Archive for February, 2009

PMI Anyone?

Saturday, February 21st, 2009
If you ever work with buyers with less than 20% down, this matters to you!  Again, this change does not affect Mountain Crest Mortgage as we are a banker.
 
Another hurdle for mortgage brokers. . .  In what could be another nail in the coffin of the loan brokerage industry, The PMI Group of San Francisco confirmed it will no longer insure any mortgages brought to them by third-party originators unless these firms have a warehouse line of credit. It’s believed that PMI is the first of the nation’s seven MI firms to totally exclude loan brokers from their coverage menus. In recent months other MIs - including Genworth and MGIC - have tightened guidelines on broker-sourced loans, particularly condominiums and high LTV notes.
 
A PMI spokesman confirmed the new policy change to National Mortgage News adding that, “This does not apply to correspondents.” He said PMI would honor any commitments on broker loans in its pipeline. Marc Savitt, president of the National Association of Mortgage Brokers, said he is seeking a meeting with White House officials to discuss issues affecting brokers (including the PMI matter) and believes the sector has been unfairly blamed for the nation’s mortgage crisis. “We don’t underwrite loans,” he said.
 
The NAMB chief believes the nation’s largest commercial banks are part of a “well orchestrated campaign” to put brokers out of business and gain market share. In a letter NAMB sent to the White House today he writes: “Make no mistake about it. This campaign to eliminate our profession has absolutely nothing to do with consumer protection. It’s about market share” (Nat’l Mtg News).

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Stimulus for Housing?

Saturday, February 21st, 2009
The $787 Billion Stimulus Plan made up of tax cuts and spending programs aims at reviving the US economy. Although the package was scaled down from nearly $1 Trillion, it still stands as the largest anti-recession effort since World War II. Home owners and potential homebuyers stand to gain from key provisions in this stimulus plan. Here is what we know as of today…
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction - a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Incentives to Spur Energy Savings and Green Jobs - This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.
Landmark Energy Savings - This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.
Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing - This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.
Expanding Housing Assistance - This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.
More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama’s plan to help struggling borrowers before they are faced with a default on their mortgage.
According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.
While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That’s because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

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Stimulus Anyone?

Saturday, February 21st, 2009
People often ask me what I think of the stimulus package and honestly I’m less than enthusiastic.
 
Treasuries dropped yesterday as the Fed signaled it’s not going to purchase U.S. securities to lower consumer borrowing costs any time soon.
 
There are actually two huge plans – the $787B economic stimulus package and yesterday’s details on a plan to help millions of mortgagors re-finance their homes and avoid foreclosure (called “workouts”). Given the reactions from investors neither plan is being met with much outward enthusiasm. Interest rates are unchanged from last week, the stock market is teetering close to its November lows, markets do not believe the plans will make significant impacts to turn the ailing economy anytime soon.
 
On the mortgage rescue plan, James Lockhart, head of the Federal Finance Agency that is responsible for Fannie and Freddie is saying today that he believes 40% of the workouts will within six months end up back in delinquency. Sheila Blair at the FDIC thinks 55% of the workouts will eventually fail. Not very good odds when taxpayers have to pay for it, and the reason the plan is being met with tepid enthusiasm. Even the government doesn’t give it high marks for success. Nevertheless, at the same time the two regulators are firmly behind the plan. It is now almost two years and $2.5T, the credit markets are still not functioning, foreclosures are still increasing, home prices are still falling, and there is still no value being placed on the trillions of dollars of bad assets sitting on banks’ books. Until markets know how deep the losses are at banks there is no shining light out there signaling any end in sight.

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