The Norris Group Blog

Today’s News Synopsis:

The U.S. Commerce Department reports that total housing production increased by 1.5 percent, but single unit home production decreased by 3 percent. According to the Mortgage Bankers Association, mortgage bankers made an average of $1,088 in profit on each loan originated in the first quarter of 2009. Statistics from MDA DataQuick show that the number of homes and condos that closed escrow last month decreased by 14.3 percent from the month before. A report from the Federal Reserve’s Flow of Funds shows that household wealth increased by $2 trillion in the second quarter.

In The News:

National Mortgage News – “Mortgage-Interest Deduction a Headache for the Internal Revenue Service” (9-16-09)

“Taxpayers have deducted mortgage-interest payments on their federal returns since Congress enacted the federal income tax in 1913. And although the rules were changed in 1987 to limit the write-off, it is still the third most expensive income-tax expenditure. In 2009 alone, Uncle Sam is expected to forego about $80 billion in lost revenue because of the deduction.”

Mortgage Servicing News - “New Rules Set for Some Commercial Loan Modifications in REMICs” (9-16-09)

“The Internal Revenue Service and Treasury Department have issued new regulations related to certain modifications of commercial mortgages held by real estate mortgage investment conduits. The new regulations, which were not expanded to include mods of commercial mortgages held by investment trusts as some in the industry have proposed, would allow lenders to modify commercial real estate loans held by REMICs in some cases without incurring tax penalties.”

NAHB - “Single-Family Starts Ease As Credit Deadline Looms” (9-17-09)

“Production of new single-family homes slowed in August as the expiration date for an important buyer incentive drew nearer, according to figures released by the U.S. Commerce Department today. While overall housing starts rose 1.5 percent to a seasonally adjusted annual rate of 598,000 units for the month, single-family starts declined 3 percent to a rate of 479,000 units, ending what had been a five-month run of improvements.”

Mortgage Bankers Association – “MBA Study Shows Increased Production Profits in the First Quarter of 2009, Spurred by Heavy Refinancings” (9-17-09)

“Mortgage bankers made an average profit of over $1,088 on each loan they originated in the first quarter of 2009, according to the Mortgage Bankers Association (MBA). This profit marks a marked improvement over the 4th quarter 2008 results in which average profits were $148 per loan, according to the MBA’s Quarterly Mortgage Bankers Performance Report. This new report measures the performance of independent mortgage bankers and subsidiaries of banks, thrifts and hedge funds.”

DQNews – “Bay Area August home sales and median price fall” (9-17-09)

“A total of 7,518 new and resale houses and condos closed escrow in the nine-county Bay Area last month. That was down 14.3 percent from 8,771 in July and up 4.0 percent from 7,232 in August 2008, according to MDA DataQuick of San Diego.”

Bloomberg – “Mortgage Rates in U.S. Decline to Lowest Since May” (9-17-09)

“The average 30-year rate dropped to 5.04 percent from 5.07 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. That’s the lowest since the week ended May 28, when the rate was 4.91 percent. The 15-year rate fell to 4.47 percent from 4.5 percent.”

Bloomberg – “Toll Sells $33 Million in Stock for $88 Million Total” (9-17-09)

“Toll sold a total of 1.6 million shares yesterday at an average price of $22.13, according to a U.S. Securities and Exchange Commission filing. Yesterday’s transactions bring Toll’s total stock sales for the year to $87.9 million. Toll Brothers shares have jumped more than 50 percent since reaching a 52-week low in March as the housing market has stabilized.”

Bloomberg – “Household Net Worth in U.S. Increases by $2 Trillion” (9-17-09)

“Household wealth in the U.S. increased by $2 trillion in the second quarter, bringing an end to the biggest slump on record. Net worth for households and non-profit groups climbed to $53.1 trillion from $51.1 trillion in the first quarter, marking the first gain since the third quarter of 2007, according to the Federal Reserve’s Flow of Funds report today in Washington. The government began keeping quarterly records in 1952.”

Wall Street Journal – “Turf Battle Heats Up Over Limits on Water-Guzzling Landscapes” (9-17-09)

“Later this year, the Environmental Protection Agency plans to expand its WaterSense conservation program to include a voluntary label for newly built homes. Homes could win certification if they consume roughly 20% less water than standard new homes. Along with criteria for high-efficiency toilets and faucets, the program has a landscaping clause that could strictly limit the amount of turfgrass participating builders plant. The rationale: Homeowners waste a lot of water laboring to keep lawns lush.”

Orange County Register – “Feds target Irvine loan-aid firm” (9-17-09)

“The Federal Trade Commission said today it took action against two companies, including one in Irvine, for allegedly making false promises about helping people avoid foreclosure. The FTC late last month charged Irvine-based Infinity Group Services and its president, Kahram Zamani, with falsely claiming they would obtain a loan modification in all, or nearly all, cases and give refunds if they failed to get help.”

Looking Back:

One year ago, the Commerce Department announced that home building was in decline. DQNews stats’ showed that housing prices in Southern California had decreased by over 5 percent in a month’s time. The MBA reported that loan applications had increased from the previous quarter.

Today’s News Synopsis:

The House of Representatives passes two FHA reforms designed to assist certain borrowers. The National Association of Home Builders reports that builder confidence increased for the third consecutive month. The Mortgage Banker’s Association’s weekly survey shows that the volume of mortgage applications decreased by 8.6 percent from the previous week. John Isakson is pushing an extension of the $8,000 tax credit through the senate. Doug Duncan, of Fannie Mae, warns that if the Federal Reserve stops purchasing agency mortgage-backed securities then mortgage rates could jump by 30 basis points. The UCLA forecast predicts the nation will emerge from the recession this quarter although California will most likely lag in the recovery. The federal reserve is now looking into the vulnerability of small banks with commercial exposure as losses mount.

In the News:

DSNews - House Passes Two FHA Reform Measures in Voice Votes (9-16-09)

“The House of Representatives passed two housing measures this week designed to assist certain borrowers of Federal Housing Administration loans, earning kudos from some of the nation’s largest trade groups in the mortgage and housing industries.”

NAHB - “Builder Confidence Edges Up Again In September” (9-16-09)

“Builder confidence in the market for newly built, single-family homes edged higher for a third consecutive month in September, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. The HMI rose one point to 19 this month, its highest level since May of 2008.”

Mortgage Bankers Association – “Mortgage Applications Decrease in Latest MBA Weekly Survey” (9-16-09)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 11, 2009. This week’s results include an adjustment to account for the Labor Day holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 8.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 18.3 percent compared with the previous week and decreased 18.7 percent compared with the same week one year earlier.”

San Francisco Chronicle – “UCLA forecast: Recession ending in California” (9-16-09)

“California and the rest of the nation will emerge from the recession this quarter, although the state will likely lag in recovery because of high unemployment and tepid consumer spending, according to an economic forecast released Wednesday. The quarterly Anderson Forecast from the University of California, Los Angeles predicts the state’s jobless rate will jump to 12.2 percent later this year — up from 11.9 percent in July — and continue in double digits into 2011.”

Bloomberg - “Fed Examining Mid-Sized Banks’ Losses to Commercial Real Estate” (9-16-09)

“Federal Reserve supervisors are examining the vulnerability of medium-sized lenders to falling commercial real-estate values to gauge the size of potential losses across the banking system. The Fed is focusing on banks smaller than the 19 largest lenders examined in detail in May, a central bank official said on condition of anonymity.”

Bloomberg - “Real Estate Rebound Will Reap ‘04 Prices, Simon Says” (9-16-09)

“Prices of U.S. shopping malls may return to 2003 or 2004 levels as consumer spending and the commercial real estate market recover, Simon Property Group Inc. Chief Executive Officer David E. Simon said. That would represent a decline of as much as 23 percent. Simon, the biggest U.S. shopping mall owner, has $3.8 billion on its balance sheet and is looking at possible acquisitions, Simon said in an interview in New York.”

Bloomberg - “Homebuyer Tax-Credit Extension Gains Support on Isakson Push” (9-16-09)

“An extension of the $8,000 U.S. homebuyer tax credit is gaining support in the Senate as bill sponsor John Isakson said he is rallying lawmakers to continue a program that helped boost home sales by more than 1 million.”

Orange County Register – “Expert: high-end housing market is ‘awakening’” (9-16-09)

“Third quarter is now benefiting from six months of inventory reduction and stabilization of the entry market. Buyers have been communicating they feel stability and don’t want to miss out on the combination of low interest rates and low home prices. There is a consistent activity level now up to $1 million sale price as the process continues. Even now the higher end market is awakening yet still stabilizing. The overhang is the talk of an impending overload of REOs forthcoming. There will be a release as the moratorium ends and the fourth quarter will see the affect. However, the pent up demand based on the sheer number of pre-qualifications and current multiple offers on existing properties will go a long ways to eliminate further decay of sales prices created from this affect.”

Orange County Register – “Mortgage rates could jump in January” (9-16-09)

“If the Federal Reserve Board suddenly stops purchasing agency mortgage-backed securities on Jan. 1, mortgage rates could jump by 30 basis points to 50 bps, according to Fannie Mae chief economist Doug Duncan. Conventional mortgages with principal balance up to $417,000 would likely rise by 30 bp and rates on higher balance loans of $650,000 to $729,750 could go up by 50 bps, he told MortgageWire.”

Orange County Register – “Trulia fixes price cut mix-up” (9-16-09)

“Huntington Beach ZIP 92648 ranks 3rd in the county, with 39% of homes on the market showing discounts. “

Looking Back:

One year ago, Washington Mutual was telling the media that the recent downgrade by Standard and Poor’s credit rating of the company to junk would have a “material” effect on the company.  The National Association of Home Builders announced a rise in builder confidence for the first time in seven months.

Today’s News Synopsis:

A survey from the National Association of Home Builders shows that buyers are unwilling to pay more for a new “green” home. DQNews reports that the total sales in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange Counties fell 10.8 percent from the previous month. Both Ben Bernanke and Bank of America believe the U.S. financial downturn is coming to an end. The Coopers Korpacz Real Estate Investor Survey estimates that U.S. commercial property will not recover until 2012. If you watched I Survived Real Estate 2009, it’s interesting to hear what industry experts are saying compared to some of these economists. Also, NAR reports in a recent survey less foreign real estate purchases measured year over year.

In the News:

NAHB – “Home Buyers Want To Save Energy – But Only At The Right Price, NAHB Survey Shows” (9-15-09)

Today’s News Synopsis:

The Sacramento Bee reports that the New Home-Buyer Tax Credit extension failed to pass. According to John Burns analysis, investors represent approximately 26 percent of all the sales occurring within the 53 markets that he observes. JPMorgan Chase & Co. chief economist Bruce Kasman believes that the economy will grow by 3.5 percent per quarter during the next year, but won’t be enough to bring the GDP back to its $13.42 trillion pre- crisis peak. Realtors will be excited to hear that Docusign just got an iPhone app.

Courant - “Recession may forge a housing shift in California” (9-13-09) “The Federal Reserve reported last week that the amount Americans owe on credit cards, auto loans and other forms of consumer loans dropped for a sixth straight month in July, the longest decline since 1991. It’s the same story with home equity lines of credit, which financed a significant degree of consumer spending during the boom. The amount of money owed on these loans is down 3% from a peak of $1.13 trillion in mid-2007, according to the latest Fed figures.”

Mish’s Global Economic Trend Analysis – “Decade of No Income Gains” (9-12-09)

“The typical American household made less money last year than the typical household made a full decade ago. To me, that’s the big news from the Census Bureau’s annual report on income, poverty and health insurance, which was released this morning. Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.”

Sacramento Bee – “Extension of new-home buyer tax credit fails to pass” (9-14-09)

“Legislation aiming to extend California’s maximum $10,000 new home buyer tax credit to several thousand more buyers has stalled, failing to pass during a frantic weekend rush to adjournment by the state Legislature. The bill, AB 765, was among those pushed aside by bigger final-hour statewide issues, backers said Monday.”

Wall Street Journal - “Your House: Just a Home” (9-14-09)

“Foreclosures and short sales, where homes are sold for less than the debt outstanding on them, comprised 31% of total sales in July, according to the National Association of Realtors, helping depress prices for all. Buyers and sellers are at loggerheads in many markets, as home sellers refuse to accept the reality of lower prices. Depressed values and tighter credit in turn have reduced everyone’s ability to borrow against their houses for remodeling, refurbishing, college tuition or other purposes. The lockup has caused people to feel poorer, even if they’re employed and don’t need to move. This feeling has, in a reversal of the boom’s wealth effect, curbed consumer spending.”

Inman - “Real estate’s September report card” (9-14-09)

“Investor buyers are back and help explain some of the resurgence in sales we have seen in many markets. Investor sales now constitute nearly 26 percent of total sales in the 53 markets where we track this statistic, which is higher than the peak of 24 percent in 2005-2006 and a considerable rise from just 21 percent in Q3 2008. Our data source misses a certain category of investor activity, so the actual percentage is higher than shown throughout the entire period, but we believe the recent trends are valid.”

Bloomberg - “U.S. Economy May See Its Slowest Recovery Since 1945″ (9-14-09)

“The slump this time was so deep, said JPMorgan Chase & Co. chief economist Bruce Kasman, that the 3.5 percent average quarterly growth rate he sees in the next year won’t be enough to bring gross domestic product back to its $13.42 trillion pre- crisis peak. That’s in contrast with the last 10 recoveries, when GDP returned to its previous levels within 12 months.”

Orange County Register – “Lehman legacy: Fallout batters O.C. housing” (9-14-09) “Homebuilding continued to slide, despite a few months in which sales rebounded in response to state tax breaks. Just 1,352 residential building permits were issued as of July 31, making 2009 so far the slowest year for housing starts since the end of World War II.”

Orange County Register - “Which Surf City ZIP has the most price cuts?” (9-14-09)

“Here are the latest home price cut rates from Trulia.com. As you can see, ZIP code 92649 has the greatest percentage of discounts in Huntington Beach and 92647 has the fewest in the city right now.”

Reuters - “California debt sale aided by 2 strong ratings” (9-14-09)

“California’s return to the municipal debt market after its budget crisis received strong endorsements from credit ratings agencies on Monday despite fears a new state budget shortfall will return. Moody’s Investors Service assigned California’s upcoming multibillion-dollar revenue anticipation note sale its top MIG 1 rating, clearing the way for money market funds to buy the short-term debt.”

Inman - “DocuSign gets iPhone app” (9-14-09) “A new iPhone application from Smart Mobile Solutions allows real estate professionals who use DocuSign to track, view, revise and electronically sign documents on the go.”

Orange County Register – “O.C. homebuying surge nears 14th month” (9-11-09)

“It looks like August will be 14th straight month of sales gains vs. the year-ago period. That follows 33 consecutive months where sales failed to beat the previous year’s pace. “

Orange County Register – “O.C. property tax fights up 23%” (9-11-09)

“With the deadline to file an appeal less than a week off, the number of Orange County property owners disputing their taxes jumped 23% this year, the county Clerk of the Board of Supervisors reports.”

Orange County Register – “O.C. loan officer arrested in $30 million fraud” (9-11-09)

“Attorney General Jerry Brown said today his office arrested a Huntington Beach loan officer and two other men for allegedly placing consumers into $30 million worth of fraudulent loans and pocketing $1 million in illicit profits.”

Orange County Register – “Inventory drops in south coast cities, prices come down” (9-11-09)

“68 homes priced at $1 million or higher have seen price reductions in the past two weeks in Dana Point, Laguna Beach and San Clemente combined. This is most likely due to a drop in inventory in all three beach communities, which incidentally drove the average active list price up in at least Laguna Beach, according to a recent biweekly report by Steven Thomas of Altera Real Estate.”

Inman - “MSN, AOL real estate sites get traction” (9-11-09)

“MSN Real Estate leaped four positions to break into a list of the top 10 most popular real estate Web sites in August, while AOL Real Estate and mlsfinder.com climbed into the top 20.

Bruce Norris has been invited to speak both at a REOMac conference in Florida and is also participating in an upcoming Builder Industry Show in November.  More details are coming about that event at www.buildingindustryshow.com.  The theme will eb collaboration and looks like there will be a very nice line up from several industries.