Congress Set to Extend GSE Loan Limits at $729K ($697,500 for San Diego)
National Mortgage News Online - July 26, 2010
House and Senate committees have approved the Department of Housing and Urban Development(HUD) appropriation bills that extend the $729,750 loan limit through September 2011.
The maximum $729,750 loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) loans in high cost areas is due to expire at the end of this year.
As expected, elected officials and industry groups want to pass an extension now to prevent possible disruptions if the legislative process gets bogged down later this year.
Without an extension, the maximum loan limit would drop back to $625,500. House and Senate appropriators also are in sync in renewing the FHA's and Ginnie Mae's loan commitment authority at full-year 2010 levels.
The appropriation bills, which are waiting approval by the House and Senate, authorize FHA to insure up to $400 billion of single-family loans in full-year 2011 and Ginnie Mae to guarantee up to $500 billion of MBS.
The appropriators also are allocating $150 million for the FHA Home Equity Conversion Mortgage program.
Without this credit subsidy, FHA would have to make deeper reductions in the loan proceeds that seniors receive in a reverse mortgage transaction.
"We are glad to see this affirmation of support for the HEMC program and a willingness to fund it at a level that will sustain the program," according to Peter Bell, president of the National Reverse Mortgage Lenders Association.
In other GSE news, Freddie Mac disclosed that mortgages purchases rose, while delinquencies on Freddie guaranteed loans are still falling.
The delinquency rate on Freddie Mac guaranteed mortgages fell to 3.96% in June, the lowest reading since November of last year.
Delinquency readings on its credit- and non-credit enhanced portfolio also showed improvement, according to the GSE's new monthly performance statement.
Meanwhile, Freddie purchased $30.9 billion of mortgages during June, a 24% improvement from May, but a 52% decline from the same month in 2009. At June 30, its retained portfolio totaled $740 billion, a 1% decline from May.
A ward of the government since September 2008, Freddie continues to lose money. It expects to release its second quarter results sometime in August. The GSE reported 21,367 loan modifications for the month, and 93,568 since January.
House and Senate committees have approved the Department of Housing and Urban Development(HUD) appropriation bills that extend the $729,750 loan limit through September 2011.
The maximum $729,750 loan limit for Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) loans in high cost areas is due to expire at the end of this year.
As expected, elected officials and industry groups want to pass an extension now to prevent possible disruptions if the legislative process gets bogged down later this year.
Without an extension, the maximum loan limit would drop back to $625,500. House and Senate appropriators also are in sync in renewing the FHA's and Ginnie Mae's loan commitment authority at full-year 2010 levels.
The appropriation bills, which are waiting approval by the House and Senate, authorize FHA to insure up to $400 billion of single-family loans in full-year 2011 and Ginnie Mae to guarantee up to $500 billion of MBS.
The appropriators also are allocating $150 million for the FHA Home Equity Conversion Mortgage program.
Without this credit subsidy, FHA would have to make deeper reductions in the loan proceeds that seniors receive in a reverse mortgage transaction.
"We are glad to see this affirmation of support for the HEMC program and a willingness to fund it at a level that will sustain the program," according to Peter Bell, president of the National Reverse Mortgage Lenders Association.
In other GSE news, Freddie Mac disclosed that mortgages purchases rose, while delinquencies on Freddie guaranteed loans are still falling.
The delinquency rate on Freddie Mac guaranteed mortgages fell to 3.96% in June, the lowest reading since November of last year.
Delinquency readings on its credit- and non-credit enhanced portfolio also showed improvement, according to the GSE's new monthly performance statement.
Meanwhile, Freddie purchased $30.9 billion of mortgages during June, a 24% improvement from May, but a 52% decline from the same month in 2009. At June 30, its retained portfolio totaled $740 billion, a 1% decline from May.
A ward of the government since September 2008, Freddie continues to lose money. It expects to release its second quarter results sometime in August. The GSE reported 21,367 loan modifications for the month, and 93,568 since January.
Financial Market Update
Last Week; the consolidation continued in the US financial markets. The DJIA rallied 511 points, the NASDAQ +104, and the S&P 500 +55. Mortgage prices barely moved through the week, up 7/32 (.22 bp) for 30s and 15s; the 10 yr note yield moved back above 3.00% to 3.06% +8 BP. There was little in the way of economic data; the July ISM services sector data was weaker than expected and weekly jobless claims somewhat better but not much on either reports. The rally in stocks was mostly al short-covering and did not change the bearish trend. Interest rates remain technically bullish but the key 10 yr note will need more soft data to work much below 3.00%. What we did notice last week was that mortgages held well against the treasury market; however we see no reason to expect mortgage rates to move much lower as long as the treasury rates find resistance at the present very low yields across the entire yield curve.
This Week; after little data last week this week is loaded with economic releases. Not only data that will be key but Treasury will auction $69B of notes and bonds this week beginning with $35B of 3 yr notes on Monday at 1:00 pm. Expect the week to start slowly with not much change on Monday; the equity market may have a little more to go on the short-covering rally but the market is no longer technically oversold and in turn may embolden sellers to return. No double dip but not much in the way of improvement for the key indexes as the outlook has become increasingly more of a concern. Recent reports on various segments of the economy have fallen short of the excessive optimism that had captured investors' since last April. There is no way to ignore the reality that the housing sector remains in depression; every significant report on the housing sector has been disappointing and will likely continue that way for the rest of the year. There is no appetite in Washington to extend the homeowners tax credit that was extremely supportive to increasing sales---a shame as housing will keep the economic recovery muddling along with little growth.
This Week; after little data last week this week is loaded with economic releases. Not only data that will be key but Treasury will auction $69B of notes and bonds this week beginning with $35B of 3 yr notes on Monday at 1:00 pm. Expect the week to start slowly with not much change on Monday; the equity market may have a little more to go on the short-covering rally but the market is no longer technically oversold and in turn may embolden sellers to return. No double dip but not much in the way of improvement for the key indexes as the outlook has become increasingly more of a concern. Recent reports on various segments of the economy have fallen short of the excessive optimism that had captured investors' since last April. There is no way to ignore the reality that the housing sector remains in depression; every significant report on the housing sector has been disappointing and will likely continue that way for the rest of the year. There is no appetite in Washington to extend the homeowners tax credit that was extremely supportive to increasing sales---a shame as housing will keep the economic recovery muddling along with little growth.
Market update & advice from our brokerage
The San Diego real estate market continues to be in the "neutral" to "seller's favor" category when we consider the statistical performance of the detached and attached markets in our county. Interest rates are at extremely low levels, prices are very good and the number of foreclosures is down.
As of today, here's how it looks:
Detached: There are currently 7,669 detached homes on the market compared to 7,057 last month, up about 8%. 1,802 new escrows were opened in June vs. 1,677 in May, also up about 8%. This gives us about 4.3 months of inventory vs. 4.2 last month. When we add the new "contingents" (short sales with accepted buyer offer but awaiting lender approval) 2,391 more homes came off the market. Adding the new escrows and contingents shows us that 4,193 detached homes went under contract. If we take this number and divide it into the 7,669 homes on the market we show 1.83 months of supply. Normally 4 to 6 months of inventory is considered "neutral", anything below favors the seller and above favors the buyer. This means that there is still substantial market movement. Keep in mind this includes homes in all price ranges and the results could be different if analyzed by price band or area.
Attached: There are now 3,640 attached properties on the market for sale, up from 3,360 the month prior. During June 875 units went into new escrows compared to 876 the month before. Dividing the new escrows by the number of active listings we show 4.2 months of inventory, up from 3.8 last month. This approximate 10% increase in turnover time still leaves us in the "neutral" to "seller's favor" category. Another 1,892 units went "contingent" during June compared to 2.001 in May. Adding the "pendings" and "contingents" gives us a total of 2,767 units that went under contract and a 1.32 month supply of units now on the market, meaning that prices are strong.
Congress is in the process of extending the tax credit for home buyers but this will apply only to contracts that were ratified prior to the previous deadline so no new contracts will qualify.
Lately I have seen the short sale activity moving up the price ladder as many of the lower priced units have already either been foreclosed or short sold. Lenders are now (finally) adding staff to handle short sales more efficiently as they slowly learned that they will net more from a short sale than a foreclosure. They are also starting to establish policies to deal with borrowers who are strategically defaulting (walking away from their home with no other financial issues) that will penalize them on future purchases.
Keep in mind that real estate is highly "local" and that the numbers above cover our entire county. If you are considering a new home I can easily present you the numbers in your price range, preferred neighborhood, house style, etc. so you get the most relevant statistics (and so should your local agent if you are not in San Diego).
R. Ungar, Associate Broker – Keller Williams Realty
As of today, here's how it looks:
Detached: There are currently 7,669 detached homes on the market compared to 7,057 last month, up about 8%. 1,802 new escrows were opened in June vs. 1,677 in May, also up about 8%. This gives us about 4.3 months of inventory vs. 4.2 last month. When we add the new "contingents" (short sales with accepted buyer offer but awaiting lender approval) 2,391 more homes came off the market. Adding the new escrows and contingents shows us that 4,193 detached homes went under contract. If we take this number and divide it into the 7,669 homes on the market we show 1.83 months of supply. Normally 4 to 6 months of inventory is considered "neutral", anything below favors the seller and above favors the buyer. This means that there is still substantial market movement. Keep in mind this includes homes in all price ranges and the results could be different if analyzed by price band or area.
Attached: There are now 3,640 attached properties on the market for sale, up from 3,360 the month prior. During June 875 units went into new escrows compared to 876 the month before. Dividing the new escrows by the number of active listings we show 4.2 months of inventory, up from 3.8 last month. This approximate 10% increase in turnover time still leaves us in the "neutral" to "seller's favor" category. Another 1,892 units went "contingent" during June compared to 2.001 in May. Adding the "pendings" and "contingents" gives us a total of 2,767 units that went under contract and a 1.32 month supply of units now on the market, meaning that prices are strong.
Congress is in the process of extending the tax credit for home buyers but this will apply only to contracts that were ratified prior to the previous deadline so no new contracts will qualify.
Lately I have seen the short sale activity moving up the price ladder as many of the lower priced units have already either been foreclosed or short sold. Lenders are now (finally) adding staff to handle short sales more efficiently as they slowly learned that they will net more from a short sale than a foreclosure. They are also starting to establish policies to deal with borrowers who are strategically defaulting (walking away from their home with no other financial issues) that will penalize them on future purchases.
Keep in mind that real estate is highly "local" and that the numbers above cover our entire county. If you are considering a new home I can easily present you the numbers in your price range, preferred neighborhood, house style, etc. so you get the most relevant statistics (and so should your local agent if you are not in San Diego).
R. Ungar, Associate Broker – Keller Williams Realty
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