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Mortgage rates creep down toward 4%

Mortgage Rates Drop Again

Maybe the days of rock-bottom mortgage interest rates aren’t numbered, after all.

Rates dropped 0.09 percentage point this week to 4.23% for a 30-year, fixed -rate home loan, according to the latest weekly report from Freddie Mac.

Mortgage rates started the year at 4.53%, and have sunk each week in 2014, falling a total of 0.3 percentage point.

Borrowers with a 4.23% mortgage would pay $982 a month on a $200,000 balance, compared with $1,017 on a 4.53% loan.

Frank Nothaft, Freddie Mac’s chief economist, attributed the move to cooling home sales.

“Mortgage rates fell further this week following the release of weaker housing data,” he said. “The pending home sales index fell 8.7% in December to its lowest level since October 2011.”

The drop in mortgage bond purchases by the Federal Reserve, the so-called taper, that started last month, was expected to push rates gradually higher.

But worrisome economic news and a plunge in stocks has counter balanced the Fed action, according to Keith Gumbinger of HSH.com, a mortgage information company. Anxious investors have scurried to safe havens like treasury bonds and mortgage backed securities.

“Much to the benefit of mortgage shoppers, this move [to bonds] is dragging down yields and mortgage rates,” said Gumbinger. “This is a nice surprise” for people looking to purchase or refinance their homes in a rising rates environment, he said.

Rates may keep dropping, according to Gumbinger.

“The reduction in Fed support, slowing manufacturing activity here and in China, some less-than-stellar figures on consumer spending, housing, and more are causing some concern that the economy has decelerated over the last couple of months,” he said. “The economy doesn’t need to slow very much to put us back into the kind of funk we’ve been hoping to escape since the recovery began several years ago.”

SOURCE: CNN Money

NEW DIRECT FLIGHTS – Denver to Sun Valley

United Airlines will offer nonstop service between Denver and Sun Valley this summer, and those involved in securing the service say they hope it will continue next winter.

The new route, which will add 5,500 additional seats into Sun Valley for the summer, was announced Monday by Fly Sun Valley Alliance, the Friedman Memorial Airport Authority and Sun Valley Resort, which worked in partnership to secure the new flights. The route will be supported by a U.S. Department of Transportation Small Communities Air Service Development Program Grant for $500,000, awarded to the airport last fall.

CRJ 700 cockpit - New direct flights from Denver to Sun Valley

The United Express flights will run from July 2 through Sept. 23, 2014, and be operated by SkyWest Airlines using CRJ 700 regional jet aircraft with 70 seats—six in first class and 64 in economy, including 16 extra-legroom seats. The flight will run daily from July 2 to Aug. 25 and five times per week from Aug. 26 to Sept. 23.

The three local partners stated that they are working with United to add winter service for the Denver-Sun Valley route, and hope to confirm a contract by late spring for next winter.

A press release states that the flight schedule has been structured to take full advantage of connections from all major eastern markets:

  • Departs DEN at 7:15 p.m., arrives SUN at 9:03 p.m.
  • Departs SUN at 7:30 a.m., arrives DEN at 9:11 a.m.

This new nonstop route to Sun Valley will allow additional connectivity to eastern U.S. cities and other destinations in United’s global route network

Vic Kerckhoff, United’s director of leisure sales

“We are pleased to be expanding our service to the Sun Valley market and look forward to a long-term successful partnership.”

The new flights can be booked on www.united.com.

FHA to lower mortgage limits in “High Cost Areas”

The Federal Housing Administration will be reducing the amount it’ll insure on high-cost mortgages starting in the new year.

Beginning on Jan. 1, all FHA loans will be capped in high-cost areas at $625,500, reduced from the current cap of $729,750. FHA will keep its current loan limits in place in areas where housing costs are lower than $271,050. The new loan limit for the highest cost areas will affect about 650 counties, according to the Department of Housing and Urban Development.  Blaine County will be at the $625,500 limit.

FHA insures loans for buyers with down payments as low as 3.5 percent. The agency raised its limits during the financial crisis to help more home buyers, and the program quadrupled as a result. However, it faced mounting defaults and losses.

“As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play,” says FHA Commissioner Carol Galante. “Implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.”

SOURCE: Realtor News

VIDEO: Existing-Home Sales Fall But Prices Rise

 

Existing-home prices are continuing to edge up across the country, but sales aren’t keeping pace. Here are five key indicators for the housing market from the National Association of REALTORS® ‘latest existing-homes report, which reflects September data:

  1. Home prices: The median price nationally for an existing home in September was $199,200, up 11.7 percent from a year ago. Home prices have had 10 consecutive months of double-digit year-over-year increases.
  2. Home sales: Sales of existing single-family homes dropped 1.5 percent in September to a seasonally adjusted annual rate of 4.68 million. However, sales remain 10.9 percent above year-ago levels. Meanwhile, existing condo and co-op sales dropped 4.7 percent in September but are 8.9 percent above year-ago levels.
  3. Distressed homes: Foreclosures and short sales accounted for 14 percent of September sales. That’s up from 12 percent in August. A year ago, distressed home sales made up 24 percent of the market. “Lower levels in the share of distressed sales account for some of the growth in median prices,” NAR notes. In September, foreclosures were sold at an average discount of 16 percent below market value; short sales were being discounted by an average of 12 percent.
  4. Inventory: Housing inventory in September held steady, with a 5-month supply at the current sales pace. NAR’s report shows that 2.21 million existing homes were available for sale in September. For-sale inventory is 1.8 percent higher than a year ago.
  5. Days on the market: The median time on the market for all homes was 50 days in September, up from 43 days in August but down from 70 days a year ago. Short sales were on the market for a median of 93 days in September; foreclosures were at 43 days. NAR notes that 39 percent of homes sold in less than a month in September.

SOURCE: Realtor Mag.

VIDEO: Govt shutdown shuts off some expensive mortgages

The second week of the government shutdown is giving consumers and lenders second thoughts about the housing market. Lenders last week were giving assurances that they would use “work-arounds” for tax documentation on mortgage applications, but now the future is not quite as clear.

“As the government shutdown continues, we’ll continue to evaluate the circumstances,” said Tom Goyda, a spokesman for Wells Fargo, the nation’s largest lender.

Goyda said Wells Fargo is following guidance from Fannie Mae and Freddie Mac, which does not require IRS verification unless the borrower is financing multiple properties. If that is the case, the lender can close the deal without the verification but cannot deliver it to Fannie or Freddie without the IRS documents.

Jumbo loans (mortgages with values exceeding $417,000) are getting trickier, however. Some lenders will not do them at all without tax verification from the IRS. Others are delaying the process. They will all have to verify the tax information once the government opens again, and that’s a gamble. These loans are inherently riskier because most are held on bank balance sheets.

Wells Fargo is continuing to originate jumbo loans without tax document verification from the IRS. As for the risk it is taking on in doing so, Goyda said, “I can’t really speculate on that.”

“The industry is doing what it can to make the shutdown as seamless as possible, but some lenders are more conservative about it than others,” said Matthew Graham of Mortgage News Daily.

Loans backed by government insurance from the Federal Housing Administration (FHA) and loans through the Department of Veterans Affairs (VA) are largely not affected, as their processes are mostly automated or lenders have delegated authority to close the loans.

“Bottom line here: Loans that are anywhere close to ‘vanilla’ are moving through the system more or less as normal,” Graham said.

“Vanilla,” however, does not include loans needing flood insurance through FEMA, loans for self-employed borrowers or loans requiring Social Security number verification, he said.

Hardest hit by far is the Department of Agriculture home loan program. USDA loans, which are 30-year fixed with no down payment, make up less than 5 percent of the total mortgage landscape but are a favorite among first-time buyers and builders. As the so-called exurbs expand, more borrowers are qualifying for these loans. USDA is currently closed and not processing any loans.

“Some lenders are using this to advance competitive opportunity, rather than calling for an end to this, by advertising that they can close the loans if others cannot,” wrote David Stevens, CEO of the Mortgage Bankers Association, in an email over the weekend. “This disruption is negative for housing and the consumer and will only get worse as this extends.”

Stevens circulated an online ad sent to him by Premier Nationwide Lending, which touts “Good news for most of your borrowers!” The company said it has revised its policies to allow loans to be funded without IRS tax transcripts.

It noted that its policy is “short-term” and “temporary.” John Hudson, Premier’s vice president in charge of regulatory affairs noting that USDA loans are still shut down, and that one family he’s working with is “homeless” because of the shutdown.

Uncertainty in the mortgage market could not have come at a worse time. After a robust spring and summer sales season, housing was already beginning to slow down this fall, thanks to higher mortgage rates. Now concerns about the shutdown and the potential debt crisis have potential buyers pulling back yet again.

“Our September National Housing Survey results show that the improvements in consumer housing attitudes witnessed in recent months softened ahead of the government shutdown,” said Doug Duncan, chief economist at Fannie Mae. “Americans’ awareness of policy uncertainty leading up to the Oct. 1 shutdown and the pending debt ceiling debate appears to have grown as indicated by an apparent cautionary holding pattern in overall consumer housing and personal finance sentiment.”

SOURCE: CNBC

What Shutdown Means For Real Estate

Congress has failed to approve a Continuing Resolution (CR) providing funding for most government operations. Therefore, spending authority for most of the government expired at midnight on Sept. 30, 2013. Until legislation providing for funding is signed into law, many offices and programs of the federal government are now shut down.

This means many, but not all, government programs, including some that impact federal housing and mortgage programs, have been suspended or slowed due to the lapse in government funding. The Office of Management and Budget (OMB) requires each agency to have contingency plans in place. The information below is based on NAR staff review of agency agency contingency plans for the current shutdown and past experience with previous shutdowns and near-shutdowns.

Latest Status Information

(as of Oct. 3, 2013 2PM ET)

Internal Revenue Service (IRS)
The IRS is closed and has suspended the processing of all forms, including requests for tax return transcripts (Form 4506T). While FHA and VA do not require these transcripts, they are required by many lenders for many kinds of loans, including FHA and VA, so delays can be expected if the shutdown is protracted. We have received indications that many loan originators are adopting revised policies during the shutdown, such as allowing for processing and closings with income verification to follow, as long as the borrower has signed a Form 4506T requesting IRS tax transcripts. On loans requiring a Form 4506T Fannie Mae and Freddie Mac have also adopted relaxed provisions allowing closings but subject to tax transcript verification before the GSE’s purchase the loans.

Social Security Administration (SSA)
The Social Security Administration is closed and has suspended most customer service functions. According to the SSA Contingency Plan, verifying Social Security numbers through the Consent Based SSN Verification Service will also be suspended during the shutdown, a further complication for mortgage processing. As with IRS income verification, policies vary among lenders, with many choosing to exercise forbearance during the shutdown period subject to subsequent verification. Fannie Mae and Freddie Mac have also adopted policies to allow for closing subject to subsequent verification and before GSE purchase of the loan.

Department of the Interior – Bureau of Indian Affairs (BIA)
BIA has announced that there will be no processing or recording of property transactions on Leased Indian Tribal Land during the government shutdown.

Additional Status Information

(as of Oct. 1, 2013 7AM ET)

Federal Housing Administration
HUD’s Contingency Plan states that FHA will endorse new loans in the Single Family Mortgage Loan Program, but it will not make new commitments in the Multi-family Program during the shutdown. FHA will maintain operational activities including paying claims and collecting premiums. Management & Marketing (M&M) Contractors managing the REO portfolio can continue to operate. You can expect some delays with FHA processing.

VA Loan Guaranty Program
Lenders will continue to process and guaranty mortgages through the Loan Guaranty program in the event of a government shutdown. Expect some delays during the shutdown.

Flood Insurance
The Federal Emergency Management Agency (FEMA) confirmed that the National Flood Insurance Program (NFIP) will not be impacted by a government shutdown, since NFIP is funded by premiums and not tax dollars. Changes to the flood insurance program scheduled to take effect on Oct. 1 will be implemented as scheduled.

Rural Housing Programs
For the U.S. Department of Agriculture programs, essential personnel working during a shutdown do not include field office staff who typically issue conditional commitments, loan note guarantees, and modification approvals. Thus, lenders will not receive approvals during the shutdown. If the lender has already received a conditional commitment from the Rural Development office, then the lender may proceed to close those loans during the shutdown. A conditional commitment, which is good for 90 days, is given to a lender once a USDA Underwriter approves the loan. If a commitment was already issued, the funds were already set aside and the lender may close the loan at its leisure. If Rural Development has not issued a conditional commitment, the lender must wait until funding legislation is enacted before closing a loan.

It is important to note that the traditional definition of “rural” for qualifying communities for assistance will be continued in effect during the shutdown.  We expect that language to continue the current definition will be included in whatever funding measure is eventually enacted.

Government Sponsored Enterprises
Fannie Mae and Freddie Mac will continue operating normally, as will their regulator, the Federal Housing Finance Agency, since they are not reliant on appropriated funds.

Treasury
The Making Home Affordable program, including HAMP and HAFA, will not be affected as the program is funded through the Emergency Economic Stabilization Act which is mandatory spending not discretionary.

SOURCE: National Association of Realtors

Government shutdown could slow housing recovery

The fight may be in Washington, but the effects of the government shutdown will ripple through every neighborhood in America—without a fully functioning government, an already tight mortgage market may become even more prohibitive. It is exactly what the housing recovery does not need.

“This is going to be very disruptive to the mortgage industry and pretty much result in a freeze of the pipeline,” said Craig Strent, CEO of Bethesda, Md.-based Apex Home Loans. “New loans can be taken, but without IRS and Social Security number verifications, [they] will not be able to proceed to closing.”

Shut Down - Closed for BusinessAfter getting burned badly in the housing crash, most lenders now check everything on a borrower’s loan application. It has become standard to verify tax returns as a quality control measure, according to Strent. If the IRS is closed, it will not process any forms, including tax return transcripts, so the loan applications will be stalled. For government workers themselves, it’s even worse, because they will likely be unable to verify their employment on a mortgage application.

The Federal Housing Administration, which represents about 15 percent of the mortgage market, the lights will still be on, but the staff will be reduced.

This is going to be very disruptive to the mortgage industry and pretty much result in a freeze of the pipeline

“The Office of Single Family Housing will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market,” according to a post on the federal Housing and Urban Affairs’ website. Lenders with “delegated authority” will be able to go on making FHA loans. That is about 80 percent of FHA lenders. They will also be able to get FHA case numbers through the usual on-line service. The FHA will continue to collect insurance premiums from borrowers during a shutdown as well.

“The FHA program can weather a shutdown as long as it doesn’t last too long,” said Guy Cecala of Inside Mortgage Finance. “But a shutdown could also seriously impact FHA’s ability to police lenders and loan quality.”

The shutdown, if lengthy enough, could hit home mortgage refinances as well, delaying rate locks and resulting in costly extension fees.Now What?!!

“What could happen is that our customers could be put in a hold status and then subject to interest rate gyrations that are very likely to occur between the time a government shuts down and reopens,” said David Zugheri of Houston-based Envoy Mortgage.

Of course, mortgage rates could move lower if investors head to the relative safety of the bond market and drive yields down. Mortgage rates follow loosely the yield on the 10-year Treasury.

“Rates may go up this week if…Friday’s job’s report stays on the schedule,” said Matthew Graham of Mortgage News Daily. “Markets would have to defend against the possibility of a strong report reigniting October taper expectations.”

If the shutdown lasts for a few days or even a week, the immediate effects on mortgage availability will be minimal. It’s the message this whole battle has already sent that is already doing much of the damage.

“It certainly won’t help housing. Among other things, it is likely to spook would-be homebuyers,” said Cecala.

Consumer confidence is a key component of the housing recovery, and while rising home prices have helped, more uncertainty in the economy can only hurt.

“Some home-buying consumers are reluctant to buy because of the uncertainty,” said Brad Hunter, chief economist at Metrostudy. “They see the factions in Congress as ‘daring’ each other, with extremely high stakes. People are not especially comfortable making the biggest investment of their life when the government seems to be unable to solve important problems.”

SOURCE: CNBC

Bank fees rise for 15th straight year

Bank fees rose for the 15th straight year, with fees for overdrafts and out-of-network ATM usage hitting record highs, according to Bankrate.com.

The average overdraft charge rose 3 percent in 2013, to a record $32.20, Bankrate says. The average cost for using another bank’s ATM rose 2 percent, to $4.13—also a record.

Fees continue to go up, and it’s best to spend time strategizing how to avoid them

“Overdraft and out-of-network ATM fees are the low-hanging fruit in terms of raising fees,” says Greg McBride, senior financial analyst for Bankrate.com.

Overdraft fees have risen so far that a recent study by Moebs Services says that it’s cheaper to borrow $100 from a payday lender than it is to bounce a $100 check. The median price for a $100 loan from a payday lender is $18, Moebs says.

atmfeesThe fees in both cases are entirely avoidable, McBride says.

Overdraft fees were steepest in Milwaukee, where they average $34.16, and lowest in San Francisco, where they average $27.18.

Out-of-network ATM fees were highest in Denver, where they average $4.70, and lowest in Baltimore, when they average $3.59. The calculation includes the fee from the owner of the ATM and from your bank. The charge for using another bank’s ATM rose 4 percent, to $2.60, while the average fee from your bank for using another bank’s ATM fell 3 percent, to $1.53.

A few bank products became more affordable, according to the Bankrate survey of 10 banks in each of 25 large U.S. markets. The average minimum balance to offer a no-interest checking account fell 19 percent to $60.27—about where it’s been since 1998.

Good luck finding a free interest-bearing checking account: Just 3 percent were free to all customers, unchanged from 2012. But 95 percent of all the institutions surveyed would waive the fee if you kept an average balance of $5,802, down 5 percent from last year. Average monthly service fee fell 1 percent to $14.65. Average monthly service charge for a non-interest-bearing checking account: $5.54, up 1 percent from last year.

So far, fewer than 1 percent of banks charge for using a debit card.

“Fees continue to go up, and it’s best to spend time strategizing how to avoid them,” McBride says. “There’s always room for consumers to shop around.”

Banks do take notice when you leave, particularly when you take a big balance with you, McBride says. Seventy percent of consumers consider switching banks when checking account fees get too high, and those who are most likely to do so often have the highest balances.

SOURCE: CNBC

FHA offers mortgage backing to the once bankrupt

The Federal Housing Administration is making it easier for once-struggling homeowners to qualify for a mortgage backed by the agency.

For borrowers who meet certain requirements, the FHA is trimming to one year the amount of time that homebuyers must wait after a bankruptcy, foreclosure or short sale before they may qualify for a FHA-backed mortgage.

The waiting period had been two years after the completion of a bankruptcy and three years after a foreclosure or a short sale.

But only certain consumers who’ve been in those circumstances will be able to meet the criteria attached to the eased restrictions. Borrowers must be able to show their household income fell by 20 percent or more for at least six months and was  tied to unemployment or another event beyond their control. They also must prove they have had at least one hour of approved housing counseling and, among other things, have had 12 months of on-time housing payments.

“FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage,” said FHA Commissioner Carol Galante, in a letter to mortgagees announcing the changes.

FHA-backed mortgages are a popular option for first-time buyers and for consumers with lower credit scores who might not otherwise qualify for a loan backed by Fannie Mae or Freddie Mac. However, the agency has recently increased the fees tied to FHA-backed loans.

REPORT: Home Prices At 5 Year High

Home prices rose in June to their highest levels in nearly five years, increasing 2.2 percent, according to the Case-Shiller Home Price Indices released Tuesday. The 20-city index was up 12.1 percent from a year earlier, and the companion 10-city index was up 11.9 percent.

Economists surveyed by Bloomberg had expected the 20-city index to increase 2.3 percent from May and 12.2 percent from a year ago.

Case-Shiller’s national index, reported quarterly by Standard & Poor’s, was up 7.1 percent in the second quarter to 146.32, its highest level since third quarter 2008.

All 20 cities included in the survey improved both month-to-month and year-to-year.

Hear_This-320The two surveys have improved monthly and yearly for 13 consecutive months.

The national index has improved in four of the last five quarters, dropping only in the fourth quarter of 2012 in that stretch. The 7.1 percent quarter-over-quarter matched the increase in the second quarter of 2012 as the largest quarterly improvement since the national index began in 1987.

The national index was up 10.1 percent year-over-year, matching the gain in the first quarter as the largest annual jump since the first quarter of 2006.

The 10-city index rose to 173.37, up 3.73 from May, to the highest it has been since August 2008 when it was 173.35. The 20-city index rose 3.41 to 159.54, its highest since September 2008 when it was 161.64

In the same month, according to the National Association of Realtors, the median price of an existing single-family home rose 5.4 percent, up 13.3 percent from a year earlier.

According to the NAR, homes prices were held back by sales of distressed homes. Foreclosures, eight percent of transactions, the NAR said, sold for an average discount of 16 percent below market value in June, while short sales, seven percent of transactions, were discounted 13 percent.

Home values improved as well despite higher mortgage rates, which could have both a positive and negative impact: rising rates themselves might bring prices down as buyers look for affordable monthly payments, but also increase demand as buyers try to lock in rates before further increases. The increased demand against weak inventories would send prices up.

While good news for home sellers, the continued sharp increases—the indices have shown double-digit year-year increases for four months in a row —are likely to revive concerns of a growing housing bubble as personal income growth continues to stagnate.

Still the increase in home values, according to economic theory, should mean improved consumer spending. The “wealth effect” theory holds that consumers spend based on increase in net worth, not income. Home values accounted for about 25 percent of the increase in net worth in the first quarter, according to the latest data from the Federal Reserve.

The Case-Shiller Indices have gone up for seven straight months and 13 times in the last 15; each index dipped last October and November.

The monthly increases were led by Atlanta, where prices rose 3.4 percent from May to June. The price index for Atlanta is at its highest level since July 2010. The price index rose 3.3 in June in Chicago, bringing prices there to their highest level since October 2010. Prices rose 2.8 percent each in San Diego and Las Vegas, while prices were up 2.7 percent in San Francisco.

Prices have increase for 16 straight months in San Francisco to the highest level since February 2008. Prices in Las Vegas have increased for 15 straight months and are at their highest level since February 2009.

Prices were up 1.8 percent in Phoenix, the 21st straight month-over-month gain, and 2.3 percent in Los Angeles, the 16th consecutive monthly improvement.

Year-over-year the price gains were led by Las Vegas, where prices were up 24.9 percent since June 2012 and San Francisco, where prices rose 24.5 percent in the last 12 months. Those year-over-year price increases were followed by Los Angeles, up 19.9 percent, Phoenix, up 19.8 percent, and Atlanta, up 19.0 percent.

Despite the June improvement, the 10-city index is down 234 percent from its June 2006 high of 226.29, and the 20-city index is off 22.7 percent from its July 2006 peak of 206.52.

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