For anyone that is a market news junkie, you certainly got your fix this week. It has been quite some time since we have experienced a week with this much news and information on housing and the economy.
Housing Starts dropped 10% as home builders are showing caution as the tax credit expiration has seemed to place a damper on home purchase demand. The Mortgage Bankers Association reported for the first time in 6 weeks that home purchase applications have increased. Additionally, it was also reported that refinance applications jumped 21%.
The Senate and House have each passed a new amendment which would extend the time to take advantage of the tax credit. The current expiration occurs on June 30th. The current amendment is being reconciled between both branches of government and it is expected to be passed. The extension as proposed will extend the time home buyers have to close for an additional 3 months.
It was announced this week that an estimated 65 - 75% of all homeowners who have received loan modifications under the governments Home Affordable Modification Program will most likely default despite having lower mortgage payments. The main culprit causing the trend of high defaults is that many homeowners receiving modifications continue to have high balances on their other consumer debt with little or no reserves of cash in the bank.
The FBI announced a major crackdown on mortgage fraud. The FBI's program to fight mortgage fraud, called Operation Stolen Dreams, is in full swing with over 3000 investigations taking place nationwide. Already over 485 people have been netted in the operation. The driving force behind the FBI crackdown is that despite the lending industry tightening guidelines and underwriting criteria, studies have shown a significant increase in mortgage fraud from 2008 to 2009.
In other real estate news, the former CEO of failed lending institution Taylor Bean Whittaker was arrested this week while working out at his gym. He has been charged with defrauding the government and investors out of 1.5 billion dollars through the sale and transfer of bad mortgage loans.
Fannie Mae and Freddie Mac have both been delisted from the New York Stock Exchange due to their share prices continuing to remain valued below a $1. This does not impact the daily operations of these organizations.
The Consumer Price Index and Producer Price Index released this week continue to show that inflation is not an issue right now despite all of the government stimulus and low rates. Consumers have slowed spending on discretionary items once again due to uncertainty in the job market and economy. Jobless claims came in higher than expected this past week as well.
News on tap for next week:
• Tuesday June 22nd - Existing Home Sales
• Wednesday June 23rd - MBA Purchase Applications, New Home Sales, FOMC Meeting
• Thursday June 24th - Jobless Claims and Durable Good Orders
• Friday June 25th - Consumer Sentiment and GDP
Your Mortgage Consultant,
JJ Mack
916-517-1800
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment