Tag Archives: Freddie Mac

Net New Renters 1.4 Million, Net New Home Buyers 0


Freddie Mac

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Freddie Mac released today its U.S. Economic and Housing Market Outlook for October showing that the rental market is doing well with many of households under 30 are opting for renting vs buying.  This is pushing the new households into “new renters” while adding no New Home Buyers.

If you have been reading this blog for a while, you will notice we have covered this in a bunch of posts. (pent up demand).   Although there is really nothing new, this is still a nice national perspective summary from the big picture.

“Much of the rental demand is from young and newly formed households who have decided to postpone homeownership in favor of renting during unsettled economic times. Indeed, the decline in the homeownership rate has been sharpest for those household heads under 30 years of age: While the U.S. homeownership rate has fallen about 1.5 percent over the past year (from 66.9 percent to 65.9 percent during the second quarter of 2011), owner rates have fallen by 4.4 percent (to 21.9 percent) for those under 25 years of age and by 7.0 percent (to 34.7 percent) for those aged 25 to 29 years,” said the Frank Nothaft, Freddie’s chief economist.

Outlook Highlights

  • Over the year ending mid-2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing, a 4 percent rise in the number of tenant households in just one year.
  • The U.S. homeownership rate has fallen about 1.5 percent over the past year (from 66.9 percent to 65.9 percent during the second quarter of 2011) with owner rates falling by 4.4 percent (to 21.9 percent) for those under 25 years of age and by 7 percent (to 34.7 percent) for those aged 25 to 29 years.
  • Apartment rents, which had been flat to falling in many projects during the 2008-2009 recession, have begun to rise, albeit slowly.
  • New construction starts of apartments in buildings with at least 20 dwellings has picked up this year, and in the second quarter was the highest since the end of 2008.
  • Ten-year constant-maturity Treasury yields averaged 1.98 percent in September, the lowest monthly average since the Federal Reserve’s series began in 1953; these yields are a common benchmark for multifamily mortgage rates, and suggest that mortgage rates fell to new lows for multifamily lending in recent weeks.

Read the Full Freddie Mac October 2011 Economic Forecast

I believe if we can turn enough of the economic corner to allow these under 30 renters feel confident enough in their employment, they could enter the market and turn this housing market around in no time.  Sometimes I even wonder if we won’t be coming out of this down cycle straight into a housing boom as so many years of these first time homebuyers have been stuck into renting.  Time will tell.

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Mortgage rates hit record low of 3.94%: Freddie


Mortgage rates hit record low of 3.94%: Freddie.

Report from HousingWire that the 30 year fixed rate mortgage average is down to 3.94%.

The average rate for a conventional 30-year, fixed-rate mortgage dropped below 4% for the first time in history amid increasing global concerns, according to Freddie Mac.

Today’s rates from Edina Realty nudged up a bit from yesterday, I suspect these will dip back down.

Today’s Mortgage Rates

The current interest rates shown below are based on a purchase of a single-family, primary residence. For current refinance rates, contact us

as of 10/06/2011 09:35 AM Central

Product Interest Rate APR
Conforming1 and FHA1 Loans
30-Year Fixed 4.125% 4.308%
30-Year Fixed FHA 3.750% 4.550%
15-Year Fixed 3.250% 3.566%
7-Year ARM 2.875% 3.180%
5-Year ARM FHA 2.750% 2.908%
Jumbo1 Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 4.375% 4.518%
 Equal Housing Lender

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Bill allows tax-free use of retirement funds for mortgage payments


Bill allows tax-free use of retirement funds for mortgage payments.

This is interesting, a bill that would allow a homeowner to tap into their retirement funds without the normal 10% penalty to cover their mortgage payments.  Interesting how it is only for Fannie Mae and Freddie Mac  mortgages…

We will have to see if this bill becomes law.

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FHFA Lawsuit against Banks, Update


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I am not sure where this lawsuit is going yet, I don’t understand what can be gained by it other than politically.  At the same time, I’m not sure that FHFA doesn’t have a case. 

It seems counter-intuitive to me to spend billions of dollars to bail out banks only to turn around and sue them putting them back into the same position again.  Wouldn’t it have been easier just to let them fail?  Would have saved everyone a lot of money, and with the same net result…

Basically FHFA is claiming that many of the loans in the security bonds sold by these banks were misrepresenting what was contained in the securities; summarized in 2 categories.  Category 1, LTV ratios and Category 2, Owner Occupant Status.   It seems to me the later one is probably more related to the borrower than the bank that originated the loan as far as “fraud” is concerned…  I wonder if FHFA will expand this to go after the borrowers that stated they were owner-occupying they weren’t?

I suspect this will get brushed aside with a settlement and slap on the wrist…  But in the mean time, here is some information on FHFA’s claim against the banks. (read full article from HousingWire)

Major banks and others acquired during the financial crisis allegedly misrepresented the owner occupancy and loan-to-value ratios by sometimes as many as 50 percentage points or more on securities sold to Fannie Maeand Freddie Mac, according to the lawsuits the Federal Housing Finance Agency filed last week….

…It looked at whether or not the borrower’s tax bill was sent to the property’s address or a different one, whether the borrower claimed a tax exemption or whether the mailing address of the property was reflected in credit reports, tax or lien records.

On one securitization underwritten by JPMorgan Chase (JPM: 33.44 -3.44%), owners did not occupy 2.5% of the underlying properties, according to the prospectus given to investors. After conducting the test, the FHFA found this number to be at 14.6%, more than five times the amount disclosed to investors.

“The data analysis revealed that for each securitization, the prospectus supplement misrepresented the percentage of non-owner occupied properties,” according to the lawsuits.

The FHFA also conducted retroactive automated valuation models to determine the value of the properties at the time the mortgages were originated. This was done to uncover any possible faulty loan-to-value ratios.

The prospectus for one security issued in 2007 underwritten by Bank of America (BAC: 6.99 -3.59%) stated all of the loans held a LTV ratio of less than 100%. According to the FHFA analysis, more than 8.8% of the loans in the security actually held LTVs above 100%. Another security issued by Countrywide Financial Corp. showed 27% of the loans held LTVs higher than 100%, according to the analysis, as opposed to none.

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Federal Housing Financing Agency (FHFA) Sues Banks over Mortgage Backed Securities


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It is news like this that makes it near impossible to predict the market correction.  Depending on what happens here, it could either mean the mortgage business gets cleaned up or that it will shut all mortgage lending down – thus sending us into further housing slump…  Or it could just be a blip on the radar and not have any real impact.

We just spent Billions on bailing these banks now, now our Government is suing them?  Will we then need to bail these banks out after the lawsuit??  I don’t get it…

We are in uncharted waters here and I am not sure how this will play out…  I’ve got a gut feeling this is not going to help anyone out.  If we are not careful through this mess, we are heading in the direction where the only way you can get a mortgage is if the Government grants you one. (technically you give the mortgage lien on the property and receive the money or the note…)

The Federal Housing Finance Agency is ready to file suit against the nation’s largest banks, accusing the financial institutions of misrepresenting the quality of mortgage backed-securities sold in the run-up to the 2008 financial meltdown, The New York Times reported Thursday.

According to the article, the FHFA lawsuits will target Bank of America (BAC: 7.33 -7.33%), JPMorgan Chase (JPM: 34.92 -3.80%), Goldman Sachs (GS: 106.69 -4.88%) andDeutsche Bank (DB: 37.00 -4.15%) among other large MBS players.

Read Full Article from HousingWire

UPDATE:

The FHFA alleges these institutions, their executives and some lead underwriters violated federal securities laws, violated common law, failed to conduct proper due diligence and provided allegedly false information when selling these products.

What the FHFA seeks in recovery will not equal what the GSEs paid for the MBS sold. However, in each suit, the FHFA disclosed how much Fannie and Freddie bought from each particular bank and subsidiary in the case of BofA.

  • JPMorgan Chase: $33 billion
  • RBS: $30.4 billion
  • Countrywide: $26.6 billion
  • Merrill Lynch: $24.8 billion
  • Deutsche Bank: $14.2 billion
  • Credit Suisse: $14.1 billion
  • Goldman: $11.1 billion
  • Morgan Stanley: $10.5 billion
  • HSBC: $6.2 billion
  • Bank of America: $6 billion
  • BarCap: $4.9 billion
  • Citi: $3.5 billion
  • Nomura: $2 billion
  • Société Générale: $1.3 billion
  • First Horizon: $883 million

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Mortgage Delequincies falling (S&P Experian reports)


There is some good news that we will hopefully begin feeling in the real estate market.  The default index is dropping on first and second mortgages despite high unemployment rates, reported by S&P Experian.

S&P Experien Default Index

This is Nationally, so hopefully our market place is tracking similar or better.  Could this be a sign the worst of the foreclosures is behind us?  Or is this too early to judge if this is just a temporary lull?

 

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30 Year Conventional Mortgage rate historical perpective


It seem like we always hear “near record low mortgage rates”, like another “Guitar Center blow out sale”.

This will help put things in a little perspective.  This was just updated 2011-08-11 4:31 PM CDT

30 Year Mortgage Rates 1976-05-07 to 2011-08-11

How much lower do you think they will go?

I am thinking now is a good time…
 

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