Sales of New Homes Worse Than Expected
WASHINGTON, Sat Dec 29, 07:28 PM
The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.
The slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession.
New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995.
"It was ugly," declared Richard Yamarone, economist at Argus Research. "It is the one sector of the economy that doesn't show any signs of life. It doesn't look like there is any resuscitation in store for housing over the next year," he said.
The housing picture turned out to be more grim than most anticipated. Many economists were predicting sales to decline by 1.8 percent to a pace of 715,000.
By region, sales fell in all parts of the country, except for the West.
In the Midwest, new-home sales plunged 27.6 percent in November from October. Sales dropped 19.3 percent in the Northeast and fell 6.4 percent in the South. In the West, however, sales rose 4 percent.
Over the last 12 months, new-home sales nationwide have tumbled by 34.4 percent, the biggest annual slide since early 1991, and stark evidence of the painful collapse in the once high-flying housing market.
think you can classify what we are seeing in the housing market as a crash," said Mark Zandi, chief economist at Moody's Economy.com. "Sales and home prices are in a free fall. The downturn is intensifying."
The median sales price of a new home dipped to $239,100 in November. That is 0.4 percent lower than a year ago. The median price is where half sell for more and half for less.
On Wall Street, the Dow Jones industrials, after an erratic session, managed to squeeze out a small gain even as the grim home sales report added to some investors' angst. The Dow closed up 6.26 points at 13,365.87.
Would-be home buyers have found it more difficult to secure financing, especially for "jumbo" mortgages — those exceeding $417,000. The tighter credit situation is deepening the housing slump. Unsold homes have piled up, which will force builders to cut back even more on construction and look for ways to sweeten the pot to lure prospective buyers.
"A lot of borrowers are being disqualified for loans. If you can't qualify for a mortgage the game is over. For those who do qualify, it takes longer to get loans," said Brian Bethune, economist at Global Insight.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs and probably will keep rising. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
Problems in housing are expected to persist well into 2008 — a major election year.
The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, the situation has given Democrat and Republican politicians— including those who want to be the next president — plenty of opportunities to spread blame around.
The economy's growth is expected to have slowed sharply to a pace of just 1.5 percent or less in the final three months of this year. Former Federal Reserve Chairman Alan Greenspan recently warned that the economy is "getting close to stall speed." The big worry is that the housing and credit troubles will force individuals to cut back on spending and businesses to cut back on hiring and capital investment, throwing the economy into a tailspin.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Its latest rate cut, on Dec. 11, dropped the Fed's key rate to 4.25 percent, a two-year low. Many economists are predicting the Fed will lower rates again when they meet in late January.
"The risks are as high as they've ever been during this expansion that started in late 2001 that the economy will fall into a recession," said Bethune. "The odds are now nudging up close to the 50 percent mark."
Sunday, December 30, 2007
Saturday, December 22, 2007
38,000 might qualify, but pilot program would fund 500 mortgages
Friday, December 21, 2007Inman News
Five banks have committed $125 million to help New England homeowners with good payment histories refinance out of high-cost loans or avoid interest rate resets on adjustable-rate mortgages.
At least 38,000 borrowers in six New England states may be eligible for help under the program, but the initial funding pledged by Citizens Bank, Sovereign Bank, TD Banknorth, Webster Bank and Bank of America would only fund about 500 mortgages.
The Federal Reserve Bank of Boston, which organized the Mortgage Relief Fund, is hoping it will be expanded to include more banks and more funding.
"If the demand proves to be greater than the initial $125 million commitment, we will try to go further -- especially if the mortgages can be securitized," participants in the program said in a press release.
Backers said outreach is a key part of the initiative, and the banks have created a Web site, www.MortgageReliefFund.com, providing more information for borrowers and information on contacting the banks.
"It is particularly important to find and locate the borrowers who may be eligible for a better rate and a healthier relationship with their lender," said Boston Fed president Eric Rosengren in a statement.
Rosengren said participating banks will tap state programs and Federal Housing Administration loan guarantees, which include flexible underwriting and eligibility guidelines. Those programs will help banks offer troubled borrowers lower interest rates, similar to those paid by prime borrowers.
The Boston Fed estimates that 38,000 subprime borrowers in New England may qualify for the program, because they had 10 percent equity in their homes when they took out a loan, had credit scores over 620, and took out fully documented loans on owner-occupied houses.
Those criteria provide a "conservative estimate" of the number of subprime borrowers who might qualify for the program, Rosengren said, including more than 15,000 households in Massachusetts, 10,000 in Connecticut, 3,800 in New Hampshire and Rhode Island, 3,400 in Maine and nearly 1,000 in Vermont.
The program is "not designed for borrowers who are seriously delinquent on their mortgage payments or facing imminent foreclosure," although those borrowers may be eligible for refinancing under the new FHASecure loan guarantee program.
***
Friday, December 21, 2007Inman News
Five banks have committed $125 million to help New England homeowners with good payment histories refinance out of high-cost loans or avoid interest rate resets on adjustable-rate mortgages.
At least 38,000 borrowers in six New England states may be eligible for help under the program, but the initial funding pledged by Citizens Bank, Sovereign Bank, TD Banknorth, Webster Bank and Bank of America would only fund about 500 mortgages.
The Federal Reserve Bank of Boston, which organized the Mortgage Relief Fund, is hoping it will be expanded to include more banks and more funding.
"If the demand proves to be greater than the initial $125 million commitment, we will try to go further -- especially if the mortgages can be securitized," participants in the program said in a press release.
Backers said outreach is a key part of the initiative, and the banks have created a Web site, www.MortgageReliefFund.com, providing more information for borrowers and information on contacting the banks.
"It is particularly important to find and locate the borrowers who may be eligible for a better rate and a healthier relationship with their lender," said Boston Fed president Eric Rosengren in a statement.
Rosengren said participating banks will tap state programs and Federal Housing Administration loan guarantees, which include flexible underwriting and eligibility guidelines. Those programs will help banks offer troubled borrowers lower interest rates, similar to those paid by prime borrowers.
The Boston Fed estimates that 38,000 subprime borrowers in New England may qualify for the program, because they had 10 percent equity in their homes when they took out a loan, had credit scores over 620, and took out fully documented loans on owner-occupied houses.
Those criteria provide a "conservative estimate" of the number of subprime borrowers who might qualify for the program, Rosengren said, including more than 15,000 households in Massachusetts, 10,000 in Connecticut, 3,800 in New Hampshire and Rhode Island, 3,400 in Maine and nearly 1,000 in Vermont.
The program is "not designed for borrowers who are seriously delinquent on their mortgage payments or facing imminent foreclosure," although those borrowers may be eligible for refinancing under the new FHASecure loan guarantee program.
***
Friday, December 21, 2007
Bush signs tax bill to aid ailing homeowners
Forgiven debt, renegotiated terms will no longer be classified at income
WASHINGTON - President Bush on Thursday signed a measure to provide financial relief for financially strapped homeowners facing foreclosure or in bankruptcy.
The bill gives a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off. Currently such debt forgiveness is taxable income.
"When you're worried about making your payments, higher taxes are the last thing you need to worry about," Bush said in a bill-signing ceremony. He stood along side members of his Cabinet and lawmakers who pushed the measure.
While the measure is anticipated to reduce taxes of some strapped homeowners by $650 million, the cost to the government would be offset in part by limiting a tax break available on the sale of second homes.
The bill was in response to a mortgage crisis touched off this spring by a blowup in high-priced home loans for risky borrowers, throwing a pall over the economy. Foreclosures are at record highs and late payments are spiking. Lenders have been forced out of business and investors have taken huge financial hits.
"This is going to make a happy holiday for many homeowners," Bush said of the bill moments before signing it into law.
An estimated 2 million to 2.5 million adjustable-rate mortgages _ worth some $600 billion _ will jump from low initial "teaser" rates to higher rates this year and next. Steep prepayment penalties have made it difficult for some to get out of their mortgages, and some overstretched homeowners can't afford to refinance or sell their homes.
Forgiven debt, renegotiated terms will no longer be classified at income
WASHINGTON - President Bush on Thursday signed a measure to provide financial relief for financially strapped homeowners facing foreclosure or in bankruptcy.
The bill gives a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off. Currently such debt forgiveness is taxable income.
"When you're worried about making your payments, higher taxes are the last thing you need to worry about," Bush said in a bill-signing ceremony. He stood along side members of his Cabinet and lawmakers who pushed the measure.
While the measure is anticipated to reduce taxes of some strapped homeowners by $650 million, the cost to the government would be offset in part by limiting a tax break available on the sale of second homes.
The bill was in response to a mortgage crisis touched off this spring by a blowup in high-priced home loans for risky borrowers, throwing a pall over the economy. Foreclosures are at record highs and late payments are spiking. Lenders have been forced out of business and investors have taken huge financial hits.
"This is going to make a happy holiday for many homeowners," Bush said of the bill moments before signing it into law.
An estimated 2 million to 2.5 million adjustable-rate mortgages _ worth some $600 billion _ will jump from low initial "teaser" rates to higher rates this year and next. Steep prepayment penalties have made it difficult for some to get out of their mortgages, and some overstretched homeowners can't afford to refinance or sell their homes.
Thursday, December 20, 2007
Number of filings up 68% year-over-year in November
Wednesday, December 19, 2007Inman News
Nevada continued to lead the nation for its rate of foreclosure filings per household in November -- a position it has held for the past 11 months, foreclosure data company RealtyTrac reported today.
The company reported a 67.8 percent nationwide gain in the volume of foreclosure filings in November 2007 compared to the same month last year, though filings declined 10 percent compared to October 2007.
The national rate of foreclosure filings in November was 1 for every 617 households -- Nevada had a rate of 1 filing for every 152 households during that month.
Next on the list was Florida, with a rate of 1 filing for every 282 households; followed by Ohio, 1-in-307; Colorado, 1-in-320; California, 1-in-325; Michigan, 1-in-391; Georgia, 1-in-421; Arizona, 1-in-441; Indiana, 1-in-484; and Illinois, 1-in-624.
"The 10 percent drop in November is the first double-digit monthly decrease we've seen since April 2006," said James J. Saccacio, RealtyTrac, in a statement.
Saccacio also stated that the company anticipates "a seasonal surge in foreclosure filings and another possible wave of resetting mortgages" next year that "could place further pressure on the housing market."
Five of the 10 metro areas with the highest foreclosure rates in the nation in November are in California, RealtyTrac reported. Stockton, Calif., led the nation with a metro area foreclosure rate of one filing for every 99 households. Modesto, Calif., ranked second, with one foreclosure filing for every 104 households.
Merced, Calif., took third, with a rate of one foreclosure filing for every 106 households, followed by Las Vegas, Detroit, Vallejo, Calif.; Greeley, Colo.; Cape Coral-Fort Myers, Fla.; Riverside-San Bernardino, Calif.; and Miami.
California led the nation for its total number of foreclosure filings in November, with 39,992; followed by Florida with 29,238; Ohio with 16,308; Texas with 11,599; Michigan with 11,464; Georgia with 8.968; Illinois with 8,238; Nevada with 6,694; Colorado with 6,425; and New York with 5,794.
Wednesday, December 19, 2007Inman News
Nevada continued to lead the nation for its rate of foreclosure filings per household in November -- a position it has held for the past 11 months, foreclosure data company RealtyTrac reported today.
The company reported a 67.8 percent nationwide gain in the volume of foreclosure filings in November 2007 compared to the same month last year, though filings declined 10 percent compared to October 2007.
The national rate of foreclosure filings in November was 1 for every 617 households -- Nevada had a rate of 1 filing for every 152 households during that month.
Next on the list was Florida, with a rate of 1 filing for every 282 households; followed by Ohio, 1-in-307; Colorado, 1-in-320; California, 1-in-325; Michigan, 1-in-391; Georgia, 1-in-421; Arizona, 1-in-441; Indiana, 1-in-484; and Illinois, 1-in-624.
"The 10 percent drop in November is the first double-digit monthly decrease we've seen since April 2006," said James J. Saccacio, RealtyTrac, in a statement.
Saccacio also stated that the company anticipates "a seasonal surge in foreclosure filings and another possible wave of resetting mortgages" next year that "could place further pressure on the housing market."
Five of the 10 metro areas with the highest foreclosure rates in the nation in November are in California, RealtyTrac reported. Stockton, Calif., led the nation with a metro area foreclosure rate of one filing for every 99 households. Modesto, Calif., ranked second, with one foreclosure filing for every 104 households.
Merced, Calif., took third, with a rate of one foreclosure filing for every 106 households, followed by Las Vegas, Detroit, Vallejo, Calif.; Greeley, Colo.; Cape Coral-Fort Myers, Fla.; Riverside-San Bernardino, Calif.; and Miami.
California led the nation for its total number of foreclosure filings in November, with 39,992; followed by Florida with 29,238; Ohio with 16,308; Texas with 11,599; Michigan with 11,464; Georgia with 8.968; Illinois with 8,238; Nevada with 6,694; Colorado with 6,425; and New York with 5,794.
Wednesday, December 19, 2007
Home foreclosures fall second time in 3 months
Defaults remain at elevated levels as rising payments pressure borrowers
NEW YORK - Home foreclosure filings fell in November from October, though they may remain at elevated levels as rising payments on adjustable loans pressure borrowers, a real estate data company reported on Wednesday.
The hardest-hit states were Nevada and Florida, where price gains were among the strongest during the housing boom.
Lenders filed 201,950 foreclosure filings last month, down 10 percent from October, for a foreclosure rate of one in 617 households, according to RealtyTrac. Total filings were up almost 68 percent from November 2006, said the firm, which markets foreclosed houses.
Soaring foreclosures have set regulators and lawmakers scrambling to curb the trend, which many economists say could tip the U.S. economy into recession. Plans that make it easier to get a government-insured loan or would freeze interest rates for some subprime borrowers will slow foreclosures, analysts say. But many homeowners remain vulnerable to default.
The decline in November follows a 2 percent increase in filings in October and an 8 percent fall in September.
"This could indicate that foreclosure activity has topped out for the year, but the true test of whether this ceiling will hold will come at the beginning of next year" when a seasonal increase tends to occur and rates on more mortgages are to rise, James Saccacio, chief executive officer of Irvine, California-based RealtyTrac, said in a statement.
About $500 billion in adjustable-rate mortgages are due to reset at higher levels in 2008, according to JPMorgan.
States with strong price gains during the boom are seen leading a drop of as much as 15 percent in national home prices by 2009, according to UBS economists.
In Nevada and Florida, annual price gains approached 20 percent and 30 percent, respectively, at the height of the housing boom in 2005. Nevada topped the list of foreclosure rates for the 11th month, with one filing for every 152 households, RealtyTrac said. The rate, based on a 1 percent rise from October, is more than four times the national average.
In Florida, filings declined 3 percent, but the Sunshine State still had one filing for every 282 households, the data showed.
Ohio, beset with a shaky economy, had the third-worst rate of foreclosures in November, with one filing for every 307 households. However, total foreclosures in Ohio declined 6 percent from October.
Among cities, Stockton, California, posted the worst foreclosure rate, with one in every 99 homes, the report showed. The top 10 cities included four others in California, as well as Las Vegas, Nevada.
Defaults remain at elevated levels as rising payments pressure borrowers
NEW YORK - Home foreclosure filings fell in November from October, though they may remain at elevated levels as rising payments on adjustable loans pressure borrowers, a real estate data company reported on Wednesday.
The hardest-hit states were Nevada and Florida, where price gains were among the strongest during the housing boom.
Lenders filed 201,950 foreclosure filings last month, down 10 percent from October, for a foreclosure rate of one in 617 households, according to RealtyTrac. Total filings were up almost 68 percent from November 2006, said the firm, which markets foreclosed houses.
Soaring foreclosures have set regulators and lawmakers scrambling to curb the trend, which many economists say could tip the U.S. economy into recession. Plans that make it easier to get a government-insured loan or would freeze interest rates for some subprime borrowers will slow foreclosures, analysts say. But many homeowners remain vulnerable to default.
The decline in November follows a 2 percent increase in filings in October and an 8 percent fall in September.
"This could indicate that foreclosure activity has topped out for the year, but the true test of whether this ceiling will hold will come at the beginning of next year" when a seasonal increase tends to occur and rates on more mortgages are to rise, James Saccacio, chief executive officer of Irvine, California-based RealtyTrac, said in a statement.
About $500 billion in adjustable-rate mortgages are due to reset at higher levels in 2008, according to JPMorgan.
States with strong price gains during the boom are seen leading a drop of as much as 15 percent in national home prices by 2009, according to UBS economists.
In Nevada and Florida, annual price gains approached 20 percent and 30 percent, respectively, at the height of the housing boom in 2005. Nevada topped the list of foreclosure rates for the 11th month, with one filing for every 152 households, RealtyTrac said. The rate, based on a 1 percent rise from October, is more than four times the national average.
In Florida, filings declined 3 percent, but the Sunshine State still had one filing for every 282 households, the data showed.
Ohio, beset with a shaky economy, had the third-worst rate of foreclosures in November, with one filing for every 307 households. However, total foreclosures in Ohio declined 6 percent from October.
Among cities, Stockton, California, posted the worst foreclosure rate, with one in every 99 homes, the report showed. The top 10 cities included four others in California, as well as Las Vegas, Nevada.
Real estate rates fall overnight
30-year fixed rate down to 5.84%; 10-year Treasury yield at 4.12%
Wednesday, December 19, 2007Inman News
Long-term mortgage interest rates were lower Tuesday, and the benchmark 10-year Treasury bond yield dropped to 4.12 percent.
The 30-year fixed-rate average sank to 5.84 percent, and the 15-year fixed rate dipped to 5.4 percent. The 1-year adjustable rate held at 5.59 percent.
The 30-year Treasury bond yield edged down to 4.54 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average rose 65.27 points, or 0.5 percent, finishing at 13,232.47. The Nasdaq gained 21.57 points, or 0.84 percent, closing at 2,596.03.
Stock figures are current as of 7:30 p.m. Eastern Standard Time.
30-year fixed rate down to 5.84%; 10-year Treasury yield at 4.12%
Wednesday, December 19, 2007Inman News
Long-term mortgage interest rates were lower Tuesday, and the benchmark 10-year Treasury bond yield dropped to 4.12 percent.
The 30-year fixed-rate average sank to 5.84 percent, and the 15-year fixed rate dipped to 5.4 percent. The 1-year adjustable rate held at 5.59 percent.
The 30-year Treasury bond yield edged down to 4.54 percent.
Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.
Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.
In other economic news, the Dow Jones Industrial Average rose 65.27 points, or 0.5 percent, finishing at 13,232.47. The Nasdaq gained 21.57 points, or 0.84 percent, closing at 2,596.03.
Stock figures are current as of 7:30 p.m. Eastern Standard Time.
Home loan apps plunge 19%
MBA index posts largest decline in years
Wednesday, December 19, 2007Inman News
Mortgage application volume last week posted the sharpest drop in recent years as interest rates continued higher, the Mortgage Bankers Association reported today.
The group's market composite index, a measure of home loan application volume, tumbled 19.5 percent on a seasonally adjusted basis from the first week of December. The last double-digit losses for the index were seen in December 2006 (down 14.3 percent) and June 2005 (down 11.3 percent.)
MBA reported that the index that tracks refinancings tumbled 27.3 percent last week from just one week earlier, while the purchase-loan index fell 10.6 percent.
As a result, the refinance share of applications fell to 53.2 percent last week from 57.6 percent one week earlier, while the adjustable-rate mortgage (ARM) share actually rose during the period from 9.4 percent to 9.9 percent.
Borrowing costs were up considerably for the second straight week, as the average contract interest rate for 30-year fixed-rate mortgages gained from 6.07 percent to 6.18 percent, the average 15-year fixed climbed from 5.72 percent to 5.78 percent, and the average one-year ARM rate was up to 6.48 percent from 6.31 percent in the previous week.
Points, or loan-processing fees expressed as a percent of the total loan amount, averaged 1.12 on the 30-year loans, 1.1 on the 15-year, and 0.95 on one-year ARMs -- compared with 1.17, 1.01 and 0.97, respectively, in the previous week. These points include the origination fee and are based on loan-to-value ratios of 80 percent.
The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
MBA index posts largest decline in years
Wednesday, December 19, 2007Inman News
Mortgage application volume last week posted the sharpest drop in recent years as interest rates continued higher, the Mortgage Bankers Association reported today.
The group's market composite index, a measure of home loan application volume, tumbled 19.5 percent on a seasonally adjusted basis from the first week of December. The last double-digit losses for the index were seen in December 2006 (down 14.3 percent) and June 2005 (down 11.3 percent.)
MBA reported that the index that tracks refinancings tumbled 27.3 percent last week from just one week earlier, while the purchase-loan index fell 10.6 percent.
As a result, the refinance share of applications fell to 53.2 percent last week from 57.6 percent one week earlier, while the adjustable-rate mortgage (ARM) share actually rose during the period from 9.4 percent to 9.9 percent.
Borrowing costs were up considerably for the second straight week, as the average contract interest rate for 30-year fixed-rate mortgages gained from 6.07 percent to 6.18 percent, the average 15-year fixed climbed from 5.72 percent to 5.78 percent, and the average one-year ARM rate was up to 6.48 percent from 6.31 percent in the previous week.
Points, or loan-processing fees expressed as a percent of the total loan amount, averaged 1.12 on the 30-year loans, 1.1 on the 15-year, and 0.95 on one-year ARMs -- compared with 1.17, 1.01 and 0.97, respectively, in the previous week. These points include the origination fee and are based on loan-to-value ratios of 80 percent.
The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.
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