While many home loan companies banked on a rising housing bubble, the Federal Housing Administration (FHA) remained steady with regulations and guidelines. This has allowed them to continuously support middle and lower income families and their effort to move into a home. When the housing bubble broke, the FHA continued as it had during the [...]
While many home loan companies banked on a rising housing bubble, the Federal Housing Administration (FHA) remained steady with regulations and guidelines. This has allowed them to continuously support middle and lower income families and their effort to move into a home. When the housing bubble broke, the FHA continued as it had during the housing bubble.
The rules and guidelines for obtaining FHA loans have allowed the organization to maintain solid footing through a fiscal and real estate crisis. This means that FHA loans have been secured and have avoided the pitfalls of many banks and mortgage institutions.
With this solid footing in mind and all of the recent federal spending, Commissioner Dave Stevens has announced some new, appropriate steps to protect the tax payers backing FHA loans. The modifications are shifting the responsibility for the mortgages from the taxpayers who have shouldered it thus far to the lenders using mortgage brokers for the FHA home loan process. This enables a shield of protection for the taxpayers. Additionally, the FHA has modified requirements for appraisers, calling attention to geographic competence and appraiser independence from mortgage brokers and loan companies. This protects the home buyer and seller with a more accurate appraisal. Lastly, the approval process has been revamped with spot approvals removed and some loosening of the commercial space limits on subject properties.
With these changes, the Federal Housing Administration stands alone in the mortgage industry, and on solid ground. They are moving steady through the dangerous waters of real estate and economic decline. As always, give us a call if you have questions when seeking a FHA home loan or need information about your real estate related question.
For Immediate Release Contact: Corinne Russell (202) 414-6921
February 24, 2009 Stefanie Mullin (202) 414-6376
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The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.
RECORD HOME PRICE DECLINES IN FOURTH QUARTER;
ISOLATED POCKETS [...]
For Immediate Release Contact: Corinne Russell (202) 414-6921
February 24, 2009 Stefanie Mullin (202) 414-6376###
The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.3 trillion in funding for the U.S. mortgage markets and financial institutions.RECORD HOME PRICE DECLINES IN FOURTH QUARTER;
ISOLATED POCKETS OF STRENGTHWASHINGTON, DC – U.S. home prices posted record declines in the fourth quarter of
2008 according to the Federal Housing Finance Agency’s House Price Index (HPI). The
FHFA seasonally-adjusted purchase-only house price index, based on data from home
sales, was 3.4 percent lower on a seasonally-adjusted basis in the fourth quarter than in
the third quarter. This decline was greater than the 2.0 percent decline in the third quarter
and the largest in the purchase-only index’s 18-year history. Over the past year,
seasonally-adjusted prices fell 8.2 percent from the fourth quarter of 2007 to the fourth
quarter of 2008.FHFA’s all-transactions House Price Index, which includes data from home sales and
appraisals for refinancings, showed significantly less weakness over the latest quarter than
the purchase-only index. The all-transactions HPI fell 0.2 percent in the latest quarter. It
was down 4.5 percent over the four-quarter period, the largest four-quarter drop in the
index, which extends back to 1975. These data reflect trends as of Dec. 31, 2008.
FHFA has also included its monthly house price index through December 2008.
Prices increased 0.1 percent from November to December on a seasonally-adjusted basis
after a downward adjustment for November and are down 10.9 percent since their April
2007 peak.“Price declines continued in the fourth quarter although not as rapidly as some had
expected,” said FHFA Director James B. Lockhart. “We are hopeful the housing initiatives
announced last week by President Obama will begin to provide much-needed stability to
the housing markets.”While the national purchase-only house price index fell 8.2 percent between the fourth
quarters of 2007 and 2008, prices of other goods and services rose 1.4 percent.
Accordingly, the inflation-adjusted price of homes fell approximately 9.6 percent over the
latest year.Significant Findings:
Purchase-only Index:
1. Prices fell over the last four quarters in 44 states and Washington, D.C.
2. Four-quarter price declines exceeded five percent in 22 states and were in excess
of 10 percent in eight states.
3. All nine Census Divisions experienced price declines in the latest quarter. Prices
were weakest in the Pacific Census Division, which experienced a 7.1 percent
seasonally-adjusted price decline in the quarter and the West South Central
Division was strongest, with a seasonally-adjusted decline of 0.9 percent.
All-transactions HPI:
4. The MSAs with the greatest appreciation over the past year were: Decatur, AL
(6.6%), Monroe, LA (6.3%), Kingsport-Bristol-Bristol, TN-VA (6.3%), Austin-Round Rock, TX (4.4%).
5. Of the 20 ranked cities with the greatest price declines over the last four quarters,
all but one (Las Vegas-Paradise, NV) was in California or Florida.
6. The MSAs with the sharpest depreciation over the year: Merced, CA (-49.5%),
Stockton, CA (-40.2%), and Modesto, CA (-37.8%).
The complete list of state appreciation rates is on pages 15 and 16.
The complete list of city (MSA) appreciation rates is on pages 30–46.Highlights/Technical Note
The quarter’s Highlights article updates an analysis that was provided in the last HPI
discussing alternative weighting systems that might be used in constructing the national
house price index. This release uses data through the fourth quarter to produce an
alternative, state-weighted national index and compares that index against the standard
Census Division weighted index. FHFA continues to study options for reweighting the
national index.Background:
FHFA’s purchase-only and all-transactions house price indexes track average house price
changes in repeat sales or refinancings of the same single-family properties. The purchaseonly
index is based on more than five million repeat sales transactions, while the alltransactions
index includes more than 36 million repeat transactions. Both indexes are
based on data obtained from Fannie Mae and Freddie Mac for mortgages originated over
the past 34 years.FHFA analyzes the combined mortgage records of Fannie Mae and Freddie Mac, which
form the nation’s largest database of conventional, conforming mortgage transactions. The
conforming loan limit for mortgages purchased since the beginning of 2006 has been
$417,000. Loan limits for mortgages originated in the latter half of 2007 through
December 31, 2008 were increased to as much as $729,750 in high-cost areas in the
continental United States. The American Recovery and Reinvestment Act, passed on Feb.
16, 2009, extended those limits for 2009 originations in places where those limits were
higher than those originally calculated for 2009.This HPI report contains four tables: 1) A ranking of the 50 States and Washington, D.C. by
House Price Appreciation; 2) Percentage Changes in House Price Appreciation by Census
Division; 3) A ranking of 292 MSAs and Metropolitan Divisions by House Price
Appreciation; and 4) A list of one-year and five-year House Price Appreciation rates for
MSAs not ranked. Note that the Office of Management and Budget (OMB) announced
three new MSAs in late 2008: Cape Girardeau-Jackson, MO-IL, Manhattan, KS, and
Mankato-North Mankato, MN. Metropolitan area index series are now available for these
cities.
So, I read this and it validated my gut feeling about the market that we are in in Austin. (You can read the full report here) Austin has been virtually immune to the housing market woes that are causing widespread panic, loss, and foreclosure. That is not to say that we haven’t felt some impact to the curent economic turmoil, but moreso that we have seen a market adjustment to the hay days of 2006-2007, but that Austin is still growing and appreciating within our 4-7% “norm”.
I have to admit that watching the local and national news has started to skew my own view of the local economy. It’s too bad that there’s not a more balanced way to get the daily news. I suppose we have to chalk it up to misery, crime, drama, etc sells. Getting back to the report, I pulled these snippets from the full report and wanted to share them.
HUD has just announced the new (old) FHA loan limits:
SFR/Condos – $288,750
2-units – $369,650
3-units – $446,800
4-units – $555,300
This essentially takes us back to last year’s loan limits!
Conventional conforming limits stay the same at $417,000.
FHA is expected to account for almost 40% of all loans originated this year. If you have [...]
HUD has just announced the new (old) FHA loan limits:
SFR/Condos – $288,750
2-units – $369,650
3-units – $446,800
4-units – $555,300
This essentially takes us back to last year’s loan limits!
Conventional conforming limits stay the same at $417,000.
FHA is expected to account for almost 40% of all loans originated this year. If you have any questions on FHA contract, guidelines, etc., just give me a call!
Marie Funston
Senior Mortgage Advisor
Cell: (512) 750-7270
Office: (512) 691-6757
Fax: (512) 343-1224
There are so many options with regard to mortgage loans, that the opportunity to review some basic terms is the best approach before obtaining a loan. Often heard during the mortgage and home buyer experience are several references to federal mortgage corporations. Rarely are they explained in a simple clear manner. We will begin [...]
There are so many options with regard to mortgage loans, that the opportunity to review some basic terms is the best approach before obtaining a loan. Often heard during the mortgage and home buyer experience are several references to federal mortgage corporations. Rarely are they explained in a simple clear manner. We will begin by explaining what Fannie Mae, Freddie Mac and Ginnie Mae actually are and how they apply in the industry.
Fannie Mae is Federal National Mortgage Association or FNMA – The Company was chartered by the congress, however it is share-holder owned. Currently they are the principal supplier of residential mortgage funds.
Ginnie Mae or the Government National Mortgage Association or GNMA – The Company is a part of the United States Department of Housing and Urban Development (HUD). This Government agency was created by Congress to provide mortgage funding for lenders who are purchasing with a VA or other Government owned / backed Loans.
Freddie Mac is the Federal Home Loan Mortgage Corporation or FHLMC – This Company is a shareholder run company who creates a secondary mortgage market by purchasing all forms of loans from the primary market for mortgage lenders.
Generally speaking the two share holder based companies do not have much if any federal involvement. Recently due to the Real Estate Mortgage Crisis, and the subsequent repercussions, the federal government has altered their position. They now hold influential positions with in both companies to attempt to circumvent further problems. Time will tell if this was the correct choice for the country and the real estate market place.
Jumbo loans will be exempt from the secondary mortgage market where Fannie Mae, Freddie Mac, and the Federal Housing Authority (FHA) purchase mortgages. Those loans between $417,000 and $729,750 – ‘jumbo light’ loans – will not be traded on the ‘to be announced’ (TBA) market, it was announced in a February article at Inman.com, as [...]
Jumbo loans will be exempt from the secondary mortgage market where Fannie Mae, Freddie Mac, and the Federal Housing Authority (FHA) purchase mortgages. Those loans between $417,000 and $729,750 – ‘jumbo light’ loans – will not be traded on the ‘to be announced’ (TBA) market, it was announced in a February article at Inman.com, as well as several other sources, including a press release on the Fannie Mae site. The Securities Industry and Financial Markets Association (SIFMA) worry that the larger loans may raise rates on the smaller conforming loans because of performance uncertainties that would, in turn, raise costs or hinder the trading of all mortgage-backed securities.
Instead, this new class of mortgages will be traded under unique pool codes or included in alternative mortgage investment transactions, specifically the Real Estate Mortgage Investment Conduit (REMIC). SIFMA feels this process will be the least disruptive to the secondary mortgage market for these higher balance loans, creating greater liquidity and interest rate relief to the jumbo mortgagee.
A downside to this placing the jumbo loans in separate pools is that this could delay the lower interest rates Congress had hoped to achieve if Fannie Mae, Freddie Mac, and the FHA had been allowed to by these loans. In fact, interest rates on the jumbo loans have gone up, and are about 1 percent higher than conforming loans.
Guarantees from Fannie, Freddie, and Ginnie Mae backing conforming loans relieves investors’ fears about delinquent payments and defaults. The jumbo loans carry an inherent higher risk. SIGMA wants to keep these jumbo loans in separate trading to belay these risks. As investors get more comfortable with the jumbo loans and the collateral they carry, it’s predicted interest rates will drop on these larger loans over time as well.
