Treasury Weighs Action on Mortgage Rates
Plan would aim to buy housing market by forcing down the cost of loans
By David Cho, Zachary A. Goldfarb and Dina ElBoghdady
The Washington Post
updated 3:30 a.m. ET, Thurs., Dec. 4, 2008
The Treasury Department is strongly considering a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the moribund housing market, according to sources familiar with the proposal.
Under the initiative, the Treasury would offer to buy securities that finance newly issued loans for home purchases, according to the sources. But to participate in the government's program, mortgage lenders would have to set exceptionally low interest rates, for instance, no more than 4.5 percent for traditional, 30-year fixed-rate loans.
These securities would be purchased primarily from Fannie Mae and Freddie Mac, the financing giants that buy most mortgages from U.S. lenders, according to sources who spoke on condition of anonymity because the plan has not been finalized.
The cost of the plan and source of funding remain unclear. One possibility is for the Treasury to raise money by issuing bonds to the public at 3 percent interest. This could allow the government to turn a profit because it would be buying securities that pay 4.5 percent.
At a meeting attended by the Treasury's Interim Assistant Secretary for Financial Stability Neel Kashkari and the National Association of Realtors in mid-November, senior Treasury officials said they were optimistic that subsidizing lower mortgage rates with taxpayer dollars would help revive the housing market, sources said.
Treasury officials told the Realtors that the plan could be a more effective way to help homeowners than focusing efforts solely on borrowers who are struggling to meet their monthly payments, the sources said. Democratic lawmakers have been advocating a proposal to modify the mortgages of distressed homeowners.
A source said Treasury officials suggested at the meeting that the Realtors start a grass-roots campaign to press the mortgage rate plan with lawmakers.
Treasury officials described the situation as fluid and said the plan was still being finalized, according to people in contact with the department. The officials expressed concerns yesterday that premature disclosure of the plan could prompt Americans to put off buying homes and hold out for a better rate, sources added.
Treasury spokeswoman Brookly McLaughlin said she would not comment on the matter.
Key to solving financial crisisTreasury Secretary Henry M. Paulson Jr. has said that a recovery in the housing market is key to solving the financial crisis. Such a rebound would restore confidence in the banking system and support the value of troubled assets backed by mortgages.
Though he has said a mortgage modification plan proposed by Federal Deposit Insurance Corp. Chairman Sheila C. Bair could help the housing market, Paulson has expressed concerns about whether it would reward borrowers who bought houses they couldn't afford. Bair's plan would use tens of billions in federal funds to modify adjustable-rate mortgages for several million financially troubled homeowners.
The initiative under review at the Treasury would be an alternative. Borrowers would have to meet standards set by Fannie Mae, Freddie Mac or the Federal Housing Administrations that include documenting their income, sources said. Fannie and Freddie were put under government control in September. The Treasury plan would not apply to refinances.
Any efforts by the Treasury to lower rates on new mortgages would work in concert with a Federal Reserve plan announced last week to buy $500 billion worth of existing mortgage-backed securities issued by Fannie Mae and Freddie Mac, and $100 billion worth of those companies' debt.
The Fed was pleasantly surprised that 30-year fixed mortgage rates fell by as much as three-quarters of a percentage point in anticipation of their program. Homeowners rushed to refinance. Cheaper monthly payments may bolster consumer spending, the most important component of U.S. economic activity.
'Short-term windfall'News of the Treasury plan spread quickly through the markets. Shares of home builders rose. At Long & Foster, the Washington area's largest real estate brokerage, top brass informed agents that they should gear up for increased demand from potential buyers.
"This is going to be a short-term windfall that everybody needs to jump on," said Dave Stevens, the firm's president and chief operating officer and a former Freddie Mac official. The move by the Treasury certainly would mean "interest rates will drop," he added.
But it is unclear whether lower mortgage rates will spark home buying, which is a weightier decision for ordinary people than refinancing a loan.
There are also questions about how much the Treasury would spend to buy down the mortgage rate. One industry source said another idea being pushed by trade groups calls for the Treasury to spend $50 billion of its $700 billion financial rescue package to reduce the fees, or points, that home buyers pay when they want a lower rate for a mortgage.
Yesterday, the average rate on a 30-year fixed-rate mortgage increased slightly to 5.75 percent yesterday, up from 5.54 the previous day, said Keith Gumbinger, a vice president at research firm HSH Associates.
"What's not known is the timing of the purchasing of the mortgage-backed securities and how quickly money will be pumped into the marketplace and that matters as to how low the mortgage rates will go," Gumbinger said.
Staff writer Neil Irwin contributed to this report.
© 2008 The Washington Post Company
URL: http://www.msnbc.msn.com/id/28045659/
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Thursday, December 4, 2008
Thursday, October 9, 2008
Pending Home Sales Jump 7.4 Percent
Jump may be brief because of global financial meltdown-
WASHINGTON - Pending sales of existing U.S. homes unexpectedly jumped in August to the highest in over a year, data from a real estate trade group showed on Wednesday.
The National Association of Realtors Pending Home Sales Index, based on signed contracts, rose 7.4 percent in August to 93.4 from an upwardly revised 87.0 in July on pent-up demand as affordability improved.The jump may be fleeting, however, as global financial markets chaos has since escalated, some analysts said.
August’s reading was 8.8 percent higher than a year earlier and was the highest since 101.4 in June 2007. Economists polled by Reuters had expected sales to drop by 1.8 percent.
“What we’re seeing is the momentum of people taking advantage of low home prices,” the association’s senior economist Lawrence Yun said in a statement.
“Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie,” in early September, he said. “August shows some unleashing of pent-up demand before the credit crisis accelerated in September.”
Home funding giants Fannie Mae and Freddie Mac, the largest buyers of U.S. mortgage bonds, were taken under government control on September 7. Yun said it is unclear how contract activity will be disrupted by the crisis on Wall St, “but we’re hopeful most of the increase will translate into closed existing-home sales.”
Pending home sales gained across all regions in August: up 18.4 percent in the West, 8.4 percent in the Northeast, 3.6 percent in the Midwest and 2.3 percent in the South. “The pending home sales data is not a signal of where we are going. Foreclosed homes at bargain prices have probably been supporting it,” said Nigel Gault, chief U.S. economist at Global Insight in Lexington, Massachusetts. “We shall see if these sales close and if those people will go through the transaction because people’s finances have worsened since that time,” he added. “Housing at first impacted the economy and the economy is now impacting housing in a vicious cycle.”
The 30-year fixed mortgage rate will average 6.1 percent in the fourth quarter, rising to 6.6 percent by the end of next year, the NAR predicts.
The trade group forecasts U.S. existing home sales at 5.04 million this year, rising to 5.41 million in 2009, and new home sales of 503,000, falling to 471,000 next year.
Housing starts, including multifamily units, should drop 28.2 percent to 973,000 units this year, and fall further to 843,000 in 2009 as builders clear inventory, it added.
Copyright 2008 Reuters.
The National Association of Realtors Pending Home Sales Index, based on signed contracts, rose 7.4 percent in August to 93.4 from an upwardly revised 87.0 in July on pent-up demand as affordability improved.The jump may be fleeting, however, as global financial markets chaos has since escalated, some analysts said.
August’s reading was 8.8 percent higher than a year earlier and was the highest since 101.4 in June 2007. Economists polled by Reuters had expected sales to drop by 1.8 percent.
“What we’re seeing is the momentum of people taking advantage of low home prices,” the association’s senior economist Lawrence Yun said in a statement.
“Home buyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie,” in early September, he said. “August shows some unleashing of pent-up demand before the credit crisis accelerated in September.”
Home funding giants Fannie Mae and Freddie Mac, the largest buyers of U.S. mortgage bonds, were taken under government control on September 7. Yun said it is unclear how contract activity will be disrupted by the crisis on Wall St, “but we’re hopeful most of the increase will translate into closed existing-home sales.”
Pending home sales gained across all regions in August: up 18.4 percent in the West, 8.4 percent in the Northeast, 3.6 percent in the Midwest and 2.3 percent in the South. “The pending home sales data is not a signal of where we are going. Foreclosed homes at bargain prices have probably been supporting it,” said Nigel Gault, chief U.S. economist at Global Insight in Lexington, Massachusetts. “We shall see if these sales close and if those people will go through the transaction because people’s finances have worsened since that time,” he added. “Housing at first impacted the economy and the economy is now impacting housing in a vicious cycle.”
The 30-year fixed mortgage rate will average 6.1 percent in the fourth quarter, rising to 6.6 percent by the end of next year, the NAR predicts.
The trade group forecasts U.S. existing home sales at 5.04 million this year, rising to 5.41 million in 2009, and new home sales of 503,000, falling to 471,000 next year.
Housing starts, including multifamily units, should drop 28.2 percent to 973,000 units this year, and fall further to 843,000 in 2009 as builders clear inventory, it added.
Copyright 2008 Reuters.
Thursday, March 27, 2008
Here is a great way to round up some buyers!!!
Bus tours show off foreclosed homes
Realtors eager to show off rash of properties meet with buyers in bulk
The Associated Press
updated 4:01 p.m. ET, Wed., March. 26, 2008
ORLANDO, Fla. - The white bus rumbles into the quiet suburban neighborhood, heading toward a foreclosed home that sits empty. Neighbors, young and old, cock their heads in curiosity or point at the slow-moving coach.
Once the vehicle stops, about 20 potential buyers file out and become detectives, opening and closing cabinets and drawers, knocking on walls and asking about the price, the previous owners and what repairs may be needed.
Welcome to the Foreclosure Bus Tour, a six-hour expedition to show Orlando-area homes and educate potential buyers on the vagaries of snatching foreclosures in a state where the housing market has struggled over the past two years. Real estate agents have also organized tours in California, where the idea seems to have originated, and cities such as Phoenix, Detroit, Kansas City and Jacksonville.
The Orlando prospects included working-class people looking for a family home, speculators seeking a bargain investment and even a Brit trying to take advantage of the weak dollar. To avoid embarrassing owners, the bus stops only at empty homes.
"I thought it would be nice to have a look at some American houses all at once, see how the market works," said Geoff Lamont, a London tanker truck driver who was on vacation and dreams of moving to Florida with his wife.
"You see some nice, nice properties that are much cheaper than you can get in the U.K. It's been good. You can get a feel for how a place is," said Lamont, 50.
The homes were in the market after lenders took them over from owners who failed to make mortgage payments. In February, Florida trailed only Nevada and California in the percentage of homes in foreclosure. RealtyTrac Inc. said 32,447 homes were in foreclosure statewide in February, up more than 69 percent from February of last year and up more than 7 percent from January.
For Janice Ziesig, owner of Z House Realty Group in Orlando, the tours present allow her to show homes to many people at once. A cost of $45 per person or $65 per couple covered the tour, house information, teaching sessions, a continental breakfast and lunch at Applebee's. Everyone on the bus said the fee was worth it.
The March 15 tour also included a mortgage broker; a home inspector who pointed out details such as structural issues, water damage and electrical problems; an attorney who answered questions about title insurance and short sales; and real estate agents with information on square footage, when the home was built and other key information.
The group dynamic, with 20 people from different backgrounds and income levels, made for constant dialogue between prospective buyers and the experts.
"A day like this is a great laboratory and a great classroom, and it almost gives you a stepping-off point that when you do go to buy, it gives you areas you need to dig deep into," said Ken Nuckols, who was looking for a home.
The first house — in a subdivision with single-family homes, tennis courts and abundant green space — was an example of a fixer-upper that needs "a little lipstick and rouge," Ziesig said. At $201,000, the three-bedroom, two-bath home that was built in 2003 looked fine from the outside, but inside it had visible water damage on the walls, carpet stains and other issues.
Some were intrigued at the low price and the chance to fix it up. Others weren't.
"Either it was people who weren't very careful when they ripped stuff out or the people who owned it just didn't take care of it at all," Nuckols said. "You would have to invest quite a bit of money to bring it up to a standard that you would want."
The second property, a two-story home with four bedrooms and three baths, drew raves because it was so well-maintained. Built in 2004, the 2,514-square foot, two-story home was a relative bargain at $257,000.
Between stops, mortgage broker Cecil Moore answered questions on home loans and risk, telling the riders to get a deal that fits their budget to avoid foreclosure themselves.
"Go with your gut instinct," Moore said. "If you feel like something is not right with your financing or any aspect of the transaction, it's important to feel like ... you have the ability to bring things to a halt."
A few stops later, the bus arrived in a neighborhood where homes were much older. Homes with nice lawns and updated exteriors were peppered among others with sagging rain gutters and peeling paint.
Built in 1985, the three-bedroom, two-bath home with 1,543 square feet was rife with repair issues, including a pool deck that directed water toward the home instead of away. That made the $169,000 price just a starting point.
Kim Douglas Moore, a home inspector who is no relation to Cecil Moore, estimated that the home needed more than $30,000 in repairs.
Across the street, a woman and two girls sat in their front yard, and another neighbor came walking by. They were not enthusiastic about the traffic problem the bus's presence caused and having its passengers milling about.
"If it came through every day, it would be annoying because there's kids playing here all the time," said neighbor Jennifer Mastin.
Tour participant Beverly Frazier, of Poinciana, said she wanted to buy homes to rent, and had no misgivings about buying a home that once belonged to someone who couldn't meet loan obligations.
"It doesn't affect me because you didn't do your homework and you didn't budget properly," Frazier said. "When you purchase a home you have to know that it's a big commodity and you have to actually take care of it and do research on it."
The tour ended after seven homes, and while Ziesig received no concrete offers for any of the homes, she was happy she was able to make home buying more fun and accessible to potential buyers. She plans tours in April and May, and even wants to have a bilingual tour for Spanish-speakers.
"It's turning out just the way it's supposed to," Ziesig said. "We wanted to do something different. We wanted to teach people. People are interested. It gets people to call."
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/23814563/
MSN Privacy . Legal© 2008 MSNBC.com
Realtors eager to show off rash of properties meet with buyers in bulk
The Associated Press
updated 4:01 p.m. ET, Wed., March. 26, 2008
ORLANDO, Fla. - The white bus rumbles into the quiet suburban neighborhood, heading toward a foreclosed home that sits empty. Neighbors, young and old, cock their heads in curiosity or point at the slow-moving coach.
Once the vehicle stops, about 20 potential buyers file out and become detectives, opening and closing cabinets and drawers, knocking on walls and asking about the price, the previous owners and what repairs may be needed.
Welcome to the Foreclosure Bus Tour, a six-hour expedition to show Orlando-area homes and educate potential buyers on the vagaries of snatching foreclosures in a state where the housing market has struggled over the past two years. Real estate agents have also organized tours in California, where the idea seems to have originated, and cities such as Phoenix, Detroit, Kansas City and Jacksonville.
The Orlando prospects included working-class people looking for a family home, speculators seeking a bargain investment and even a Brit trying to take advantage of the weak dollar. To avoid embarrassing owners, the bus stops only at empty homes.
"I thought it would be nice to have a look at some American houses all at once, see how the market works," said Geoff Lamont, a London tanker truck driver who was on vacation and dreams of moving to Florida with his wife.
"You see some nice, nice properties that are much cheaper than you can get in the U.K. It's been good. You can get a feel for how a place is," said Lamont, 50.
The homes were in the market after lenders took them over from owners who failed to make mortgage payments. In February, Florida trailed only Nevada and California in the percentage of homes in foreclosure. RealtyTrac Inc. said 32,447 homes were in foreclosure statewide in February, up more than 69 percent from February of last year and up more than 7 percent from January.
For Janice Ziesig, owner of Z House Realty Group in Orlando, the tours present allow her to show homes to many people at once. A cost of $45 per person or $65 per couple covered the tour, house information, teaching sessions, a continental breakfast and lunch at Applebee's. Everyone on the bus said the fee was worth it.
The March 15 tour also included a mortgage broker; a home inspector who pointed out details such as structural issues, water damage and electrical problems; an attorney who answered questions about title insurance and short sales; and real estate agents with information on square footage, when the home was built and other key information.
The group dynamic, with 20 people from different backgrounds and income levels, made for constant dialogue between prospective buyers and the experts.
"A day like this is a great laboratory and a great classroom, and it almost gives you a stepping-off point that when you do go to buy, it gives you areas you need to dig deep into," said Ken Nuckols, who was looking for a home.
The first house — in a subdivision with single-family homes, tennis courts and abundant green space — was an example of a fixer-upper that needs "a little lipstick and rouge," Ziesig said. At $201,000, the three-bedroom, two-bath home that was built in 2003 looked fine from the outside, but inside it had visible water damage on the walls, carpet stains and other issues.
Some were intrigued at the low price and the chance to fix it up. Others weren't.
"Either it was people who weren't very careful when they ripped stuff out or the people who owned it just didn't take care of it at all," Nuckols said. "You would have to invest quite a bit of money to bring it up to a standard that you would want."
The second property, a two-story home with four bedrooms and three baths, drew raves because it was so well-maintained. Built in 2004, the 2,514-square foot, two-story home was a relative bargain at $257,000.
Between stops, mortgage broker Cecil Moore answered questions on home loans and risk, telling the riders to get a deal that fits their budget to avoid foreclosure themselves.
"Go with your gut instinct," Moore said. "If you feel like something is not right with your financing or any aspect of the transaction, it's important to feel like ... you have the ability to bring things to a halt."
A few stops later, the bus arrived in a neighborhood where homes were much older. Homes with nice lawns and updated exteriors were peppered among others with sagging rain gutters and peeling paint.
Built in 1985, the three-bedroom, two-bath home with 1,543 square feet was rife with repair issues, including a pool deck that directed water toward the home instead of away. That made the $169,000 price just a starting point.
Kim Douglas Moore, a home inspector who is no relation to Cecil Moore, estimated that the home needed more than $30,000 in repairs.
Across the street, a woman and two girls sat in their front yard, and another neighbor came walking by. They were not enthusiastic about the traffic problem the bus's presence caused and having its passengers milling about.
"If it came through every day, it would be annoying because there's kids playing here all the time," said neighbor Jennifer Mastin.
Tour participant Beverly Frazier, of Poinciana, said she wanted to buy homes to rent, and had no misgivings about buying a home that once belonged to someone who couldn't meet loan obligations.
"It doesn't affect me because you didn't do your homework and you didn't budget properly," Frazier said. "When you purchase a home you have to know that it's a big commodity and you have to actually take care of it and do research on it."
The tour ended after seven homes, and while Ziesig received no concrete offers for any of the homes, she was happy she was able to make home buying more fun and accessible to potential buyers. She plans tours in April and May, and even wants to have a bilingual tour for Spanish-speakers.
"It's turning out just the way it's supposed to," Ziesig said. "We wanted to do something different. We wanted to teach people. People are interested. It gets people to call."
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/23814563/
MSN Privacy . Legal© 2008 MSNBC.com
Tuesday, March 18, 2008
Welcome!
Thank you for visiting my site. I am here to help you with all of your mortgage needs. I will be posting new information weekly to keep you updated on all the latest changes in the market.
Check back with me on a regular basis and I can assure you that I will get you the answers and help you need to make this a smooth process.
Thank you and I look forward to working with you!
Zack
Gateway Home Loans
Check back with me on a regular basis and I can assure you that I will get you the answers and help you need to make this a smooth process.
Thank you and I look forward to working with you!
Zack
Gateway Home Loans
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