Archive for November 2013

FDIC Institutions Report First Loss in More Than Four Years

November 29, 2013

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This is a totally misleading report. The loss referred to is only due to illegal activity by one of the major banks (FDIC Chairmen Martin Gruenberg didn’t say if it was B of A or JP Morgan) and their 4 Billion Dollar attorney bill. This is a double whammy as not only did they screw borrowers out of a boatload of cash when they were caught they hired a bunch of high priced lawyers and then wrote the legal bill off of their taxes. They pay fewer taxes and, therefore, you pay more.   For a more detailed look at this subject – please read the article below.

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For the first time in more than four years, banks insured by the Federal Deposit Insurance Corporation reported an annual loss, according to the FDIC’s Quarterly Banking Profile released Tuesday.

At $36 million, the net income of FDIC-insured banks in the third quarter is $1.5 million below earnings reported in the third quarter of last year.

The drop in earnings is “mainly attributable to a $4 billion increase in litigation expenses in one institution,” said FDIC Chairman Martin J. Gruenberg during a press conference Tuesday.

“Had it not been for that, the upward trend in earnings would have continued for the industry,” Gruenberg continued.

Gruenberg also pointed out a secondary source of the decline: “a reduction in mortgage lending activity,” which led to a decline in net operating revenue.

Mortgage originations were declined 30 percent from the second quarter, and mortgage sales declined 24 percent.

The FDIC reported a $4 billion decline in quarterly noninterest income from the sale, securitization, and servicing of one- to four-family residential mortgage loans.

To read the complete article – please use the link below.

Report First Loss

Bidding Wars Resume in Major Markets in October

November 26, 2013

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This is really good news for sellers and not so good for buyers. If you are trying to buy a home you might need to become more aggressive than in the past. For a more detailed look at this subject – please read the article below.

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Despite a softening market, competition among buyers remained fairly fierce in October, Redfin reported in its Real-Time Bidding Wars release for the month.

Last month, 55.9 percent of offers written by the Seattle-based brokerage’s agents faced competition from other buyers, a decline from 58.3 percent in September. Bidding wars have been on a downward slope since peaking at 79 percent in February.

October was also the third consecutive month to see a drop in competition compared to the same month last year, Redfin said.

Even with the decline, though, competition last month was higher than expected, given the effects of the government shutdown on consumer confidence.

“While many Americans paused their home-buying and selling plans during the shutdown, overall demand in October was more robust than expected, with home tours and offers rebounding once the government reopened,” said Redfin analyst Rachel Musiker. “This unexpectedly strong demand paired with dwindling inventory likely kept competition from falling even further in October.”

Out of the 22 markets reporting, Boston saw the biggest drop in competition, with 61.3 percent of offers facing bidding wars—down from 70.1 percent in September. San Diego, meanwhile, experienced the biggest increase in bidding wars, with 63.0 percent of offers competing against multiple bids compared to 56.1 percent the month prior.

To read the complete article – please use the link below.

Bidding Wars

New Head of FHFA Expected

November 26, 2013

This is good and bad news for the country. With Mr. Watt running the FHFA you can expect more principle forgiveness with more buyers qualifying for mortgages. On the down side his programs will cost the U.S. Taxpayer more money in the form of government subsidies (HAPM, Etc.)  For a more detailed look at this subject – please read the article below.

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Analysts expect to see a new face at the helm of the agency overseeing Fannie Mae and Freddie Mac now that Democrats in the Senate have changed the rules, eliminating the use of the filibuster to block presidential appointments.

The Senate majority’s instatement of the so-called nuclear option “has cleared the path for Mel Watt’s confirmation” as director of the Federal Housing Finance Agency (FHFA), according to secondary market analysts at Barclays.

Under the chamber’s new rules, the president’s nominees for all positions except Supreme Court judge can be approved with a simple majority vote, rather than the previous requirement of 60 “yay” votes.

Rep. Mel Watt (D-North Carolina) received 56 votes in favor of his confirmation on October 31st, just 4 votes shy of the number needed under the old rules but enough to be confirmed under the new simple-majority requirement.

“[H]e has the required votes and should be confirmed as the new FHFA director. In our view, this raises the level of policy risk,” Barclays said, “as we would generally expect him to be more supportive of the administration’s policies. … [K]ey areas of concern would be principal forgiveness for the GSEs and potential expansion of the HARP [Home Affordable Refinance Program] eligibility date.”

To read the complete article – please use the link below.

Head of FHFA

Fannie Mae Foresees Market Volatility in Coming Months

November 25, 2013

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The uncertainty of another government shutdown and high unemployment are the major causes for the shifts in the housing market. For a more detailed look at this subject – please read the article below.

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In the aftermath of the federal government shutdown and contentious debt ceiling negotiations, Fannie Mae predicts “continued market volatility” for at least the next few months.

Consumer sentiment toward the economy and the housing market wavered last month, according to Fannie Mae’s November Economic Outlook.

Looking forward, “[s]ince many remaining policy decisions will spill over into the beginning of next year, it seems likely that both consumers and businesses will continue to pull back in the interim, leading to increased volatility in the markets,” said Doug Duncan, chief economist at Fannie Mae.

The markets await a final budget, a decision regarding the debt ceiling, and the appointment of a new Federal Reserve chair.

Overall, Fannie expects 2013 to end with yearly economic growth around 2 percent and an uptick to 2.5 percent next year.

The housing market contributed 0.4 percentage points to growth domestic product (GDP) in the third quarter, unchanged from the second quarter, according to Fannie Mae.

Existing home sales declined in September, as did pending home sales, which signal more declines in the next couple months.

Single-family home starts “have disappointed” this year, according to Fannie Mae. In fact, they began to decline before interest rates began rising.

To read the complete article – please use the link below.

Market Volatility

Senate Banking Committee Approves Yellen Nomination for Fed Chair

November 24, 2013

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Of all the people that have been suggested for this post Dr. Yellen seems to be the best choice. Her understanding of the importance of job creation is a very encouraging point in her favor. For a more detailed look at this subject – please read the article below.

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The Senate Banking Committee has voted to approve Janet Yellen’s nomination to chair the Federal Reserve, bringing Yellen one step closer to being the first woman to serve as head of the country’s central bank.

The committee approved Yellen’s nomination by a vote of 14-8, passing it to the Senate floor for a final vote.

Currently serving as the Fed’s vice chair, Yellen is viewed by many on Wall Street as a “dove” on monetary policy who is more concerned with unemployment than inflation.

In her nomination hearing before the committee on November 14, she defended steps the Fed took to stabilize the economy following the economic crash, putting an emphasis on the number of jobs regained. Like her predecessor, Ben Bernanke, she is expected to push for accommodative monetary policy as the economy slowly recovers.

With Senate Democrats and several Republicans supporting her nomination, her confirmation seems likely.

To read the complete article – please use the link below.

Yellen Nomination for Fed Chair

Sales of Existing Homes Slip for Second Straight Month

November 24, 2013

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It seems that this is really a seller’s market except for the stringent requirement to qualify for a mortgage. Most mortgage brokers think that the lenders are taking advantage for this increase in sales to demand that buyers are “Over Qualified” before they will grant a mortgage. For a more detailed look at this subject – please read the article below.

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October saw existing-home sales decline for the second straight month as low inventory propped up prices, the National Association of Realtors (NAR) reported Wednesday.

Total existing-home sales—completed transactions of single-family homes, townhomes, condominiums, and co-ops—fell 3.2 percent from September to October, coming out to a seasonally adjusted annual rate of 5.12 million. Compared to last year, sales were still up 6.0 percent, marking the 28th consecutive month of year-over-year improvement.

“The erosion in buying power is dampening home sales,” said NAR chief economist Lawrence Yun. “Moreover, low inventory is holding back sales while at the same time pushing up home prices in most of the country. More new home construction is needed to help relieve the inventory pressure and moderate price gains.”

The national median existing-home price for all housing types was $199,500, up 12.8 percent annually.

Part of the rise in median price came from a smaller share of discounted distressed sales: Foreclosures and short sales together made up 14 percent of October’s sales (9 percent foreclosures and 5 percent short sales) compared to 25 percent last year.

At the same time, inventory remains a challenge. The total number of existing homes available for sale at the end of October was 2.13 million, down 1.8 percent year-over-year. At the current sales pace, inventory levels come to a 5.0-month supply, NAR reported.

To read the complete article – please use the link below.

Sales of Existing Homes

Down Payments Continue to Decline in Third Quarter

November 23, 2013

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This is probably a trend that will continue into the near future. As home prices and mortgage rates rise less people will be applying for mortgages. The quest for new business will cause down payment requirements to decline slightly from month to month. For a more detailed look at this subject – please read the article below.

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The average down payment on a 30-year, fixed-rate mortgage loan in the third quarter of this year was 15.73 percent, according to Charlotte, North Carolina-based LendingTree, an online marketplace connecting potential borrowers with lenders.

The third-quarter average is down 2.74 percent from the previous quarter, according to LendingTree, which suggested in a press release that the drop is due to a slight loosening of standards by lenders across the nation.

“Lenders are putting more focus on purchase mortgages and are adjusting minimum requirements to attract borrowers,” said Doug Ledba, founder and CEO of LendingTree.

“With home values improving, the risk of borrowers defaulting on loans has decreased, giving lenders more confidence to lend with less cash down from qualified borrowers,” Ledba said.

The lowest average down payment percentage in the third quarter took place in Nebraska, where down payments averaged 12.5 percent of loan values.

South Dakota (12.8 percent), Arkansas (12.9 percent), and Alabama (12.9 percent), followed, all with averages under 13 percent for the quarter.

Missouri filled the No. 5 spot with an average down payment of 13.1 percent.

The highest down payment percentages in the third quarter were recorded in New Jersey (18.8 percent), California (18.6 percent), New York (18 percent), D.C. (17.9 percent), and Massachusetts (17.5 percent).

To read the complete article – please use the link below.

Down Payments