Housing Recovery? Not This Year, Experts Say

Housing Recovery? Not This Year, Experts Say
One in every nine homes in the United States is sitting vacant, according to the U.S. Census Bureau. Economists predict that getting rid of this glut nationwide will take at least three years.

Here’s the math: The number of housing units in the United States increased by 8.65 million from 2002 to 2007. During that period, the number of U.S. households rose by only 6.7 million. Subtract a half-million homes that will be torn down or lost to fire, and that leaves an excess of 1.3 million units, not including vacation homes.

The country adds about 1.5 million households every year, but the recession and a slowdown in immigration is reducing that number. Additionally, Gen Xers, most of who are within the age range when people tend to have the most children, are relatively small in number and won’t create an enormous need for larger living space.

Factor in the number of new homes being built—about 700,000 this year, according to Arthur C. Nelson, director of the University of Utah’s Metropolitan Research Center— and the bottom line is a multi-year recovery.

As Robert Lang, head of the Metropolitan Institute at Virginia Tech, puts it, "Population is still growing, and sooner or later, you'll want to move out of relatives' basements."

Utah’s Nelson analyzed government and private housing data and predicts that hard-hit housing markets in the West and South will start to bounce back later this year and during the first half of 2010. The Northeast and Midwest will have the slowest comeback, possibly extending beyond 2012, he says.

Source: USA Today, Hava El Nasser (09/10/2009)

S&P/Case-Shiller Home Price Indices show continued declines

S&P/Case-Shiller Home Price Indices show continued declines

Nationwide, prices of existing, single-family homes showed continued declines in January, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10 percent compared with January 2008, according to the S&P Case-Shiller Home Price Index.

“Home prices, which peaked in mid-2006, continued their decline in 2009,” says David M. Blitzer, chairman of the Index committee at Standard & Poor’s. “There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path, with all of the 20 metro areas reporting annual declines, and nine of the MSAs falling more than 20 percent in the last year.”

As of January 2009, average home prices across the United States are at level similar to those in late 2003.

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Mortgage rates bounce back

Still under 5% for borrowers with good credit

By Inman News, Thursday, April 9, 2009.

Inman News

Mortgage rates bounced back this week but remained below 5 percent for borrowers with good credit and 20 percent down payments, Freddie Mac said in releasing the results of its weekly survey of lenders.

Applications for conventional purchase mortgages are up 22 percent since the end of February, and demand for refinancings is up 129 percent, Freddie Mac said, citing data from the Mortgage Bankers Association.

Freddie Mac said 30-year fixed-rate mortgages averaged 4.87 percent with an average of 0.7 point for the week ending April 9, up from 4.78 percent a week ago and 5.88 percent a year ago.

The 15-year fixed-rate mortgage averaged 4.54 percent with an average 0.7 point, up from 4.52 percent last week and 5.42 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.93 percent with an average 0.7 point, up from 4.92 percent last week and 5.56 percent a year ago.

One-year Treasury-indexed ARMs averaged 4.83 percent with an average 0.5 point, up from 4.75 percent last week and 5.18 percent a year ago.

Those rates were for mortgages eligible for purchase or guarantee by Freddie Mac. Borrowers taking out loans too large or risky for Freddie Mac, or providing down payments less than 20 percent, can expect to pay more.

Applications for both refinance and purchase loans were up last week, the Mortgage Bankers Association reported in a separate survey.

The MBA said loan applications were up 4.7 percent during the week ending April 3. Demand for purchase loans was up 11.1 percent, driven by a 17.1 percent jump in applications for government-backed loans, largely FHA. Demand for conventional purchase loans was up 7.7 percent.

Demand for refinance loans increased a more modest 3.2 percent. Refinance applications made up 77.9 percent of all mortgage applications during the week ending April 3, down from 79.1 percent the previous week.

Looking back one year, applications for purchase loans are down about 23 percent, while demand for refinance loans is up 150 percent. At this time a year ago, refinance applications made up 52.2 percent of mortgage applications.

Fannie Mae recently reported it nearly doubled the dollar volume of refinancings from February to March, to $77 billion -- the company's largest refinance month since 2003.

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Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas

Fannie Mae Announces Guidelines for Loan Limits in High Cost Areas

On March 30, 2009, Fannie Mae issued Announcement 09-08, implementing the 2009 conforming loan limits for high cost areas ("high-balance" loans above $417,000). The American Recovery and Reinvestment Act (ARRA) raised loan limits for high cost areas for 2009 to the higher of the permanent limits in effect for 2009 or the temporary limits in effect for 2008. In most cases the 2008 limits are higher. The guidelines apply to loans delivered to Fannie Mae starting May 1, 2009.

The Fannie Mae announcement specifies eligibility requirements for high-balance loans, including:

—Loan must be conventional, first-lien mortgages only.

—One to four unit properties are eligible.

—Loans must be fixed-rate or adjustable rate loans (no balloons).

—Loans must meet loan-to-value (LTV) and minimum credit score requirements. For one unit properties with a fixed rate mortgage, the maximum LTV is 90% and the minimum credit score is 700 for LTVs above 75% and 660 for LTVs at or below 75%. For one unit properties with an adjustable rate mortgage, the maximum LTV is 75% and the minimum credit score is 680. For second homes and investment properties, the maximum LTV is 65% and the minimum credit score is 740. Other rules apply to other categories.

Fannie Mae Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised
www.freddiemac.com
Eligibility Requirements for High-Balance Mortgage Loans

Come Out and Play!

Come Out and Play!

--posted by irongrace on Mar 11, 2009

I thought it was rather odd when my friend from the nursing home asked me to motor her wheelchair through the puddles that formed from the melting snow. I didn't really get it, but I went along with it. We were out on one of our walks or what I like to call one of our"weekly strolls" because I stand and she rolls. Adhering to my friend's peculiar request, we were off on our watery wheelchair adventure! We splashed through each puddle together and came out of each experience, slightly damp and smiling. In fact, after a few puddle excursions, even I started looking out for larger and more daunting puddles to sail through until one day we were out on our stroll, and to our dismay, no puddles were to be found. They had all dried up.

Keen on keeping our strolling adventure alive, we discovered something new that awaited us. As we headed down the residential street, there was a small pile of leaves. My friend asked me to roll her through them and we did like two small children rushing into a cluster of autumn leaves which flew up into the air, softly floated around us and then made their way gently back to the earth.

It was at that moment that I reflected more deeply on my friend's predicament. My friend had been in a wheelchair her whole entire life. As a child she never gotten to splish and splash through puddles or sprinklers or fly into a pile of leaves or roll through snow or feel her toes wiggle in the warm grainy sand. Her family always instructed her to "be an adult" and as the obedient daughter, she did her best to fit the mold, but I now see that the spirit of the child had been locked inside her for all these years. So, all she wanted to be with me, was a child who was free, free to laugh and play and get wet.

From wheelchair speeding through puddles and leaves, and across lawns, to howling with laughter, and screaming for no particular reason, we were like two playmates realizing what it truly meant to enjoy life, despite the strange looks or grouchy remarks we would hear from those around us who had let the joy of life slip through their worn fingers.

Thanks to my friend, I am now on a mission to find all those children within us and make them come out and play!

U.S. Treasury: Mortgage Rates 'as Low as 2 percent'

U.S. Treasury: Mortgage Rates 'as Low as 2 percent'
by Broderick Perkins

Some of the 3 to 4 million homeowners eligible for loan modifications could see interest rates as low as 2 percent under the Obama administration's new "Making Home Affordable" (MHA) initiative.

Originally dubbed the "Homeowner Affordability and Stability Plan," MHA contains a provision to modify mortgages for qualified homeowners struggling to make the monthly payment.

A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one. Modifications are designed to make mortgages more affordable.

Also called a "workout," this provision is open to anyone including those who haven't missed payments, but may be at risk of missing payments.

The modification plan is open to anyone with any loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750 in some high-cost areas.

The modification program, also designed to standardize a hodge-podge of modification efforts by lenders, comes with financial incentives for both homeowners and lenders.

Loan servicers get thousands of dollars for modifying mortgages and borrowers get a principal reduction also for thousands of dollars over five years for paying on time.

MHA modifications are designed to make the monthly cost of housing more affordable by reducing the mortgage payment to as little as 31 of household income. Lenders can accomplish that by reducing interest rates, extending the life of the loan and even reducing the principal -- though to date most lenders have balked on forgiving debt.

"To reach the target affordability level of 31 percent, interest payments will first be reduced down to as low as 2 percent. If at that rate the debt to income level is still over 31 percent, lenders then extend the term or amortization period up to 40 years, and finally forbear principal at no interest, until the payment is reduced to the 31% target," according to the Treasury's "Making Home Affordable Updated Detailed Program Description."

The program runs through 2012, allows borrowers to modify a loan only once and applies only to loans made on or before Jan. 1 2009. Mortgages for single-family homes worth more than $729,750 are excluded.

• Do you qualify? Visit FinancialStability.gov's modification area to find out.

• There's more mortgage modification news that really hits home by helping you make the right choices to get the lender on your side.

Refinancing help

MHA also includes a refinancing provision for those with loans held by Fannie Mae or Freddie Mac.

Homeowners with less than 20 percent equity in their homes, who now find it difficult if not impossible to refinance, may be eligible to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value.

The refinanced loans can be as large as $729,750 in high cost areas and go to those who are current and on time with their mortgage payments.

• Do you qualify? Visit FinancialStability.gov's refinance area to find out.

• For more information on all the provisions of the Obama administration's MHA, visit Making Home Affordable on line.