What The Shutdown Means For The Housing Market

Since Tuesday morning, many government services were shut down or cut back. Congress is battling back and forth trying to resolve their issues. This is the first government shutdown in 17 years. "Essential employees" are still allowed to work but as many as 800,000 "non-essentials" are not allowed in government buildings and they don't know when they'll be paid again.

As you may know, the central issue being debated is Obamacare.  According to House Speaker John Boehner (R-OH), "The House has voted to keep the government open, but we also want basic fairness for all Americans under Obamacare."

While 800,000+ employees are on the sidelines, the members of Congress are still working and because of the 27th Amendment, all 533 of them are still being paid.

President Barack Obama has said "the idea of putting the American people's hard-earned progress at risk is the height of irresponsibility, and it doesn't have to happen. Let me repeat this. It does not have to happen."

Congress and the President continue to disagree and have yet to reach a resolution. What does this mean for the housing industry? According to the president of NAMB- The Association of Mortgage Professionals, Don Frommeyer, "the shutdown isn't going to help the U.S. economy continue to grow and interest rates across the board could very well increase, depending on what the bond market does during this time."

As of September 27th, The U.S. Department of Housing & Urban Development (HUD) has indicated that the FHA will continue to endorse single-family loans during the shutdown. Of their 8,709 staff members, only 349 of them are "essential" and continue to work. However, an even more limited number of FHA staff is allowed to do their underwriting and approve new loans. So right now, anyone in the process of purchasing a home may see delays since the shutdown will cause these processes to take much longer than usual.

Those facing foreclosure right now will still have loss mitigations continue but the FHA will not approve any lender applications right now.

If you have any questions about how the shutdown could be affecting your mortgage process, feel free to call your loan officer or give us a call at 888-883-5252 and we will try our best to answer your questions!

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Making Home Affordable Program is now Extended Through 2015!

Good news to start off your week: the Obama Administration's Making Home Affordable program has now been extended through December 31, 2015!  This was just announced by the Department of the Treasury and the Department of Housing and Urban Development (HUD) in association with the Federal Housing Finance Agency (FHFA). The goal was to align the deadline with that of the Home Affordable Refinance Program (HARP) as well as the Streamlined Modification Initiative for those with loans with Fannie Mae and Freddie Mac.

The Obama Administration has been working hard to provide relief to families on the brink of foreclosure. The Making Home Affordable Program has been an integral part of the housing market recovery. This two year extension of the deadline should further aid those affected by the housing crisis.

“The housing market is gaining steam, but many homeowners are still struggling,” said Treasury Secretary Jacob J. Lew. “Helping responsible homeowners avoid foreclosure is part of our wide-ranging efforts to strengthen the middle class, and Making Home Affordable offers homeowners some of the deepest and most dependable assistance available to prevent foreclosure. Extending the program for two years will benefit many additional families while maintaining clear standards and accountability for an important part of the mortgage industry.”

Originally launched in March 2009, this program has been able to help nearly 1.3 million homeowners. Another part of the Making Home Affordable Program is the Home Affordable Modification Program (HAMP) which works much like a refinance. Homeowners are able to modify the terms of their current mortgage and reduce their monthly payment in the hopes of avoiding foreclosure. More than 1.1 million homeowners have taken advantage of HAMP. Because of these modifications, the median savings is $546 per month! Would you like to save 38% of your previous payment?

“The Making Home Affordable Program has provided help and hope to America’s homeowners," said HUD Secretary Shaun Donovan. "Families across the country have used its tools to reduce their principal, modify their mortgages, fight off foreclosure and stay in their homes - helping further stimulate our housing market recovery. And with this extension, we ensure that the program keeps supporting communities for years to come.”

In addition to saving money, there are also new standards set in motion for the mortgage servicing industry that protect homeowners. Better communication, more efficient timing, and superior assistance are now expected to be norm for all lenders.  With the recent crack down on mortgage fraud, qualifications for a loan are more strict and monitored, but this is good for the borrower.

Now that the deadline for this great program is extended, struggling borrowers will find it easier to pay their mortgage payments and the number of foreclosures should decrease over time. If you feel like you are unable to pay your mortgage, please learn more about these assistance programs! There is no need for anyone to lose their home!

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HUD Will Sell Thousands of Delinquent Mortgage Loans

Although the economy is improving, there are still many severely delinquent mortgage loans. HUD plans to sell 20,000 distressed loans that are insured by the FHA in an effort to deepen the inventory and bring relief to areas hit hard by foreclosure.  Its Distressed Asset Stabilization Program (DASP) will help with the sale of these loans and help to stabilize the nation's communities.

HUD has sold delinquent loans before, and previously did so by conducting note sales. There are two auctions planned, one for June 26th that will handle the sale of 15,000 notes through "national pools" and another auction on July 10th that will offer 5,000 notes through Neighborhood Stabilization Outcome (NSO) pools. The NSO pools allow qualified bidders notes located in Southern California, Chicago, Southern Ohio, and North Carolina. In addition, HUD is expanding the use of single-family loan sales by including a competitive bidding process in which loan pools are sold to the highest bidder.

“We’ve seen a tremendous response to our note sales which allow us to support particular areas of our country hard-hit by foreclosures while improving outcomes for FHA,” said FHA Commissioner Carol Galante. “These auctions allow us to continue stabilizing hard-hit housing markets and to improve FHA’s overall financial position at the same time.”

HUD expects to sell more than 40,000 distressed loans this year. These sales will help to reduce the FHA's total claims costs and increase recovery on any loses the FHA may have experienced regarding their Mutual Mortgage Insurance Fund.  The severely delinquent FHA-insured loans will be sold competitively at a market-determined price. Generally, the price will be well below the outstanding principal balance. When the loan is purchased, foreclosure is delayed for six months and the new servicer has time to help the borrower find an affordable solution to avoid foreclosure.

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Report: HUD Taking Steps to Enforce Fair Housing Act

Compared to previous administrations, the Obama Administration's efforts have proven to be more vigorous in enforcing state and local governments to comply with fair housing obligations through the Department of Housing & Urban Development (HUD). There was a recent report by three different national civil rights organizations that find Obama to be doing superior work toward improving housing conditions across the country. However, despite these high marks, the report also noted that there is plenty of "unfinished business" for HUD to attend to, including finalizing a regulation codifying its grantees' obligation to further fair housing.

“This report indicates that HUD has, for the first time, taken significant actions to enforce the Fair Housing Act’s requirement that recipients of federal housing assistance affirmatively further fair housing,” said Joe Rich, director of the Fair Housing and Fair Lending Project at the Lawyers’ Committee for Civil Rights Under Law. “Such action is important in achieving the goal of the Act to provide fair housing throughout the country. But, it is also important that HUD release its long awaited regulation addressing this requirement.”

There are plenty of things that HUD has done already, including their participation in increased enforcement in federal court cases. They've processed and investigated private fair housing complaints, and adopted a "disparate impact" rule that codifies existing court interpretation of the Fair Housing Act. HUD has also increased its review and rejection of state and local "Analyses of Impediments" to Fair Housing, which is a requirement of federal housing. Additionally, HUD has undertaken compliance reviews that have resulted in voluntary compliance agreements addressing fair housing requirements.

All in all, the civil rights groups are pleased with HUD's leadership. In the past, many of these enforcement actions were completely avoided, but today's HUD is determined to reform its own programs to improve fair housing for all.

In one case, HUD helped to persuade a suburb of New Orleans to repeal a discriminatory zoning ordinance that had previously excluded African American families from the area. HUD promotes racial integration in housing, even though it has been moving at a slow pace. If HUD can pick up the pace in the areas that are still lacking, residential integration can be reached.

“Our families, our communities, our economy and our country are all enriched and strengthened when we have open access to healthy, diverse neighborhoods,” said Shanna L. Smith, president and CEO of the National Fair Housing Alliance. “HUD has a critical role to play in making sure that state and local governments are doing all they can to create diverse communities and make sure they are open to everyone. The rule to affirmatively further fair housing is needed to provide jurisdictions with clarity about their obligations and guidance about how to achieve this important goal.”

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Housing Starts take a dip in January

According to HUD and the Census Bureau, housing starts took a nationwide dip in January with a decline of 8.5% which is 890,000 units. This was based on a seasonally adjusted annual rate.

Specifically, single-family housing starts were little changed, registering a 0.8% gain to 613,000 units.  The pace of these starts have been improving; this was the strongest production pace for single-family housing since July 2008.

However, multi-family housing starts were the biggest contributor to the nationwide decline. These tend to have significant month-to-month volatility. In January, they declined 24.1% to a mere 277,000 units.

Bad news for housing starts doesn't necessarily mean bad news in the rest of the market.

Issuance of permits for new-home construction has increased by 1.8% to 925,000 units which is the quickest pace since mid-2008.

"Steady demand for new homes is prompting builders to put more construction crews back to work in order to replenish thin supplies of completed product," said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. "We expect this progress to continue through the spring buying season and beyond, with credit availability and poor appraisals being the primary limiting factors."

Permit issuance can be an indicator of future building activity. Single-family permits rose 1.9% to a seasonally adjusted annual pace of 584,000 units. The multi-family permits increased by 1.5% which is a 341,000 unit pace. Both of these are at their strongest paces since 2008.

"Today's report is quite positive in that it shows continued upward movement in single-family housing production and permitting activity for both single- and multi-family units," noted NAHB Chief Economist David Crowe. "Meanwhile, the decline in multifamily starts reflects an adjustment from an unsustainably large gain in December, and is consistent with the up-and-down swings that are often associated with that sector."

As always, the housing market has its ups and downs, but overall, the economy is recovering. As these reports continue to come out, we receive more and more data that points to overall improvement!

If you are ready to purchase a home, call us at 888-883-5252. We can answer all your questions.

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HUD Set to Sell Nearly 40,000 Distressed Loans in 2013

In an effort to support hard-hit communities and to increase recovery on losses to the FHA's Mutual Mortgage Insurance Fund, HUD will sell roughly 40,000 distressed loans over the next year. Working with HUD, the Distressed Asset Stabilization Program (DASP) has been instrumental for selling loans of severely delinquent mortgages that are insured by the FHA. There is a competitive bidding process involved that sells loan pools to the highest bidder. The results of these sales from September's auction shows that investors and communities alike are eager for this program to continue. The sales were strong and had a record number of participating bidders. The FHA saw $1 billion in economic value added to their MMI fund due to the decrease of losses that were expected on FHA loans. The first sale in 2013 will be held late in the first quarter and will be held in two parts.

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Sales for New Homes Slowed

According to HUD and the U.S Census Bureau, the sales figures for newly built, single-family homes has slowed down 8.4%. It is now sitting at a seasonally adjusted annual rate of 350,000 units for the month of June. This comes off of a steady increase that the previous months have had. Despite slowing, the sales numbers are indeed up on a quarterly and yearly basis. Builders are gaining more serious buyers too, so the news is positive overall. However, builders are still facing issues with tight inventory of new homes for sale. Having a larger selection of new homes for sale would make things easier for them, but they also face issues with obtaining credit to build new homes.

The figures for Pending Home Sales has declined in June as well. The steady decline of housing inventory proves to be an issue for more than just builders. While buyers continue to show interest in purchasing homes in this market, there are fewer and fewer homes listed and available, which leads to fewer contracts signed. It is speculated that the amount of homes for sale will need to double over the next two years in order to meet the demands of the market for both rentals and ownership. Part of the reason that there are not many homes for sale is that people have been taking advantage of low interest rates. They are opting to refinance their existing homes rather than buy new homes.

If you are in the market for a new home or even to refinance your current home, don't hesitate to call Quest Loans. We would love to help you with this process! 888-883-5252.

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New Home Sales Increase in May

According to HUD and the Census Bureau, the month of May saw an increase in the sales of newly built homes. The sales rose by 7.6% which amounts to a seasonally adjusted annual rate of 369.000 homes. While there was an increase overall throughout the country, these sales were very regional. The Northeast had new home sales increase by 36.7% while the Midwest actually declined by 10.6%. This all indicates that more potential home buyers are being drawn to the housing market because of the current low mortgage rates. The steadying and slowly recovering economy is lending more confidence to home builders and home buyers alike. Despite the increase in new home sales, however, the inventory of new homes for sale remains at a low 145,000 units in May. Compared to March and April, though the month of May proved to have solid growth which will eventually lead to an increased need for the construction of new homes.

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Obama Adminstration's May Housing Scorecard

The May Housing Scorecard has been released, courtesy of HUD, the Department of the Treasury and the Obama Administration. It is a comprehensive report on the status of the nation's housing market. All indicators point to signs of stability. There's been an overall increase in the sale of existing homes across the nation. The inventory of newly constructed homes has also increased. The only slight hindrance right now comes in the form of delinquencies and underwater mortgages. However, the economy is continuing to recover. More than 180,000 borrowers have taken advantage of the Home Affordable Refinance Program to secure mortgage relief. This has helped foreclosure starts to decline.

The Obama Administration has many programs in place to aid homeowners with the woes of the housing market. So far, these programs have established some critical standards and accountability for mortgage servicers. These have forced the industry to provide struggling homeowners with more effective assistance than ever before. Millions of American homeowners have received relief from these foreclosure programs, and the Administration hopes to continue providing it. It is very important that the nation's housing market crisis can recover.

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HUD's Plan to Improve Public Housing

The U.S. Department of Housing and Urban Development (HUD) has recently given $1.8 billion to public housing authorities that will allow these agencies to improve their public housing units. This will have an effect on all 50 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands. These grants are supplied through HUD's Capital Fund Program which annually provides funds for public housing communities to be able to build, repair, renovate and upgrade features such as roofs, plumbing and electrical systems to enhance efficiency.

HUD's budget for 2012 will ultimately help to preserve and enhance America's affordable housing, which includes public housing. They have been given the go-ahead by Congress to test a comprehensive demonstration tool to begin this preservation process. As part of President Obama's plan to keep HUD homes more affordable, HUD will initiate a Rental Assistance Demonstration (RAD) program. Public housing authorities say that they will need $26 billion in order to keep these homes safe for its inhabitants.

RAD will enable public housing authorities to continue improving and modernizing homes. This is expected to ready more than 60,0000 properties for long term rental assistance contracts. In turn, public housing authorities will then be able to raise around $6 billion in private financing to reduce the amount of capital repair needs to the homes.

Capital repair needs are defined as large-scale improvements required to make housing decent and economically sustainable, and ultimately more energy efficient. According to a study that HUD performed last year regarding Capital Needs in Public Housing, they found that of the nation's 1.2 million public housing units, it would take approximately $25.6 billion to make these much-needed capital repairs. This also includes overdue repairs such as accessibility improvements for the disabled, and water and energy conservation to make the homes more cost effective.

Many families rely on public housing in order to afford a home. Sadly, the nation loses thousands of units every year because of disrepair. Obama proposed RAD as a way to keep these homes maintained and available for rent. The federal government has invested billions in these units and keeping these in working order is fundamental for the overall housing market's stability. HUD will be announcing in the coming months the final details on RAD's timeline and application.

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REO Initiative to Rent Out Foreclosed Properties

The FHFA has announced the first step of an REO initiative that will aim to help the cities that got hit the hardest nationwide. Investors can pre-qualify to establish eligibility so they can bid on transactions during this initial phase. Qualified investors will be allowed to purchase foreclosed properties but they are required to rent these out for a specified number of years. The hope is that this rental period will provide relief for depressed housing markets that are overwhelmed by foreclosed properties, and will also provide more rental options. This should put the country one step closer to stabilizing communities and maximizing the value of homes.

This REO Initiative is partnered with the U.S. Department of the Treasury, the HUD, the FDIC, the Federal Reserve, Fannie Mae and Freddie Mac. They worked together to find options for selling single-family REO properties that are currently held by Fannie Mae, Freddie Mac and the FHA. During this first phase, Fannie Mae will offer pools of rental properties, vacant properties and non-performing loans focusing on the areas that were hit the hardest.

Those that have pre-qualified to receive more information about these properties must meet the following criteria: (a) financial wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity; and (c) agreement to keep certain information about the REO and related matters confidential.

Investors can register at the FHFA's REO Initiative page.

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