“Today 90% of the $14 trillion in outstanding residential mortgages is controlled by the Federal Housing Administration (FHA), the Department of Veterans Affairs, or Fannie Mae and Freddie Mac—with the latter two under government conservatorship.”- Wall Street Journal
SALES RISE – VALUES DROP
Existing homes sales gain momentum with a 10% increase in volume, marking the second month in a row for an increase in home sales. Of those homes that were sold in September, nearly 35% were in foreclosure. – cnnmoney.com
The increase of sales volume in existing homes was likely influenced by the drop in home prices. We are not at the bottom yet. Home prices experienced another 1.5% drop in August.
HISTORIC NEGATIVE YIELD FOR THE TREASURY
“The Treasury sold $10 billion of five-year Treasury Inflation Protected Securities at a negative yield for the first time at a U.S. debt auction as investors bet the Federal Reserve will be successful in halting deflation. U.S. debt gained even after data showed sales of existing homes rose 10 percent last month, more than forecast, the National Association of Realtors said today in Washington. Purchases increased to a 4.53 million annual rate from 4.12 million in August, the data showed. Economists in a Bloomberg News survey forecast sales would rise to a 4.3 million pace.” – Bloomberg.com
BANK OF AMERICA SHUTS DOWN MORTGAGE WHOLESALE DIVISION
Bank of America announced this month that they are exiting (once again) the wholesale mortgage business. Bank of America surprised many in the industry by re-entering the wholesale mortgage business shortly after acquiring Countrywide Home Loans. Bank of America will no longer accept mortgage broker business. This will create great opportunities for other wholesale mortgage banks as the world’s largest bank throws in the towel.
"Bank of America remains committed to purchasing and financing loans from Correspondent Lending clients, including those approved to originate loans from brokers. We intend to build upon our leadership position in the market to provide enhanced liquidity to the smaller financial institutions and independent mortgage companies that supply mortgages as our correspondent clients." – Statement from Bank of America
Bank of America will still offer mortgages at inflated rates at any one of their thousands of “retail” banking locations.
THE RACE FOR THE MOST FORECLOSURES
TAKE OUT A LOAN AND PAY FOR YOUR MORTGAGE
Having trouble paying for you mortgage? The Federal Government will soon be issuing loans up to $50,000 for homeowners that qualify, to pay for their mortgage. Not making this up. The loan will be forgiven if the home owners stay in the property for at least five years.
“The federal program, however, is relatively small. Congress gave the Housing Department $1 billion to spend, meaning it will help at least 20,000 people. But that's just a small fraction of those who need assistance.” – cnnmoney.com
RATE WATCH
Mortgage Type Interest Rate APR
30 Year Fixed 3.875% 4.005%
15 Year Fixed 3.375% 3.598%
5/1 ARM 2.625% 2.975%
Interest rates as of 10/27/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.
Conventional Refinance: If you have a conventional mortgage (must be owned or guaranteed by Fannie Mae or Freddie Mac) without mortgage insurance, you may be able to refinance up to 125% of the home’s value. Owe more than 125%? With enough compensating factors (i.e. credit, assets, etc.), you may be able to get an appraisal waiver and slip into the 125% range you need to be in. Rates are slightly higher than a standard conventional loan, but with good credit, they are still quite low.
FHA Streamline Refinance: FHA streamlines do not require an appraisal. It does not matter how much you owe verses the value of the home. Anyone with a 5% interest rate or more should look into a streamline refinance. A streamline refinance allows the homeowner to lower their rate with little or no closing costs, and no appraisal. It will not solve your value issues, but it will lower your payment.
MARKET UPDATE brought to you by:
Chris Tiller
Geneva Real Estate and Investments
tiller34@hotmail.com
602-561-1346
fax:602-595-5450
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