Home Loan Focus

HUD issues 2008 Annual Homeless Assessment Report to Congress

WASHINGTON – The U.S. Department of Housing and Urban Development today issued its 2008 Annual Homeless Assessment Report to Congress, a national study that explores changes in homelessness nationwide. HUD’s assessment concludes that while overall homelessness in America held fairly steady from 2007 to 2008, the number of homeless families, particularly those living in suburban and rural areas, increased.

Source: http://www.hud.gov/news/release.cfm?content=pr09-108.cfm

Secretary Donovan approves Cincinnati’s Recovery Act Plan to revitalize neighborhoods and create jobs

WASHINGTON – U.S. Housing and Urban Development Secretary Shaun Donovan today approved the City of Cincinnati’s plan to use a $3.5 million federal grant to help stabilize and revive local neighborhoods, rehabilitate affordable housing, and improve key public facilities. Funded through American Recovery and Reinvestment Act of 2009, HUD’s Community Development Block Grant (CDBG) Program will support state and local community development while stimulating employment.

Source: http://www.hud.gov/news/release.cfm?content=pr09-111.cfm

HUD to host neighborhood networks workshop in Philadelphia

WASHINGTON – The U.S. Department of Housing and Urban Development will hold a
Neighborhood Networks Regional Technical Assistance Workshop in Philadelphia on July 15 – 17.
The event themed Neighborhood Networks: A Community Asset will feature Carol Galante, the new Deputy Assistant Secretary for the Office of Multifamily Housing Programs at HUD who will speak during the opening ceremony.

Source: http://www.hud.gov/news/release.cfm?content=pr09-110.cfm

The Mortgage Week in Review

The average rate on a 30-year fixed rate loan dipped to a six-week low of 5.20 percent, down from 5.32 percent the previous week.

• Freddie Mac  chief economist Frank Nothaft: “Interest rates for 30-year fixed-rate mortgages fell for the second week in a row to the lowest level in six weeks amid market concerns over a weakening labor market.”

More people are applying for government-insured mortgage loans now than they have for almost the past 20 years. In June, the government loans like FHA and VA loans made up 35.9 percent of all mortgage applications.

• Orawin Velz, Mortgage Bankers Association, associate vice president of economic forecasting: “A primary reason government-insured loans have retained a high share of the purchase market is that these loans typically require lower down payments than conventional loans. In addition, lending standards tend to be tighter for conventional loans, especially for loans that require private mortgage insurance.”

The FBI reported that mortgage fraud activity increased 36 percent in 2008, with the hardest hit states being California, Florida, Georgia, Illinois, and Michigan.

• FBI statement: “Several of these schemes have the potential to spread if the current economic downward trend, as expected, continues into 2009 and beyond” and “While the amount of mortgage fraud cannot be precisely determined, industry experts agree that there is a direct correlation between fraud and distressed real estate markets.”

A new report says foreclosures were down 11 percent in the second quarter of 2009, while pre-foreclosures or delinquencies were down 10 percent.

• Alexis McGee, president of ForeclosureS.com : “These huge drops—double-digit in many parts of the nation—are a sigh of relief for the economy and housing markets as they bump along toward recovery. Despite higher unemployment rates, industry and government stimuli are making a difference. It’s not just depressed properties that are selling anymore.”

Source: The Mortgage Week in Review

Underwater Loans, Not Poor Credit, At the Heart of Foreclosure Crisis

A recent article on the Wall Street Journal blog makes a bold claim: predatory lenders and liar loans are not the main cause of the current foreclosure crisis – the prevalence of underwater mortgages is the biggest contributing factor. Stan Liebowitz, the author, asserts that even subprime mortgages, now almost a dirty word, were not the main problem.  He says:

“The focus on subprimes ignores the widely available industry facts (reported by the Mortgage Bankers Association) that 51% of all foreclosed homes had prime loans, not subprime, and that the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for subprime foreclosures. (These percentages are based on the period since the steep ascent in foreclosures began — the third quarter of 2006 — during which more than 4.3 million homes went into foreclosure.)”

So, foreclosures are not on the rise because of low credit scores, upwardly adjusting mortgage rates, or all the loans made to people without documentation of their income. Why is simply owing more than your house is worth such a big problem?

“The important factor is whether or not the homeowner currently has or ever had an important financial stake in the house. Yet merely because an individual has a home with negative equity does not imply that he or she cannot make mortgage payments so much as it implies that the borrower is more willing to walk away from the loan.”

I don’ t think Mr. Liebowitz’ explanation is very complete. Borrowers are certainly more willing to walk away from their mortgages, but that doesn’t mean they will in the absence of other factors. So doesn’t it make sense that the other factors are important? If someone whose house is now worth half of the mortgage loan and they lose their job or their payments jump up, aren’t those really the things that caused the foreclosures? Being underwater just makes it easier for these borrowers to toss in the towel.

Source: Underwater Loans, Not Poor Credit, At the Heart of Foreclosure Crisis

Gov’t Expands Homeowner Rescue Plan, While Rates and Mortgage Apps Dip

According to the Wall Street Journal, the Obama administration is redefining who can qualify for government assisted refinance programs. Apparently the original guidelines were not broad enough to help those most struggling with their loans.

After all, the first rules limited homeowners to having a 105 percent loan to value ration on their homes, yet according to Moody’s Economy.com, almost 30 percent of homeowners are underwater in their mortgages and many by much more than 5 percent. The new limit has been raised to 125 percent.

The revised rules come after only 20,000 borrowers received help under the program from March to June. The administration claimed it would be able to save up to 5 million homes from foreclosure at the outset of the initiative, a figure that was never likely to be achieved with the initial restrictions.

Meanwhile, interest rates are dropping and so are applications for mortgage loans. Freddie Mac announced Thursday that the average rate on a 30-year fixed rate loan fell to 5.32 percent, excluding fees, from 5.42 percent the previous week. Freddie had no explanation for the drop in rates this week, but they were likely due to falling yields on Treasury notes as investors worry that excessive government debt may result in inflation.

And mortgage application volume plummeted 18.9 percent in the latest week, according to the Mortgage Bankers Association on Wednesday. Home purchase applications fell by 4.5 percent, but refinance requests plunged down by 30 percent, as mortgage interest rates have risen in recent weeks, much higher than their record lows from the spring.

Not a particularly good week in the mortgage markets, but good things could be just around the corner, right?

Source: Gov’t Expands Homeowner Rescue Plan, While Rates and Mortgage Apps Dip

Home Prices Fell Just a Little in April, But No Real Sign of Economic Recovery

The median price of home sales in 20 of the nation’s major cities fell by an average of 0.6 percent in April, according to Standard & Poor’s Case-Shiller index, showing great improvement over March when they slid by 2.2 percent. Yet plenty of people are not so sure this is a sign of economic recovery on the whole.

As Steve Blitz writes on his economic markets blog:

“Recession definitely impacts home prices… But in each cycle, home prices recover before the economy does… Because the perception of recovery lags reality, this means that home prices begin to recover long before consumers believe the recession has ended and certainly before the unemployment rate starts to turn down… My forecast is for home prices to begin [to] move higher in the third quarter and to finish 2009 with prices about 11% below year-end 2008 levels.”

And home prices did start to rise in several of the tracked metro areas. Dallas, Denver, and Cleveland all experienced price gains of 1 percent or more from March.

But even S&P chairman David Blitzer is cautious about announcing this as a good sign.

“While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here,” he said.

Blitzer attributed the slowing of price declines to a rise in consumer confidence and rallies in the stock market.  So what’s it all mean? Now may be the best time to get off the fence and buy a home before prices continue to rise. Then again, these number can easily fluctuate based on unemployment and other factors, so maybe you can wait until you actually start seeing price gains in a majority of the metro areas.

Source: Home Prices Fell Just a Little in April, But No Real Sign of Economic Recovery

Fame & Fortune: Danny DeVito

The actor is proud of his Jersey roots and the indie films he’s produced, such as “Pulp Fiction.”

Source: Fame & Fortune: Danny DeVito

Credit card rewards help foil recession

Choosing the right credit card rewards program can help a smart borrower get through the recession.

Source: Credit card rewards help foil recession

4 alternatives to payday lending

Payday loans often create more problems than they solve. Here are four alternatives for quick cash.

Source: 4 alternatives to payday lending