Monday, August 25, 2008

Existing-homes sales rise, inventory swells

By Patrick Rucker Mon Aug 25, 1:07 PM ET

WASHINGTON (Reuters) - Sales of previously owned U.S. homes ticked higher in July thanks to lower prices, but record inventory suggested the battered housing market is unlikely to recover soon, a trade group report showed on Monday.
Home resales rose 3.1 percent to a 5 million-unit annual rate, according to the National Association of Realtors. While that topped analysts' expectations of a pace of 4.90 million, the overall picture was mixed.
The median national home price declined 7.1 percent from a year ago to $212,400 and the inventory of homes for sale rose to 4.67 million which would take 11.2 months to clear at the current sales pace. That matched a record set in April.
The data points to a generally weak but stable market since the volume of sales has hovered around 5 million for 10 months despite gyrations in price and inventory, said Michael Englund, chief economist with Action Economics in Boulder, Colorado.
"Generally we have re-established the sideways pattern in existing home sales since October, which given the general down draft in a lot of housing data it is certainly good news that we seem to have some kind of floor," he said.
U.S. stocks initially pared losses after the data but the benchmark S&P 500 index was down almost 2 percent at mid-day on concerns about the health of financial industry. Yields on the benchmark 10-year Treasury were lower and the dollar was little changed.
Sales have rebounded in many markets in the West and Florida recently where prices have tumbled, but it is too soon to call a bottom for those regions, Realtors' chief economist Lawrence Yun said. "There is still too much uncertainty," he said.
Other analysts agreed that the July data was a relief after months of grim news for housing, which enjoyed five boom years before prices begin to slide in 2006. Compared to a year ago, the median existing home price was off 7.1 percent.
"Right now the sign is encouraging, not that it's over, but you're starting to see a bottom," said David Wyss, chief economist for Standard & Poor's in New York.
"Prices have come down more than we have expected, but sales and starts have actually held up better. That may be a sign of realism out there, that people have accepted the fact they can't get as much for the house as they thought they could."
(Reporting by Patrick Rucker; Editing by Tom Hals)

Monday, August 11, 2008

Federal Reserve finds deepening credit crisis

WASHINGTON (AP) - More banks are tightening lending standards on home mortgages and other consumer and business loans as a deepening credit crisis exerts a heavier toll on the economy.

The Federal Reserve said Monday the percentage of banks reporting tighter lending standards rose across various loan types in its July survey. In April, the central bank had found that the percentage of banks reporting tighter lending standards was already near historic highs.

The new survey, conducted in early July, found that about 75 percent of the banks surveyed indicated they had tightened their lending standards for prime mortgages. That was up from about 60 percent of banks who said they were tightening lending standards for prime mortgages in the previous survey.

The Fed's July survey covered 50 banks which hold about 80 percent of the residential mortgages on the books of all commercial banks.

Out of this group of 50 banks, 32 said they were still originating so-called nontraditional home mortgages. Among these 32 banks, about 85 percent said they had tightened their lending standards, up from 75 percent who said they were tightening lending standards for nontraditional mortgages in the April survey.

The Fed defines nontraditional mortgages as adjustable-rate mortgages with multiple payment options, interest-only loans and "Alt-A" mortgages that require limited verification of income.

The Fed survey found that only seven of the 50 banks said they were still participating in subprime mortgages, loans made to borrowers with weak credit histories. Of those seven, six said they had tightened lending standards on subprime loans with only one saying it had left standards basically unchanged for subprime loans.

The survey found that most banks were reporting tighter lending standards across a broad swath of consumer and business loans over the past three months.

For home equity lines of credit, 80 percent of the banks surveyed said they had tightened their lending standards in this area.

For credit cards, the percentage of domestic banks reporting tighter lending standards was about 65 percent, more than double the 30 percent who reported they were tightening lending standards for credit cards three months ago.

Analysts said that the big jump in higher standards for credit card debt could represent a serious threat to the already weak economy, given that consumer spending accounts for two-thirds of total economic activity.

Harm Bandholz, an economist with UniCredit Markets, said that the tightening in bank standards for credit cards and other types of consumer loans would be "another nail in the coffin of the U.S. consumer, who is already suffering from the weak labor market, high inflation and falling house prices."

David Wyss, chief economist for Standard & Poor's in New York, said the tighter lending standards reflect the huge loan losses that banks have already suffered. Those losses have depleted the capital they need as reserves against future losses and made it more difficult for the banks to sell their mortgages and other loans as asset-backed securities, a process that provides them with money to make new loans.

Wyss said he did not believe bank lending will start to pick up until next spring when he is forecasting that the economy will begin to rebound.

"The country is probably going through the most severe credit crunch since 1991-92," Wyss said, referring to a time when banks and savings and loans came under severe pressure while the economy was in a recession. "I think bank credit is going to remain tight for a while."
The current credit crisis hit with force a year ago with rising defaults in the market for subprime mortgage loans. The credit problems have since spread from subprime loans, mortgages provided to borrowers with weak credit histories, to other types of mortgages and other kinds of loans.

The country's major financial institutions have reported billions of dollars in losses and financial markets remain unsettled with investors concerned about potential losses that have yet to be disclosed.

Saturday, August 9, 2008

2nd Quarter NM Homes Sales
Statewide the number of homes sold is down nearly 28% from 2nd quarter 2007, however, both average and median prices are up from last year. Click here for complete 2nd quarter statistics.

Entry for August 7, 2008
How the New First-Time Buyer Tax Credit Works
Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit. Find out if your buyers qualify. Read more >

Little-Known Loans for Buyers
Federally-sponsored mortgage programs can help borrowers with stable jobs, but no savings. Read more >

Fed Issues Rules to Prevent Abusive Lending
The Federal Reserve has adopted rules to prevent unfair or deceptive practices by lenders and to protect home buyers from the kind of loans that drove many into foreclosure. The new rules apply to all lenders and not just to banks supervised by the Fed. Some of the new rules require lenders to escrow money to pay taxes and insurance for risky borrowers, document borrower's income before a loan is issued, limit and-in some cases-ban prepayment penalties, prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value, and require mortgage advertising to contain information about rates, monthly payments, and other features of the loan. Most of the rules are expected to take effect Oct.1, 2009. Escrow requirements won't go into effect until April 1, 2010. The rules do not apply to home equity lines of credit, construction loans, bridge loans, or reverse mortgage loans.

Entry for August 1, 2008
Great News!!
President Bush just signed into law the Housing and Economic Recovery Act of 2008. This is a major victory for REALTORS®, consumers, and our nation. Homebuyers will soon have access to more affordable financing, and first-time homebuyers (those who have not owned a home for three years) will receive a tax-credit to help them enter the market. For more details on all of the provisions in the new law, please use the link below.

Entry for July 29, 2008
Existing Home Sales Drop Nationally
NAR reports single-family, townhome and condo purchases fell 2.6 percent in June and are down more than 15 percent from the same period last year. Read more >

Foreclosure Activity Continues to Rise
According to RealtyTrac's Q2 2008 U.S. Foreclosure Market Report, New Mexico ranked among the bottom half of the states for its second quarter filings. The report defines foreclosure filings as default notices, auction sale notices and bank repossessions. New Mexico ranked No. 37 among the 50 states, with 1,150 total filings, which is a 2.7 percent decrease from the previous quarter but a 60 percent increase over the second quarter 2007.

FHA Adds Enhancements to FHASecure Initiative
The Federal Housing Administration recently implemented NAR-backed enhancements to the FHASecure Initiative which will give FHA flexibility to insure mortgages for borrowers who were late on some payments or received a principal write-down from their lender. FHASecure gives home owners with non-FHA adjustable rate mortgages the ability to refinance into a FHA-insured mortgage. With the new FHASecure criteria, lenders may voluntarily write down the outstanding subprime mortgage principal balances to a 97 percent or 90 percent LTV ratio depending on the borrowers' circumstances. FHA will also encourage lenders to make other arrangements, such as subordinate financing, to fill the gap between the existing loan balances and the FHA-insurable loan amount. The refinanced loan amount backed by the FHA would be based upon a new appraisal, performed by an FHA-approved appraiser. In February, NAR had sent a letter to the Secretary of Housing and Urban Development recommending many of these enhancements. Questions? Contact Jerome Nagy, 202-383-1233 Entry for July 29, 2008 FHA/GSE Legislation Passes On Monday, the U.S. Senate passed a final bill on FHA and GSE that NAR had long fought for, after deliberations and negotiations for the past few weeks. The House passed the identical bill on Wednesday, July 23. For more information, read the bill summary. The President has said he will sign the legislation into law. This bi-partisan legislation, NAR believes, will aid in calming mortgage markets, strengthen housing markets, and stabilizing our economy. The new loan limits are now set at $625,500 for the GSEs and FHA, as well as a $7,500 home ownership tax credit. The legislation also includes broad GSE Reform, FHA Reform, development of a National Affordable Housing Trust Fund, and creates a new FHA program to help homeowners at risk for foreclosure.
(c) 2008, REALTORS® Association of New Mexico. All rights reserved.2201 Brothers Road, Santa Fe, New Mexico 87505 800-224-2282 Fax: 505-983-8809


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