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Paul R. Spenard, CMPS
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Sunday, March 28, 2010
Friday, March 26, 2010
Feds Increase Incentives for HAFA Short Sales
Feds Increase Incentives for HAFA Short Sales
The Treasury Department has increased the incentives for servicers, investors and distressed homeowners to participate in an expedited short sales program that goes into effect April 5.Under the Home Affordable Foreclosure Alternative program, the servicer can receive a $1,500 incentive and the homeowner can receive $3,000 when a short sale or deed-in-lieu transaction is completed. "That $3,000 is going to turn some heads," said Travis Olsen, chief operating officer of Loan Resolution Corp. "That is going to make it truly worthwhile" for the borrower to complete a short sale, he added. LRC specializes in short sales.
Last December, Treasury proposed to pay the servicer only $1,000 and the homeowner $1,500 for relocation costs. Treasury also doubled the maximum payoff for subordinate lien holders that relinquish their claims and the reimbursement for first mortgage investors. Now the investor can pay the second lien holder up to 6% of the loan amount with a $6,000 cap and be reimbursed on a one-for-three match for up to $2,000. Originally, Treasury capped reimbursement at $1,000 and the payoff at $3,000. Subordinate liens must be extinguished under HAFA so the property can be sold and the former homeowner can walk away debt free.
The Week in Review
In an odd leap, long-term Treasury yields blew up, Wednesday the worst single day in nine months. The 10-year T-note stopped at 3.88%, a level touched for the fifth time since last June, but the violence of this move threatens upward breakout. Meanwhile, mortgages held fairly well, inside the 5.25% top that has held since August.
The peculiar part: big sell-offs like this are driven by good economic news, but that’s not what we got. February sales of new and existing homes fell (new ones at the lowest pace since stats began in 1963, 303,000 annualized), and unsold inventory rose.
Unemployment claims fell to 442,000 last week, but must drop well into the 300s to mark new hiring. The BLS says unemployment in February rose in 27 states, fell in 7, and 16 were flat. California at 12.5% unemployed rather more than offsets North Dakota at 4.1%, and Nebraska and South Dakota at 4.8%. Four states -- Florida, Nevada, North Carolina, and Georgia -- set all-time highs for percentages out of work.
So, why the rate blow-up? Three theories, so far. The first: the healthcare bill. Nobody in the credit markets believes its revenue assumptions, nor does anyone believe the expense forecast. No politics involved! If you work in the credit markets and trust government promises, your career will be short. Centerline market estimate for healthcare’s annual deficit addition: $50-$100 billion. However, no matter how accurate, that’s a long-term worry. Something short-term happened here.
Theory two: national debt of all kinds is in trouble, budgets from Club Med to Japan immensely out of balance, all selling mountains of new paper. Maybe, but the Europeans seem to be kicking the Grecian urn down the autobahn, no immediate crisis in prospect. Besides, that mess is pushing cash to dollars and Treasurys.
Theory three: The Fed is pulling the plug. The Fed has been buying MBS and associated Fannie-Freddie debt for fifteen months, the total roughly $1.4 trillion. This winter everyone wondered what would happen to mortgage rates when the Fed stops buying next week, but we’ve been watching the wrong market.
The Fed bought those Agency MBS from super-cautious investors who buy only government paper. The Fed’s buys had three effects, one indirect: they did pull down mortgage-Treasury spreads, and the buys did provide “quantitative easing” (the Fed shooting money directly into the economy, bypassing busted banks that can’t make loans). The third effect that most of us missed: the Fed’s buys soaked up last year’s entire federal deficit, pulling down Treasury yields themselves.
The mechanism: lift $1.4 trillion in government paper out of that market, and investors then used the cash to buy other government paper. Treasurys.
Next week the Fed will stop, but the Treasury will not: it will continue to sell bonds at a pace near $150 billion per month. Who will buy those bonds, and the flood issued by governments from Athens to Tokyo, and at what rates have been mysteries that will soon find answers. The Fed fears overdoing its quantitative easing: possibly inflationary, possibly generating backlash from excessive use of power, or worst of all, breeding accusations of round-heeled “monetizing” of government indiscipline.
If the Fed is out, the nightmare-dilemma end game has arrived. Cut the Keynesian deficit while the recession runs on? Or allow that spending to drive up interest rates, and maybe do more damage than fiscal discipline would do?
I think the Fed mistakes putting down panic for recovery, while we are still in a slow-motion landslide in asset values. Nothing but low rates will stop the slide. However, for the Fed to stay in the game a while longer, a commitment to fiscal discipline by Congress and Administration would be mandatory.
How different all of this might look if Mr. Obama had reversed priorities early last year: appointed a bi-partisan commission on healthcare, and put all of his momentum and majority behind getting our books in order.
by: Lou Barnes
The peculiar part: big sell-offs like this are driven by good economic news, but that’s not what we got. February sales of new and existing homes fell (new ones at the lowest pace since stats began in 1963, 303,000 annualized), and unsold inventory rose.
Unemployment claims fell to 442,000 last week, but must drop well into the 300s to mark new hiring. The BLS says unemployment in February rose in 27 states, fell in 7, and 16 were flat. California at 12.5% unemployed rather more than offsets North Dakota at 4.1%, and Nebraska and South Dakota at 4.8%. Four states -- Florida, Nevada, North Carolina, and Georgia -- set all-time highs for percentages out of work.
So, why the rate blow-up? Three theories, so far. The first: the healthcare bill. Nobody in the credit markets believes its revenue assumptions, nor does anyone believe the expense forecast. No politics involved! If you work in the credit markets and trust government promises, your career will be short. Centerline market estimate for healthcare’s annual deficit addition: $50-$100 billion. However, no matter how accurate, that’s a long-term worry. Something short-term happened here.
Theory two: national debt of all kinds is in trouble, budgets from Club Med to Japan immensely out of balance, all selling mountains of new paper. Maybe, but the Europeans seem to be kicking the Grecian urn down the autobahn, no immediate crisis in prospect. Besides, that mess is pushing cash to dollars and Treasurys.
Theory three: The Fed is pulling the plug. The Fed has been buying MBS and associated Fannie-Freddie debt for fifteen months, the total roughly $1.4 trillion. This winter everyone wondered what would happen to mortgage rates when the Fed stops buying next week, but we’ve been watching the wrong market.
The Fed bought those Agency MBS from super-cautious investors who buy only government paper. The Fed’s buys had three effects, one indirect: they did pull down mortgage-Treasury spreads, and the buys did provide “quantitative easing” (the Fed shooting money directly into the economy, bypassing busted banks that can’t make loans). The third effect that most of us missed: the Fed’s buys soaked up last year’s entire federal deficit, pulling down Treasury yields themselves.
The mechanism: lift $1.4 trillion in government paper out of that market, and investors then used the cash to buy other government paper. Treasurys.
Next week the Fed will stop, but the Treasury will not: it will continue to sell bonds at a pace near $150 billion per month. Who will buy those bonds, and the flood issued by governments from Athens to Tokyo, and at what rates have been mysteries that will soon find answers. The Fed fears overdoing its quantitative easing: possibly inflationary, possibly generating backlash from excessive use of power, or worst of all, breeding accusations of round-heeled “monetizing” of government indiscipline.
If the Fed is out, the nightmare-dilemma end game has arrived. Cut the Keynesian deficit while the recession runs on? Or allow that spending to drive up interest rates, and maybe do more damage than fiscal discipline would do?
I think the Fed mistakes putting down panic for recovery, while we are still in a slow-motion landslide in asset values. Nothing but low rates will stop the slide. However, for the Fed to stay in the game a while longer, a commitment to fiscal discipline by Congress and Administration would be mandatory.
How different all of this might look if Mr. Obama had reversed priorities early last year: appointed a bi-partisan commission on healthcare, and put all of his momentum and majority behind getting our books in order.
by: Lou Barnes
Mortgage News Brief
HAMP Changes Encourage Principal Writedowns
The Obama administration is expanding its flagging HAMP program to address the two main drivers of foreclosures-job loss and underwater mortgages where borrowers owe more on their loan than the property is worth.
New FHA Refi Program Tackles Underwater Mortgages
The Federal Housing Administration is taking another crack at creating a refinancing program that requires principal writedowns and gives investors an option to cut their losses on underwater conventional loans.
California Extends $10,000 Homebuyer Tax Credit
California Gov. Arnold Schwarzenegger has signed legislation that re-establishes and extends the state's $10,000 tax credit for homebuyers, a program that proved so popular last year that it ran out of money by the end of June, eight months before it was set to expire.
Regulators Put Pressure on First and Second Lien Holders
Federal regulators are working on ways to match holders of delinquent and/or modified first mortgages with the holders of seconds in an effort to improve communication between the two parties so they can restructure loans.
Major Banks Summoned to Testify On 2nd Lien Mods
Executive of major banks will be testifying before the House Financial Services Committee soon on their efforts to modify and write down second liens.
Fannie Completes Second Bulk REO Auction of 2010
Fannie Mae recently completed a bulk auction of 212 real estate owned properties, its second such offering of the year.
American General in the Market with Legacy Mortgages
American General Financial Services, a subsidiary of AIG, will be coming out with two deals backed by legacy mortgage assets within the next two weeks.
Michigan Thrift Raising $250MM in Stock Offering
Flagstar Bancorp Inc. has priced a public offering of 500 million shares of common stock at $0.50 per share, which is below the stock's 52-week low.
--------------------------------------------------------------------------------
The Obama administration is expanding its flagging HAMP program to address the two main drivers of foreclosures-job loss and underwater mortgages where borrowers owe more on their loan than the property is worth.
New FHA Refi Program Tackles Underwater Mortgages
The Federal Housing Administration is taking another crack at creating a refinancing program that requires principal writedowns and gives investors an option to cut their losses on underwater conventional loans.
California Extends $10,000 Homebuyer Tax Credit
California Gov. Arnold Schwarzenegger has signed legislation that re-establishes and extends the state's $10,000 tax credit for homebuyers, a program that proved so popular last year that it ran out of money by the end of June, eight months before it was set to expire.
Regulators Put Pressure on First and Second Lien Holders
Federal regulators are working on ways to match holders of delinquent and/or modified first mortgages with the holders of seconds in an effort to improve communication between the two parties so they can restructure loans.
Major Banks Summoned to Testify On 2nd Lien Mods
Executive of major banks will be testifying before the House Financial Services Committee soon on their efforts to modify and write down second liens.
Fannie Completes Second Bulk REO Auction of 2010
Fannie Mae recently completed a bulk auction of 212 real estate owned properties, its second such offering of the year.
American General in the Market with Legacy Mortgages
American General Financial Services, a subsidiary of AIG, will be coming out with two deals backed by legacy mortgage assets within the next two weeks.
Michigan Thrift Raising $250MM in Stock Offering
Flagstar Bancorp Inc. has priced a public offering of 500 million shares of common stock at $0.50 per share, which is below the stock's 52-week low.
--------------------------------------------------------------------------------
Thursday, January 14, 2010
Obama proposes special fee on financial companies
Obama will propose a special 10-year fee on large financial companies to repay taxpayers for the "extraordinary" assistance they got to keep the economy from collapsing in late 2008, a senior administration official said Wednesday.
The assessment on excess liabilities at big firms is suppose to raise about $90 billion over 10 years. It would remain in place for at least 10 years, or until all losses from the Troubled Asset Relief Program were repaid.
The TARP law gives the Obama until 2013 to come up with a repayment plan, but he decided not to wait.
With tough congressional elections coming up and many voters angry at the bailouts, Obama wants it to look like he supports the tax paying voters and not like another patsy for the Wall Street.
The White House doesn't think the fee would not be passed along to customers. It is obvious that like many in Congress, and the White House, they never ran a business.
Chief Executive Jamie Dimon, of J.P. Morgan Chase & Co., told reporters Wednesday that any fee would be passed along to customers.
"All businesses pass their costs on to their customers. That is not un-normal," he said.
The bottom line is the same as always, protect those that get you elected while looking like you support the voter. The bailouts took care of those who run the show. This new fee, if passed, is another way to extract more money from the regular Joe tax paying citizen. It's always about wanting more. Greed and power is ruining this country, and countries around the world. Little by little we are transferring wealth to the same financial institutions this bill is designed to look like it's penalizing.
The assessment on excess liabilities at big firms is suppose to raise about $90 billion over 10 years. It would remain in place for at least 10 years, or until all losses from the Troubled Asset Relief Program were repaid.
The TARP law gives the Obama until 2013 to come up with a repayment plan, but he decided not to wait.
With tough congressional elections coming up and many voters angry at the bailouts, Obama wants it to look like he supports the tax paying voters and not like another patsy for the Wall Street.
The White House doesn't think the fee would not be passed along to customers. It is obvious that like many in Congress, and the White House, they never ran a business.
Chief Executive Jamie Dimon, of J.P. Morgan Chase & Co., told reporters Wednesday that any fee would be passed along to customers.
"All businesses pass their costs on to their customers. That is not un-normal," he said.
The bottom line is the same as always, protect those that get you elected while looking like you support the voter. The bailouts took care of those who run the show. This new fee, if passed, is another way to extract more money from the regular Joe tax paying citizen. It's always about wanting more. Greed and power is ruining this country, and countries around the world. Little by little we are transferring wealth to the same financial institutions this bill is designed to look like it's penalizing.
Sunday, December 13, 2009
Homebuyer Tax Credit Extended and Expanded!
Homebuyer Tax Credit Extended and Expanded!
Last month, a new Homebuyers Tax Credit bill was signed into law. The bill extends the tax credit for first-time homebuyers (FTHBs), as well as opens it up to current homeowners who are looking to buy. And even if you aren't looking to purchase - pass on this article to anyone you think might be in the market to do so. This is information that might benefit them greatly, and I'll be happy to be of service to them.
Here is a brief overview of the Homebuyers Tax Credit - and its benefits - based on the new bill.
Tax Credit for First-Time Homebuyers
FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Tax Credit for Current Homeowners
The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.
What's So Great About a "Tax Credit"?
The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!
Higher Income Caps
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible.
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
Maximum Purchase Price
Qualifying buyers may purchase a property with a maximum sales price of $800,000.
Remember, the new tax credit program includes a number of details and qualifications. Call or email today if you have questions or would like to see if you can benefit from the tax credit...and email this article along to anyone else you feel it might benefit as well!
Thursday, September 24, 2009
U.S. stock market frets over fragility of housing market
Looming expiration of tax credit for new home buyers another concern
By Kate Gibson, MarketWatch
The U.S. stock market's underlying worry about the state of the troubled housing industry took hold Thursday, with equities tumbling on an unexpected drop in the sale of existing homes last month.
The National Association of Realtors reported home resales fell 2.7% in August after four consecutive months of gains.
Investors had expected Thursday's report to illustrate the gradual improvement recently seen in residential real estate, looking for signs that the brighter picture was "not just driven by incentives given to first-time home buyers," said Art Hogan, chief market strategist at Jefferies & Co.
"We have to cross the bridge from an economy growing from government stimulus to an economy that is self-sustaining. If investors have one concern, that's it," Hogan said.
The $8,000 government subsidy for new home buyers expires Nov. 30.
The coming expiration of the tax credit was expected to bring some weakening in sales, as the incentive likely "pulled a portion of existing home sales forward into the summer months," Omar Sharif, an analyst at RBS Securities Inc., wrote in a research note.
"While we still hold to that idea, it is not clear if the August drop reflects that dynamic or simply a modest pullback following the largest percentage gain in resales since at least 1999," he added.
On Wall Street, energy shares led the losses as the major stock indexes erased early gains in the wake of the disappointing housing data.
The Dow Jones Industrial Average ($INDU) slipped 45.80 points, or 0.5%, to 9,702.75. The S&P 500 Index ($SPX) dropped 9.77 points, or 0.9%, to 1,051.1. The Nasdaq Composite (COMP) declined 26.27 points, or 1.2%, to 2,105.15.
On Friday, the economic data will include another report on housing, with new home sales expected to climb about 2% to a seasonally adjusted annual rate of 433,000 in August, which would mark the fifth straight increase and the highest level in a year.
Kate Gibson is a reporter for MarketWatch, based in New York.
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