Mortgage News of the Week

Here's the Kansas City area mortgage news from Carol Poppe


Carol Poppe, Vice President Mortgage
Ph 913-652-7302 cell 913-707-1153
www.fcbloan.com/CLPoppe

MORTGAGE NEWS FOR THE WEEK OF 09/27/2007

UPDATE ON MORTGAGE INSURANCE TAX DEDUCTIBILITY:

A House of Representative panel has met recently to enact a bill that will help ease problems in the housing crunch. Top on their list was changing the law that taxed homeowners on the amount of forgiven debt by lenders. As the law stands, homeowners who short sell their home back to their lender to avoid foreclosure get taxed on the forgiven debt because they treat it as income. The legislation was approved to change this rule.

The big news is that the committee proposed legislation to extend income tax deduction for private mortgage insurance. A temporary one is in place but is expiring December 31, 2007. The new legislation will extend this through December 31, 2014.

The new bill is backed by The National Association of Home Builders, the Mortgage Bankers Association, and the National Association of Realtors.

This new bill will be presented to the House of Representatives for a full House vote after the House Ways and Means Committee approved the bill by voice vote.

The Latest Kansas City Mortgage News

Here's the latest Kansas City Mortgage News from my friend at First Community Bank

Mortgage Division



From: CAROL POPPE 913-652-7302



WEEKLY NEWS REPORT: 8/6/2007



Well as we say in this business, “the wheels are falling off the bus.” Last week was The Good, The Bad and The Ugly. The good news last week came in the form of friendly inflation and employment news which helped rates on CONFORMING home loans improve over the course of the week. I just locked a $390,000 loan (80% LTV) in at 6.375%. Conforming home loans are those under $417,000 and subject to very standard credit, income and asset qualifying, nothing exotic, outside the box, or fancy.



A little bad news came by way of the Bureau of Economic Analysis, revising previous personal savings rate estimates higher, but showing that Americans still save less than 1% of their income.



The Ugly last week – well, was really ugly. The media screamed all week about issues in the mortgage industry particularly impacting what are called Non Conforming home loans; those that are dollar amounts higher than $417K, or with credit, income or assets not falling under traditional guidelines. Many of those rates got excessively ugly, in many cases, overnight. Why? Over the past several yeas, many loans were made to homeowners with somewhat non-traditional or “non-conforming” situations, be it poor credit, inability to document income, or any number of factors that do not fit within the traditional box for home loans. These loans are often called “Sub-Prime” or “Alt-A”, meaning that they were somewhat riskier in nature than A credit, prime or traditional loans. Another type of “non-conforming” home loan is one where the credit and income might be perfectly fine, but the loan amount is higher than $417K, which is the current maximum loan that can be done using pools of money from mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC). These are known as Jumbo Loans – but the end money comes from private institutions, not from the large government sponsored entities of Fannie and Freddie. Most Non-Conforming loan product rates popped significantly higher in the last week even though Jumbos have not suffered from the increased delinquencies like the Sub-prime and Alt-A. This was due to the fact that these pools of mortgages are being purchased by smaller private entities that can’t afford to take on the margin of risk of foreclosures.



From our pool of investors, Wells Fargo jumped the highest in their Jumbo rates. The 100% financing options are deteriorating very quickly and the rules are changing overnight. Several large companies have shut their doors in the last week including American Home Mortgage (huge in stated and no income programs) and Fieldstone (a Sub-Prime company). US Bank has announced today that they are no longer doing “No Income” and “No Ratio” mortgage loans. BE WARY OF OLDER PRE-APPROVALS whether you are putting a contract on a home or are receiving one. Everything is changing so quickly it is hard to keep up with all the changes. Some investors have raised the credit score minimums for 100% financing. We are seeing that those people who have credit scores under 680 and make more than $82,000 are going to be challenged in 100% financing if they purchase over the FHA limit (approximately $210,000). Their options are dwindling. This is the group buying $225,000-$350,000, and even though some of these are buying their second home, they are not netting enough out of the sale of their first home to have much downpayment after they cover their costs.



Remind your buyers that now is NOT the time to be playing the risky game of trying to scour the entire nation to find someone who promises to save you a paltry amount on costs, or deliver a rate that seems too good to be true. A smooth closing and being reassured that it will close on time are just too important, and the times have changed. I am here to help and advise during these volatile times – and would welcome calls from you and your clients.

Kansas City Area Economic News from Carol Poppe

Here's Economic News for this week from Carol Poppe, VP of Residential Lending

REAL ESTATE: As is no surprise, new home sales plunged 17.3% in 2006, the biggest drop in 16 years. The median home price for December was still below the year-earlier price reading, another sign of weakness in the market. However, since the median home price hasn’t changed from a year earlier, some prognosticators feel we have hit the bottom. This is why conforming limits are unchanged from the year before, $417,000. Major homebuilders around the country, like Pulte Homes, saw sharp declines in earnings in 2006 with the slump. What this means to you is it is still a buyer’s market.
BONDS: The Bond prices slipped after this report hinted at stabilization in the housing market. Also the stock market slumped with fears that this information would revive worries about higher interest rates from the Feds. Strong economic growth is good for corporate profits but if growth is too strong, it will cause the Feds to start raising rates again to curb inflation. The Federal Reserve has a policy meeting this week (Tues. & Weds) which at this point, is expected to keep the interest rate unchanged. Since the middle of last year, the focus of the markets has been whether the Fed will be tempted to lower rates to stimulate the economy and avoid a recession. This would have been good for the real estate market. However, now, it is thought that we will see a continued pause, encouraged by solid job growth reports, higher payrolls, and tumbling oil prices. Durable good orders climbed in December, higher than expected. These are items that are meant to last more than 3 years. Excluding defense and aircraft orders, non-defense capital goods orders jumped, following declines in the previous two months. Motor vehicle and parts orders posted the strongest gains/month since August, 2004.
RESULTS: What all this means is that interest rates continue to edge slowly up, rather than the anticipated decline. Since it appears we are not going to see a decline in the second mortgage rates for awhile, be sure your buyers who are needing 95-100% financing look at all options, not just 80/20’s. There are some great new options out there for 100% financing which will give a lower payment than 80/20’s.

Carol Poppe,
VP/Mortgage Lending
10740 Nall Avenue • Suite 210 • Overland Park, KS 66211 Office: 913.652.7302 • Fax: 913.649.3222
Cell: 913.707.1153www.fcbankonline.com