Latest Mortgage Trends [Housing Tracker]

Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.

Quote of the Day

“Obviously, those who shouldn’t have been buying homes who were buying homes who couldn’t afford it, now its the other way around people who have good sound credit are unable to get mortgages.” - Frank Finlaw, Charleston Division President for Beazer Homes. (WCIV, Oct. 2

Mortgage Trends

FHA Will Take on Subprime Loans Shunned by Lenders. “By the end of the year the Federal Housing Administration will guarantee mortgages for three in 10 U.S. borrowers, many of whom have bad credit or loans that required no verification of income. Congress wants FHA to do more. The Hope for Homeowners program, unveiled Oct. 1, authorizes the agency, part of the cabinet-level Department of Housing and Urban Development, to guarantee up to $300 billion of 30-year, fixed rate home loans for struggling borrowers over the next three years. The Congressional Budget Office estimates that 400,000 households will get FHA- insured loans and about one-third of those will fall behind again on their new loans.” (Bloomberg, Oct. 6) 

Bank Writeoffs May Triple, Bond Premiums Narrow as TARP Begins. “Lehman Brothers: Yields on securities rated AAA and composed of subprime or home-equity loans was near a record of 7.57 percentage points more than Treasuries last week, from 0.53 percentage point at the beginning of last year. The yield premium, or spread, for investment-grade corporate bonds in the U.S. widened to a record 4.91 percentage points on Oct. 3 from 2.03 percentage points at the start of the year, according to the Merrill Lynch Corporate Master Index… Goldman Sachs CFO David Viniar: Goldman marked down its holdings of bonds backed by Alt-A mortgages to 50 cents on the dollar on average on Aug. 31, to $3.6 billion.” (Bloomberg, Oct. 6) 

Fannie Mae Shelves Delivery Charge Hike. Fannie Mae (FNM) announced late Thursday that it will scrap a planned increase in its existing adverse market delivery charge. Fannie first announced the delivery charges in December 2007 in response to “accelerated deterioration of market conditions.” The 0.25% upfront charge was set to apply to all whole loan mortgages purchased and all mortgage loans packaged into mortgage-backed securities as of March 1, 2008. Fannie’s delivery charge was scheduled to jump 25 basis points to 50 basis points for every loan beginning Nov. 1, likely heightening the burden on consumers.” (Housing Wire, Oct. 3) 

Markit Postpones Index Launch. “Markit has postponed the launch of the Markit ABX.HE 05-2 index. The ABX.HE is a tradable synthetic index of US sub-prime asset-backed securities. Markit ABX.HE index dealers voted to postpone the launch because of market conditions. The index was scheduled to launch on October 2, 2008. A new launch date has not been set.” (Hedge Funds Review, Oct. 1)

                                                           

Get Seeking Alpha's housing market coverage by email -- it's free and takes only seconds to sign up.

Comments

[User 265729:]

Quick...

Snap up real estate in Las Vegas.

2008 Oct 06 06:39 PM

[poor&unempl...:]

Hi Judy,

Great website.

Your quote of the day actually tells us the mind set of our business leaders.

Housing prices were highly inflated and still remain so. There are lot of people I know, who were smart to sell their houses and rent during the crazy period of home flipping. These people have the cash and the credit to buy the houses without any problem. Most may not need the mortgage to buy a house. But who is selling? If you check the county records, there are thousands of houses owned by the banks (REO Properties), which are not being marketed. WHY? Is it because the banks do not want to take the losses? Key to liquidity is to sell at market price and get cash. Retail industry has been doing this for centuries.

No one is asking the right questions. We have already lost 800 billion dollars to the banks and will lose more.

It would appear that we want to recreate the same problem once again - Lend people money to buy overpriced and unaffordable houses.

2008 Oct 06 10:51 PM

[Smalltownba...:]

As a mortgage lender I can tell you that the quote of the day is completely false, at least in markets where a market value can be determined.

Some firms have completely stopped lending on Condos in Florida. Lenders have established very low benchmark credit scores (580) below which they will not lend. They are requiring a down payment. They are requiring documentation of income. They are, in short, going back to requiring applicants to prove they are qualified to handle homeownership. What a great idea.

An applicant with good credit, 3-5% down payment and verifiable income that supports the payment can buy a home (unless it is a condo in Florida) with a loan from any lender in the nation. Beazer and other builders were major contributors to our problems since they owned the mortgage company, contracted exclusively with the attorney's and title companies to handle settlement, and exerted extraordinary influence over the appraisers since the appraiser was hired by the lender who was owned by the builder.

We must strengthen RESPA, ban any kind of monetary agreements between builders, lenders, agents, appraisers, and settlement agents and enforce and reform TILA. We should require licensure of loan officers based on mandatory training and testing with continuing education requirements and hold employers 100% responsible for the actions ot their employees. This will force them to enact their own oversight procedures to identify and prevent fraud before the loan is made.

Housing prices will correct and level themselves at an appropriate level in communities as soon as the Government quits intervening and allows those who cannot afford their homes to be foreclosed on. The banks will sell their property as soon as they see fit. If they have the assets to hold them for a longer period of time that is a decision their Board and management will have to make. I work for a bank and we sell as quickly as we can get a viable buyer.

2008 Oct 07 08:59 AM