Tuesday, February 15, 2011

FHA significantly increases Monthly Mortgage Insurance Premium

HUD is making a significant change to FHA monthly insurance premiums, they will be increasing by .25% across all products. The change is estimated to bring in another $3 billion to shore up the FHA. This will definitely put pressure on the lower end of the market. Combine this increase with the recent rate spike, it looks like the Spring selling season will disappoint.

Turns out giving underqualified buyers underpriced loans isn't a great way to stay solvent.

Sunday, February 13, 2011

Short Sale & Foreclosure for Ventura County - January 2011

Here are the sales for Ventura County January 2011. Based on me taking statistics a bit later than usual and adjusting for recent changes in the underlying data sources I think the Dataquick number will be around 540 for December. That would be the second worst showing for January since I've been keeping records. Some of that is due to Decembers stronger showing which was a pulling forward of demand due to the spike in interest rates.
I don't watch the broader market quite as close as I used to since buying a house but I still look at a narrow segment within Ventura County. My general sense is that the low end if falling away and the mid-market houses are just stagnating, with little inventory to chose from and intense competition for any "deals" that pop up. With rates knocking on 5.25% area that puts intense pressure on the market compared to just a month and a half ago where buyers could get a 4% mortgage rate.

"Keep Your Home California"

More wasting of taxpayer funds:

Unemployment Mortgage Assistance Program (UMA) – Intended to assist homeowners who have experienced involuntary job loss. UMA will provide temporary financial assistance in the form of a mortgage payment subsidy of varying size and term to unemployed homeowners who wish to remain in their homes but are in imminent danger of foreclosure due to short-term financial problems. These funds can provide up to six months of benefits with a monthly benefit of up to $3,000 or 100% of the existing total monthly mortgage, whichever is less.
Mortgage Reinstatement Assistance Program (MRAP) – Intended to assist homeowners who have fallen behind on their mortgage payments due to a temporary change in a household circumstance. MRAP will provide limited financial assistance in the form of funds to reinstate mortgage loans that are in arrears in order to prevent potential foreclosures. These funds can provide benefits of up to $15,000 per household.
Principal Reduction Program (PRP) – Intended to assist homeowners at risk of default because of an economic hardship coupled with a severe decline in the home’s value. PRP will provide capital to reduce outstanding principal balances of qualifying borrowers with negative equity. Principal balances will be reduced in an effort to prevent avoidable foreclosures and promote sustainable homeownership. The principal reduction program will most likely be a prelude to loan modification. (Servicers that contribute through matching funds increase the benefit for homeowners).
Transition Assistance Program (TAP) – Intended to promote community stabilization by providing homeowners with relocation assistance when it is determined that they can no longer afford their home. TAP will be used in conjunction with a servicer-approved short sale or deed-in-lieu of foreclosure program in order to help homeowners transition into stable and affordable housing. Homeowners will be responsible to occupy and maintain the property until the home is sold or returned to the servicer as negotiated. Funds will be available on a one-time only basis.

The market is guaranteed to be stagnant for a long time.