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Larry Kudlow writes a piece about the housing report that came out this week. He see the negative things that the press reported but he also sees what they, I assume, chose not to report. Could this be beginning of the bounce back, let's pray!
The Media Are Missing the Housing Bottom
Media reports painted a pessimistic picture of today's release on existing home sales, which fell 15 percent from a year ago and recorded higher inventories. But inside the report was an awful lot of very good new news, which appear to be pointing to a bottom in the housing problem; in fact, maybe the tiniest beginnings of a recovery.
For example, the median existing home price has increased four consecutive months and is up 10 percent since February. Yes, it's down 6 percent over the past year. But the monthly numbers show a gradual rebound. Actually, this median home price is $215,000 in June, compared to $196,000 last winter.
And there's more. One of the hardest hit regions is the West, including California, Arizona, and Nevada. The other two bad states are Florida and Michigan. However, existing home sales in the western region are up four straight months, and are 17 percent above the low in October. At the same time, prices in the West have increased three straight months.
Meanwhile, overall national existing home sales are basically stabilizing at just under five million. And in the first and second quarters of 2008, these sales dropped slightly by 3 percent in each case, which is a whole lot better than the roughly 30 percent sales drops of the prior three quarters.
It's a pity the mainstream media keeps searching for more and more pessimism. The reality is a possible upturn in the housing trend, and at the very least we are getting a bottom. Stocks sold off 165 points largely on media reports of terrible home sales and prices. But I am hoping the market comes to its senses and realizes the data are a whole lot better.
And on top of all that, just as housing may be on the mend, Congress is about to ratify a huge FHA-based bailout that could total $42 billion. Congressional solons are putting up $300 billion to refinance and insure distressed loans through the Federal Housing Administration. But this dubious government agency, with a whole history of bad portfolio management, may wind up taking in the very worst loans on the books.
Of course, taxpayers are on the hook. More government semi-socialism.
posted by Money Politic$ at 2:05 PM
GREAT NEWS!!!! Today Fannie Mae announced they are will be changing their previous position; regarding additional down payment requirements for financing a home located in a declining market. (see article below) We have been in contact with the market as well as with the MI companies, to determine when we can begin originating loans under these new terms. As soon as additional information, becomes available, we will pass on to the group.
Contact me with any questions concerning this or any other question you may have about mortgage loans, FNMA, Freddie, FHA, VA, downpayment assistance. I'm here to help you sell more homes!
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May 16, 2008 |
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Fannie Mae Announces Single National Down Payment Policy;
Replaces Policy Regarding Markets Where Home Prices are Declining
WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today announced a new, national policy on down payment requirements for conventional, conforming mortgages the company will purchase or guarantee. Starting June 1, 2008, Fannie Mae will accept up to 97 percent loan-to-value ratios for conventional, conforming mortgages processed through its Desktop Underwriter® (DU®) automated underwriting system, and 95 percent loan-to-value ratios for loans underwritten outside of DU, in all geographic locations in the United States. The new national down payment policy will supersede the policy the company adopted in December 2007 that required higher down payments in markets where home prices are declining.
"As another part of our 'Keys to RecoveryTM' initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."
The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences. Down payment requirements will vary for other occupancy, property and transaction types. The company will implement systems and operational changes over the summer to accommodate the new national policy.
"We are able to adopt this new, national down payment requirement, even in markets where home prices are declining, because our new automated underwriting risk assessment model DU Version 7.0 will limit risk layering and assess each loan more precisely," Sullivan added. "At the same time, we believe that equity matters, especially in this market. Down payments are a critical success factor in homeownership -- and responsible lending is good business."
Since the housing correction began, Fannie Mae has expanded its mortgage guaranty business to serve the market's urgent need for stability, liquidity and affordability. The company also undertook steps to help protect borrowers, manage the increased credit risk in the market, and fortify the company's capital position. Among these steps, the company has continued to assess and establish new pricing, eligibility and underwriting criteria for its business that more accurately reflect the current risks in the housing market and guard against the potential for foreclosure. These changes have been incorporated into DU and have included adjustments to credit risk assessment, loan-to-value ratios and down payment requirements, among other factors.
Among the changes in response to market conditions, in December 2007 Fannie Mae adopted a "Maximum Financing in Declining Markets Policy" that restricted the loan-to-value ratios on properties in markets where home prices are declining, essentially requiring higher down payments in these markets. The new single national down payment policy announced today will supersede that policy.
Fannie Mae Senior Vice President Jeff Hayward stressed the company's commitment to special affordable lending programs to support homeownership for families of modest means. "We are stepping up to provide more liquidity and affordability to some of the most distressed communities while also seeking at least a 3 percent down payment investment through our Desktop Underwriter system from borrowers to help ensure their success."
Fannie Mae will continue to provide support for homebuyers that need down payment assistance, and will continue to allow loans with Community Seconds® up to a maximum 105 percent combined loan-to-value ratio. Community Seconds allow a borrower to obtain a second-lien mortgage to help cover down payment and closing costs, with funding typically provided by a state or local housing agency; an employer; or a nonprofit organization. Fannie Mae also offers MyCommunityMortgage® and Flex mortgage products, which permit down payment assistance programs in the form of gifts and grants.
"We recognize that down payment assistance programs remain a viable tool for borrowers who can afford a mortgage long term, but might need a little help getting started," Sullivan said.
As part of its "Keys to Recovery" initiative, Fannie Mae is expanding its partnership with the National Council of State Housing Agencies. The company will provide up to $10 billion in financing to help Housing Finance Authorities (HFA) serve first-time homebuyers of modest means. In some cases, Fannie Mae will purchase HFA mortgages that have greater than 97 percent loan-to-value ratios.
The first "Keys to Recovery" initiative that Fannie Mae announced on May 6, 2008 also includes: streamlined refinancing for Fannie Mae borrowers whose mortgage balances exceed the value of their homes; improved pricing for jumbo-conforming mortgages to help borrowers in high-cost areas; and a neighborhood stabilization initiative with the Center for Community Self-Help for targeted areas with high home foreclosures.
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Here's the article we've been waiting for. God, I hope it's true. I have an Eco Degree from FSU so I get it and understand it. I think Cyril Moulle-Berteaux does a great job explaining why we may be at the bottom of the slide, namely "affordability"! He also explains why by 2009 we should be in be in a tighter housing market. Read on; The Housing Crisis is Over -- Wall Street Journal Wall Street Journal, By Cyril Moulle-Berteaux May 6, 2008The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.  How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor. Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the trough levels of 1982. Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much. Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst. Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in. The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do. In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.  The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high -- but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months. Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually. Inventories will drop even faster to 400,000 -- or seven months of supply -- by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market. Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons. Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading. This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity. When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face. More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure. A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy. We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to sub-trend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now. Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York.
These are the loan limits in the Orlando MSA, go to www.hud.gov to find out what your area limits are. This can be a shot in the arm for us in the Real Estate and Mortgage business.
Help your past clients and current sellers/buyers make the most of their home purchase by being up to date on the new Florida Amendment 1. The fact that we get an extra $25,000 more of homestead exemption is great, but the portability factor is what can really change the perspective of the home buying public out there. Orange County, FL's Property Appraisers office has put together a Power Point that is outstanding and can help you be the expert concerning "Portability" of a buyers property tax benefits they have worked so hard to earn. Just go to this address and watch and learn. http://www.ocpafl.org/downloads.html Afterwards, tell me what you thought of the Power Point and we can discuss how you can take this information and create a whole new leg of your business, showing you past clients how they can take advantage of this and clime the "ladder" of home ownership. See these FAQ concerning this topic. Q: What is portability? A: It's the ability to transfer the dollar benefit of the homestead property assessment limitation known as the "Save Our Homes benefit" from a prior homestead to a subsequent homestead. The portable amount is the difference between market value and assessed value. Example: 2007 Certified Market Value from prior homestead $250,000 (minus) 2007 Certified Assessed Value from prior homestead - $150,000 equals Portable Amount = $100,000 See our Portability PowerPoint presentation for examples. http://www.ocpafl.org/downloads.html Q: Do I have to apply for portability? A: Yes, if you desire to "port" a benefit from your prior homestead, you must fill out a DR-501T "Transfer of Homestead Assessment Difference" in addition to applying for your homestead exemption or when you file an application for your new homestead exemption. If you have already applied for the homestead exemption, you can download the application, complete, and submit to the Property Appraiser. Q: When do I apply for portability? A: Now. If you qualify, you must file by March 3rd 2008. Q: What happens after I apply?
A: After you apply, there is nothing else you have to do. Upon receipt of your application, we will send it to the Property Appraiser of your previous homestead. Then, your previous Property Appraiser will issue a "Certificate of Portability" DR-501R which will be mailed back to us (your new Property Appraiser) for us to calculate your portability amount and apply the benefit to your new parcel value. NOTE: Because this is a newly created procedure and because of the ‘cross-transfer' of documents, you should allow a minimum of 6 - 8 weeks for full processing. Look for the adjusted value on your Notice of Proposed Property Taxes (TRIM) in mid-August. If we have any questions or if we discover you are not eligible for the portability transfer, we will contact you.
Q: Can I also apply for additional exemptions such as widows/widowers, disability or senior exemption if I have portability? A: Yes, "Portability" is just adjusting the assessed value of the newly homesteaded property; you may still qualify for additional exemptions.
Q: What is the maximum amount I can transfer "port" to my new property?
A: The maximum amount you can transfer "port" is $500,000.
Q: What will my $$$ SAVINGS be?
A: We have designed an easy to use calculator that shows the calculations and savings you could potentially bring to your new homestead property. Try our Portability Calculator at http://paraster.ocpafl.org/TaxReform/Search.aspx
Q: When does "Portability" go into effect?
A: 2008 is the first year anyone will be able to apply for portability. It is retroactive to January 1, 2007. Meaning, if you abandoned a homestead in 2007 and moved into your new homestead on or before January 1, 2008, you may qualify for Portability.
Q: If I sold my property in 2006 can I qualify for portability?
A: No, the law only allows portability for property that had a homestead exemption in 2007 forward.
Q: After I've sold or abandoned my prior homestead, how long do I have to use my portability? A: The law allows up to 2 years to transfer the portability benefit - starting in 2007.
Q: Do I have to sell my home before I can qualify for portability?
A: No, you only need to abandon your existing homestead, meaning you may still own the property but no longer receive an exemption on the property for the year you are attempting to get portability. Should you abandon your homestead, or move, please notify this office.
Q: Do I have to purchase a new property to get the portability benefit?
A: No, if you already own another property (2nd home, beach house, etc.) and establish your homestead there for 2008, you can remove the homestead from the old property and apply for the portability benefit.
Q: I owned a property with another person. I moved and established another homestead; however, they still live in the original property, can I transfer "port" my benefit to my new homestead?
A: No, the law requires the previous exemption be "abandoned" before you can port any of the Save Our Homes benefit. Meaning, another person can't still be receiving the old homestead.
Q: Can I "port" a savings from another state?
A: No, portability applies only if you had a State of Florida homestead exemption in 2007.
Q: How many times in one (1) year can I use portability?
A: One time. Since a homestead exemption is required in order to transfer a portable benefit, you must reside in the new home on or before 1/1/2008 (or January 1 of a future year). If you sold your home in 2008 and established a new homestead on or before 1/1/2009, you could technically "port" your savings again for the 2009 homestead
Q: What is the formula for the Portability?
A: The formulas are easily explained in our Portability PowerPoint presentation at http://www.ocpafl.org/downloads.html
They are as follows:
If you are upsizing (moving to a home of equal or greater value) it is:
Certified Market Value of existing homesteaded property
(Minus) Certified Assessed Value of existing homesteaded property
(Equals) The portable amount (not to exceed $500,000)
Certified Market Value of new homestead property
(Minus) Portable amount from prior homesteaded property
(Equals) New assessed value for new homesteaded property
If you are downsizing (moving to home of lesser value) it is:
Certified Market Value of existing homesteaded property
(Minus) Certified Assessed Value of existing homesteaded property
(Equals) The portable difference (not to exceed $500,000)
(Divided by) The Market Value of existing homesteaded property
(Equals) The percentage eligible to "port" to new property
Certified Market Value of New homestead property
(Multiplied by)Portable percentage from prior homesteaded property
(Equals) The portable amount from portable percentage from prior property
Certified Market Value of New homestead property
(Minus) Portable amount from portable percentage from prior property
(Equals) The New assessed value for new homesteaded property
This is what can happen when good people come together for the right reasons. I want to thank all that came out and took part in the first Bikes for Tikes Bike Build. Over 130 selfless folks from all walks of life came together on Dec. 2nd, 2007 and built 500 bikes for Toys for Tots. (look at the Real Estate Show video and see what start this. It's in my blog, just go a little deeper.) What is even more unbelievable is that all these bike were build in less that 4 1/2 hours. Starting at approx. 10:00 and finishing at 2:30, everyone was fed, hydrated and worked their Christmas buns off. This turned out better than I could have dreamed, I thought we'd be there until 6:00, still building bikes. Families, businesses, individuals and friends came together in what I consider the best event my Kiwanis Club has done in quite some time. Thanks to the Variety Children's Charities and the good people at MSI for all the help and money to buy, ship and build these 500 bikes! I'm still not in full belief that it all happened, and all because I went over to my neighbors home and asked if we could get together and help them with there project. It was the best question I've ever asked. The Johnsons are great folks and stated this in their front yard, last year building 222 bikes with the help of relatives and friends, and about 10 US Marines. This all happened because this family wanted to make a child's Christmas a little better by having a bike under the tree. Together we made 500 kid's Christmas a whole lot better. Thanks again to everyone. Merry Christmas and Have a Happy New Year. (which by the way, we'll be building 1,000 bikes!)
</embed Please click on this show and see my Christmas and New Years wish for you and your family. Focus this year on being of service to others and this giving of your self will come back to you 10 fold! Pay attention to what matters and not to the gloom and doom press. Thank you again for a great 2007, with all of its changes and chanlanges, it was an exciting ride. Here's to a 2008 that brings you joy in what you do and the peace that Christmas brings all year long. Please see the other shows here in my blog so you can see just how special 2007 was.
Again, this year was a great success, and we thank everyone that made it all possible. Over $10,000 was raised this year at our Great South Auction and BBQ. And this money will help support the charities we fund and the community projects we participate in.
Every year, our members, neighbors and other businesses around our area donate merchandise and money to our auction and BBQ. We take the items and have a live and silent auction to raise money. We also have a BBQ before, some of the best ribs, chicken, slaw and beans you'll ever taste.
And the Kiwanis Club of South Orlando is made up of your neighbors, friends, business men and women, and working folks like you. We've come together because we think that by caring and giving of ourselves and our resources that we can make a difference in a child's life. You can make a difference too, come, join us for lunch every Wednesdays and see how. Lunch is on us, come, join us!
Every year we hear it again and again, "I won't cook another turkey for as long as I live, I'll just bring'em here and let you do it, it's the best deal going!"
And it's true, for just $10 we'll take your thawed turkey, roast, ribs, or almost anything and turn it in to something so special, you'll want to take pictures before you dive in. The cookers we have do much of the work, but it's years and years of experience that lets us make your Thanksgiving so special. Over a 2 day period we'll smoke between 300 to 400 birds and other meats and we've been doing it for over 25 years. When it comes to smoking meats and BBQ, the Kiwanis Club of South Orlando know how to do it!
Come by on the Tuesday and Wednesday before Thanksgiving and let us take away the worries about how your meal will turn out, it will be great!
Your donation of $10 will go towards helping the children of the world and the ones next door. For over 40 years, the Kiwanis Club of South Orlando has been helping our community by sharing our resources, and our time and efforts to make this community a better place.
We are your neighbors, business men and women, hard working folks like you that think that if we care and give of ourselves we can make a difference in a child's life.
Come and have lunch with us, we have our weekly meeting on Wednesdays, be our guest and let us show you how you can make a difference too. Come, join us.
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Thomas Kirk
Kissimmee,
FL
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CenterState Home Loans
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Here is a list of articles to go to where you can see the other side. Please remember to only trust this information as far as you can verify it with your own knowledge or research. I'm sure you've done your homework on Al Gore's movie and went beyond just taking him at his word. I mean he's first and foremost a politician for god's sakes. When was the last time you really trusted one of them. There can be no consensus in science, if their is, then it's not science it's religion. I could go on but I'd much rather you start reading some of these articles written by the non-consensus side of the argument.;)
;)
