The U.S. Federal Reserve will buy 1.2 trillion of debt to boost lending.  The Federal Reserve said it hopes the measures will boost mortgage lending and the struggling housing market by lowering interest rates on mortgages and other forms consumer debt. 

In efforts to provide greater support to the mortgage and housing industries, the Federal Open Monetary Committee has decided to increase the size of the Fed’s initial purchase of debts by adding an additional $750 billion U.S. dollars of agency mortgage-backed securities, bringing its total purchases of these securities to up to 1.25 trillion this year, and to increase its purchases of agency debt this year by up to 100 billion to a total of up to 200 billion US dollars. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to 300 billion of longer-term Treasury securities over the next six months.

The anticipation is good for the housing market.  As some areas of the country are possibly experiencing a “bottoming out effect”, this bold move by the Feds is supposed to have a strong effect on reviving the economy, to include the housing market.

“The Fed is clearly ready, willing and able to be the ATM for the credit markets,” said Terry Connelly, dean of Golden Gate University’s Ageno School of Business in San Francisco.

Where does the Fed get all the money? It prints it.  Now if we could just figure out how to insert our own individual relief plans into the system while all of this money is getting printed, we would really all be happy.

Tags: charlotte, Foreclosure, housing, mortgage, short sales
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Jacksonville, Florida-based Lender Processing Services, Inc. (LPS), a provider of technology and services to the mortgage industry, has released the results of a recent study that reveals the impact of foreclosure, or REO, sales on home prices. 

LPS has reported that the largest drop in prices of foreclosure sales was observed in Riverside county, California.  Home prices dropped an astonishing 28 percent in Riverside County in 2008.  Compared to a year ago, prices fell by 34 percent on an annual basis.   In the phoenix market, prices fell by 29 percent during 2008. 

For information on specific markets, view LPS’s website.  For information on all of Charlotte areas and all surrounding counties declines and market projections, send an email to sold@homeandauction.com for specific neighborhood or zip code market trend data.

Tags: charlotte, estate, foreclosures, home, prices, real, short sale
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Good news for Charlotte as the unemployment rate rose to 10.5 in January 2009.  Over 200 new jobs are expected to be added in the Charlotte area by GMAC Financial Services LLC.

GMAC’s incentives from the state of North Carolina and Charlotte, Mecklenburg County include 4.5 million dollars from the state Job Development Investment Grant over a nine year period and $237,000 over three years from the county. 

“We are excited about growing our presence in Charlotte. This is a great city with a deep talent pool,” GMAC chief executive officer Alvaro de Molina said in a statement.  The deal does not call for moving GMAC’s headquarters from Detroit, said John Lassiter, who chairs the city council’s economic development and planning committee. “GMAC’s headquarters is in Detroit, Mich., and we have no plans to change that,” GMAC spokeswoman Toni Simonetti said in an email.

There are currently 265 GMAC workers in the Ballantyne area.  Once office space is found in the uptown area, existing employees will relocate to the new office.  GMAC is an auto finance and mortgage company.  In December it became a bank holding company, allowing it to receive 5 billion dollars from the Treasury Department’s $700 billion financial bailout fund.

GMAC promised to hire at least 130 people by the end of the year and add at least 200 by the end of 2010, under the terms of a state incentives deal agreed to Friday. The average salary for the jobs expected to include finance, risk management, accounting and corporate administration will be $96,600 a year.

Tags: charlotte, estate, GMAC, loan, modification, mortgage, real, short sale
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Kick Start to Help Frozen Credit Markets Move Money and Help the Economy

Treasury Secretary Timothy Geithner’s Public-Private Investment Program, or PPIP will provide up to $1 trillion in financing and guarantees to private investors to kick-start the frozen credit markets.  The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

By offering leverages and guarantees, the Treasury will start lending $75 to $100 billion to encourage investors to buy non-performing loans to help frozen credit markets.  Here’s the breakdown.  To help private investors buy pools of non-performing loans,  The FDIC will insure the majority of the purchase price of the deal, the Treasury Department will finance 50% and investors will be responsible for for 7%. 

A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed.   Under the new powers being sought by the administration, the treasury secretary could only seize a firm with the agreement of the president and the Federal Reserve.

Mark Zandi, an economist at Moody’s Economy.com, estimated that the government will need an additional $400 billion to adequately deal with the toxic asset problem, seen by many analysts as key to finally resolving the banking crisis.  Zandi said the administration has no choice but to rely heavily on government resources because of the urgency of getting soured real estate loans and troubled asset-backed securities off the books of banks so that they can resume more normal lending to consumers and businesses.
We will wait and see how promising the PPIP will be in jump starting frozen credit markets and helping the economy out of recession.  Positives are expected overall for our real estate market along with loan modifications and an increase in approved short sales from lenders.

Tags: charlotte, credit, department, Foreclosure, geithner, mortgage, treasury
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Existing home sales increased in February according to the National Association of Realtors. Even with this increase reversing the losses in January, sales still remain relatively soft due to increased layoffs and buyers waiting for the incentives of the economic stimulus package to kick in.

According to NAR, existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.1 percent to a seasonally adjusted annual rate1 of 4.72 million units in February from a pace of 4.49 million units in January, but are 4.6 percent below the 4.95 million-unit level in February 2008. Seasonal adjustment factors are more volatile in winter months, but sales rates over the past few months show dampened sales activity.

NAR chief economist, Lawrence Yun states that first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”

The national median existing-home price2 for all housing types was $165,400 in February, down 15.5 percent from a year ago when the median was $195,800 and conditions were close to normal.

Yun also acknowledges “Given the downward distortion in price comparisons due to distressed sales, it’s important for owners to keep in mind that this doesn’t equate to a similar loss of value for traditional homes in good condition”.

For our area in particular, NAR reports that in the South, existing-home sales rose 6.1 percent to an annual pace of 1.74 million in February but are 11.2 percent below February 2008. The median price in the South was $146,700, down 10.0 percent from a year ago.

Tags: buyers, charlotte, Foreclosure, home, NAR, sales, sell, sellers
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Treasury Secretary Timothy Geithner’s Public-Private Investment Program, or PPIP will provide up to $1 trillion in financing and guarantees to private investors to kick-start the frozen credit markets.  The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

By offering leverages and guarantees, the Treasury will start lending $75 to $100 billion to encourage investors to buy non-performing loans to help frozen credit markets.  Here’s the breakdown.  To help private investors buy pools of non-performing loans,  The FDIC will insure the majority of the purchase price of the deal, the Treasury Department will finance 50% and investors will be responsible for for 7%. 

A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed.   Under the new powers being sought by the administration, the treasury secretary could only seize a firm with the agreement of the president and the Federal Reserve.

Mark Zandi, an economist at Moody’s Economy.com, estimated that the government will need an additional $400 billion to adequately deal with the toxic asset problem, seen by many analysts as key to finally resolving the banking crisis.  Zandi said the administration has no choice but to rely heavily on government resources because of the urgency of getting soured real estate loans and troubled asset-backed securities off the books of banks so that they can resume more normal lending to consumers and businesses.
We will wait and see how promising the PPIP will be in jump starting frozen credit markets and helping the economy out of recession.  Positives are expected overall for our real estate market along with loan modifications and an increase in approved short sales from lenders.

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The U.S. Senate has approved an amendment to the economic stimulus package that would provide a tax credit of up to $15,000 for homebuyers who purchase a primary residence in the upcoming year. 

Senate added to the $900 billion stimulus bill on Wednesday a home purchase tax credit of $15,000, or 10% of the purchase price.   Also on tap is a proposal being pushed by Senate Republicans for a federalized 4% interest rate on 30-year fixed mortgages.   They believe this will spur home sales and help homebuyers, homesellers, builders and all alike. 

A Hike in FHA and VA Loan Limits?
The stimulus bill that passed included provisions to increase limits on loans eligible for financing from government-backed mortgage entities as high as $729,750 in the nation’s most expensive housing markets.
Will it Work?
Some economist argue that throwing the “kitchen sink” in incentives to buyers will encourage builders to start doing what they love to do, build.  Therefore increasing our already oversupply of inventory on the market. 

What I believe
I believe that believing in our government and having a bit of consumer trust will spur home sales. It’s like having an addict as a friend or family member. You want to invite them back into your life, but they not only need to talk the talk they have to walk the walk. Even though the country seemed to have had confidence that change was coming, it did not take away the continued job loss, home sales decline and lack of a plan to help the masses. This administration is doing a lot to help our economy, but it takes a lot to help our ecomony. Home prices are still TOO high in most housing markets for those who have experienced job loss, pay decreases and higher living expenses to afford a home and all that comes with maintaining it. Many foreclosures enter the market at fair market value within 90-120 day marketing modules instead of “quick sale pricing”. Why? Why not? If there is an offer generated within 1-90 days to help the investor recapture some of the possible loss of the foreclosure, why not take that risk. Especially if the property is located in a stable to mildly depreciating market area. We need to push short sales more on Capitol Hill. It creates a better market for homes to be priced as they should, helps the buyer afford what he or she can, and allows the homeowner to have piece of mind for an upside down mortgage if they can not qualify for a loan modification.

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Has the Housing Market Bottomed?

The housing market has possibly bottomed in many market areas of the country and we may see a good 2009 after all.  The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January. It was the largest sales jump since July 2003.  Buyers are getting everything thrown at them including the kitchen sink to purchase homes and now they are coming out of their safe havens and doing so.  Between the 8,000 no-pay back tax credit, foreclosures, short sales, builder incentives and deep discounts by both builders and homeowners, what are buyers waiting on?  Not to mention historically low, low interest rates.  The Federal Reserve last week moved to reduce already low rates by printing $1.2 trillion and pumping it into the economy through the purchases of mortgage-backed securities and Treasury debt.

Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”

Regional Breakdown
Yun says a recovery in the West is much stronger than expected. “Strong sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years,” he says.

Here’s how existing-home sales fared across the country:
Northeast: jumped 15.6 percent to an annual pace of 740,000 in February, but 14.9 percent below February 2008. Median price: $251,200, down 4.8 percent from a year ago.

Midwest: increased 1 percent in February to a pace of 1.04 million but 14 percent lower than a year ago. Median price: $131,000, which is 7.8 percent below February 2008.

South: rose 6.1 percent to an annual pace of 1.74 million in February but 11.2 percent below February 2008. Median price: $146,700, down 10 percent from a year ago.

West: increased 2.6 percent to an annual rate of 1.2 million in February and remain 30.4 percent higher than a year ago. Median price: $204,600, which is 30.3 percent below February 2008.

Source: The National Association of REALTORS

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Individual investors can now bid on notes on a new website, BigBidder.com.  Newport Beach, California-based BigBidder.com throws out the traditional business-to-business model of buying and selling mortgage debt notes.  BigBidder.com offers open access to qualified investors to purchase individual or pools of notes secured by real estate.  Investors can bid on mortgages, deeds of trust, land contracts throughout the county.

Buying and selling notes have been a way for investors and institutional firms to make money for decades.  Offering online auction of notes is a move towards an innovative way for many to profit and help in rebuilding the secondary mortgage market.  The creators of BigBidder.com, the LFC Group of Companies, have spent decades in the commercial and residential online real estate auction businesses.  Paul Lyons, SVP at LFC, explained, “For years institutional firms and savvy investors have bought and sold notes for profit and to maintain cash liquidity. Were breaking away from the traditional paradigm with this powerful tool allowing individual qualified investors and small investment consortiums to diversify their portfolios by investing in notes via a fair and transparent retail process.”

John Kohler, managing director at 12th Street Capital, a secondary market investment firm specializing in mortgage-backed securities (MBS), said, “BigBidder.com fills a void in the market for notes. The BigBidder.com business model is unique in the way it delivers price discovery to the individual investor, which is key to getting their participation. And I think institutional sellers will see BigBidder.com as an efficient way to reach that broader retail audience and improve liquidity in their product.”

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How can the pending Housing Rescue Bill help you if you are facing foreclosure?    The House on Wednesday passed a 300 billion housing rescue bill.  President Bush withdrew his threat to veto the bill that can potentially help thousands of at-risk borrowers to refinance their old mortgages into a new low-cost fixed FHA loan.

There are an estimated 400,000 borrowers with $68 billion in loans that may benefit from the program. 

Who Qualifies for the Program?

To qualify, borrowers must:

Have lived in thier homes and have loans issued between January 2005 and June 2007.

Must be spending at least 40% of their gross monthly income on all household debt.

Prove they can’t continue to pay for their existing mortgage.

Must retire any debt such as home equity loans or lines of credit on their home.

Total debt cannot exceed 95% of the home’s appraised value.

A voluntary Program

This is a voluntary program, so lenders may be very cautious as to who will be given a rework.  The bill requires lenders to write down the value of the loan to 90%.  This is helpful in areas where prices have dropped in value.  If you originally had a $200,000 home, the refinanced loan will be based on $180,000 at a considerably lower rate.

What is Will Cost the Borrower?

Borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers will also share any profits from future home-price appreciation with the FHA. To do that, they’ll pay a “3% exit fee” of the mortgage principal to the FHA when they resell or refinance.

Borrowers will agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

What if You Do Not Qualify?

If you feel you do not qualify for the program, still call your lender and inquire about the possibility of a rework on your loan.  If you are still having problems, contact us today and speak with me at (704) 559-5988 X 5.  As a licensed loan officer and contract loss mitigation specialist with lenders who fund loans in NC, I may be able to assist you with some options to help you if you are facing foreclosure in the Charlotte North Carolina area.

Tags: Bill, Foreclosure, Rescue
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