MortgageMatters
The Federal Reserve today announced it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time. “Information … suggests that economic activity continues to strengthen and that deterioration in the labor market is abating,” the Fed said in a prepared statement.
“Household spending is expanding at a moderate rate, but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability,” the Fed said.
To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.
During his State of the State address, Governor Schwarzenegger today announced his 2010 proposals for California. Included in the proposals is a recommendation to set aside $200 million for a new round of $10,000 state tax credits for first-time home buyers. The proposal expands upon the initial $10,000 state tax credit by including both new and existing homes. Last year’s tax credit applied only to new homes.
The tax credit could be combined with the recently extended and expanded federal tax credit for home buyers.
The Federal Reserve today announced it will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, and expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time. “Information ? suggests that economic activity has continued to pick up and that the deterioration in the labor market is abating,” the Fed said in a prepared statement.
“Financial market conditions have become more supportive of economic growth, although economic activity is likely to remain weak for a time. The Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability,” the Fed said.
To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve also said it will purchase a total of $1.25 trillion of agency mortgage-backed securities and nearly $175 billion of agency debt, and will gradually slow the pace of these purchases in order to promote a smooth transition in markets.
Calif. median home price - October 09: $297,500 (Source: C.A.R.)
Calif. highest median home price by C.A.R. region October 09: Santa Barbara So. Coast $970,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region October 09: High Desert $118,580 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 2009: 64 percent (Source: C.A.R.)
Mortgage rates – week ending 12/03/09 30-yr. fixed: 4.71% Fees/points: 0.7% 15-yr. fixed: 4.27% Fees/points: 0.6% 1-yr. adjustable: 4.25% Fees/points: 0.6% (Source: Freddie Mac)
Fannie Mae last week announced its First Look initiative, which provides owner occupants and public entities an advantage in purchasing Fannie-Mae owned foreclosed properties. With First Look, only offers from owner occupants and buyers using public funds are considered during the first 15 days a property is on the market. Offers from investors will be considered only after the first 15 days have passed.
In addition to First Look, buyers using Neighborhood Stabilization Program (NSP) funds from the U.S. Dept. of Housing and Urban Development’s (HUD) Community Development Block Grant (CDBG) program, HOME Investment Partnerships Program funds from HUD, local housing trust funds, or charitable foundation funds also may qualify for additional benefits, including:
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Deposit waivers
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A reserved contract period, and
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Extra time for closing
For more information about Fannie Mae’s First Look initiative or the company’s programs for public entities, contact publicentity_reosales@fanniemae.com. For more information about Fannie Mae-owned properties for sale, please visit www.HomePath.com.
The Federal Housing Administration (FHA) is proposing raising minimum credit scores for borrowers who receive FHA-backed mortgages, increasing down payment requirements, and limiting the amount of money sellers can provide toward closing costs. The proposed changes are part of an effort to shore up the agency’s finances, which have been hit with rising defaults to its mortgage insurance program.
The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding in the third quarter, up 40 basis points from the second quarter, and up 265 basis points from one year ago, according to the recently released Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The delinquency rate, which set a new record in the third quarter, includes loans that are at least one payment past due, but does not include loans that are in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago.
“Once again the states of Florida, California, Arizona, and Nevada have a disproportionate share of the mortgage problems,” said Jay Brinkmann, MBA’s chief economist. “They had 43 percent of all foreclosures started in the third quarter, down only slightly from 44 percent both last quarter and the third quarter last year. They had 37 percent of the nation’s prime fixed-rate loan foreclosure starts and 67 percent of the prime ARM foreclosure starts.”
Source: M.B.A.
Fannie Mae last week announced a new Deed for Lease™ program. Deed for Lease allows borrowers to transfer their property back to the lender and then lease back the house at market rate. The lease period is for up to 12 months, with possible month-to-month contract extensions after that period. The program is designed for borrowers who do not qualify for or have not been able to obtain other loan-workout solutions, such as a loan modification.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance also may be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31 percent of their gross income.
Source: C.A.R.
Roger Wald recently discovered he would save $25,000 a year if he refinanced his five-year mortgage at 4.75 percent. Wald, an auto body repairman in Sarasota, Fla., could have gotten that rate last month.
But like many homeowners, he waited for rates to fall further. Now, he’s worried he missed his chance.
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