FHFA's 2013 Conservatorship Scorecard for the GSEs

Edward J. Demarco, the Acting Director of the Federal Housing Finance Agency (FHFA), has recently released the 2013 Conservatorship Scorecard for Fannie Mae and Freddie Mac.  This "Scorecard" is literally rating their performances on things like "the quality, thoroughness, creativity, effectiveness, and timeliness of their work products." They are also graded on how well they cooperate and collaborate with FHFA, each other, and the industry.

The three keywords that they must focus on are "Build, Contract, and Maintain." These were brought up in 2012 as the three goals of the FHFA's Strategic Plan for the GSEs.

"Build" refers to their goal to "build a new securitization infrastructure platform for the secondary mortgage market."

They must also "Contract the Enterprises dominant presence in the marketplace while simplifying and shrinking certain operations by lines of business."

And finally, they must "Maintain foreclosure prevention activities and credit availability for new and refinanced mortgages."

"Despite some signs of normalization in the housing market, our nation finds itself in the uncomfortable position of having over 90 percent of new mortgage originations supported by the federal government," said DeMarco. "That support is provided directly through government loan programs like the Federal Housing Administration (FHA), and through the financial support that the Treasury Department provides to maintain the solvency of Fannie Mae and Freddie Mac."

In the works is a new "joint company" headed up by the FHFA to focus on securitizing home loans. This is hoped to lead to decreased government involvement in the mortgage market. It would also mean that the FHFA is forcing Fannie Mae and Freddie Mac to abandon their current separate systems and construct a single infrastructure to support the mortgage market. This new entity will be the previously mentioned "joint company". It will be more structured and it will be owned by Fannie Mae and Freddie Mac.

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30-Year Fixed-Rate Has Dropped!

According to Freddie Mac's recent Primary Mortgage Market Survey (PMMS), the average fixed-rate mortgage (FRM) for a 30-year term has been lowered! After not changing much in the past month, the rate has now clocked in at an average of 3.51 percent, which is down from 3.56 percent last week. This means good news for those seeking to purchase a home or refinance. This time last year, the 30-year FRM was averaging 3.90 percent.

"Mortgage rates eased somewhat as the consumer price index in February held steady for the second month in a row," said Frank Nothaft, vice president and chief economist for Freddie Mac. "House price indicators, however, showed gains in 2012. The S&P/Case-Shiller national home price index rose 7.3 percent last year, reflecting the largest four-quarter growth since the third quarter of 2006. This, in part, was a driving force that pushed up the number of existing and new home sales in February to the highest levels since July 2007 and July 2008, respectively."

The housing market is progressively becoming stronger as time passes. With these low interest rates, more and more people are able to save money every year on their mortgages. If your mortgage rate is currently higher than 4%, we'd recommend calling us and asking about refinancing.

It is also possible to switch from a 30-year FRM to a 15-year FRM as well, which may further reduce your overall mortgage balance. The 15-year FRM is averaging at 2.76 percent.  Ask us if this option may be right for you!

Call Quest Loans at 888-883-5252 with any and all questions you may have! We are interested in helping you save money!

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2 Million Homeowners Freed from Negative Equity in 2012

At the end of 2011, the percentage of homeowners with negative equity, or an underwater mortgage, sat at 31.1%.  Q4 of 2012 saw that percentage fall to 27.5%. This means that nearly two million homeowners were freed from negative equity in 2012.

To spell out just how many homeowners those percentages point to, in 2011, 15.7 million people owed more on their mortgages than their homes were worth. That number now rests at 13.8 million homeowners as of Q4 2012. On top of those statistics, it is evaluated that those 13.8 million homeowners were collectively underwater by more than $1 trillion.

This information comes from Zillow's Negative Equity Report. They further predict that by Q4 of 2013, the negative equity rate will fall to at least 25.5%. That figure would mean that more than 999,000 additional homeowners nationwide would be freed.  This is all determined by Zillow's method of applying anticipated appreciation or depreciation rates to a home, assuming all other factors remain constant.

"As home values continue to rise and more homeowners are pulled out of negative equity in 2013, the positive effects on the housing market will be numerous. Freed from negative equity, homeowners will have more flexibility, and some will likely choose to list their home for sale, helping to ease inventory constraints and moderating sometimes dramatic, demand-driven price increases in some markets," said Zillow Chief Economist Dr. Stan Humphries. "But negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas. As a result, negative equity will remain a major factor in the market for the foreseeable future."

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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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Home Prices Increase at Strongest Level in 7 Years!

According to the latest quarterly report from the National Association of Realtors (NAR), several metropolitan areas had higher median home prices in Q4 of 2012. In fact, 2012 proved to have the strongest year-over-year increase that we've seen in the past 7 years. On top of that, housing affordability in metro areas has reached record high conditions.

“Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years,” said Lawrence Yun, NAR chief economist. “Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates. Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play.”

He also said that in order to relieve some of the pressure in the market, there needs to be more housing construction. This will help to keep home prices from overheating.

There are always many factors that could contribute to skewing the price growth percentages. Data is taken from across the nation to create these statistics. Sometimes you will see average prices, but medians are more typical than average prices. Taking the median price is where half of the homes sold for more and half sold for less.

In Q4, the national median existing single-family home price was $178,900. This figure is an increase of 10% from $162,600 in Q4 of 2011.

According to Freddie Mac, the average 30-year fixed-rate mortgage hit a record low 3.36% in Q4 of 2012, which is down from 3.54% in Q3, and 4.01% in Q4 of 2011.

“In reality, home prices over-corrected on the downside and homes in most of the country were selling for less than replacement construction costs, which means they were undervalued,” said NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, CA. “At the same time we've had record low mortgage interest rates and slow but steady improvements in median family income. Combined, these factors boosted housing affordability conditions to the highest on record in 2012.”

If you are familiar with how the Housing Affordability Index works, you'll know that it is calculated based on the relationship between the median home price, the median family income, and the average effective mortgage interest rate. A high index means a strong household purchasing power; the higher the better. Therefore, an index of 100 is defined as the middle ground. At this point, a median-income household has exactly enough income to qualify for a median-priced home, (with a 20% down-payment and 25% of their gross income being devoted to their mortgage payment). The affordability levels are lower for first-time buyers who make small down-payments.

That said, the NAR's annual Housing Affordability Index rose to a record high 193.5 in 2012, which is up from 186.4 in 2011.

“The housing affordability index shows that the national median income of families was almost double the income needed to buy a median-priced home in 2012, so most buyers are able to stay well within their means,” Yun said. “Even with rising home prices, conditions are expected to stay very favorable with the index averaging 161 in 2013, which would be the third best on record.”

If you are seeking to purchase a home in 2013, give Quest Loans a call! We can help you start the qualification process right away! 888-883-5252

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Mortgage Delinquency Rate Declines 14% in 2012

The national mortgage delinquency rate is defined as the rate of borrowers who are 60 or more days past due on their monthly mortgage payments. The amount of people who fall in this category has declined for the fourth consecutive quarter. Q4 of 2012 saw a mortgage delinquency rate of 5.19% which was down from 5.41% in Q3, and 6.01% in Q4 of 2011. Statistics aside, delinquency is decreasing. This means that as the economy continues to recover with time, more and more people are able to continue paying their monthly payments.

This was the largest yearly decline that the delinquency rate has seen since the recession officially ended, but we still have a long way to go to radically improve life for homeowners. In 2007, delinquencies rose 54%. They rose 53% in 2008 and 50% in 2009. Since then, the decline has been much more gradual than the rise was. It dropped 7% in 2010, 6% in 2011 and now 14% in 2012. We are on the right track but the overall levels are still high compared to where they sat before the recession hit.

If more borrowers can qualify for refinancing, they can obtain lower interest rates that will ultimately lead to lower monthly mortgage payments. This lends to fewer foreclosures and fewer delinquencies. If you are having difficulty paying your mortgage, Quest Loans can help you apply for refinancing. Call us at 888-883-5252 for more information, or visit QuestLoans.com!

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"The Responsible Homeowner Refinancing Act of 2013"

How would you like to be among the millions of responsible homeowners who can refinance their mortgages at a lower rate in order to save thousands of dollars each year? It's within your reach! Especially now that U.S. Senators Robert Menendez (D-NJ) and Barbara Boxer (D-CA) have introduced this legislation in the 112th Congress. It is called "The Responsible Homeowner Refinancing Act of 2013" and it plans to remove the barriers that are currently preventing borrowers from obtaining the lowest rate possible.

This bill would streamline refinancing as we know it for all of Fannie Mae and Freddie Mac's borrowers whether they are underwater or not. Up-front fees would be reduced, appraisal costs for borrowers would be eliminated, and the HARP program would be extended by one year to allow eligible borrowers to take advantage of it.

"We need to bring much-needed relief now to hard working, responsible homeowners who are struggling to keep up with their high interest rate loans" said Sen. Menendez. “We need to do this before interest rates go up again. It’s time that Congress finally put families first and give homeowners who have played by the rules a fair chance to refinance at today’s low rates."

He also adds that this will be done at no cost to taxpayers and that it is intended to stimulate the economy. It has been referred to as a "No-Brainer".

According to Senator Boxer, "this bill is a win-win!" She goes on to say, “Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum. That’s why the Menendez-Boxer bill has such broad support from industry and consumer groups. We should take action on this common-sense plan immediately while interest rates remain low so American families can realize major savings.”

With the recent record-low rates for a 30-year mortgage averaging around 3.53%, you could be one of the nearly 12 million homeowners guaranteed by Fannie Mae and Freddie Mac who could refinance! There are many who are not currently able to refinance because of policies and high fees, but if the Menendez-Boxer bill goes into effect, all that red tape would be gone!  In fact, through HARP, the average homeowner saves $2,500 per year as it currently is. The bill plans on increasing that amount by expanding refinancing opportunities for all those who are eligible.

If you are ready to take advantage of the current low rates, find out if you are qualified for a loan now! Call Quest Loans at 888-883-5252 to find out when it is the right time for you to refinance! We will answer all your questions!

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