Delinquency Drop Shows Impact of FHA Measures

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. American Banker, By Sara Lepro and Kate Berry:

In a surprise reversal, the delinquency rate on single-family mortgages insured by the Federal Housing Administration has fallen in each of the last three months amid record volume.

Stable housing prices and higher-quality loans are aiding the agency’s recovery, though FHA Commissioner David Stevens cautioned that the mortgage market is still on federal life support.

“Let’s be real – it’s still a government-financed market,” Stevens told a group of industry executives Monday at a Mortgage Bankers Association conference in New York. “We have a lot of work to do to get the capital markets back to a sustainable level.”

Citing a study by Campbell Communications, a Washington research firm, Stevens also said the FHA backed more single-family mortgages than Fannie Mae and Freddie Mac purchased or guaranteed in the first quarter of this year.

The FHA is on track to guarantee 1.9 million loans this fiscal year, the same as in the one that ended Sept. 30, which was up from 1.1 million a year earlier.

For FHA to handle so much volume “is a sign of a very sick market,” Stevens said. “Unfortunately, I don’t think that’s going to be changing anytime soon.”

These days FHA loans are nearly the only product lenders can offer borrowers who have little money for a down payment (and the Department of Veterans Affairs and the Department of Agriculture’s Rural Housing Service serve only their respective niches). FHA lending now accounts for 30% of all residential mortgages written, up from 3% in 2006, said Brian Chappelle, a partner at the Washington consulting firm Potomac Partners and a former official with the Department of Housing and Urban Development.

In recent years higher volume and market share came at a stiff price: higher defaults and losses. An audit released in November showed that in the fiscal year that ended Sept. 30, the FHA’s capital reserve ratio had fallen to 0.53%, well below the congressionally mandated minimum of 2%.

To read this full report, please visit www.americanbanker.com. For any home or lending information, please visit www.simiishome.com.

U.S. Regulator Says Mortgage Lenders Stabilizing

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The New York Times/REUTERS:

The U.S. thrift industry reported its third consecutive quarter of profit, earning $1.82 billion during the first three months of the year.

The Office of Thrift Supervision, which largely regulates mortgage lenders, said on Monday that earnings more than quadrupled from the prior quarter, and that overall it seemed that the thrift industry is stabilizing.

However, earnings were still suppressed by the additional $2.7 billion the industry tucked away during the quarter in anticipation of more loan losses, many tied to bad mortgages.

“The health of the thrift industry is improving but we cannot say the industry has fully recovered from the financial crisis,” said OTS Acting Director John Bowman. “Until America gets back to full employment and more families are able to pay their monthly mortgages on time, the thrift industry will continue to face significant challenges.”

The first-quarter profits were the highest since the second quarter of 2007.

The amount of troubled assets also moderated. The percentage of noncurrent loans and repossessed assets fell to 3.27 percent of industry assets, from 3.29 percent in the prior quarter.

The agency said the increases in problem assets are a direct result of the continued housing market downturn and high unemployment.

Earlier on Monday the National Association of Realtors said sales of previously owned U.S. homes touched a five-month high in April, but the inventory of existing homes also jumped, putting pressure on home prices.

Tax-Credit Rush Boosts Home Sales

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Washington Post, By Dina ElBoghdady:

Sales of previously owned homes surged in April to higher levels than analysts expected as buyers rushed to take advantage of a lucrative tax credit before it expired along with low interest rates and affordable prices, according to industry data released Monday.

Sales of existing homes, which consist mainly of single-family houses, town homes and condominiums, jumped 7.6 percent in April from March to a seasonally adjusted rate of 5.77 million units, the National Association of Realtors reported. Sales were up 22.8 percent from the comparable period a year earlier, the group said.

The new figures reflect significant improvements in the country’s housing market as the selling season takes off. But they could prove short-lived once the tax-credit benefit fades.

Every region in the country experienced solid month-to-month gains except for the West, where sales fell 6.2 percent. The strongest showing was in the Northeast, where sales climbed 21.1 percent.

Trailing behind were the Midwest and the South, which rose 9.9 percent and 8.6 percent, respectively.

But even as sales rose, the supply of for-sale homes grew more than the Realtors’ group expected, putting a damper on otherwise upbeat results.

As key elements in boosting sales, the report highlighted an $8,000 tax credit available to some first-time home buyers and a $6,500 tax credit available to certain homeowners who buy a new primary residence.

But many who track the industry warned not to read too much into the spike in sales ahead of the tax credit’s expiring.

“The sales would be very healthy if they were happening on their own, but they’re happening with the helpful hand of Uncle Sam,” said Michael Larson, a housing analyst at Weiss Research.

Many economists say they suspect that the tax credit lured people who were already planning to buy houses into purchasing them earlier than planned. This means the robust sales activity of the past two months could eat into sales later this summer.

To read this full report, please visit www.washingtonpost.com. For any home or lending information, please visit www.simiishome.com.

CitiMortgage Exits Jumbo Wholesale

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. American Banker, By National Mortgage News:

CitiMortgage, a top ten player in wholesale lending, will no longer fund non-agency jumbo mortgages through loan brokers, National Mortgage News has learned.

A New York area broker that has used the bank for years said he received notification on Monday, and a spokeswoman for Citi confirmed, that “we are not currently offering jumbos through the broker channel.”

The bank-owned lender, however, will continue funding jumbos through its retail channel.

The spokesman said CitiMortgage offers “attractively priced” jumbo mortgages to “our highly credit-worthy customers, as we anticipate holding these loans on our balance sheet.”

CitiMortgage is based in O’Fallon, Mo., but its parent bank is headquartered in New York, one of the most expensive housing markets in the nation, and home to many financial service executives who live in New Jersey, New York, and Connecticut where home prices can easily exceed the GSE jumbo limit of $729,750.

Many jumbo providers today require down payments of at least 20%. Liquidity in the market is beginning to loosen up somewhat thanks to a recent jumbo securitization done by Redwood Trust, a publicly traded REIT.

For any home or lending information, please visit www.simiishome.com.

Data Firms Going Deeper on Mortgages

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Wall Street Journal, By Prabha Natarajan:

Investors’ quest for more nitty-gritty details on borrowers of home loans and real-estate trends have spawned a new industry for data providers.

Credit bureaus are using data-mining techniques to make detailed consumer and loan-level information easily available to residential-mortgage-backed-securities investors and analysts-not just when the securities are created, but also whenever they are sold in secondary markets. The expectation is that such analysis will prevent situations where buyers of bonds and other financial products tied to mortgages know little about what exactly they own. This added to the fears during the economic crisis of 2008.

Some investors once relied on credit-ratings firms to check under the hoods of these investments. But double-digit-percent age losses laid at the feet of credulous credit analysts and rapid ratings downgrades have undermined trust in the credit raters. Many investors now want to check the creditworthiness of each borrower whose loan is pooled into a security they own.

The latest in the stable of products that caters to this market is CreditHorizons for Securities, from Experian Capital Markets, a division of the credit bureau. It provides details on each mortgage holder and lets investors make their own judgments before buying a bond, especially one composed of distressed debt.

“The introduction of consumer-centric data to the market brings increased insight for determining future payment behavior and probability of default,” said Ethan Klemperer, general manager of Experian Capital Markets.

Investors are less sanguine. They said they find many of the products pricey and don’t buy full data sets. Instead, portfolio managers cherry-pick bits and pieces of information they need, and supplement with census data and other free information, said Paul Norris, portfolio manager with Dwight Asset Management.

Also, some investors note that they have access to these databases through their contacts at Wall Street banks, who have budgets that support purchase of these data sets.

This idea of using and monitoring consumer credit data through the life of a loan gained credence after the financial crisis. Investors and lenders felt close monitoring of credit profiles of borrowers would have helped spot the cracks in the ability of consumers to make payments early on.

To read this full report, please visit www.wsj.com. For any home or lending information, please visit www.simiishome.com.

Housing Market Holds its Ground

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. Los Angeles Times, By Alejandro Lazo:

Southern California’s housing market held its ground in April, data released Tuesday show, with prices rebounding off their year-earlier lows but sales slipping for the first time in nearly two years as the number of fast-selling foreclosure properties dwindled considerably.

The median price for all Southland houses, town homes and condominiums sold last month was $285,000, a 15.4% increase from the April 2009 bottom, when foreclosures accounted for more than half the resale market. But the closely watched median — the price at which half the homes sold for more money and half for less — was unchanged from March, according to San Diego-based MDA DataQuick.

Sales for the region fell 1% in April compared with a year earlier — the first decline in 22 months — indicating that the Southland’s supply of cheaper, bank-owned properties is tightening compared with last year’s glut. The month-to-month drop was almost the same, 0.9% compared with March.

“The market’s still taking baby steps on a long road to recovery, trying to find its footing,” MDA DataQuick President John Walsh said. “It’s unclear which of today’s sales characteristics are part of a new reality and which are still temporary turbulence.”

Some of the sales slowdown may be attributable to buyers delaying their closings until May 1 or after to take advantage of a state tax credit of up to $10,000 for first-time buyers and those purchasing new homes.

Also, any last-minute rush of buyers motivated by the expiring federal tax credit last month isn’t likely to be fully captured in April’s data. Many of those deals are likely to close this month or next, particularly if buyers timed their purchases to claim both the federal and state incentives.

Many experts worry that the housing market could take another fall in coming months because a slew of government programs intended to support it have expired, the jobs picture remains cloudy and the mortgage market is still in disarray. A much-feared flood of foreclosure properties, if it materializes, could also send values falling again.

To read this full report, please visit www.latimes.com. For any home or lending information, please visit www.simiishome.com.

“Where Can I Get the Lowest Rate?”

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The following is taken from Kiplinger Report dated June 10, 2010 “Where can I get the lowest rate?”

Some mortgage brokers may be able to give you a wholesale rate that beats the rate from a bank’s loan officers. Known as correspondent lenders, they are typically large brokers that do the underwriting and immediately sell the loans they originate to wholesale lenders or investors-meaning they can both find you a loan and approve it. If you’re trying to get a loan, a mortgage broker may also offer more options that a retail loan officer.

I work with top qualified mortgage brokers who will give you all of the available options that are best suited to you. If you would like to speak with a loan broker professional, please contact me. I look forward to helping you. Ken Grech

Now Is The Time To Buy!

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. I hope you find the following article very informative.  From Kiplinger’s Personal Finance magazine, May 2010

This spring, opportunity is knocking hard for home buyers.  Aside from the soon-to-expire tax credit worth as much as $8,000 (you must have a contract by April 30 and close the deal by June 30), affordability has returned to pre-boom levels and mortgage money is cheap, with the 30-year fixed rate hovering around 5%.

Unless you area is rife with foreclosures that promise to drag down prices, there’s little reason to wait to buy.  Mortgage rates are likely to head higher—the 30 year fixed rate may hit 5.7% by year-end, according to Freddie Mac—which may negate any benefit you’d get by waiting for lower prices.  Suppose you buy a home with a $300,000 mortgage now and lock in a 5% rate. Your monthly principal and interest payments would be $1,610. If you wait until prices drop 6% and borrow $282,000—but have to pay 5.7% on the loan—your monthly payment would be $1,637.

The supply of homes for sale nationally has drifted downward from its peak in 1988 but is still stacked in favor of buyers—although in many cities the inventory of entry-level homes has dropped quickly, as first-time buyers and investors have scooped up bargains. On the new-home front, most builders have burned off their existing supply of homes and reduced or eliminated concessions and incentives. They may pay closing costs, but later this year Federal Housing Authority (FHA) rules will limit the seller’s contribution to 3% of the purchase price. You can still get upgrades, but you’ll pay for them upfront, say Jody Kahn, vice-president of John Burns Real Estate Consulting.

If you need to sell a home before you can buy again, your best strategy is to price it realistically to move it fast (see 3 Keys to Selling Your Home). That was Andy May’s strategy when he sold his condo in Rochester, Minn., for a loss before he and his fiancé, Lexi Davis, moved to Salt Lake City. In their search for a home, the couple started their shopping on the Internet. Once they began to tour homes, they discovered that many properties that had looked good online didn’t cut it in person—because of unappealing floor plans or unacceptable commutes. In home buying, what you want—or not—evolves after you actually see the homes, says May.

After visiting at least 20 houses, they put a bid on a home with four bedrooms, three bathrooms and a big yard for their dog. The home was listed for $250,000 and had been for sale for six months. The couple offered $230,000, and after negotiating settled on a price of $238,500 with $3,500 in seller-paid closing costs—including a home warranty and a year’s worth of homeowner’s insurance. They put down $7,000 and took out a 30-year, fixed-rate FHA mortgage with a rate of 4.75%.  As a first-time homebuyer, Davis qualified for a tax credit $8,000.

Now is a great time to buy! Take advantage of what’s available to you now!  I look forward to helping you. Ken Grech

Fannie Tightens Rules

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. South Florida Sun-Sentinel, From News Services:

Mortgage finance company Fannie Mae is tightening standards for the adjustable-rate and interest-only loans that fed the housing boom and contributed to the bust.

The company said it will require mortgage lenders to consider how high a borrower’s mortgage payments might rise after teaser rates expire.

Fannie Mae said it will enact tighter standards for “interest only” loans that allow borrowers to avoid making principal payments for several years. To obtain those loans, borrowers taking out new mortgages must have a down payment of at least 30 percent and enough assets for two months of living expenses.

Fannie Mae’s new rules, which go into effect in September, affect loans that adjust in five years or less.

For any home or lending information, please visit www.simiishome.com.

Taking the Direct Route on Risky Mortgages

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. The Wall Street Journal, By David Reilly:

No more liar loans. That should be one goal of the financial-overhaul legislation set for debate in the Senate this week.

But, as things now stand, the bill doesn’t directly set minimum standards for mortgages or stamp out those practices that helped inflate the housing bubble. These would include liar loans, also known as stated-income or no-documentation mortgages, as well as negative-amortization loans that caused mortgages to balloon by allowing homeowners to defer principal or interest payments.

Instead, the legislation requires banks to retain a 5% portion of many loans they intend to sell, or securitize. The thinking is that banks won’t make risky loans if they have to eat their own cooking. The danger is that Wall Street engineers its way around the restrictions come the next housing boom.

Better to take more direct action. That may happen following recent congressional hearings on the financial crisis that brought up the issue of liar loans. During last week’s hearing on Goldman Sachs Group, Delaware Democratic Sen. Edward Kaufman questioned executives about stated-income loans and how they may have helped contribute to the failure of securities sold by the firm. 

To read this full report, please visit www.wsj.com. For any home or lending information, please visit www.simiishome.com.