Home-Account.com

The S&P Case-Shiller index data for February, 2009 show home prices continue to decline (20
city composite index is down 18.6% year-over-year), but the rate of decline did slow in most regions during the month. Home prices seem likely to fall further (future prices suggest another 10 percent or so this year for the 20 city index), but lower mortgage rates and improving consumer sentiment could help limit the declines, providing some additional support to the economy.

So here’s the big question: if home prices have only another five percent or so to drop nationally, is it still worth waiting to buy?  Clearly not if you are also selling in the same or a similar market, but it may still be worth waiting if you are a new buyer or new to the market and there seem to be a lot of available properties that meet your needs.

Another five percent drop in prices could have significant impact on your down payment.  Instead of putting-down $7,500 (five percent on a $150,000 home for a $142,500 mortgage) you could put down that same $7,500 (5.45 percent on a $142,500 home for a $137,500 mortgage) and save thousands in interest over the life of the loan.  For some purchasers, then, it may still be worth waiting, especially in distressed markets like Las Vegas and Miami.

The 20-city composite index showed a 2.2 percent decline from January (compared to a 2.8 percent decline in January and 2.55 percent decline in December). This index is now 30.7 percent lower than its peak level (July, 2006) and has fallen back to August, 2003 levels. While the year over-year-decline in for the 20-city composite at 18.6 percent is slightly lower than the 19 percent yr/yr decline reported in January, it is equal to December’s, the second largest ever. Since 2000, the index has now increased at a compound annual rate of about 4.05 percent.

The 10-city composite index was 18.8 percent lower yr/yr and 2.1 percent lower sequentially. It is 31.6 percent below its peak levels reached in June 2006. Over the past 10 years, despite the recent decline, this index has still risen at a compound annual rate of about 6.2 percent.

All 20 metropolitan areas showed a sequential and year-over-year decline in February. But for 16 the January/February percent change was smaller than the December/January decline.

The worst year-over year decline in January was in Phoenix (-35.2 percent y/y, -50.8 percent from peak) followed by Las Vegas (-31.7 percent y/y, -48.4 percent from peak) and San Francisco (-31 percent y/y, -44.9 percent from peak).

Several markets showed modest year-over year declines, including Dallas (-4.5 percent y/y, -11.1 percent from peak), Denver (-5.7 percent y/y, -14.3 percent from peak) and Boston (-7.2 percent y/y, -18.5 percent from peak). Along with

the 10 and 20 city composite indices, only Charlotte, Washington DC, Cleveland, and New York
experienced greater declines from January to February than from December to January.

FHFA’s (formerly OFHEO’s) purchase-only house price index (non-seasonally adjusted) increased
1.13 percent in February, but declined 6.43 percent from a year ago. The year-over-year decline in February was lower than that in January and December.

Data from the National Association of Realtors on existing median home prices showed a 2.1 percent
increase in February and 4.2 percent increase in March. Year-over-year declines were 14.1 percent in February and 12.4 percent in March.

cringely Blog, News Case-Shiller, housing prices

There has never been a better time than now to refinance your mortgage – IF you can be approved. Thanks to the Fed, rates have been driven to record lows, though not as low as they appear given the number of rate add-ons dictated by new rules from Fannie Mae and Freddie Mac. The mortgage industry is finally getting in-gear for the refi boom, though approval rates are still in the 30-40 percent range, which is not good. Workouts are required in many cases and the system is still not in place to generate or monitor them. Also there is about to be a fight in Congress about restructuring the mortgage industry that may well lead to some playing of “chicken” in the market that will hurt consumers. So while in the long run things are improving, in the short run we all need a friend in the mortgage business more than ever. We all need Home-Account.

cringely Pulse

There are various classifications of lenders — brokers , correspondent lenders, and mortgage lender-servicers which includes retail and commercial banks, credit unions, or thrift institutions.

Brokers may include table funded lenders who do not actually underwrite the loan directly. They act as agents or have lines of credit with the lenders. Correspondent lenders sell their loans to servicers, national examples include Quicken Loans and Lending Tree.  Lender-servicers underwrite and keep the loans on there books, while collecting ongoing loan payments.  This includes such lenders as Countrywide, Wells Fargo, or Bank of America.

Home-Account’s lenders currently are considered Super regional correspondent lenders.  They operate as direct lenders without working through a broker, either servicing the loans themselves or re-selling the loan to a larger servicer.  Home-Account will be dealing with the banker who is funding the mortgage and at the same time either able to service the loan or sell the mortgage to a larger servicer resulting in lower interest rates (i.e. better value) for our members. 

These specialized lenders are able to handle numerous applications and mortgages, on average able to close over 2,000 mortgage per month.  Over a billion dollars of mortgage loans were funded in 2008 by just our initial five lenders.

Here are some additional links you might find interesting:

htttp://www.sideroad.com/Mortgage/home-financing-correspondent-lender.html

http://mortgage-x.com/library/lender_types.htm

http://www.bankaholic.com/finance/what-are-correspondent-lenders/

http://www.mtgprofessor.com/A%20-%20Type%20of%20Loan%20Provider/what_is_a_correspondent_lender.htm

Jack Library Broker, Correspondent, lenders, mortgage

Yogi Berra said, “It’s not over ‘til it’s over,” but there’s a hint at least in recent housing numbers to suggest we’ll have a real bottom to the real estate market later this year.

It all comes down to supply and demand, with supply being the number of new and existing homes for sale and demand being the number of sales actually completed. Families are started even in a recession so housing units are continually being absorbed. Unfortunately the housing bubble created too many new housing units causing the market to collapse. The question this week is when will that collapse end, housing prices will firm, and existing homeowners can start to recover from their underwater mortgages? Based on housing inventory numbers from the National Association of Realtors we have another six months or so to go.

That’s how long it will take, at current building and sales levels for the inexorable population increase to absorb enough excess housing inventories to return us to historic norms. What even allows us to get back to those norms is the steep decline in builders of new homes, many of which are no longer in business.

The number of new and existing houses on the market historically is enough to last 3-4 months, which is to say at current sales rates without replacing any of those homes all would be sold in 3-4 months. But right now housing inventories stand at 9.7 months. With only a marginal influx of new homes the difference between 9.7 and 3.5 (6.2 months) is the best predictor of when the market will hit BOTTOM, after which prices will finally start to increase on a national basis.

Does this mean yu should wait six months to buy a house?  NO!  It means this is an ideal time to be shopping for a house because it is a buyer’s market.  But the perfect house is hard to find.  When you find yours, BUY IT!

cringely Pulse housing prices, mortgage crisis

Two months after Treasury Secretary Timothy Geithner began talking about new programs to help holders of federally insured mortgages who have lost all their equity in the housing bust and are now under water, rules for the new programs are finally starting to appear. But like most of the other federal homeowner initiatives described to date, early details suggest the Making Home Affordable Program will be of little practical help to those with low-to-negative equity and less-then-perfect credit scores.

The new programs for mortgage refinancing and modification sound ideal on paper, often requiring no mortgage insurance and allowing loan-to-value ratios as high as 105 percent and requiring no specific credit rating at all as long as homeowners have remained current to date on their mortgage payments. But the devil is in the details and looking into the conforming rate sheets just published by major lenders we see new risk-based pricing adjustments (generally called “loan level pricing adjustments” in the mortgage industry) that can add up to four basis points to the mortgage principal for homeowners with LTV’s above 95 percent and credit scores below 620 – the very heart of the homeowner group in the greatest trouble.

While the government claims the programs can help 7-9 million homeowners, that doesn’t seem likely under the current rules.

On top of other pricing adjustments for property type and loan amount these new programs can add thousands to the loan balances of homeowners with low equity and less-than-perfect credit, with the increased costs often enough to price many homeowners out of the programs entirely.

A homeowner trying to refinance a loan with a 100 percent LTV and poor credit, for example, might easily see the required risk-based points take that loan beyond the 105 percent LTV limit. While it is possible to take the points from savings or investments rather than roll them into the loan, most homeowners in this group don’t have such savings or investments available.

While the new programs are good for homeowners with credit ratings above 680 and LTVs in the 80s or lower, this does not describe most of today’s conforming mortgage holders who truly need a refi or modification.

cringely Blog fannie mae, freddie mac, Geithner, Making Home Affordable Program, mortgage crisis, mortgage modification, refinance