Posts Tagged with "finance"
Growing Number of Foreclosures
Tuesday, January 12, 2010 - By Gate Arty
Statistics from Lender Processing Services indicate that as of November 30th 2009, one in every 7.5 homeowners either fell into delinquency or foreclosure. The total number of delinquencies reached a record high of 9.97%, a 5.46% increase from the previous month and a 21.29% increase from November 2008. Loans falling into more severe delinquent categories reached 5.01% through November, compared to 1.52% of loans improved toward a current status. That's compared to November’s mortgage monitor report, when 4.02% of current mortgages through December 2008 fell into delinquency by October 2009. The states with the most non-current loans were Florida, Nevada and Mississippi. Those with the fewest were North Dakota, South Dakota and Alaska.
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Friday, October 16, 2009 - By Gate Arty
Foreclosures are at an ALL-TIME HIGH. In the 3rd quarter of this year 937,84 homes received a foreclosure letter. How do you put this in perspective? Well, that means that 1 in every 136 homes were in foreclosure. That’s a 5% increase from the 2nd quarter. It’s also a whopping 24% leap from this point in 2008! These numbers represent the worst 3 month stretch in terms of foreclosures ever. The foreclosure toll this year is reported to be 623,852 & climbing. Perhaps with these numbers on the rise, banks will begin being more cooperative with short-sales? Wouldn't that be rational? Either way, the real estate investors will be back in full-force to pick up REO properties & pre-foreclosures that are indeed priced to sell. Check out investing opportunities at MidFloridaREO.com.
High-End Mortgage Foreclosures
Tuesday, October 13, 2009 - By Gate Arty
Recent statistics have shown that the trend of foreclosures is now hitting the top-tier of mortgages. In June 30% of foreclosures involved homes that were in the top 1/3 of local residential values. When the foreclosure crisis began 3 years ago, this figure was around 16%. On the opposite end of the spectrum, the bottom 1/3 of the residential market only accounts for 35% of foreclosures now. This figure is way down from 55% in 2006.
Tags: finance, foreclosures, home values, mortgage, statistics
Homes Sales Increase Again
Thursday, August 13, 2009 - By Gate Arty
Homes sales increased 3.8% in the 2nd quarter of 2009 from the 1st quarter. The annual adjusted rate was 4.76 million in the 2nd quarter & 4.58 million in the first quarter. What is accounting for this rise in activity? No doubt, the great values in the housing market are beginning to capture the attention of prospective home buyers. The $8000 tax credit that will expire on November 30th is also a major motivation. The median sales price in the first quarter was $174,100, which represents a decrease of 16% below this time one year ago. “With low interest rates, lower home prices and a first-time buyer tax credit, we’ve been seeing healthy increases in home sales, which are a hopeful sign for the economy,” said Lawrence Yun, NAR’s chief economist.
Foreclosure News - 2nd Quarter 2009
Thursday, August 13, 2009 - By Gate Arty
Foreclosures continue to be the driving force in today’s real estate market. In the 2nd quarter, foreclosures & distressed sales accounted for over a third of all sales! According to recent statistics, the rate of foreclosures jumped another 7% in July from June. This also represents a 32% increase from the same time period last year. More than 360,000 homes with mortgages received foreclosure filings in July. This was the highest point since January 2005. California, Florida, Arizona, & Nevada accounted for an astounding 57% of July foreclosures nationwide! Many factors contribute to the tidal wave of foreclosures like: tighter lending guidelines & unemployment, but chiefly responsible is the negative home equity that many homeowners now have. Many homeowners are finding it “easier” to go into foreclosure than ride out the market waiting for values to rebound or restructure the loan.
Home Sales Rise in May 2009
Tuesday, June 23, 2009 - By Gate Arty
The National Association of Realtors announced that existing home sales rose to 4.77 million units in May 2009. This represents a rise of 2.4% over from April. This is promising because it’s the second straight month that sales have risen, undoubtedly spurred by attractive mortgage interest rates. The NAR announced that this is the first month-on-month increase since August/September 2005. The total hosing inventory stood at 3.80 million units, which represents nearly a 9.6 month supply, down from 10.1 in April.
Market Activity Affected by Economy
Wednesday, May 27, 2009 - By Gate Arty
As the unemployment rate hovers around 9%, most economists expect that the rate of foreclosures will account for approximately 60% of mortgage defaults this year alone. The next wave of foreclosures is expected to include not only the “sub-prime” mortgages, but also those who have been traditionally financially healthy, but have been affected by job-loss. As a result of these foreclosures, housing prices are expected to decline overall. Do not expect to see price declines at ALL price points however. Many realtors have expressed that in some of the moderate price ranges, prices have become so attractive that buyers are jumping back into the fray in waves. In many instances buyers & sellers are once again involved in “multiple offer negotiations.” This has been scarce since the real estate boom of 2006. The home price decline that has resulted from the increasing number of foreclosures, tighter lending standards, & large supply of unsold inventory will eventually spur activity. With mortgage interest rates still at all-time lows, many buyers are viewing NOW as the time to act upon golden buying opportunities. According to Standard & Poor's/Case-Shiller Home Price Indices, home prices in the U.S. fell by 18.7% in March from a year earlier.
Tags: buying a home, economy, finance, home prices, mortgage, real estate, realtors, selling a home
Commercial Mortgages Down
Thursday, May 14, 2009 - By Gate Arty
The Mortgage Bankers Association’s (MBA) Quarterly Survey reports that commercial mortgage loan originations continued to drop in the first quarter of 2009. At this point, they are an astounding 70% lower than during the same period in 2008, and down 26% from the fourth quarter of 2008. The 70% overall decrease in commercial lending activity during the first quarter was driven by decreases in originations for all property types. When compared to the first quarter of 2008, the decrease included:
• 88% decrease in loans for hotel properties
• 80% decrease in loans for health care properties
• 76% decrease in loans for retail properties
• 66% decrease in loans for office properties
• 61% decrease in multifamily property loans
• 50% decrease in industrial property loans
Tags: commercial real estate, finance, mortgage
Mortgage Activity Strengthens
Friday, March 27, 2009 - By Gate Arty
Mortgage applications spiked last week as a result of the record low interest rates. This fueled demand for home refinance loans. Mortgage applications increased a whopping 32.2% for the week ending March 20th. Refinancing accounted for nearly 80% of all of these applications. Despite stricter lending guidelines, the majority of those that apply for a loan, still get approved. The Mortgage Bankers Association reported an approximate 60% approval rate. As a point of reference, in 2003 nearly 80% of applicants got their loans approved. OOPS!
At least activity is finally picking up . . .
Tags: finance, loan, mortgage application, refinance
Fannie Mae Loosens Up
Tuesday, March 10, 2009 - By Gate Arty
Effective March 1st, Fannie Mae (which guarantees approximately half of the $12 TRILLION of the United State’s mortgage market) loosened loan restrictions on real estate investors & secondary home buyers. This move is seen as a major coup for real estate investors that wanted back IN the real estate market, but were essentially locked out. The new guidelines allow these borrowers to obtain Fannie Mae-secured financing for up to 10 properties. Most recently the amended limit was only 4 properties. Meaning, if you had already four mortgages, you could not buy another property with Fannie-backed financing. In essence, making it nearly impossible to buy & borrow. There are, of course, stricter financial underwriting guidelines. Some things to expect are:
• No foreclosures or bankruptcies in the last 7 years.
• A minimum credit score of 720 when the four property threshold is exceeded.
• Heightened reserve requirements that are tied to the type of property being purchased. For example, a multi-family dwelling (duplex, triplex, etc.) would have stricter reserve requirements than a single-family home.
• A borrower MUST have at least 25% down on a second home & at least 30% down on an investment property.
In spite of these stricter guidelines, this is great news for professional real estate investors, and is a major step toward loosening the credit flow stranglehold on the housing market. Now Freddie Mac, the other major player & insurer of mortgages, needs to follow suit.
The "NEW" housing tax CREDIT
Tuesday, February 17, 2009 - By Gate Arty
The American Recovery and Reinvestment Act of 2009 is now in effect. A tax credit of up to $8,000 is now available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009. Unlike the tax credit enacted in 2008, that offered a $7500 deduction that had to be repaid, the new $8000 figure credit does NOT have to be repaid. The high points of the tax credit are as follows:
- It is for first-time home buyers only. A first-time home buyer is defined as as a buyer who has not owned a principal residence during the three-year period prior to the purchase.
- This is a tax credit & does not have to be repaid. For example, If you owe $5,000 in taxes & qualify for the $8,000 credit, then you would get a REFUND of $3,000! A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. Windfall!
- The duration of this program is only for homes purchased between January 1st, 2009 to December 1st, 2009. Act NOW!
- There is an income imit. It is $75,000 for singles & $150,000 for married couple's combined incomes.
Chase acquires Washington Mutual
Friday, September 26, 2008 - By Gate Arty
After months of speculation, Washington Mutual became the largest U.S. bank to collapse to date. Although WaMu shareholders have no reason to celebrate, those at JP Morgan Chase seized an opportunity. Chase bought WaMu’s $307 billion in assets and $188 billion in deposits for a mere $1.9 billion, which actually goes to the FDIC. The bank will also re-capitalize by selling some of its stock to raise $8 billion. JP Morgan Chase will now have 5,400 branches in 23 states. Wall Street’s reaction was positive on news of the acquisition, while shares advanced 10%. Investors believe the company continues to scoop up assets cheaply that will eventually provide substantial shareholder return. Once again, proving that those properly positioned in this market will succeed & seize investment opportunities. Top-to-bottom, investors large & small will buy assets that will eventually increase in value.
The Housing and Economic Recovery Act of 2008 & FHA
Wednesday, September 17, 2008 - By Gate Arty
The Housing and Economic Recovery Act of 2008 (HERA) is beginning to be implemented by FHA. As of October 1, 2008 HERA will mandate FHA to require a minimum of 3.5% in down payment, up from the current 2.25% down payment. Accordingly, mortgages with new FHA case numbers assigned on or after January 1, 2009, will require a down payment of 3.5% of the lesser of the appraised value or purchase price, PLUS ANY CLOSING COSTS TO BE PAID BY THE BORROWER. The seller will still be able to pay up to 6% of the sale price towards the borrowers closing costs and prepaids. FHA does allow gifts from relatives and government down payment and/or closing cost assistance (Keystone/SHIP), but no longer allows seller-funded down payment assistance (Nehemiah and Ameridream) as of October 1, 2008.
Market Turmoil
Wednesday, September 17, 2008 - By Gate Arty
The recent turmoil in the financial markets has been nothing but staggering. Storied institutions such as Bear Stearns and Lehman Brothers are essentially gone. Merrill Lynch was scooped up by Bank of America for a song. The US government has come into rescue Fannie Mae and Freddie Mac, but it figured at some point there is a risk of doing too much bailout.
What does all this mean for the real estate industry?
Get ready for more wild rides. Now that equity markets have proven an unsafe and risky investment, more and more real estate investors will be coming out to play. And now that financial institutions are filing for bankruptcy, this will setup even greater liquidation among those real estate assets.
Which means that more wealth will be created for some individuals now than ever before, and frankly this type of wealth creating wasn't even possible when things were considered "good." Sure things are plain awful out there for some investors, but for others this is the opportunity that comes around only once a decade, or perhaps a century. The only thing that resembles this is the S&L crisis in the 1980s, where 747 savings and loan associations failed.
Will there be more government subsidized bailouts? Many are asking why Lehman Brothers was not rescued. Well, enter the economic concept of moral hazard.
Let me ask you a question. Have you ever bought rental car insurance? You know, after you pay for it you feel a little free when your driving someone else's car, right? I know with rental cars I love to take the corners sharper, gun the engine, and basically get “my monies worth,” knowing full well that if I bang up the car, I've got nothing to lose (other than my health if I bang it up too much!). Now please don't forward this e-mail to Avis and get me on their blacklist!
Same concept for the government. They bailed out Bear Stearns. They bailed out Fannie Mae and Freddie Mac. But if they were to bail out yet another financial institution, particularly one that we can all live without, there would be a sense of carelessness that would encourage future speculators.
So what's the story here? In this case, the government wants them not to intentionally cut off their toes, but rather if they see gangrene they go to the hospital rather than awaiting their financial windfall. Lehman Brothers financial woes, due in large part to bad bets on real estate and its related securities, means that the economy is frankly in worse shape than many think. There will be more collateral damage. Lehman's unwinding will cause damage to other financial institutions as inevitably the interest rate swaps (which the Wall Street Journal reported may run into the millions) and other financial instruments affect other institutions, too.
Asset Protection & the FDIC
Wednesday, September 10, 2008 - By Gate Arty
After the failure of IndyMac Bank, many people have wondered how safe their accounts really are. While the Federal Deposit Insurance Corporation (FDIC) guarantees most bank deposits, here are some important details to remember.
What types of accounts are covered?
The FDIC protects checking and savings accounts, certificates of deposits (CDs), Christmas club accounts, and money-market savings accounts. However, Stocks, Bonds, and mutual fund shares...even those purchased through an FDIC bank...are not protected.
What are the limits of FDIC insurance?
Bank accounts that have less than $100,000 in them and certain retirement accounts (IRAs held in CDs and money market accounts) that have less than $250,000 are fully protected by the FDIC even if the bank fails. If you want to exceed these account limits, you can keep your deposits fully protected by:
Dividing your money among several different bank companies. Note that dividing your money among several different branches of the same bank does not guarantee full protection. If you prefer to keep your money in the same bank company, you can still be fully protected if you divide your money among various "ownership categories". Ownership categories include a personal account in your name, a personal account in your spouse's name, a joint account co-owned by you and someone else, and a trust account that names someone other than you as a beneficiary.
What are some common ways customers end up with uncovered deposits?
If you purchase a CD through an investment broker, this CD will often be placed with a bank at which you already have an account. If the CD and your other accounts exceed the $100,000 limit, you may not be full protected. Before purchasing CD's through a broker, ask where they will be placed.
In addition, keep track of the interest your accounts earn so you don't exceed the limits this way.
What will happen if your bank fails?
In most cases, depositors can fully access their funds by the next business day. Typically, failed banks are closed on Fridays, and funds are available by the following Monday. People can also usually use their ATM cards and write checks over that weekend as well. And for customers whose accounts exceeded the FDIC limit, all hope is not lost. Though this amount has varied, they can generally expect to recover 70 cents on the dollar of their uncovered funds after the bank's assets are sold.
The good news is that the vast majority of US banks are secure, but the above information will help you stay fully protected. For more information, visit www.fdic.gov.
Downpayment Reform
Monday, August 04, 2008 - By Gate Arty
The new Housing and Economic Recovery Act of 2008 contains a provision that forbids FHA from insuring mortgages in which the downpayment comes directly, or indirectly, from an interested third party (such as the seller), beginning October 1, 2008.
On Thursday, July 31, 2008, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008 (H.R. 6694) was introduced by several members of Congress. Representatives Maxine Waters, Gary Miller, Al Green and Christopher Shays sponsored this bill that if passed and signed into law will allow downpayment assistance to continue indefinitely.
Housing and Economic Recovery Act of 2008
Friday, August 01, 2008 - By Gate Arty
On July 30th, President Bush signed the Housing and Economic Recovery Act of 2008. All provision details are not yet available, but the major components included broad authority for the Treasury Department to safeguard the nation’s two largest mortgage finance giants (Fannie Mae and Freddie Mac) and a plan to help hundreds of thousands of troubled homeowners avoid foreclosure.
As anticipated, all seller-funded DPA programs will be abolished October 1st, 2008. Meaning the minimum cash investment requirement will increase to 3.5% of the purchase price.
More news to come on this as it becomes available!
Tags: business, down payment, economy, fannie mae, finance, freddie mac, mortgage, real estate
Down-Payment Assistance Eliminated?
Wednesday, July 23, 2008 - By Gate Arty
Mortgage programs that offer down-payment assistance (DPA) assisted nearly $80,000 people buy homes in the depressed market of 2007. The Senate and House of Representatives are fast-tracking legislation that would likely abolish DPA programs. The repercussions could be devastating to the already ultra-sensitive real estate market.
DPA programs are operated by nonprofit organizations. These organizations provide buyers with money for their down-payment. In turn, home sellers reimburse the organizations and pay an administrative fee. These loans are insured by the Federal Housing Administration (FHA).
Mortgages with DPA account for almost 40% of FHA’s volume! It has been estimated that if DPA programs are eliminated, the direct impact on real estate could result in an estimated $50 billion in lost real estate sales & mortgages, not to mention the loss of jobs in the building & lending sectors of the real estate industry.
Fannie Mae & Freddie Mac Concerns
Monday, July 14, 2008 - By Gate Arty
Concerns about the solvency of both Fannie Mae and Freddie Mac, which guarantee over $5 trillion of the nation's $12 trillion in mortgage debt, sent the stocks of both companies into a tailspin this past week. Fannie Mae, open the day trading at $23.00 previously had a 52 week high of $41.65. Freddie Mac opened at $23.50 today with a 52-week high of $45.50. The Federal Reserve voted Sunday to allow Fannie and Freddie to borrow directly from the central bank.
Add to this the announcement that IndyMac Bancorp shut its doors, which marks the first time in 15 years that a bank with over $10 billion has collapsed. The Federal Deposit Insurance Corporation seized control of the bank late Friday. IndyMac focused on deposits and originating home mortgages.
Tags: fannie mae, fdic, federal reserve, finance, freddie mac, mortgage
Mortgage Insurance
Friday, July 11, 2008 - By Gate Arty
Three mortgage insurance (MI) companies filed for bankruptcy this week. Mortgage insurance is insurance to offset losses in the case where a mortgagor (borrower) is not able to repay the loan and the lender is not able to recover its costs after foreclosure and sale of the mortgaged property. Mortgage insurance is typically required on loans where the borrower has less than a 20% down payment.
Remaining mortgage insurers have been tightening their standards and offering borrowers fewer ways to avoid purchasing mortgage insurance. The MI companies have begun categorizing more and more of the country as a "declining market," raising the requirements and making such insurance more difficult to obtain. Stated simply, without MI, buyers will have to put more money down to qualify for loans - perhaps 10%.
During the previous housing boom, borrowers were often able to avoid mortgage insurance by taking out two loans: one that covered four-fifths of the home's purchase price and a second "piggyback" loan that covered the traditional 20-percent down payment. With this type of lending practice now being non-existent, potential home buyers need MI to buy, and the overall buying pool has consequently significantly decreased.
Tags: bankruptcy, finance, foreclosure, insurance, loan, loans, mortgage, property value
100% Financing options?
Friday, July 11, 2008 - By Gate Arty
With the mortgage & lending industries further tightening their lending requirements & guidelines, it is becoming increasingly difficult for home buyers to qualify for homes. Are there still low down payment options available? The USDA / Rural Development program is certainly a very viable option for certain buyers in certain areas. The advantages of a USDA loan are:
- No down payment & 100% financing
- Loan not limited by contract amount
- No PMI
- No need for "seasoned funds"
- No maximum purchase price
- Not limited to first-time buyers
The property does have to be in an area that qualifies as rural. To check if a property qualifies, click: USDA.
Tags: down payment, finance, insurance, mortgage, usda loans
Mortgage rates
Monday, March 17, 2008 - By Gate Arty
Long-term mortgage interest rates were down again Monday, and the benchmark 10-year Treasury bond yield sank to 3.31 percent.
The 30-year fixed-rate average dropped to 5.74 percent, and the 15-year fixed rate fell to 5.09 percent. The 1-year adjustable rate dipped to 5.07 percent.
Tags: finance, interest rates, mortgage
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