Austin Living Online

1. Interest rates are hovering in the low 5's this week, from 5.125% to 5.375%, on 30 yr fixed. 15 yr fixed rates are typically .25 to .375% lower. This is WELL BELOW the 6.50% rates we saw last summer.

2. From my friend, Joe Bryson: "The Federal Governments support of the mortgage market is going to end next April. When that happens, interest rates will rise, probably never to see these ranges again. This is a serious opportunity for buyers right now. For sellers, once interest rates go up, buyers will be able to afford less, so prices will have downward pressure."

3. The $8,000 tax credit expires Nov 30, 2009! That leaves you with 4 months to get a first time home buyer closed and funded, or they don't get the $$$$. Do NOT count on this being extended into the middle of next year. It's possible, but I personally don't think the odds are in our favor. I have yet to hear any more talk about it's extension.

4. Here's some BIG News! The Department of Housing and Urban Development announced today that struggling borrowers with FHA loans may now be eligible for assistance via the Making Home Affordable program. The new "FHA-Home Affordable Modification Program" aims to make monthly mortgage payments more affordable through the use of a partial claim, which defers the repayment of mortgage principal through an interest-only subordinated lien. Borrowers up to 12 months in arrears may be brought current through buy downs of up to 30 percent of the unpaid principal loan balance; the target front-end debt-to-income ratio will be 31 percent. FHA borrowers are expected to be able to apply for assistance beginning August 15 and should contact a loan counselor to determine eligibility.

5. I'm sure many of you are wondering about the near future of real estate. You might find this article interesting. http://www.housingwire.com/2009/07/30/radar-logic-dont-call-it-a-housing... Again, from my friend, Joe Bryson, who seems to concur on the local level with this article: "The June data just came out. As far as # of sales and dollar volume for June we did good. Inventory is still growing slightly. Prices amazingly have not fallen off that much overall (people are still buying what they can afford, just they're getting more house for it). Is this the end? I don't know. This Fall will be interesting."

6. Your government at work: House Passes Foreclosure Rental Bill -- The House of Representatives this week passed a bill that would authorize federally-insured depository institutions and banks to lease real estate-owned homes for a limited period of time — up to five years. By allowing these institutions to enter long-term leases with occupants of the foreclosed property or other parties to restrict the number of houses moving onto the market, the bill aims to keep unsold inventory down and in turn help stabilize home values and restore confidence in housing markets. It would also generate monthly payments and ultimately reduce the extent of the loss taken by the bank upon the property's sale. But even if passed, the decision to allow homeowners to remain in foreclosed properties as renters remains with the FDIC-member depository institution, an independent think tank points out in a statement on the bill. "If Congress does want to give foreclosed homeowners the option to stay in their homes as renters, it will be necessary to pass legislation that explicitly gives them this right."

Lots of subjects to talk about, so I'm going to just highlight as many as I can. But before I do, I just want to say "Happy Fourth of July!" Be safe if you're handling fireworks, and remember what the day is all about. And have a hotdog for me....

First up, Rates! Rates are dropping again this week. 30 yr fixed rates are hovering between 5% and 5.25%. 15 yr fixed rates down to 4.625%. This is with no buydowns, 30 day locks. Rates have dropped in almost every category. If the stock market keeps thinking the economy is not getting better anytime soon, they should stay here, or get a little lower.

GOOD News for Realtors: "the real estate industry registered the largest monthly increase in online job demand during June. Monster noted that the rise coincides with "marginally improved statistics" on residential home sales from the National Association of Realtors. This rise, it continued, suggests a pick-up in housing sector activity "may be imminent."

REFINANCES: "Fannie Mae and Freddie Mac have received the green light from their regulator to refinance underwater homeowners with loan-to value ratios as high as 125%. The special refinancing plan that Obama administration officials unveiled in February limited the refinancing option to loans with LTV ratios of 80% to 105%. But the 105% LTV limit would not offer any relief for borrowers who have seen the values of their home erode by 15% to 30%."

MORE GOOD News for Realtors: On the national level, "The National Association of Realtors` (NAR) Pending Home Sale Index measures the volume of contracts signed in May as an indicator of home sales in coming months. This index rose 10 bps since April and is 6.7% higher than in May 2008. While it's seemingly normal to see pending home sales increase throughout the home buying season, it's the first time they've been able to string together four consecutive months since October 2004." >>Yay!

Appraisals and HVCC: "Since the HVCC was implemented, appraisal management companies (AMCs) have been ordering most of the appraisals, but taking an unknown share of the total cost paid by borrower. "Given the rapidly growing reliance by residential mortgage lenders on AMCs to provide appraisal services, the restriction on total appraisal fees to `no more than' the customary fee for an appraisal has driven down the fees paid to large numbers of appraisers to well below what has been customary and reasonable in given market areas," the groups wrote." >> In other words, these AMC's are taking half of the total appraisal fee, leaving the appraiser, who does all the work, with half the income he/she is used to earning. Ouch!! And, this explains why it's now all about volume, and why many appraisals are not as good as they could be. Appraisers are mad, and taking action: "Four professional appraisal organizations have called on the HUD to rescind a 12-year old policy limiting the total appraisal fees that can be charged on FHA loans, warning that it presents significant risks to the federally-backed program." Look for the cost of appraisals to RISE, making the loan just a little more expensive.

THIS IS HUGE (no pun intended): During the first quarter, the top jumbo lenders saw marked improvement, with Bank of America leading the way on $9 billion in loan volume. We are seeing agressive marketing from our wholesale mortgage lenders, pushing some very low 5 yr and 7 yr ARMS. If you are hesitant to list expensive homes, don't be! Come talk to us about low jumbo rates.

News you may have heard already (but, if not, pay attention!): "Among the 38 metro areas with a work force of at least 750,000, only Austin gained jobs from April 2008 to April 2009, the bureau said. It was the third month in a row Austin had earned that distinction. Austin added 3,400 jobs in that period, a 0.4 percent gain that brought the regional job count to 781,400. In January, Austin, Houston and San Antonio were the only large metro areas that had more jobs than a year earlier. Austin's job picture isn't all rosy: The area has been losing manufacturing and construction jobs at an accelerating pace, but those losses are being offset by gains in government, retailing and services fields."

That's all for now, folks. Have a great 4th of July!

Last week, it looked like the plan to allow first time homebuyers to use their $8k tax credit as part of the down payment was scrapped. The announcement was taken off the HUD website. Now, I'm reading that HUD and FHA are working out the details and the plan to move forward is still on. "HUD spokesman Brian Sullivan said he couldn't comment further, except to say that the FHA is continuing to work out final details", according to my sources.
Here's more: "The program is expected to mirror efforts already in place in a handful of states, including Missouri, Delaware, New Jersey, Washington, and Pennsylvania. Under those programs, the states offer bridge loans that allow buyers to borrow against their tax credit for down payment and closing costs, then repay it when their tax refunds arrive. If the borrower doesn't pay, the unpaid loan becomes a lien on the property, at a slightly higher interest rate, which means the borrower faces higher monthly payments over the next decade."

More: "In his speech to the National Association of Realtors, HUD's Donovan said that "we all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a downpayment." He said the FHA will allow "trusted FHA-approved lenders," as well as HUD-approved nonprofits, and state and local government entities, to monetize the credit through short-term bridge loans."

The controversy lies in the fact that this allows buyers who don't have the money, or "skin", to put into the home, like most home buyers, therefore, it's the subprime business all over again. Some are calling this the "homebuilder payoff", since they lobbied so hard for something like this.

Stay tuned, more info to follow soon. In the meantime, have a happy Memorial Day Weekend!