Freddie Mac Rolls Out Two New Mortgages for Multi Family

Freddie Mac brings out two new mortgage products.

1. Acquisition Rehabilitation Mortgage: The total repair cost must be a minimum of $10,000 per unit but must not exceed the lesser of $30,000 per unit or 30 percent of acquisition cost. NOTE: This would allow an new buyer to completely rehab a property and reposition for a different target market. Perhaps a neighborhood in transition would be a prime reason to look into this option.

2. Acquisition Upgrade Mortgage: The total repair cost must be a minimum of $3,000 per unit but must not exceed the lesser of $10,000 per unit or 20 percent of acquisition cost. This product offers borrowers financing of up to 86 percent loan-to-purchase and 80 percent loan-to-cost. NOTE: This mortgage is designed for unit upgrades such as appliances or new bath remodels.

These new products can be obtained at the same time maximizing mony available for a big rehab with guaranteed rate lock-ins. More on the Freddie Mac page

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www.yourpropertypath.com

Freddie Mac Mortgage Update

Mortgage Rates Reverse Trend And Rise This Week
Housing Industry Still Struggling


McLean, VA Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.11 percent with an average 0.5 point for the week ending December 13, 2007, up from last week when it averaged 5.96 percent as well. Last year at this time, the 30-year FRM averaged 6.12 percent.

The 15-year FRM this week averaged 5.78 percent with an average 0.5 point, up from last week when it averaged 5.65 percent. A year ago at this time, the 15-year FRM averaged 5.86 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.89 percent this week, with an average 0.6 point, up from last week when it averaged 5.75 percent. A year ago, the 5-year ARM averaged 5.92 percent.

One-year Treasury-indexed ARMs averaged 5.50 percent this week with an average 0.6 point, up from last week when it was 5.46 percent. At this time last year, the 1-year ARM averaged 5.45 percent.

Direct from the Freddie Mac Site.

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www.yourpropertypath.com

Finally, Some Good News in the Sub Prime Markets

The Wall Street Journal writes of a discussion with Rosengren, the Boston Fed governor, who indicated that many of the sub prime holders had the ability to refi through the FHA. He goes on to note that 55% of the sub prime holders never missed a payment and had some euqity in their homes with reasonable FICO scores and were therefore good candidates for a FHA refi. The article goes on to say that amounts to 1.2 million loans that can be refinanced to lower risk.

What is amazing to me is that the average interest rate on a fixed rate two year loan was 8%. I looked on the net for a comprehensive directory of banks that provide FHA insured loans and couldnt find a single source. This makes it very hard to alert people to the possibilitiy of reducing risk or getting a more suited mortgage for their home. The HUD www.hud.gov/offices/hsg/sfh/insured.cfm site offers some help, but didnt make it easy for consumers to find a bank.
If anyone has any information on DHA refinancing opportunities please share here

Thanks for reading
Howard Bell
www.yourpropertypath.com

Foreclosures on the Rise: A Deal in the Making

The Wall Street Journal reports that are up 94% since last year and now may be leveling off. Whats interesting according to the article is that the default rate is down 9% from last year. Its pure speculation as to why, but realtytrak CEO james Saccacio thinks that some of the programs put in place to help homeowners amy be beginning to make a mark.

Is Bush Cutting a Deal

Whats very hopeful to me is that according to MSN, the Bush Administration and some of the big banks are coming close to a deal that will help keep homeowners in their homes and supply off the market.

How?

By having the major banks agree to keep those low teaser rates in place for a few more years. The banks just might go for this because some cash flow is better than none if homes move to foreclosure or default.

"An estimated 2 million of those initial low, teaser rates are scheduled to reset to much higher levels by the end of next year, pushing the payment on a typical mortgage from $1,200 per month to $1,550, an increase of $350. The concern is that many homeowners will not be able to meet the higher payments, triggering hundreds of thousands of defaults." From MSN.com

This is a good market solution that wont require the Govt to bail out homeowners and the lenders take responsibility by keeping loans rates low , buying enough time to keep them in their homes. lets hope this goes through. The Treasury Secretary speaks before the national Housing Conference on Monday. Stay Tuned...

Thanks for Reading

Howard bell
www.yourpropertypath.com

Housing Recession: Is It Over Yet

According to Donald Kohn, a top Fed official, the Fed will give serious attention to cutting rates again at the Dec 11 meeting. As of this date we have seen a 3/4 of a point drop in rates and still inventory is increasing and the foreclosure rates are going through the roof. No doubt, only to get worse because we have so many ARM's beginning to reset.

His remarks sent the stock market up over 300 points on the possibility of a rate cut to keep the economy from slowing down, seems the credit tightening is now slowing economic activity. Generally, rate cuts take 6-9 months to better economic activity.

NAR's LAwrence Yun doesnt predict any major who said low mortgage rates and job growth should keep sales from falling. Personally, I think we have quite a ways to go. It takes a long time for peoples perception to change and as of now that perception is to wait for more price decline and possibly lower rates. Not yet stabilized in my opinion.

Thanks for reading
www.yourpropertypath.com

Mortgage Rates and Market Opportunity

Freddie Mac Weekly Updates

The 30-year fixed-rate mortgage (FRM) averaged 6.24 percent unchanged from last week when it averaged 6.24 percent as well. Last year at this time, the 30-year FRM averaged 6.24 percent. Note: The 30 year rate has not changed since last year.

The 15-year FRM this week averaged 5.88 percent . A year ago, the 15-year FRM averaged 5.94 percent. Note: The shorter term 15 year rate is lower by 6 basis points year over year.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.96 percent this week. A year ago, the 5-year ARM averaged 6.04 percent. Note: The short term variable rate is lower 8 basis points year over year.

The Take-Away

The Fed rate reductions are hardly impacting mortgage rates which means to me that they are not interested in bailing our the homeowner. If we cant count on the Fed to stimulate sales and keep homeowners in their homes then where is the market opportunity.

Market Opportunity

1. Rental Property: The apartment sector is doing well because when people are not buying they will rent. This is soaking up rental supply and boosting cash flow and property value.

2. Foreign Buyers: The dollar keeps dropping relative to other currencies. When interest rates drop, other currencies "pay better" than the dollar. I think that if you are an investor or agent in areas that are of investment interest to foreigners, then there may be opportunity in marketing to investors who see our property as inexpensive vs. their own currency.

Thanks for reading

Howard Bell
www.yourpropertypath.com

Is the Fed Really Helping Homeowners

Chairman Ben S. Bernanke speaks before the Joint Economic Committee, U.S. Congress on the economic outlook on November 8, 2007

Developments in Financial Markets

Chair of the Federal Reserve system spoke before Congress on Nov 8 to report on the state of the economy. I read the report and Here is a summary of what I got out of it.
1. Financial turmoil was triggered by investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates.
2. Delinquencies on these mortgages are likely to rise further in coming quarters as a sizable number of recent-vintage subprime loans experience their first interest rate resets.

Federal Reserve Policy Actions
1. August 17, the Federal Reserve Board cut the discount rate ( read short term rates, mortgages are long term rates) the rate at which it lends directly to banks--50 basis points, or 1/2 percentage point, and subsequently took several additional measures.
2. These efforts to provide liquidity appear to have been helpful on the whole, but the functioning of a number of important markets remained impaired.

The Risks
1. Financial market conditions would fail to improve or even worsen, causing credit conditions to become even more restrictive than expected
3. House prices might weaken more than expected, which could further reduce consumers' willingness to spend and increase investors' concerns about mortgage credit.
4. Financial market volatility and strains have persisted.
5. Sharp increases in crude oil prices have put renewed upward pressure on inflation and may impose further restraint on economic activity.

KEY: The FOMC will continue to carefully assess the implications for the outlook of the incoming economic data and financial market developments and will act as needed to foster price stability and sustainable economic growth. Note: Sounds like another cut in interest rates to me. But whats the impact? Where is the homeowners in this reduction. We know that credit card owners and home equity loans are the kind of debts that respond to short term reductions, but where is the help for the homeowner?

KEY: From Freddie Mac - the 30-year fixed-rate mortgage (FRM) averaged 6.24 percent, Last year at this time, the 30-year FRM averaged 6.33 percent. The 15-year FRM this week averaged 5.90 percent, A year ago, the 15-year FRM averaged 6.04 percent. Now, I have read that the variable mortgages will be readjusting for 3-5 years and that the average households annual mortgage increase will be $10,000. The long term rates are hardly affected by the .75% decrease already provided by the Fed. The total decline in rates from last year to this is not enough help. Can the Fed possibly think that .09% on the 30 year and .14% decrease on the 15 year mortgage rates will be enough to keep people in their homes and supply off the market? Im afraid as far as price and supply there is much more bad news to come, unless Congress steps up and significantly helps the home owner.

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www.yourpropertypath.com

Fed Lowers Rates Today

Today the Fed cut rates a 1/4 of a point to 4.5%. This is going to provide immediate impact to HELO loans and credit cards. ARM's, resetting now are expected to increase monthly payments by as much as $10,000 a year per household. I expect these people to get some immediate relief, since banks want to own loans not property.

The Fed cut rates by a half point only six weeks ago on Sept. 18. The rate reduction was designed "to forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets."
This rate cut may help consumers and variable owners stay in their homes (we hope), but the larger economy needs more time for the good news to trickle down because rate cuts take 6-9 months to work their way through the economy.

Michael Corkery's article in the Wall Street Journal today quotes an economist at Goldman Sachs. The latest decline in the homeownership rates indicates that this year, as many as 900,000 households moved from owning homes to renting them, says Jan Hatzius, an economist at Goldman Sachs. "It's a very big deal," Mr. Hatzius says. "It implies a very low level of housing demand over the next several years."

Good News
Property managers will do well since people relocating or owning more than one home will have trouble selling.

Multi family housing (rentals) should do well. All those people who would like to buy will now rent and wait out the market hoping to "catch the bottom".

Thanks for reading
Howard Bell
Your Property Path

Housing Markets: Where Are We Now

Fed Watch:
Much of what happens rests on the cost of money. Lower interest rates grease everything from home sales to commercial loans which the the economy at large. The Fed meets Oct. 30 to Oct. 31 and the lingering issues of the credit markets probably will give us another rate cut. Home Equity Loans and credit card purchases are very quick to respond but typically Fed rate cuts take six to nine months to completely filter through the economy.
Arms, are expected to reset and I read that they will add another $10,000 of annual mortgage payments to households. Without a rate reduction we will see even more supply, lower prices and more foreclosures. The more these things happen, the more people wait before buying as they try to catch the bottom. It just reinforces the existing trend. If anything should convince the Fed its time to lower rates (they are about where they where last year) this should do it.

I wanted to pass on to you the projections of the Mortgage Bankers Association; following is an edited list from the article

Housing Starts; We expect housing starts and home sales to reach bottom in the second and the third quarter of next year, respectively.
Existing home sales for 2007; will decline by about 12 percent from 2006 to 5.72 million units. Sales will decline further by about ten percent in 2008 before picking up by five percent in 2009.
New home sales; will decline by 22 percent from 2006 to 819,000 units. We expect an additional decline of ten percent in 2008. For all of 2009, we expect new home sales to rise by about six percent.
Home prices; for new and existing homes are expected to decline this year, with median prices falling about two percent. Prices should decline at a similar rate in 2008 before flattening out in 2009.
Residential mortgage originations; will decline about 15 percent in 2007 to $1.18 trillion from $1.40 trillion in 2006. Given projected declines in sales and prices for all of 2008, purchase origination should fall by 15 percent to 1.00 trillion in 2008. We expect purchase originations to rise about five percent in 2009, as home sales and home prices pick up.
Refinance originations; will also decline about 15 percent to $1.13 trillion in 2007 from $1.33 trillion in 2006. A significant amount of loans have faced or will face their resets this year and next year.
Total mortgage production will be down about nearly 15 percent to $2.31 trillion this year from $2.73 trillion in 2006. Total originations should decline another 18 percent next year as both purchase and refi originations drop.

Thanks for Reading

Your Property Path

Markets are Telling us Something

Stocks continued to decline today. The last big surprise was Citigroup reporting a loss of 57% of its income for the quarter. Today Merril Lynch reported a much larger than expected loss Merril Lynch increased the amount of its write-down by $2.9 billion for a total of $7.9 billion. Merrill said it lost $2.24 billion, or $2.82 a share, compared with a profit of $3.05 billion, or $3.17 a share, in the period a year earlier. Earnings from continuing operations were $2.85 a share. Revenue fell 94 percent, to $577 million from $9.83 billion a year earlier.

These losses are much greater than any of the experts were expecting and all is due to the subprime mess and the financial engineering of very complex products that exaggerated the move .

Whats it Mean for Us

Of course, if the lenders dont know how deep this is, no one else does .My guess is that the Fed will have to lower interest rates....

Freddie Mac reports that:

15-year Fixed Rate Mortgage: this week averaged 6.08 percent with an average 0.6 point, up from last week when it averaged 6.06 percent. A year ago, the 15-year FRM averaged 6.06 percent.

30-year Fixed-rate Mortgage:averaged 6.40 percent with an average 0.5 point for the week ending October 18, 2007, unchanged from last week when it averaged 6.40 percent. Last year at this time, the 30-year FRM averaged 6.36 percent.

Im surprised that rates havent really dropped at all from last year. The Fed better get on it or we face a looming recession is my guess... Sorry for the gloom

Thanks for Reading

Howard Bell

Your Property Path

Real Estate: What the Markets are Telling Us

Yesterday the markets took a real tanker, dropping over 366 points on more bank losses. Wachovia reported a 10% drop in income and a 1.3 billion dollar loss, much better than the Citigroup loss of almost 57%.

Given the bank reported losses of recent days this wasnt as bad as it could be. What caused this real drop was that Caterpillar reported a decline in income...causing fears that the real estate recession was spreading. A small panic set in and sellers stepped up.

Looking closer: Caterpillar posted a 21 percent gain in quarterly profit but fell short of analysts’ estimates. The company cut its full-year profit forecast, sending its stock down 5.3 percent, to $73.57. Net income at Honeywell, the manufacturer based in New Jersey, climbed 14 percent, and the company raised its yearly sales expectations. But the stock still fell nearly 4 percent, to $58.32.

Can we draw any conclusions for the real estate industry

1. People are really nervous

2. Seems some of this is a small panic, but Monday will tell us more.

Are we Dead in the Water

According to Freddie MAc's Richard Syron: Some parts of the housing market are literally frozen up. It has introduced an enormous amount of fear into large parts of the household sector about what's going to happen to them when they get to reset [their mortgage rates] . . . I think this is a substantial depressive to the overall economy . . . I would put the possibility [of a US recession] in the 40 to 45 per cent range.

However

1. The volume of applications filed to refinance an existing loan was down 1.1% on a week-to-weak basis.

2. Applications for loans to purchase homes rose a seasonally adjusted 2.1%.

The trick is to find those sectors in your area that are doing well.

1. Depressed prices draw long term investors

2. Foreclosures draw bargain hunters

3. Multi Family is doing well because rentals become in short supply lifting cash flow

4. Vacation homes are doing well

5. Certain retirement communities may not be tied to the economic cycle

Thanks for Reading

Howard bell

Your Property Path

The Markets are Telling Us Something

The big banks have reported earnings and what is clear to me are two things:

1. They lost a bundle: Bank of America corporation chalked up big charges due to credit-related turmoil. They lost something like 33% this quarter, suggesting that the problems in the credit market may yet be closer to the beginning than to the end. Citigroup saw its profit drop 57% in the third quarter.
2. Even they were not aware of how bad this would become. I remember Citigroup saying that they were very surprised that there losses were so high. Th is is the largest bank in the world and 57% of its quarterly income is a huge amount of money.
3. If the lenders arent sure how bad there loans are, then no one has a handle on the extent of this problem.

The Secty of the Treasury summed up the recent mess this way according to an article via Mortgage Daily News;

• Housing starts are off more than 40 percent from the peak of 2.3 million units in early 2006;
• employment in residential building, including specialty trade contractors, has dropped by almost 200,000 since early 2006, offsetting about one-quarter of the jobs gained in the housing boom, and mortgage defaults and foreclosures are rising.
• At the end of the second quarter of this year, more than 900,000 subprime loans were at least 30 days delinquent.
• Foreclosures have increased about 50 percent from 2000 to 2006 and those involving subprime loans are up over 200 percent in that same period.
• Current trends suggest there will be just over 1 million foreclosure starts this year - of which 620,000 will be subprime.

"The housing decline is still unfolding," the Secretary said, "and I view it as the most significant current risk to our economy.

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Your Property Path

Poor Credit: Builders Will Help You Buy

Yes, its true. New home builders are having a tough time moving supply and so one answer aside from chopping price is to increase the pool of available buyers. How do you do that, you ask? Well one way is to take motivated buyers who have poor credit and help them with credit repair programs. The Wall Street Journal has an interesting article about a program that more than one new home builder is trying out.

Both Hovanian and DR Horton are large home builders with an uncomfortable amount of supply. They have devised similar programs that puts "credit challenged home buyers" through intensive coaching that includes assistance with debt reduction and responsible spending, according to the company's Web site."

"The program is now available in 19 states for products including single-family homes, town homes and active-adult communities. Applicants are screened carefully, says Hovnanian, and about half of those referred sign up. The company pays Debt Resource USA, Fort Lauderdale, Fla., $150 upfront and $200 when a student graduates and closes on a house. In a third of communities, aspiring buyers sign contracts before joining the credit program. Those who don't complete the program can't buy a house."

There is another good article on How to erase bad credit that points out that many credit repair company's are scams. We dont think large companies such as DR Horten would be involved in such schemes, but it is wise to check with the FTC Bureau of Consumer Protection, if you are looking into companies on your own.

This is certainly a win win situation. I dont think it will move the kind of supply that these builders are seeing, but its a positive market approach to self help that we can all applaud.

Thanks for reading
Howard Bell
Your Property Path

Foreclosures: Fed to the Rescue

Hope Now Coalition:

The White house forms a new mortgage coalition to help people who are facing foreclosure. The ARM's resetting now and in the future can increase monthly payments by many hundreds of dollars, forcing more supply onto the market and driving prices down even further. The expectation is to help some two million households facing loss. The idea is to offer lower rates to individuals ho qualify and allow them to stay in their homes.

Affordable Housing Bill Passes the House

Now the House has just passed a bill, which Bush says he will veto if it gets to his desk. This is a much larger effort than Project Hope. The idea here is to create more affordable housing so that the boom that created such high prices cannot easily happen again. The House bill would create a federal trust fund to finance construction and rehabilitation of affordable housing. It would provide between $800 million to $1 billion a year with the goal of creating 1.5 million affordable housing units over the next decade by funding grants to a variety of housing providers.
The housing debacle has proven to many that housing has gotten beyond the reach of all but a few. I would like to see this bill pass so that homes remain within reach and job creation in America. Its how our money should be returned to us.

Howard Bell
Your Property Path

Time to Buy?

There was a good article on the Wall street Journal site that made an interesting point. A question was posed to author June Fletcher that has to do with days on the market. Is a home that has been on the market too long an bad buy?

June goes on to make a few interesting points:
1. Many people are waiting to catch the bottom and are not buying quickly. The property itself may be quality and even well priced in qa slow market and still sit. Dont assume all properties with many days on the market are poor candidates
2. She uses the phrase "shopworn Listings" and makes the good connect that these sellers are now tired and perhaps worried. It can be a very good time to negotiate price or improvements. If you are well heeled it can be a good time to leverage the bad times to your favor.
3. Days on market can be misleading....and this is a VERY good point - many listing services will reset the number back to zero when re-listing a property. You should call your local listing MLS or NLS and ask for their policy.

There is also a good article on Your Property Path on three indexes for home prices that all interested should follow for price fluctuations in your area. One new one is tarcking 25 metro areas daily.

Thanks for Reading
Howard Bell
Your Property Path

Stock Markets Telling Us The Worst is Over

Good article from CBSmarketwatch

The stock markets pay attention to interest rates and mortgage backed securities. The health of these markets is directly related to mortgage rates and availability of money for new homes sales.

The market hit a record high....thats right a high as it broke through 14000 before sliding back a little. One can never tell for sure but it seems that the mortgage crises is now behind us. Liquididty is back

1. Libor was 5.7% in early September and now trades at 5.24%.

2. The credit market is now functioning in a way that is conducive toward economic expansion, certainly much better than was the case in early August," said Tony Crescenzi, fixed-income strategist at Miller Tabak.

3. Fed Chairman Alan Greenspan kept up the upbeat tone: "Is this August-September credit crisis about to be over? Possibly," the Times of London quoted him as saying.

4. The Fed did lower rates a half a point recently

5. Kim Rupert, managing director of fixed income at Action Economics. "There's still a lot of nervousness, even if there are no reports of the illiquidity that we saw in asset markets back in August."

6. My blog of 09.18.07 - "foreclosures are declining" and other pieces of news point to the early beginnings of a more positive change in the markets

Surely, there is more pain in the pipeline, because the variable mortgages are resetting and higher monthly costs will force more supply and lower prices and then there is the psychology of boom /busts...it takes a while for people to regain some trust and be sure that the worst is oveR...BUT THERE ARE REAL SIGNS OF HOPE

Thanks for Reading

Howard Bell

Your Property Path

Recent Housing Markets: How Bad Is It

Following is a compilation of some views and statson the housing markets from credible sources:

CBS Marketwatch: Glut of unsold homes rises to 18-year high. Home prices falling at fastest pace in 16 years, Case-Shiller says. The Case Shiller monthly survey of 20 Metro Markets shows us that the declines are still with us. Shiller is a professor of Economics at Yale University.

Atlanta Federal Reserve Board: "Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said "I believe the bottom of the housing downturn could be a ways off -- potentially the second half of 2008 or later,"

US Dept of Commerce: Sales of new one-family houses in August 2007 were at a seasonally adjusted annual rate of 795,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 8.3 percent (±12.4%)* below the revised July rate of 867,000 and is 21.2 percent (±9.0%)below the August 2006 estimate of 1,009,000.

Finally, I think I caught a little light in all of this gloom. CBS Marketwatch Also quoted Lawrence Yun, senior economist for the real estate trade group, as saying he credit-market freeze in August no doubt contributed to the decline in sales ". Many loans that had been committed to fell through, Yun said, so the sales couldn't close. Existing-home sales are measured at closing.
An informal survey of real estate brokers showed about 10% of jumbo loans were failing to close, Yun said. The increase in inventories was driven mostly by lower sales, not by more supply hitting the market.
The emphasis is mine..... I wouldn't make the case we are seeing a bottom but it is always good to know that some of the recent worst was due to the credit problem, no longer with us

Thanks for Reading

Howard Bell

Your Property Path

Moving/Buying: Check Out Your Rotten Neighbor First

Im not at all sure whether this is a good idea, but i wanted to share this beta website with all of you. Now we all have rotten neighbors and wish if we only new....we would never buy or move near one of those rude entitled neighbors that can really ruin a life.

There is a web site that amounts to a database of neighbors beyond the pale. Anyone can enter their story and it is seachable by zip code. Not only can you find out if you are about to have a really rotten neighbor experience, but you can find out exactly what type of rotten experience you are about to have.

Personally, I wonder if we are getting just a little too personal and I can certainly see thundering lawsuits screaming slander. But, I do know that some Credit Reporting Agencies link to bad tenant data bases. If you are a landlord, its possible to search a rental applicant to see if any other landlord has had such a bad experience they went to the trouble of adding that name to the data base.

Your Property Path

Buying or Selling online; End of Days?

We know that the computer has provided a wealth of information and search ability for buyers and sellers. The next question is will it replace the agent? Can a deal be made completely on line and if so, will people trust it and use it?

There are a few sites that are testing this hoping to be the next "killer app" or the next disruptive technology. Disruptive technologies such as the computer or email app or even the cell phone really change our lives and make the early developers rich. You know they will try hard and attract a lot of development money.

Now there are a few sites testing the nets ability to offer a complete transaction without the agent, thereby saving the buyers and sellers money.

Industry stats tell us that 8 of 10 use the net to search for property. This is a good thing, because we all prefer informed clients. They are easier to work with because they know what they want and are less likely to be time wasters.

NAR weighs in: According to an article in the Wall street Journal; "Walt Molony, spokesman for the National Association of Realtors, says that's not likely. He says that the trade group's research shows that more than half of Web surfers begin their searches on metropolitan multiple listing sites or on the industry's own Realtor.com. For-sale-by-owner (FSBO) sales are at "historic lows" of only 12% -- and 5% of those transactions occur between people who already know each other, according to NAR. Furthermore, he says, no matter what tools a Web site offers, many buyers and sellers will still want a professional to guide them through a home-sale transaction."

The world rarely is a matter of one of two choices. I think that the agent will remain the central focus for transactions, but that we will see more competition from web sites that will offer a variety of ways to buy or sell. Following are some sites that offer competing services to traditional methods are worth looking at:

MLS type sites:

Trulia

Zillow

Housing Tracker

Transaction type sites:

Real Umbrella

Owners.com

Realtor.com

Redfin

Real Estate Auctions

Ebay

Realty Trac

Realty Bid

Thanks for Reading

Howard Bell for Your Property Path

At the Right Price Buyers are Everywhere

From an article at cbsmarketwatch, we find that one of the major homebuilders, Hovnanian Enterprises decided to drop prices due to painfully high supply of new homes. Faced with declining sales and declining profit margins Hovnanian bit the bullet and lowered prices dramatically. They dropped homes $100,000 which some saw as an indication of how bad things are - fair observation, however the stock went up $3.22 or 28%. Thats quite a lot of applause!

Heres whats amazing: Home sales went up at ten times the recent sales rate. "There are interested buyers in the marketplace," Hovnanian said, but they are hesitant because they want to catch the bottom. "Competitors are likely to respond with even bigger discounts, so deals for home buyers are likely to get even better over time," wrote Banc of America Securities analyst Daniel Oppenheim in a research note this week.

At the right price buyers are everywhere...

Thanks for Reading

Your Property Path

How Bad is the Foreclosure Situation Really

The Sept Mortgage Bankers Association press release reveals some unexpected good news. Its hard to see any good news in a report about the state of foreclosures, yet the numbers where encouraging......

The national numbers for foreclosures would have dropped except for four states, which had such a high spike in foreclosures that it skewed the national average, California, Florida, Nevada and Arizona.

Were it not for those four states the survey finds, we would have seen a nationwide drop in the rate of foreclosure filings. "Thirty four states had decreases in their rates of new foreclosure and the increases were very modest in the states with increases, other than those four,” said Doug Duncan, MBA’s Chief Economist and Senior Vice President of Research and Business Development.

We all know how numbers can be used to paint a picture and we understand that the press will always write emotionally about trends because it grabs attention. Its good to know that clearly there is a lot of pain out there, but their seems to be some light at the end of this tunnel.

Thanks for reading

Howard Bell for Your Property Path

The Credit Crunch is Over: Money is Available

But The Standards Have Tightened

I came across a an interesting article at the Wharton School of business at the U of Penn. According to Joseph Gyourko director of Wharton's Samuel Zell and Robert Lurie Real Estate Center, the Mortgage freeze, whereby people with good FICO scores and solid downs could not get a mortgage is over. Now that is good news that should help stabilize the markets.

The article goes on to quote Todd Sinai, an associate professor at Wharton who makes the point that although money is available, the standards have tightened ( the reform correction after a bust) and that homes that need to sell may come down in price to meet the buyer.

The pendulum of any boom bust cycle is to go from a relaxing of the rules that allows too many weak players into the market to a washing out process of those players through a generally painful correction.

Often there is a stepping back as the markets reassess the risks (lending standards and cost of money are impacted by this). Reforms are instituted and the slowly markets get a life. This is the quiet period characterized little market activity and buyer shock. You can help your sellers price more realistically if they understood that their will be quite a few less buyers in the marketplace due to stricter rules.

Hang in There and Thanks for Reading

Howard Bell for Your Property Path

Increased Apartment Demand

As the residence market slows and tips over in many sections of the country, one property sector is still shining. The increase in rents has been staggering in some areas of the country, especially in a strong job growth markets as buyers eek to rent soaking up available supply and pushing multi family cash flow up

The national Multi Housing Council reported on August 2 that although residences have been severely impacted by the sub prime meltdown its been a positive for the multi family sector.

We have tracked this before and its good to see some sectors still shining. The report goes on to say:

"On average, survey respondents reported few changes in the strong market conditions recorded three months ago, with the exception of a significant worsening of debt market conditions.

When asked specifically about the impact of the subprime mortgage meltdown on the flow of apartment residents leaving to become homeowners, 18 percent said that there has been a big decrease and 37 percent noted a small decrease. The continued strong demand conditions suggest that any supply spillover from the excess inventory in the for-sale market into the rental market has not exceeded the growing demand for apartment residences."


Thanks for Reading

yourpropertypath.com

ARMs: One Year Arms Rates Spike

Short Term Rates Increase Strongly

The Freddie Mac Weekly Survey shows a decline in all mortgage rates except the short term rate.
The 15-year FRM this week averaged 6.12 percent with an average 0.5 point, down from last week when it averaged 6.18 percent. A year ago, the 15-year FRM averaged 6.14 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.35 percent this week, with an average 0.6 point, up slightly from last week when it averaged 6.34 percent. A year ago, the 5-year ARM averaged 6.11 percent.

One-year Treasury-indexed ARMs averaged 5.84 percent this week with an average 0.8 point, up from last week when it averaged 5.60 percent. At this time last year, the 1-year ARM averaged 5.59 percent.

Freddie Mac

The short rate is up almost 24 basis points this week. We understand that the Arms will begin to reset in October. This is the next shoe that many have been fearful of. The ARM mortgages will reset and are certain to increase monthly costs to home owners. The big unknown - how many more will we see in the listings.....

On a more positive note: According to the Mortgage Bankers Association - "Commercial and multifamily mortgage bankers' loan originations were once again strong in the second quarter, according to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Up from the first quarter, second quarter originations were 40 percent higher than compared to the same period last year. The increase was seen across most property types and investor groups."

Howard Bell for yourpropertypath.com

Two Strategies for Getting Buyers into Homes

The Washington Post had a very good article about how buyers must work around the credit crunch. Basically the lack of trust in the mortgage markets is forcing investors to shun all loans that are no "conforming" loans. Freddie Mac Govt limitations will not allow them to purchase or guarantee a loan above $417.000. Anything above this amount is called a Jumbo Loan and the rates are much higher, if you can get one at all.

Two Strategies for Getting Buyers into Homes

1. In many areas homes selling for under $417,000 after a buyers down payment should be much easier to finance with lower interest rates. Concentrating on buyers for homes around $500,000 may see less deals dissolve

2. If you do have a buyer for homes above $500,00 you should split the loan into one for $417,000, the maximum Freddie Mac will insure. This will get you the lowest rate available as a Govt insured loan. Then take a piggy back loan for the difference at a higher rate. You can then average the two loans for an overall lower rate and provide a litle more safety to the lender because the bulk of the laon can have a Govt backed assurance.

* This is why jumbo rates were rising and a conforming 30-year fixed-rate loan is the lowest it has been since June today.

As of 08/29/07

30-Year Fixed 6.08% 6.25%

15-Year Fixed 5.76% 6.02%

Jumbo 30-Yr Fixed 7.16% 7.27%

Thanks for Reading
Howard Bell for yourpropertypath.com

The Insurance Hoax

Property insurers use secret tactics to cheat customers out of payments--as profits break records.
By David Dietz and Darrell Preston

When there's a disaster, the companies homeowners count on to protect them from financial ruin routinely pay less than what policies promise. Insurers often pay 30-60 percent of the cost of rebuilding a damaged home--even when carriers assure homeowners they're fully covered, thousands of complaints with state insurance departments and civil court cases show.

The insurance companies routinely refuse to pay market prices for homes and replacement contents, they use computer programs to cut payouts, they change policy coverage with no clear explanation, they ignore or alter engineering reports, and they sometimes ask their adjusters to lie to customers, court records and interviews with former employees and state regulators show.

This is contested by Robert Hartwig, chief economist at the Insurance Information Institute. He says about 1 percent of policyholders contest what they're offered. Do we have the financial ability to fight a long case?

Then there is Katrina...the article goes on to say
The August 2005 storm killed more than 16,000 people in Louisiana and Mississippi, left 500,000 people homeless and cost insurers $41.1 billion. More than 1,000 homeowners sued their insurers in the wake of the storm--the largest- ever number of insurance lawsuits stemming from a U.S. natural disaster.

For insurers, the multibillion-dollar question regarding Katrina was how much of the destruction was caused by wind and how much by water. Property insurance policies don't cover damage caused by flooding; homeowners have to purchase separate insurance administered by the U.S. government. The wind/water issue has spurred allegations that insurers manipulated the findings of adjusters and engineers.
Even the former Federal Flood Insurance Commissioner felt that the claim,s settlement procedure was skewed in favor of the insurance companies. David Dietz is a senior writer at Bloomberg News in San Francisco and did an excellent expose of the P& C industry.

Your Property Path: When Katrina first happened I thought that insurance stocks would drop like a rock. Not so...at first I couldnt understand and then it became clear. Unless you had Federal Flood Insurance the property and casualty companies didnt have to pay for flood damage. Now the claimant contest was whether the damage to many of those homes was caused by the storm surge or wind and rain...anyway you get the picture. I just wonder how many of the reps that sold homeowners actually made that clear .

Bloomberg

Howard Bell for Your Property Path

The Mortgage Crunch is on

Following the stock markets is a good way to understand whats next. We have a full on panic right now and the mortgage originator and mortgage hedge fund owners will continue to show us weakness. Although the Fed and other world banks have injected a lot of money into the system, its being reported that they are not meeting the demand.

What this means to me is that we will continue to see the weakest players make headlines as they pass. This should keep buyers away and credit very tight. The NY Times reports:

When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent.

The investment banker’s problem was that he was taking out a so-called jumbo mortgage — a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up.

NY Times

The worlds central bankers will not let the system falter, but it will not save everyone either. So, I think more to come. Heres what they have been up to this week. According to CBS Marketwatch

Central banks in Europe, Asia and the U.S. injected billions of dollars into banking systems Friday, moving to further boost liquidity in markets suffering the ripple effect of the subprime-credit crisis and saying they stood willing to provide more cash.
The European Central Bank said it had provided 61 billion euros ($84 billion) to banks in a three-day tender offer, and the U.S. Federal Reserve carried out two three-day repurchase agreements totalling $35 billion, while the Bank of Canada injected C$ 1.68 billion ($1.78 billion).
In Asia, the Bank of Japan supplied 1 trillion yen ($8.48 billion) after a rise in the overnight call rate. And The Reserve Bank of Australia added A$4.95 billion ($4.17 billion).

Marketwatch

Micro-Booms Defy the Downturn

Although real estate sales and prices are flat or down in dozens of metropolitan areas, micro-markets within them are performing differently, with prices and sales up over last year and plenty of buyers still wanting to move in.

Good Markets Have These Things in Common

• Above median income -- often well above -- with home prices to match. Typically, these are not first-time-buyer markets, nor do they have a lot of new subdivision construction. Residents' education levels exceed regional norms, local school systems are highly regarded, and crime rates generally are low.
• Prime, not subprime, mortgage territories, with little to none of the negative neighborhood impacts of rising foreclosures caused by payment-shock loans going sour.
• Close-in, established neighborhoods convenient to the urban center's employment and cultural attractions. They don't require residents to make long commutes, sit in traffic for hours or worry about gas prices.

Wall Street Journal

Thanks for reading

Your Property Path

Jumbo Loans Get Pricey

In Credit Crisis, Large Mortgages Grow Costly

When an investment banker set out to buy a $1.5 million home on Long Island last month, his mortgage broker quoted an interest rate of 8 percent. Three days later, when the buyer said he would take the loan, the mortgage banker had bad news: the new rate was 13 percent.

The investment banker’s problem was that he was taking out a so-called jumbo mortgage — a loan greater than the $417,000 mortgage that can be sold to the federally chartered enterprises, Freddie Mac and Fannie Mae. The market for large mortgages has suddenly dried up.

NY Times

• 
  

AIG warns mortgage defaults spreading

While saying that most of its mortgage insurance and residential loans were safe, AIG made a presentation to analysts and investors that showed delinquencies are becoming more common among borrowers in the category just above subprime.
It said 10.8 percent of subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime.

msnbc.com

• 
  

Central banks inject billions more in cash

Central banks in Europe, Asia and the U.S. injected billions of dollars into banking systems Friday, moving to further boost liquidity in markets suffering the ripple effect of the subprime-credit crisis and saying they stood willing to provide more cash.
The European Central Bank said it had provided 61 billion euros ($84 billion) to banks in a three-day tender offer, and the U.S. Federal Reserve carried out two three-day repurchase agreements totalling $35 billion, while the Bank of Canada injected C$ 1.68 billion ($1.78 billion).
In Asia, the Bank of Japan supplied 1 trillion yen ($8.48 billion) after a rise in the overnight call rate. And The Reserve Bank of Australia added A$4.95 billion ($4.17 billion).

MarketWatch.com

Mortgage Crunch

Housing Market Weakens As Mortgage Industry Takes Cure
By James R. Hagerty

"This week is going to be a nightmare," says Melissa Cohn, chief executive of Manhattan Mortgage in New York. Lenders are scaling back so fast that it isn't clear which loans are available or on what terms, and rates are jumping even on large loans, known as jumbos, for prime borrowers.

These stricter lending standards reduce demand for homes and nudge some people who can't refinance toward foreclosure. Higher foreclosures add to a glut of homes on the market in most of the country. And, completing the vicious circle, a weaker housing market comes back to bite the lenders by wiping out owners' equity in their homes and increasing the risk of even more foreclosures down the road.

"The market is in a panic," says Larry Goldstone, president of Thornburg Mortgage Inc., a lender in Santa Fe, N.M. He says he thinks the mortgage-bond market, which supplies most of the money for home mortgages, will calm down within a few months, but the housing market may need at least another year or two to heal.

Wall Street Journal

• 
  

Central banks moves to counter liquidity crunch
ECB, Fed, Bank of Canada take steps to calm jittery market

The European Central Bank loaned 49 firms a total of nearly 95 billion euros ($131 billion) -- the most it has ever provided -- after rising worries about spillover from difficulties in the U.S. subprime mortgage market left banks uneasy regarding lending to each other.
Across the Atlantic, the Federal Reserve carried out a $12 billion one-day repurchase agreement, on top of an earlier $12 billion 14-day repo.
Later Thursday, the Bank of Canada said it also provide liquidity "to support the stability of the Canadian financial system and the continued functioning of financial markets

CBS MarketWatch

• 
  

Mortgage crunch hits Bay Area hard because of jumbo loans

Many lenders now only want to make loans that can be purchased by Fannie Mae or Freddie Mac, the two quasi-governmental entities that help provide liquidity in the mortgage market. Those two entities cannot buy jumbo mortgages.

"If your (mortgage) is above the Fannie Mae/Freddie Mac limit, even if you're a prime borrower, you will see a significant increase in the rates being charged," said Doug Duncan, chief economist with the Mortgage Bankers Association in Washington, D.C. "If you're not a prime borrower, you will have a hard time getting credit today."

Duncan said jumbo loans are carrying interest rates of 7.5 percent to 8 percent, 1 to 1.5 points higher than a month ago. "This is a big run-up, and we expect it to significantly delay the housing recovery, if it stays there for a while," he said.

Another category feeling the pain: Home buyers who can't make a 20 percent down payment.

SF Chronicle

Its more important than ever to use the search capacity for mortgage rates at Your Property Path

Foreclosure Help Is Available

The Federal Reserve Board has reminded lenders that they must educate owners and offer counseling before a foreclosure takes place. If you are in a situation do try the counseling. Keep in mind lenders lend money they dont manage property or sell property...If all else fails talk to your lender about a short sale and see if that can help you find a reasonable way out. Your Property Path has a good follow article on this.

Foreclosure Help Is Available
GET HELP

There is a lot more assistance out there than there was even a few years ago. A credit counselor may be a good place to start. They will make those negotiation calls to the credit card companies and maybe even to your mortgagee. They are trained and know what to say and can remain emotionally detached during what can be some ugly conversations. There are some bad apples in the counseling business, however. Use one that is approved by the U.S. Department of Housing and Urban Development (www.hud.gov/counseling for a state by state list) or by the NeighborWorks® organization (www.nw.org.)

In some larger cities Freddie Mac (and maybe Fannie Mae) has teamed up with local housing groups and/or legal assistance organizations to form foreclosure avoidance projects. Where these are available community based housing organizations will be aware of them.

There are now a few funds out there to help people in precarious situations with their mortgages. NeighborWorks or local community housing organizations may be able to plug you in.

If you think your problems are the result of predatory lending practices or a fraudulent loan get in touch with the state consumer protection agency (call your state attorney general or secretary of state.)

Mortgage News Daily

• 
  

When the housing rebound comes
How will you know?

Because housing markets are intensely local, it won't do much good to check national figures. Instead, stay alert to leading indicators of recovery in your local market, such as: Inventory is decliningIn markets with fewer than 6.5 months of inventory, homes tend to be appreciating faster than inflation, says Mark Dotzour, chief economist at the Real Estate Center at Texas A&M; above 6.5, prices are lagging inflation.
1. Houses are selling faster than they used to
Generally, if the average house is selling in less than a month, it's a seller's market. By 90 days it may be a buyer's ball game.
2. Realtors are feeling better
3. Sellers are acting less desperate
All this should give you a hint, says Sacramento broker Elizabeth Weintraub. "If you're seeing no decrease in FOR SALE signs, balloons and banners and OPEN HOUSE signs, and the SOLD signs aren't popping up right away, that's pretty much telling you it's still a buyer's market."

CNN

• 
  

Metropolitan Area Existing-Home Prices and
State Existing-Home Sales

NAR releases statistics on state-by-state existing-home sales and metropolitan area median home prices each quarter. The state existing-home sales report includes single-family houses, condos and co-ops. The price report reflects sales prices of existing single-family homes by metropolitan statistical area (MSA)

National Association of Realtors

Apartment Markets Remain Strong According to NMHC Quarterly

“The apartment markets continue to enjoy largely favorable conditions,” noted NMHC Chief Economist Mark Obrinsky. “Although both owners and managers are well aware of the ‘shadow rental market’—condos and single-family homes originally intended for sale but being rented out instead—any supply spillover from the for-sale market has so far not exceeded the growing demand for apartment residences.”

One-third of respondents said that occupancy rates and/or rents rose during the first quarter of the year. As a result, the survey’s Market Tightness Index edged up slightly to 56. (For all four of the survey indexes, a reading above 50 indicates that, on balance, conditions are improving; a reading below 50 indicates that conditions are worsening; and a reading of 50 indicates that conditions are unchanged.) In most markets, conditions were largely unchanged according to 43 percent of respondents.

The long-term demographics favoring rental housing—namely the coming of age of the echo boomers and strong immigration level—make the sector a favorite among equity investors. Although the Equity Financing Index fell slightly to 53 from 56 in the last quarter, it was still the 15th straight over-50 reading. Equity capital for investment in apartments remains widely available as evidenced by the 71 percent of respondents who considered conditions unchanged compared to three months earlier.

National Multi Housing Council

• 
  

Mortgage Rates Reverse Downward Trend
Short-Term Rates Remain Mixed

McLean, VA Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey in which the 30-year fixed-rate mortgage (FRM) averaged 6.73 percent with an average 0.4 point for the week ending July 12, 2007, up from last week when it averaged 6.63 percent. Last year at this time, the 30-year FRM averaged 6.74 percent.

The 15-year FRM this week averaged 6.39 percent with an average 0.4 point, up from last week when it averaged 6.30 percent. A year ago, the 15-year FRM averaged 6.37 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.35 percent this week, with an average 0.5 point, up from last week when it averaged 6.29 percent. A year ago, the 5-year ARM averaged 6.33 percent.

One-year Treasury-indexed ARMs averaged 5.71 percent this week with an average 0.5 point, unchanged from last week. At this time last year, the 1-year ARM averaged 5.75 percent.

Freddie Mac

• 
  

Home Prices Expected to Recover in 2008 As Inventories Decline

Home prices are expected to recover in 2008 with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors®.

Lawrence Yun, NAR senior economist, said a good buyers’ market has evolved. “Buyers now have an overwhelming advantage given the wide selection of homes available in many markets,” he said. “But with profit margins coming under pressure, homebuilders will limit new construction well into 2008. This should help the overall inventory level to move steadily into a more balanced state.”

Existing-home sales are expected to total 6.11 million this year and 6.37 million in 2008, down from 6.48 million last year. New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006. Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year.
Existing-home prices are likely to rise 1.8 percent to a median of $222,700 in 2008 after a 1.4 percent decline this year to $218,800. The median new-home price should rise 2.2 percent to $245,400 next year following a 2.6 percent drop in 2007 to $240,100.

“Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008,”

National Association of Realtors

East Coast, West Coast Markets Shrug off the Housing Slowdown

East Coast, West Coast Markets Shrug off the Housing Slowdown
By Lauren Baier Kim

New York Sales

New York's a big city, and it's prices just keep getting bigger: for the three months ending June 30, the median selling price for a Manhattan condo or co-op apartment was between $840,000 and $895,000, with the average price reaching about $1.3 million, according to estimates provided by three New York brokers, according to CNNMoney.com. Meanwhile, housing inventory saw a year-over-year decrease of 31.5%, and apartments are staying on the market 117 days on average, down about 10% from a year ago, CNNMoney.com says.

Seattle sales slow

It seems that even Seattle is showing signs of the housing slowdown. The metro, although tied with Salt Lake City as the strongest housing market in the U.S ., saw pending home sales in King County drop 9.4% year-over-year in June, while the number of homes for sale rose 53% year-over-year, according to a Seattle Times article. Although boosted by a strong job market, Seattle's housing market is being hurt by its high prices and lack of affordability, the Times says. But the outlook isn't all gloom and doom: "I'd still characterize the Seattle market as being healthy -- one of the few in the country," the paper quotes Lawrence Yun, senior economist for the National Association of Realtors, as saying.

Rising foreclosures in Atlanta

Atlanta, which has one of the highest rates of foreclosure in the U.S., may be a signal of what's to come for the U.S. housing market, says a New York Times article. The city's surge in foreclosures -- about 2.7% of the metro area's homes were in foreclosure at the end of 2006, versus about 1% of U.S. housing units -- has come despite a healthy local economy, the Times says. Attributed to the increase are "aggressive" low-interest-rate mortgages -- about half of them adjustable-rate mortgages -- taken out by area home buyers when home prices were rising, and a Georgia law that speeds up the foreclosure process, the Times says. Experts fear that such a trend will become apparent in the rest of U.S., as housing values fall and interest rates on loans reset. "Everybody thought if the home prices kept going up, the lenders will keep refinancing you," the newspaper quotes an economics professor from Georgia State University as saying.

Wall Street Journal

• 
  

Apartment Markets Remain Strong According to NMHC Quarterly Survey

The apartment markets continue to enjoy largely favorable conditions,” noted NMHC Chief Economist Mark Obrinsky. “Although both owners and managers are well aware of the ‘shadow rental market’—condos and single-family homes originally intended for sale but being rented out instead—any supply spillover from the for-sale market has so far not exceeded the growing demand for apartment residences.”
The long-term demographics favoring rental housing—namely the coming of age of the echo boomers and strong immigration level—make the sector a favorite among equity investors. Although the Equity Financing Index fell slightly to 53 from 56 in the last quarter, it was still the 15th straight over-50 reading. Equity capital for investment in apartments remains widely available as evidenced by the 71 percent of respondents who considered conditions unchanged compared to three months earlier.

National Multi Housing Council

• 
  

Mortgage Rates Reverse Downward Trend This Week

McLean, VA Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.73 percent with an average 0.4 point for the week ending July 12, 2007, up from last week when it averaged 6.63 percent. Last year at this time, the 30-year FRM averaged 6.74 percent.

The 15-year FRM this week averaged 6.39 percent with an average 0.4 point, up from last week when it averaged 6.30 percent. A year ago, the 15-year FRM averaged 6.37 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.35 percent this week, with an average 0.5 point, up from last week when it averaged 6.29 percent. A year ago, the 5-year ARM averaged 6.33 percent.

One-year Treasury-indexed ARMs averaged 5.71 percent this week with an average 0.5 point, unchanged from last week. At this time last year, the 1-year ARM averaged 5.75 percent.

Freddie Mac

• 
  

Why a Housing Recovery is Far Off

The key problem now is not the level of nominal mortgage rates, which are not particularly high by the standards of the past decade. Instead, buyers are backing off because the real mortgage rate has rocketed and continues to rise. At the peak of the boom, people essentially were being paid to buy a home. The average 30-year fixed mortgage rate in 2005 was a tax-deductible 5.9%. The Office of Federal Housing Enterprise Oversight says that home prices rose 10.7% that year.

As long as buyers expected prices to keep rising, the implied real mortgage rate -- home-price increase minus mortgage-interest rate -- was minus 4.8%. This was an enormous incentive to borrow heavily to buy real estate. Result: a bubble.

But recently, the average 30-year mortgage rate was 6.5%, so with home prices up just 3%, real mortgage rates are now 3.5%. And with most potential buyers well aware of the huge excess supply of homes, there's no reason to expect prices to rebound soon. A reasonable person might expect them to fall further, boosting the real mortgage rate further.

Over the past 30 years, there's been a very close association between our measure of real mortgage rates and the pace of home sales, adjusted for the U.S. population's expansion.

Barrons

Why a Housing Recovery is Far Off

Why a Housing Recovery is Far Off

The key problem now is not the level of nominal mortgage rates, which are not particularly high by the standards of the past decade. Instead, buyers are backing off because the real mortgage rate has rocketed and continues to rise. At the peak of the boom, people essentially were being paid to buy a home. The average 30-year fixed mortgage rate in 2005 was a tax-deductible 5.9%. The Office of Federal Housing Enterprise Oversight says that home prices rose 10.7% that year.

As long as buyers expected prices to keep rising, the implied real mortgage rate -- home-price increase minus mortgage-interest rate -- was minus 4.8%. This was an enormous incentive to borrow heavily to buy real estate. Result: a bubble.

But recently, the average 30-year mortgage rate was 6.5%, so with home prices up just 3%, real mortgage rates are now 3.5%. And with most potential buyers well aware of the huge excess supply of homes, there's no reason to expect prices to rebound soon. A reasonable person might expect them to fall further, boosting the real mortgage rate further.

Over the past 30 years, there's been a very close association between our measure of real mortgage rates and the pace of home sales, adjusted for the U.S. population's expansion.

Barrons

• 
  

If You Must Sell, Name Your Price Carefully
By Nancy Trejos

Fowler said sellers should consider giving the market another two years. "If you bought a house to live in, you're in pretty good shape," she said.

But if you do have to sell, be aggressive and hit the spring market as soon as you can, agents said.

"Put it on the market sooner rather than later and make sure it's priced correctly, and make sure it shows to its absolute best advantage," said Joseph Himali, a real estate agent at Best Address in Georgetown.

Agents said making sure a property looks its best is crucial. Keep every room clean, especially the kitchen and bathroom. Get rid of clutter and remove excess furniture. You might want to consider adding more lighting or plants. More important, make sure nothing needs repair. Buyers are now asking for inspections, which was not the case two years ago.

"Property in beaten-up condition or poor condition, which is not priced to reflect the poor condition it's in, will sit on the market," Worthington said. And be prepared to offer incentives, such as picking up the buyer's closing costs or the condo fees for a while.

Washington Post

• 
  

Where Housing Prices AreThe Most Likely to Fall
By Lauren Baier Kim

Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Most overvalued U.S. markets

As the housing slowdown continues, which state has the greatest threat of experiencing home-price declines? California, according to a new report by National City Corp and Global Insight, a CNNMoney.com article says. The survey, which determines what housing prices should be using factors such as selling prices, population density, interest rates and income levels, ranks Bend, Ore., as having the most "overvalued" (i.e., overpriced) housing market. Overvalued markets -- where housing prices are most likely to fall -- tend to be in places that saw big price run-ups during the boom, including California, Florida, New York and Massachusetts, the article says. The survey, which looked at fourth quarter 2006 data for 317 top metro markets, found that 157 of the cities had seen price drops during that quarter. The report ranks Dallas as the most undervalued city in the U.S.; Texas lays claim to four of the most undervalued. For an interactive map of housing markets by median price and valuation, visit National City's Web site.

Wall Street Journal

• 
  

Existing-home sales drop to 4-year low

Sales of existing homes fell for a third straight month in May, dropping to the lowest level in four years as the median sales price declined for a record 10th consecutive month.

In a troubling sign for the future, the inventory of unsold homes shot up to the highest level in 15 years, meaning more downward pressure on prices in the months ahead until the inventory glut is reduced.

Sales fell by 0.3 percent in May to a seasonally adjusted annual rate of 5.99 million units, the National Association of Realtors reported Monday. Sales now stand 10.3 percent below where they were a year ago.

MSNBC

Efforts Made To Help Borrowers Avoid Foreclosure

CSBS Senior Vice President for Regulatory Affairs Michael Stevens said, "Servicers should provide information on when the recast will occur and how

much the monthly payment will adjust. Should the loan go into default, servicers should consider workout arrangements to prevent foreclosures."

Freddie Mac is also touting its foreclosure avoidance activities. The corporation, along with Fannie Mae, the Mortgage Bankers Association, and 20 other

mortgage industry leaders has established NeighborWorks America which is sponsoring a public service advertising campaign on television urging troubled homeowners to face their problems and seek help. Two of the ads can be viewed on the Freddie Mac website.

A Freddie-sponsored survey conducted by Roper Public Affairs and Media found that 74 percent of home mortgage borrowers were very interested in seeking the assistance of housing counselors in avoiding foreclosure yet only 64 percent had been aware of the existence of such counselors. Only 61 percent of borrowers who were already late on mortgage payments were even aware that there was help available to them.

Mortgage Daily News

• 
  

Regulators Tighten Rules For Sub prime-Lending
By Damian Paletta

Federal bank, thrift and credit-union regulators issued beefed-up guidelines Friday aimed at curbing weak underwriting standards for "subprime" mortgage loans.

The guidelines require more than 8,000 federally regulated lenders to underwrite loans based on a borrower's ability to make payments on a loan's adjusted rate, not just its low introductory rate. Roughly 75% of the subprime adjustable-rate mortgages offered last year were loans with a low flat or "teaser" rate for the first two or three years and then a higher, floating rate for the life of the 30-year mortgage. The guidelines are very similar to a March proposal, with two significant changes.

First, with limited exceptions, the guidelines expect lenders to collect much more information to prove that borrowers have the capacity to pay. Second, lenders are directed to give borrowers the option to refinance out of an adjustable-rate mortgage at least 60 days before the interest rate jumps to a higher level, without penalty.

Today's Rates
30 yr fixed mtg 6.26% 30 yr fixed jumbo mtg 6.49%
15 yr fixed mtg 5.97% $30K home equity loan 8.12%7/1 ARM 6.07% $30K HELOC 7.19%

"There is no doubt in my mind that anytime you put in more stringent standards you are likely to reduce the supply of credit," Comptroller of the Currency John Dugan said. "We don't do that lightly."

Wall Street Journal Online

• 
  

With Many Loan Options, Pick One That Fits Your Needs
By Benjamin Levisohn
New York Daily News via the Washington Post

"The majority of people don't realize that the right interest rate in the wrong product can cost them tens of thousands of dollars over time," said mortgage broker Lynn Rogers.

The 30-year fixed is the granddaddy of mortgages. It's simple: Get a good interest rate, send 360 payments to the bank and the house is yours. But you can get a lower payment with adjustable-rate and interest-only mortgages, at least in the beginning. That can work for you in many circumstances, but be sure you know what you're getting into. When the initial term ends, you could see payments spike unless you refinance, adding another expense. If your house has lost value, you've really got a problem.

But adjustables make sense for borrowers who know they may need to move in, say, five years, or think they can refinance at in a better rate later on.

Washington Post

New Scheme Preys on Desperate Homeowners

New Scheme Preys on Desperate Homeowners

The schemes take various forms and often involve promises to distressed homeowners of cash upfront, free monthly rent and a chance to retain their houses in the long run. But in the process, someone else takes over the deed, borrows as much as possible against the value of the house and pockets the cash. And, almost always, the homeowners still end up losing their homes.

There are no nationwide numbers on this common fraud, known as equity stripping, but it has turned up in almost every state. Seven states have passed laws to try to stop it. Still, with foreclosure rates rising rapidly, it will be a growing problem, consumer advocates say.

New York Times

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Steps to Modify Loans and Avert Foreclosures Draw Controversy
By Lingling Wei, Ruth Simon and James R. Hagerty

Foreclosures are rising fast partly because lenders in recent years rushed to make no-money-down loans to people with weak credit records and didn't always verify their income. At the same time, the decline in housing prices in much of the country makes it hard for borrowers who fall behind to sell their homes for enough money to pay off the loan.

When borrowers can't keep up, lenders typically consider whether it makes sense to offer a loan modification. Such workout deals, known as "mods," often involve lowering the interest rate or stretching out the term. Lenders have used mods for years, but the practice is expected to proliferate as defaults rise.

Wall Street Journal

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Tips From a Foreclosure Investor
By Off The Shelf

There's never been quite so many opportunities for individual investors to buy foreclosures. There are just so many of them. Before, the market was chiefly controlled by good old boy networks, through the banks' brokers.
All kinds of things, inside and out. Look at the doors, windows, roof, concrete -- everything. Properties that are in foreclosure aren't always in great condition. After all, the owners couldn't afford the mortgage payments. They probably couldn't pay for maintenance either. It's important to have a thorough, professional home inspection before buying. But if that's not possible, then you should at least inspect the outside of the property yourself -- all four sides.

Washington Post

Harvard Study released its annual State of the Nation's Housing report for 2007.
Too soon to look for housing market bottom

While it states that the longer-term outlook for housing is (more) upbeat, the length and depth of the current correction will depend on the course of employment growth and interest rates, as well as the speed with which builders pare down excess supply. The influx of immigrants and their children has and should continue to drive household growth between 2005 and 2015 and, with the enormous increase in household wealth over the past 20 years, healthy income growth will help propel residential spending to new heights.

Mortgage News Daily

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Too soon to look for housing market bottom

The report on new home sales mirrored a report Monday on existing home sales, which showed a 0.3 percent drop in in May nationwide. The median price of an existing home in May dropped 2.1 percent from a year ago to $223,700 — the 10th consecutive month of year-over-year declines, according to the National Association of Realtors. Inventories of unsold homes are at their highest level in 15 years.

Monday’s report also came with a gloomier outlook: The real estate trade group now expects existing home sales to fall 4.6 percent this year, worse than its previous forecast of a 2.9 percent drop. And the median price for a home is expected to fall by 1.3 percent this year — the first annual decline on record.

On top of rising inventories of unsold homes and a wave of foreclosures on bad loans, the housing market is now feeling the impact of a recent jump in mortgage interest rates.

"That will lead to another down leg in housing in the next two to three months and put more pressure on home sales and home prices in the coming month," said Thomas Higgins, chief economist at the investment management firm Payden & Rygel.

MSNBC

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FOMC seen sitting tight on monetary policy
By Greg Robb

The nation's economy is looking pretty good and inflation pressures are easing, but don't look for any cigars or champagne from the Federal Reserve at the end of their two-day meeting Thursday.
Instead, the central bank will be cautious, preferring to sit tight and make only minor changes to its statement, analysts said.
The Fed is widely expected to hold its federal funds target rate at 5.25% for the eighth straight meeting, spanning one year.

MarketWatch

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Know Which 'Junk Fees' to Trash

Sandy Gadow, author of "The Complete Guide to Your Real Estate Closing" offers this advice:

When you applied for your mortgage, the bank gave you a good-faith estimate, which outlined costs you would incur. Let's look at the other fees typically disclosed here.

The first category of charges listed are those items payable in connection with your loan. These may include an origination fee, points, appraisal fee, credit-report fee, mortgage-broker fee, underwriting fee, processing fee, courier fee and wire transfer fee. An origination fee and points are typically a set fee that you have agreed to pay to obtain your loan. It may be a percentage of the loan amount, say 1 percent.

An appraisal fee and a credit-report fee are typically not negotiable, as the lender or your mortgage broker will order these. Even though you may have an appraiser who will offer you a reduced fee to perform the appraisal, the lender may require that the appraisal be done by one of its "approved" appraisers. If you do, however, have an appraiser that is considerably less costly than the lender's, your appraiser can typically become certified by your lender by simply providing the lender with certain licensing certifications.

The mortgage-broker fee listed on the good-faith-estimate form is negotiable. The lender's inspection, underwriting and processing fees may be somewhat negotiable, but many lenders stay fairly firm on these fees.

Courier and wire-transfer fees are typically charged for transferring loan documents to the escrow closing company and wiring the loan proceeds to the closing officer. You may ask that these be reduced or waived. Ask if your lender has the ability to transfer the documents electronically. Verify that the closing agent has not marked up these fees.

Washington Post