded two socially responsible minority-owned businesses—AssetPlanUSA, a national provider of training and education solutions to the housing industry, and HausAngeles, a real estate management consulting firm and brokerage located in the Los Angeles area.
She has been an advocate for standardized, pro-consumer and pro-investor short sales since the start of the housing crisis, arguing that the primary goal of everyone should be financial stability, not home retention.
But noting that short sales aren’t the only viable option, for either the borrower or the investor, Mathoda said no one is in a better position to explain their choices to consumers than real estate agents.
She admitted that realty agents don’t always have the best reputations.
But she said that operating under their brokers’ supervision and an honor code of ethics, agents have the “good business sense” to help people decide what’s best for them.
In return, she added, an agent gets a referral source, if not a client, for life.
And perhaps even a listing or two along the way.
“Real estate agents are our only professional with a fiduciary obligation, yet we’re not taking advantage of that,” Mathoda said.
“If only half the nation’s one million agents sign on, that’s still just a 14-to-1 client-to-agent ratio.
“That compares extremely favorably to just 12 counselors in Los Angeles County.”
About 150 industry professionals attended the 2011 Midwinter Housing Finance Conference at the St. Regis Deer Crest Resort, which is situated in the lower Deer Valley here.
The conference is an annual event geared to the top executives from all facets of the housing and housing finance sectors, along with government regulators, economists and those that serve the business.
Friday, March 4, 2011
Little Change in Rates
While investors continued to closely watch the events in the Middle East, there were few new developments there during the week. As a result, this week's important economic data had the greatest influence on mortgage rates. Daily volatility was high as investors reacted to the major economic reports, but mortgage rates ended the week essentially unchanged.
Much stronger than expected economic data during the week caused investors to prepare for the possibility that the economy is growing more rapidly than expected. The Chicago PMI manufacturing index rose to the highest level since July 1988, and the ISM Services index rose to the highest level since August 2005. Weekly Jobless Claims dropped to the lowest level since May 2008. Meanwhile, the Fed's Beige Book reported that many companies were passing through price increases due to rising commodity prices. As expected, mortgage rates reacted to the data by moving higher.
The results from Friday's Employment report were strong, but they did not exceed expectations. Against a consensus forecast for an increase of 200K jobs, the economy added 192K jobs in February. The Unemployment Rate declined to 8.9% from 9.0% in January. The gains were strong nearly across the board, with the exception of the government sector. Over the longer-term, the private sector must produce new jobs to sustain a recovery, so strength in the private sector was a good sign for the future. Average Hourly Earnings, a proxy for wage growth, fell short of expectations, remaining unchanged from January. Some investors were prepared for a much higher jobs number, and the on target results prompted a reversal of the rise in mortgage rates from earlier in the week.
While investors continued to closely watch the events in the Middle East, there were few new developments there during the week. As a result, this week's important economic data had the greatest influence on mortgage rates. Daily volatility was high as investors reacted to the major economic reports, but mortgage rates ended the week essentially unchanged.
Much stronger than expected economic data during the week caused investors to prepare for the possibility that the economy is growing more rapidly than expected. The Chicago PMI manufacturing index rose to the highest level since July 1988, and the ISM Services index rose to the highest level since August 2005. Weekly Jobless Claims dropped to the lowest level since May 2008. Meanwhile, the Fed's Beige Book reported that many companies were passing through price increases due to rising commodity prices. As expected, mortgage rates reacted to the data by moving higher.
The results from Friday's Employment report were strong, but they did not exceed expectations. Against a consensus forecast for an increase of 200K jobs, the economy added 192K jobs in February. The Unemployment Rate declined to 8.9% from 9.0% in January. The gains were strong nearly across the board, with the exception of the government sector. Over the longer-term, the private sector must produce new jobs to sustain a recovery, so strength in the private sector was a good sign for the future. Average Hourly Earnings, a proxy for wage growth, fell short of expectations, remaining unchanged from January. Some investors were prepared for a much higher jobs number, and the on target results prompted a reversal of the rise in mortgage rates from earlier in the week.
Thursday, March 3, 2011
Changes Are Coming For Rural Housing!
BREAKING NEWS- USDA Loans Will Have Monthly MI as of October 1, 2011
BREAKING NEWS- USDA Loans Will Have Monthly MI as of October 1, 2011.
For the first time in the history of USDA, the Single Housing Guaranteed Loan Program has Implemented an Annual Fee. The annual fee will be calculated based on the guaranteed loan amount and based on the average annual scheduled unpaid principal balance for the life of the loan.
Effective October 1, the upfront guarantee will decrease from 3.5% to 2% for purchase loans. The up-front guaranteed fee for refinance loan transaction will remain at 1 percent. In addition, an annual fee of .30 will be calculated when the loan is made and every 12 months thereafter until the loan is paid in full or no longer outstanding and the guarantee cancelled or expired.
Overall, this change increases the monthly payment $15.88 per $100,000. For example, on a $100,000 home with 6% interest, the PI (with a 3.5% up front guarantee fee but not monthly fee) would be $620.53. With the new guidelines (with the upfront guarantee fee of 2.00 and the annual fee of .30), then the payment (PI and monthly fee) would be $636.41.
ACTION PLAN: NOW is the time to purchase…. Rates are still low, USDA is a great program with Zero Down Payment required and until October 1, no monthly mortgage insurance or annual fee.
See Below for Rural Housing Letters
RD AN No. 4551 (1980-D)
February 3, 2011
TO: State Directors
Rural Development
ATTENTION: Rural Housing Program Directors,
Guaranteed Loan Coordinators,
Area Directors and Area Specialists
FROM: Tammye Treviño
Administrator
Housing and Community Facilities Programs
SUBJECT: Single Family Housing Guaranteed Loan Program
Implementation of Annual Fee and Decreased Upfront Fee Effective
October 1, 2011
PURPOSE/INTENDED OUTCOME:
The purpose of this Administrative Notice (AN) is to plan for the implementation of
authorities granted the Secretary of the United States Department of Agriculture (USDA), via Public Law (P.L.) 111-212, Section 102 (July 29, 2010), in which the Secretary may collect from the lender an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan. The intent of the annual fee is to make the Single Family Housing Guaranteed Loan Program (SFHGLP) subsidy neutral, thus eliminating the need for taxpayer support of the program. For Fiscal Year (FY) 2012, an annual fee of 0.3 percent of the outstanding principal balance will be required in order that the SFHGLP may maintain subsidy neutrality. Rural Development is in the process of adopting a rule effective with
loans obligated on or after October 1, 2011, under which all loan transactions will be subject to the annual fee. This anticipated policy change is being announced now to allow affected lenders time to make needed systems adjustments.
COMPARISON WITH PREVIOUS AN:
There are no previous AN issued on this subject.
EXPIRATION DATE: FILING INSTRUCTIONS:
February 29, 2012 Preceding RD Instruction 1980-D
BACKGROUND:
P. L. 111-212, “Supplemental Appropriations Act, 2010,” enacted on July 29, 2010,
Section 502(h)(8) of the Housing Act of 1949 (42 U.S.C. 1472 (h) (8)), was amended to
read as follows: “(8) Fees. – Notwithstanding paragraph (14) (D), with respect to a
guaranteed loan issued or modified under this subsection, the Secretary may collect from the lender – “(A) at the time of issuance of the guarantee or modification, a fee not to exceed 3.5 percent of the principal obligation of the loan; and “(B) an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan.”
The annual fee provision of P.L. 111-212, will be applicable to purchase and refinance loan transactions. Implementation of an annual fee of 0.30 percent of the outstanding principal balance, will allow the Agency to reduce the up-front guarantee fee. Therefore under the new rule,effective October 1, 2011, the up-front guarantee fee for purchase transactions will decrease from 3.5 percent to 2 percent for purchase loans transactions. The up-front guaranteed fee for refinance loans transactions will remain at 1 percent.
Future updates to both the up-front and annual fee will be published in Exhibit K, of RD Instruction 440.1, available in any Rural Development office or on the Rural
Development website as follows: http://www.rurdev.usda.gov/regs/regs_toc.html. The
annual fee and upfront guarantee fee are subject to change annually to maintain a subsidy neutral program.
IMPLEMENTATION RESPONSIBILITIES:
Beginning October 1, 2011, it is anticipated that all purchase loans transactions will be charged (1) an up-front guarantee fee equal to 2 percent of the loan amount, and (2) an annual fee of 0.3 percent of the unpaid principal balance. The annual fee will be calculated and collected as follows:
1. The initial fee, for the first year of the loan will be determined and calculated
based on the loan amount. For remaining year of the loan, the annual fee will be
charged on the scheduled amortized unpaid principal balance (UPB) of the loan,
not the actual UPB.
2. The fee will be calculated annually and the lender will be notified of the annual
fee for the next 12 month period and billed to the lender each year on the
anniversary date of the loan. Thus, the initial annual fee will be calculated when
the loan is closed and the bill to collect the annual fee from the lender will be 12
months after the closing date of the loan. The annual fee for the next year will
also be calculated at that time.
3. The initial annual fee will be calculated based on the closing date of the loan.
4. Lenders will be billed annually, initially 12 months after the closed and
commencing annually for the life of the loan.
5. The payment will be due to Rural Development by the 15th calendar day after the
bill is generated.
6. The bill for each year will be retroactive for the prior year period.
7. A late fee of 4 percent of the annually billed amount will be assessed on the 15th
calendar day after the bill is generated.
8. If the fee for a loan is still unpaid after 30 days, an additional late fee may be
accessed on the unpaid fee amount.
9. The first payment due will begin at the end of the first 12 months after closing and will be for the prior 12 month period.
10. The annual fee, billed annually, will be collected through Pay.Gov, as follows:
• Fully web-based for lenders with 3,000 or less loans; and
• An overnight matching batch process for lenders with greater than 3,000
loans.
Rural Development is aware that lenders may need a minimum of 6 to 9 months lead time
to configure their systems to support the annual fee. Since this notice is published
approximately 8 months before the implementation date, it is anticipated that the lenders should be able to accommodate the annual fee by October 1, 2011. We will work closely with lenders and service bureaus to ensure they can support the annual fee requirement in the shortest possible timeframe. Supporting documentations for servicers as well as training materials for loan originators and servicers will be developed prior to the effective date of the annual fee.
Any questions concerning this AN should be addressed to the Single Family Housing
Guaranteed Loan Division at, (202) 720-1452.
BREAKING NEWS- USDA Loans Will Have Monthly MI as of October 1, 2011.
For the first time in the history of USDA, the Single Housing Guaranteed Loan Program has Implemented an Annual Fee. The annual fee will be calculated based on the guaranteed loan amount and based on the average annual scheduled unpaid principal balance for the life of the loan.
Effective October 1, the upfront guarantee will decrease from 3.5% to 2% for purchase loans. The up-front guaranteed fee for refinance loan transaction will remain at 1 percent. In addition, an annual fee of .30 will be calculated when the loan is made and every 12 months thereafter until the loan is paid in full or no longer outstanding and the guarantee cancelled or expired.
Overall, this change increases the monthly payment $15.88 per $100,000. For example, on a $100,000 home with 6% interest, the PI (with a 3.5% up front guarantee fee but not monthly fee) would be $620.53. With the new guidelines (with the upfront guarantee fee of 2.00 and the annual fee of .30), then the payment (PI and monthly fee) would be $636.41.
ACTION PLAN: NOW is the time to purchase…. Rates are still low, USDA is a great program with Zero Down Payment required and until October 1, no monthly mortgage insurance or annual fee.
See Below for Rural Housing Letters
RD AN No. 4551 (1980-D)
February 3, 2011
TO: State Directors
Rural Development
ATTENTION: Rural Housing Program Directors,
Guaranteed Loan Coordinators,
Area Directors and Area Specialists
FROM: Tammye Treviño
Administrator
Housing and Community Facilities Programs
SUBJECT: Single Family Housing Guaranteed Loan Program
Implementation of Annual Fee and Decreased Upfront Fee Effective
October 1, 2011
PURPOSE/INTENDED OUTCOME:
The purpose of this Administrative Notice (AN) is to plan for the implementation of
authorities granted the Secretary of the United States Department of Agriculture (USDA), via Public Law (P.L.) 111-212, Section 102 (July 29, 2010), in which the Secretary may collect from the lender an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan. The intent of the annual fee is to make the Single Family Housing Guaranteed Loan Program (SFHGLP) subsidy neutral, thus eliminating the need for taxpayer support of the program. For Fiscal Year (FY) 2012, an annual fee of 0.3 percent of the outstanding principal balance will be required in order that the SFHGLP may maintain subsidy neutrality. Rural Development is in the process of adopting a rule effective with
loans obligated on or after October 1, 2011, under which all loan transactions will be subject to the annual fee. This anticipated policy change is being announced now to allow affected lenders time to make needed systems adjustments.
COMPARISON WITH PREVIOUS AN:
There are no previous AN issued on this subject.
EXPIRATION DATE: FILING INSTRUCTIONS:
February 29, 2012 Preceding RD Instruction 1980-D
BACKGROUND:
P. L. 111-212, “Supplemental Appropriations Act, 2010,” enacted on July 29, 2010,
Section 502(h)(8) of the Housing Act of 1949 (42 U.S.C. 1472 (h) (8)), was amended to
read as follows: “(8) Fees. – Notwithstanding paragraph (14) (D), with respect to a
guaranteed loan issued or modified under this subsection, the Secretary may collect from the lender – “(A) at the time of issuance of the guarantee or modification, a fee not to exceed 3.5 percent of the principal obligation of the loan; and “(B) an annual fee not to exceed 0.5 percent of the outstanding principal balance of the loan for the life of the loan.”
The annual fee provision of P.L. 111-212, will be applicable to purchase and refinance loan transactions. Implementation of an annual fee of 0.30 percent of the outstanding principal balance, will allow the Agency to reduce the up-front guarantee fee. Therefore under the new rule,effective October 1, 2011, the up-front guarantee fee for purchase transactions will decrease from 3.5 percent to 2 percent for purchase loans transactions. The up-front guaranteed fee for refinance loans transactions will remain at 1 percent.
Future updates to both the up-front and annual fee will be published in Exhibit K, of RD Instruction 440.1, available in any Rural Development office or on the Rural
Development website as follows: http://www.rurdev.usda.gov/regs/regs_toc.html. The
annual fee and upfront guarantee fee are subject to change annually to maintain a subsidy neutral program.
IMPLEMENTATION RESPONSIBILITIES:
Beginning October 1, 2011, it is anticipated that all purchase loans transactions will be charged (1) an up-front guarantee fee equal to 2 percent of the loan amount, and (2) an annual fee of 0.3 percent of the unpaid principal balance. The annual fee will be calculated and collected as follows:
1. The initial fee, for the first year of the loan will be determined and calculated
based on the loan amount. For remaining year of the loan, the annual fee will be
charged on the scheduled amortized unpaid principal balance (UPB) of the loan,
not the actual UPB.
2. The fee will be calculated annually and the lender will be notified of the annual
fee for the next 12 month period and billed to the lender each year on the
anniversary date of the loan. Thus, the initial annual fee will be calculated when
the loan is closed and the bill to collect the annual fee from the lender will be 12
months after the closing date of the loan. The annual fee for the next year will
also be calculated at that time.
3. The initial annual fee will be calculated based on the closing date of the loan.
4. Lenders will be billed annually, initially 12 months after the closed and
commencing annually for the life of the loan.
5. The payment will be due to Rural Development by the 15th calendar day after the
bill is generated.
6. The bill for each year will be retroactive for the prior year period.
7. A late fee of 4 percent of the annually billed amount will be assessed on the 15th
calendar day after the bill is generated.
8. If the fee for a loan is still unpaid after 30 days, an additional late fee may be
accessed on the unpaid fee amount.
9. The first payment due will begin at the end of the first 12 months after closing and will be for the prior 12 month period.
10. The annual fee, billed annually, will be collected through Pay.Gov, as follows:
• Fully web-based for lenders with 3,000 or less loans; and
• An overnight matching batch process for lenders with greater than 3,000
loans.
Rural Development is aware that lenders may need a minimum of 6 to 9 months lead time
to configure their systems to support the annual fee. Since this notice is published
approximately 8 months before the implementation date, it is anticipated that the lenders should be able to accommodate the annual fee by October 1, 2011. We will work closely with lenders and service bureaus to ensure they can support the annual fee requirement in the shortest possible timeframe. Supporting documentations for servicers as well as training materials for loan originators and servicers will be developed prior to the effective date of the annual fee.
Any questions concerning this AN should be addressed to the Single Family Housing
Guaranteed Loan Division at, (202) 720-1452.
Tuesday, March 1, 2011
Poor Credit Tops List of Homeownership Barriers.
Rents Seen Rising
________________________________________
by Jann Swanson
Fannie Mae's latest National Housing Survey shows that Americans have markedly changed their perception of homeownership.
The most recent survey, conducted between October and December 2010, revealed that 64 percent of respondents felt buying a home was a safe investment. This is 6 points below the responses given in a January 2010 survey and 19 points below the answers to an initial survey conducted in 2003. Persons who are currently renting or who are delinquent on their mortgages ranked home owning lower with 53 percent of both subgroups feeling a home was a safe investment.
But at the same time, 84 percent of consumers believe that owning a home makes more sense than renting, a number that has remained relatively stable since the January 2010 survey. Respondents gave, as positive reasons for homeownership the quality of local schools (79 percent) and safety (also 79 percent.) These ranked far ahead of any financial considerations such as tax benefits or a belief that paying rent makes less sense. Among renters 28 percent thought renting made more sense.
The National Housing Survey was conducted by phone with 3,407 Americans age 18 and up. The sample included a random group of 3,004 members of the general population made up of 751 homeowners, 1,232 mortgage borrowers, and 871 renters. An oversample of 403 random delinquent borrowers was also contacted. Fannie Mae conducted similar surveys in January and June 2010 and from July to September 2010 and in 2003. The survey reported out some of its findings among subsets which included renters, delinquent borrowers, Afro-Americans, Hispanics, and "Generation Y" (adults aged 18 to 34.)
Americans have grown more confident about the stability of home prices than they were one year ago although this is not matched by their attitudes regarding strength in the economy. A majority (78 percent) feel that home prices will either stay the same or go up (73 percent held this position in January) versus 19 percent who expect further declines. Expectations among the 26 percent expecting an increase were modest; the average projected increase was 0.4 percent.
A larger share of respondents - 39 percent - expect rents to increase over the next year with the average estimate of increase at 2.8 percent.
"Over the course of the last year, we gained deeper insights into Americans' confidence in the strength of the housing market and the economic recovery," said Doug Duncan, Vice President and Chief Economist of Fannie Mae. "More Americans believe that housing prices will remain stable over the next year. We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future."
Consumers' own financial situations have not improved over the last year. Six in 10 respondents said their monthly household income has remained about the same compared to January 2010 while nearly half of the delinquent borrowers reported a significant decline. Significantly higher expenses were reported by 34 percent of respondents and 22 percent reported significant declines.
Financial reasons were most frequently named as significant obstacles to owning a home; poor credit topped the list. 42 percent of renters and seventy-three percent of delinquent borrowers cited income which is insufficient for their existing expenses. Seventy-nine percent of renters believe they would have to make a financial sacrifice to own a home and 54 percent say it would require a "great deal" of sacrifice.
The number of delinquent borrowers who say they have considered defaulting on their mortgage has declined from 39 percent in January 2010 to 31 percent and most Americans (86 percent) continue to disapprove of strategic defaults even when the home is underwater.
Despite being hit hard by the housing crisis which saw the homeownership rates in its age group drop almost four percentage points since 2009 to 39.8 percent, Generation Y remains positive about owning a home. Sixty-one percent of that subgroup in the survey felt that buying a home is a safe investment. They gave a higher value to the impact of homeownership on societal status and as a place to raise children than did other subgroups in the survey.
Minority groups have a more positive outlook toward homeownership and the economy than the general population. Fifty-none percent of Hispanics expect their personal financial situation to improve over the next year compared to 78 percent of the general population and 40 percent of African Americans. About a third of each of the two minority groups say that it is likely they will buy a home in the next three years compared to about 25 percent of all survey respondents. Both Hispanics and African-Americans are more likely, in most cases by double digits, to place a high value on homeownership as a good place to raise children, a better way to provide an education for those children, a motivation to be a better citizen, a place to keep your family safe, and as a wealth builder than is the general population.. Only 38 percent of African Americans think the economy is on the wrong track compared to 62 percent of the general population and 59 percent of Hispanics
Rents Seen Rising
________________________________________
by Jann Swanson
Fannie Mae's latest National Housing Survey shows that Americans have markedly changed their perception of homeownership.
The most recent survey, conducted between October and December 2010, revealed that 64 percent of respondents felt buying a home was a safe investment. This is 6 points below the responses given in a January 2010 survey and 19 points below the answers to an initial survey conducted in 2003. Persons who are currently renting or who are delinquent on their mortgages ranked home owning lower with 53 percent of both subgroups feeling a home was a safe investment.
But at the same time, 84 percent of consumers believe that owning a home makes more sense than renting, a number that has remained relatively stable since the January 2010 survey. Respondents gave, as positive reasons for homeownership the quality of local schools (79 percent) and safety (also 79 percent.) These ranked far ahead of any financial considerations such as tax benefits or a belief that paying rent makes less sense. Among renters 28 percent thought renting made more sense.
The National Housing Survey was conducted by phone with 3,407 Americans age 18 and up. The sample included a random group of 3,004 members of the general population made up of 751 homeowners, 1,232 mortgage borrowers, and 871 renters. An oversample of 403 random delinquent borrowers was also contacted. Fannie Mae conducted similar surveys in January and June 2010 and from July to September 2010 and in 2003. The survey reported out some of its findings among subsets which included renters, delinquent borrowers, Afro-Americans, Hispanics, and "Generation Y" (adults aged 18 to 34.)
Americans have grown more confident about the stability of home prices than they were one year ago although this is not matched by their attitudes regarding strength in the economy. A majority (78 percent) feel that home prices will either stay the same or go up (73 percent held this position in January) versus 19 percent who expect further declines. Expectations among the 26 percent expecting an increase were modest; the average projected increase was 0.4 percent.
A larger share of respondents - 39 percent - expect rents to increase over the next year with the average estimate of increase at 2.8 percent.
"Over the course of the last year, we gained deeper insights into Americans' confidence in the strength of the housing market and the economic recovery," said Doug Duncan, Vice President and Chief Economist of Fannie Mae. "More Americans believe that housing prices will remain stable over the next year. We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future."
Consumers' own financial situations have not improved over the last year. Six in 10 respondents said their monthly household income has remained about the same compared to January 2010 while nearly half of the delinquent borrowers reported a significant decline. Significantly higher expenses were reported by 34 percent of respondents and 22 percent reported significant declines.
Financial reasons were most frequently named as significant obstacles to owning a home; poor credit topped the list. 42 percent of renters and seventy-three percent of delinquent borrowers cited income which is insufficient for their existing expenses. Seventy-nine percent of renters believe they would have to make a financial sacrifice to own a home and 54 percent say it would require a "great deal" of sacrifice.
The number of delinquent borrowers who say they have considered defaulting on their mortgage has declined from 39 percent in January 2010 to 31 percent and most Americans (86 percent) continue to disapprove of strategic defaults even when the home is underwater.
Despite being hit hard by the housing crisis which saw the homeownership rates in its age group drop almost four percentage points since 2009 to 39.8 percent, Generation Y remains positive about owning a home. Sixty-one percent of that subgroup in the survey felt that buying a home is a safe investment. They gave a higher value to the impact of homeownership on societal status and as a place to raise children than did other subgroups in the survey.
Minority groups have a more positive outlook toward homeownership and the economy than the general population. Fifty-none percent of Hispanics expect their personal financial situation to improve over the next year compared to 78 percent of the general population and 40 percent of African Americans. About a third of each of the two minority groups say that it is likely they will buy a home in the next three years compared to about 25 percent of all survey respondents. Both Hispanics and African-Americans are more likely, in most cases by double digits, to place a high value on homeownership as a good place to raise children, a better way to provide an education for those children, a motivation to be a better citizen, a place to keep your family safe, and as a wealth builder than is the general population.. Only 38 percent of African Americans think the economy is on the wrong track compared to 62 percent of the general population and 59 percent of Hispanics
Wednesday, February 23, 2011
FHA Insurance Hike!
FHA Commissioner Explains Logic Behind Insurance Premium Hike
________________________________________
by Adam Quinones
Last week the FHA announced it would increase annual mortgage insurance premiums by 0.25% to "bolster capital reserves", effective for case numbers ordered on or after April 18, 2011. Naturally the sudden spike in fees led to a chorus of Bronx cheers from inside the housing industry. Originator, Realtor, and Borrower feedback was generally themed along the lines of comments like "GREAT TIMING. REDUCING THE POOL OF QUALIFIED HOMEBUYERS WILL DEFINITELY BOOST THE HOUSING RECOVERY".
Please note sarcasm. And yes, capital letters were intended to imply yelling. Beyond the frustrated muttering that emanated from the trenches, a deeper explanation of this move was requested as this move seemed to make no sense at all. So in the spirit of transparency and open communication from industry leadership, FHA Commissioner David Stevens decided it was time to pen another letter offering more perspective on the issue. The following words are his, not MND's....
A Letter from the Desk of David Stevens
On February 14, I announced a new premium structure for FHA single-family mortgages, increasing the annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30-year and 15-year loans.
It is important for everyone in the industry to understand the reason for this action.
After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster our capital reserves and to help private capital return to the housing market. As many of you are aware, FHA has a Congressionally-mandated obligation to maintain a two percent capital reserve ratio in its Mutual Mortgage Insurance (MMI) fund, and to take swift and necessary actions if the reserves fall below that level.
The MMI fund has been below the two percent threshold in our last two annual actuarial reports to Congress. The FY 2010 actuarial report, submitted in November, projected that in the base case we would not get above two percent again until 2015. FHA has suffered greatly from poorly performing loans originated in years 2006 - 2008, especially seller-funded loans.
Raising the annual premium will enable FHA to increase revenues and have a positive effect on the ongoing stability of the MMI fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010. Based on current volume projections, the annual MIP increase would generate an additional $2.5 - $3 billion annually.
We must balance this premium adjustment with the need to support the overall housing recovery. This quarter point increase in the annual MIP is a responsible step towards meeting the two percent threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.
The changes we have implemented since I became Commissioner in July 2009 have, so far, helped shelter FHA from any external intervention which could have a negative impact on the business. Though there has been talk by some of eliminating all Government guarantees, I believe that responsible management of FHA will eliminate the need for intervention.
I recommended this increase based on FHA’s obligation to get the capital reserves back to the two percent level. And I understand the concerns of those in the industry about this increase. While I do not expect all to agree, we have made these moves to protect FHA so that it can continue its vital mission.
The monthly payment for an average loan in the FHA portfolio will increase by approximately $30 due to the increase in the annual MIP. The change impacts new loans insured by FHA on or after April 18, 2011. The upfront MIP will remain unchanged at one percent. HECM loans are not impacted by the pricing change.
For more details,
read Mortgagee Letter 11-10
-------------------------------------------
________________________________________
by Adam Quinones
Last week the FHA announced it would increase annual mortgage insurance premiums by 0.25% to "bolster capital reserves", effective for case numbers ordered on or after April 18, 2011. Naturally the sudden spike in fees led to a chorus of Bronx cheers from inside the housing industry. Originator, Realtor, and Borrower feedback was generally themed along the lines of comments like "GREAT TIMING. REDUCING THE POOL OF QUALIFIED HOMEBUYERS WILL DEFINITELY BOOST THE HOUSING RECOVERY".
Please note sarcasm. And yes, capital letters were intended to imply yelling. Beyond the frustrated muttering that emanated from the trenches, a deeper explanation of this move was requested as this move seemed to make no sense at all. So in the spirit of transparency and open communication from industry leadership, FHA Commissioner David Stevens decided it was time to pen another letter offering more perspective on the issue. The following words are his, not MND's....
A Letter from the Desk of David Stevens
On February 14, I announced a new premium structure for FHA single-family mortgages, increasing the annual mortgage insurance premium (MIP) by a quarter of a percentage point (.25) on all 30-year and 15-year loans.
It is important for everyone in the industry to understand the reason for this action.
After careful consideration and analysis, we determined it was necessary to increase the annual mortgage insurance premium at this time in order to bolster our capital reserves and to help private capital return to the housing market. As many of you are aware, FHA has a Congressionally-mandated obligation to maintain a two percent capital reserve ratio in its Mutual Mortgage Insurance (MMI) fund, and to take swift and necessary actions if the reserves fall below that level.
The MMI fund has been below the two percent threshold in our last two annual actuarial reports to Congress. The FY 2010 actuarial report, submitted in November, projected that in the base case we would not get above two percent again until 2015. FHA has suffered greatly from poorly performing loans originated in years 2006 - 2008, especially seller-funded loans.
Raising the annual premium will enable FHA to increase revenues and have a positive effect on the ongoing stability of the MMI fund, which had capital reserves of approximately $3.6 billion at the end of FY 2010. Based on current volume projections, the annual MIP increase would generate an additional $2.5 - $3 billion annually.
We must balance this premium adjustment with the need to support the overall housing recovery. This quarter point increase in the annual MIP is a responsible step towards meeting the two percent threshold, while allowing FHA to remain the most cost effective mortgage insurance option for borrowers with lower incomes and lower down payments.
The changes we have implemented since I became Commissioner in July 2009 have, so far, helped shelter FHA from any external intervention which could have a negative impact on the business. Though there has been talk by some of eliminating all Government guarantees, I believe that responsible management of FHA will eliminate the need for intervention.
I recommended this increase based on FHA’s obligation to get the capital reserves back to the two percent level. And I understand the concerns of those in the industry about this increase. While I do not expect all to agree, we have made these moves to protect FHA so that it can continue its vital mission.
The monthly payment for an average loan in the FHA portfolio will increase by approximately $30 due to the increase in the annual MIP. The change impacts new loans insured by FHA on or after April 18, 2011. The upfront MIP will remain unchanged at one percent. HECM loans are not impacted by the pricing change.
For more details,
read Mortgagee Letter 11-10
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Tuesday, February 22, 2011
Why You Should Buy That Home Now
Real Estate by AnnaMaria Andriotis (Author Archive)
Why You Should Buy That Home Now
The Obama administration's proposals this morning to extricate the government from mortgage lending sounded the death knell for Freddie Mac and Fannie Mae. They weren't good news for homebuyers, either. In the proposals were changes that will mean more expensive mortgages, with higher fees and, probably, higher interest rates, larger down payments and, in the near term, fewer lenders to choose from.
No Money Down? Not Anymore
As housing prices drop, mortgage lenders are requiring larger downpayments on homes. Kelsey Hubbard talks to WSJ's Mitra Kalita about what the changes mean for consumers. ( Watch video .)
The changes aren't effective immediately, and, some, if passed by Congress, won't go into effect for several years. Even so, they pose a dilemma for today's would-be homebuyers: loans are cheaper today than they're likely to be in the future – but one of the unintended consequences of the proposals could be another drop in home prices should higher mortgage costs dampen demand. Unfortunately, there's no single right answer, experts say. "Buyers shouldn't rush in – but there's no reason in most markets to delay waiting for something better to come along – it probably won't," says Barry Zigas, director of housing policy at the Consumer Federation of America.
Congress will ultimately decide whether Fannie and Freddie have a future, and whether the other changes could go into effect as soon as this fall. Here are the big three:
Smaller mortgages
In October, the maximum size of mortgages backed by Fannie and Freddie will shrink. (That's when the current limits are set to expire, and the president's report is calling for them to not be extended.) Currently, in high-cost cities like New York and San Francisco, homebuyers can borrow up to $729,750 for a single-family home; that amount drops 14% to $625,500. The $417,000 amount for more moderately priced areas will remain the same. The new limitation would, for example, render 10% of homes in San Francisco County ineligible for financing backed by Fannie or Freddie, according to analysis by the California Association of Realtors. It could also crimp refinancing for borrowers who try to get a home loan beyond these limits.
Higher fees
In November, the Federal Housing Administration could raise annual mortgage insurance premium fees by 0.25% for all borrowers, according to proposals. The hike comes out to an extra $250 per $100,000 of mortgage per year, which borrowers can pay upfront or have rolled into their mortgage. The new premium could be as high as 1.2%, up from a previous maximum of 0.95%. Over the life of a 30-year $300,000 mortgage, the higher rate means at least an additional $12,000 more in payments. Separately, two of the administration's proposals would provide mortgage insurance for some mortgages -- for a fee, which would be passed along to the borrower.
Bigger down payments
Currently, borrowers can try to get a mortgage from a bank with just 5% down by taking on mortgage insurance – mostly because that mortgage is then sold off to Fannie Mae or Freddie Mac. That requirement would gradually increase to 10%, according to the proposals, but a Freddie Mac spokesman says no implementation details are available at this time.
There are other government groups with a similar agenda, and similar effects on homebuyers. Housing regulators are currently considering making it harder to get a mortgage – higher down payments are possible, as are other hurdles – and are expected to offer specifics in April. Around the same time, mortgages backed by Freddie Mac (starting March 1) and Fannie Mae (starting April 1) will get more expensive by 0.25% to 0.50%. Later in the summer, the Consumer Financial Protection Bureau, which is expected to make mortgages a top priority, could make the process of originating a mortgage more expensive for the lender by requiring, for example, more personnel to check documentation, says Keith Gumbinger, vice president at HSH Associates, which tracks the mortgage market. And those costs will likely be passed along to borrowers as well.
Long term, consumer advocates worry that if the government stops backing private mortgages, as Fannie Mae and Freddie Mac do currently, lenders will get out of the market and consumers will have fewer options. But for now, it's simply possible that mortgages will become more expensive, as lenders react to the uncertainty that's just been introduced to the market. As it is, mortgages have already become more difficult to obtain. In August 2010, the most recent data available from mortgage data firm CoreLogic, the average mortgage borrower had a credit score of 767, higher than the average score of 761 six months prior.
And in the long term, should these proposals go into play, a healthier housing market could ensue, says Stu Feldstein, president at SMR Research, which tracks home loan data. The most sweeping message of the proposals is that the government won't help every American buy a home, especially if they can't afford it. "Houses will be sold to people with financial wherewithal to buy them and will reduce foreclosures going forward," he says.
Why You Should Buy That Home Now
The Obama administration's proposals this morning to extricate the government from mortgage lending sounded the death knell for Freddie Mac and Fannie Mae. They weren't good news for homebuyers, either. In the proposals were changes that will mean more expensive mortgages, with higher fees and, probably, higher interest rates, larger down payments and, in the near term, fewer lenders to choose from.
No Money Down? Not Anymore
As housing prices drop, mortgage lenders are requiring larger downpayments on homes. Kelsey Hubbard talks to WSJ's Mitra Kalita about what the changes mean for consumers. ( Watch video .)
The changes aren't effective immediately, and, some, if passed by Congress, won't go into effect for several years. Even so, they pose a dilemma for today's would-be homebuyers: loans are cheaper today than they're likely to be in the future – but one of the unintended consequences of the proposals could be another drop in home prices should higher mortgage costs dampen demand. Unfortunately, there's no single right answer, experts say. "Buyers shouldn't rush in – but there's no reason in most markets to delay waiting for something better to come along – it probably won't," says Barry Zigas, director of housing policy at the Consumer Federation of America.
Congress will ultimately decide whether Fannie and Freddie have a future, and whether the other changes could go into effect as soon as this fall. Here are the big three:
Smaller mortgages
In October, the maximum size of mortgages backed by Fannie and Freddie will shrink. (That's when the current limits are set to expire, and the president's report is calling for them to not be extended.) Currently, in high-cost cities like New York and San Francisco, homebuyers can borrow up to $729,750 for a single-family home; that amount drops 14% to $625,500. The $417,000 amount for more moderately priced areas will remain the same. The new limitation would, for example, render 10% of homes in San Francisco County ineligible for financing backed by Fannie or Freddie, according to analysis by the California Association of Realtors. It could also crimp refinancing for borrowers who try to get a home loan beyond these limits.
Higher fees
In November, the Federal Housing Administration could raise annual mortgage insurance premium fees by 0.25% for all borrowers, according to proposals. The hike comes out to an extra $250 per $100,000 of mortgage per year, which borrowers can pay upfront or have rolled into their mortgage. The new premium could be as high as 1.2%, up from a previous maximum of 0.95%. Over the life of a 30-year $300,000 mortgage, the higher rate means at least an additional $12,000 more in payments. Separately, two of the administration's proposals would provide mortgage insurance for some mortgages -- for a fee, which would be passed along to the borrower.
Bigger down payments
Currently, borrowers can try to get a mortgage from a bank with just 5% down by taking on mortgage insurance – mostly because that mortgage is then sold off to Fannie Mae or Freddie Mac. That requirement would gradually increase to 10%, according to the proposals, but a Freddie Mac spokesman says no implementation details are available at this time.
There are other government groups with a similar agenda, and similar effects on homebuyers. Housing regulators are currently considering making it harder to get a mortgage – higher down payments are possible, as are other hurdles – and are expected to offer specifics in April. Around the same time, mortgages backed by Freddie Mac (starting March 1) and Fannie Mae (starting April 1) will get more expensive by 0.25% to 0.50%. Later in the summer, the Consumer Financial Protection Bureau, which is expected to make mortgages a top priority, could make the process of originating a mortgage more expensive for the lender by requiring, for example, more personnel to check documentation, says Keith Gumbinger, vice president at HSH Associates, which tracks the mortgage market. And those costs will likely be passed along to borrowers as well.
Long term, consumer advocates worry that if the government stops backing private mortgages, as Fannie Mae and Freddie Mac do currently, lenders will get out of the market and consumers will have fewer options. But for now, it's simply possible that mortgages will become more expensive, as lenders react to the uncertainty that's just been introduced to the market. As it is, mortgages have already become more difficult to obtain. In August 2010, the most recent data available from mortgage data firm CoreLogic, the average mortgage borrower had a credit score of 767, higher than the average score of 761 six months prior.
And in the long term, should these proposals go into play, a healthier housing market could ensue, says Stu Feldstein, president at SMR Research, which tracks home loan data. The most sweeping message of the proposals is that the government won't help every American buy a home, especially if they can't afford it. "Houses will be sold to people with financial wherewithal to buy them and will reduce foreclosures going forward," he says.
Friday, February 18, 2011
5 Reasons To Buy Now!
Selling Your House? 5 Reasons To Do It NOW!
by The KCM Crew on February 15, 2011 •
The conventional wisdom when selling a home has always been to wait until the ‘Spring Buying Season’. Over the years, that has seemed to make sense and is now accepted as a good strategy for those who want to sell their house and receive the best possible price. This real estate market has shattered many previously held beliefs. The wisdom of waiting for a spring market is another belief that is about to fall. Here are five reasons why?
1.) Interest Rates Are On the Rise
Interest rates have spiked up rather dramatically over the last ninety days and are now over 5%. Initially, an increase in rates has a positive effect on the market as it forces buyers off the fence. However, it also eats into a buyer’s purchasing power. As rates increase, the mortgage amount a buyer qualifies for decreases. This will eventually have a negative impact on prices.
2.) Your Dream Home Will Never Be Cheaper
If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.
3.) Buyers Are Out Early
There is mounting evidence that buyers are coming out earlier this year. A belief that now is a good time to buy coupled with the increase in interest rates has started the buying season early.
Pete Flint, CEO of Trulia:
“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth. We’ve are now experiencing 100,000 property views per minute.”
The National Association of Realtors just reported that the number of house sales increased 12.9% over last month.
4.) Inventory Increases Every Spring
Every year there is an increase of inventory which comes to market as we approach the spring. Here is the number of listings available for sale in 2010.
• February – 3,531,000
• March – 3,626,000
• April – 4,029,000
We believe there will be an increase in these numbers in 2011 as there is a pent-up selling demand created by the weak market of the last few years. You won’t have to worry about this increasing competition if you sell now.
5.) We Are in the Eye of the Foreclosure Storm
While banks are trying to rectify their foreclosure procedures, there is a large supply of discounted properties which has been delayed coming to market. This inventory will be released sometime in the next few months. Foreclosures sell on average at a 41% discount. When released they will be competing with your house for the buyers in the marketplace. If you are looking to sell in 2011, you want to sell before this inventory becomes your competition.
CNN Money quoted the leadership Of RealtyTrac on this issue:
“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James Saccacio, CEO of RealtyTrac.
“Unfortunately,” he added, “This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”
“We expect a spike in the first quarter,” said Rick Sharga, a RealtyTrac spokesman.
Bottom Line
These are five strong reasons to sell now instead of waiting until later in the year. Sit down with a local real estate professional today and decide the best options for you and your family.
by The KCM Crew on February 15, 2011 •
The conventional wisdom when selling a home has always been to wait until the ‘Spring Buying Season’. Over the years, that has seemed to make sense and is now accepted as a good strategy for those who want to sell their house and receive the best possible price. This real estate market has shattered many previously held beliefs. The wisdom of waiting for a spring market is another belief that is about to fall. Here are five reasons why?
1.) Interest Rates Are On the Rise
Interest rates have spiked up rather dramatically over the last ninety days and are now over 5%. Initially, an increase in rates has a positive effect on the market as it forces buyers off the fence. However, it also eats into a buyer’s purchasing power. As rates increase, the mortgage amount a buyer qualifies for decreases. This will eventually have a negative impact on prices.
2.) Your Dream Home Will Never Be Cheaper
If your family goal is to sell your current house and take advantage of the fabulous selection of properties currently available to buy the home of your dreams, DO IT NOW! Prices will continue to soften in most markets. However, if you are buying, COST should be more important than PRICE. Cost can be dramatically impacted by rising mortgage interest rates. Do the math and decide if now is the time.
3.) Buyers Are Out Early
There is mounting evidence that buyers are coming out earlier this year. A belief that now is a good time to buy coupled with the increase in interest rates has started the buying season early.
Pete Flint, CEO of Trulia:
“We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors – which is more than 70 percent year-over-year growth. We’ve are now experiencing 100,000 property views per minute.”
The National Association of Realtors just reported that the number of house sales increased 12.9% over last month.
4.) Inventory Increases Every Spring
Every year there is an increase of inventory which comes to market as we approach the spring. Here is the number of listings available for sale in 2010.
• February – 3,531,000
• March – 3,626,000
• April – 4,029,000
We believe there will be an increase in these numbers in 2011 as there is a pent-up selling demand created by the weak market of the last few years. You won’t have to worry about this increasing competition if you sell now.
5.) We Are in the Eye of the Foreclosure Storm
While banks are trying to rectify their foreclosure procedures, there is a large supply of discounted properties which has been delayed coming to market. This inventory will be released sometime in the next few months. Foreclosures sell on average at a 41% discount. When released they will be competing with your house for the buyers in the marketplace. If you are looking to sell in 2011, you want to sell before this inventory becomes your competition.
CNN Money quoted the leadership Of RealtyTrac on this issue:
“We’ve now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000,” said James Saccacio, CEO of RealtyTrac.
“Unfortunately,” he added, “This is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing.”
“We expect a spike in the first quarter,” said Rick Sharga, a RealtyTrac spokesman.
Bottom Line
These are five strong reasons to sell now instead of waiting until later in the year. Sit down with a local real estate professional today and decide the best options for you and your family.
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