Today’s news Synopsis:
The Federal Reserve has printed $860 billion in mortgage-backed securities. Under the new U.S. Treasury Department program, states that provide mortgages to low-income borrowers may receive up to 35 billion dollars in Federal aid. According to SoCal MLS, distressed sales accounted for 40 percent of all Orange County sales in July.
In The News:
Los Angeles Times – “Don’t bank on your home as an ATM” (9-27-09)
“The economic fundamentals that drove home values up in the 20th century — sustained growth in incomes, population and household wealth — have been sputtering for decades. Though the future isn’t necessarily bleak, economists say there’s no reason Americans should continue to see a home purchase as a path to wealth.”
San Francisco Chronicle – “Be wary of buying into homeowner association” (9-27-09)
“While there are advantages to living in a place where all the owners share the cost of operating and maintaining amenities individual owners couldn’t afford on their own, it’s also true that condo and homeowner associations obligate all members with substantial financial and legal liabilities.”
Los Angeles Times – “Beyond Fannie and Freddie” (9-27-09)
“Homeownership may be the American dream, but lately it has been an expensive one for taxpayers. The deduction for mortgage interest cost about $80 billion in lost revenue in 2009, and a tax credit for home buyers in this year’s stimulus bill will add $15 billion to the tab. Taxpayers have provided Fannie Mae and Freddie Mac, two giant, troubled mortgage finance companies, nearly $100 billion that they have little chance of recouping. Mounting defaults also threaten the Federal Housing Administration, the agency that guarantees many home mortgages, raising the odds for yet another multibillion-dollar federal bailout. Meanwhile, the Federal Reserve has effectively been printing money to reduce mortgage interest rates, using the new dollars to buy more than $860 billion in mortgage-backed securities.”
Bloomberg - “Housing Agencies May Get $35 Billion in Treasury Aid” (9-28-09)
“State housing agencies in the U.S. that provide mortgages to low-income borrowers would get as much as $35 billion in federal aid under a new U.S. Treasury Department program, people familiar with the matter said. The program would provide up to $15 billion in fresh funding for as long as three years and would purchase as much as $20 billion in tax-exempt mortgage bonds issued by state- sponsored housing finance agencies through the end of this year, a person familiar with the matter said. The program may be announced as early as Sept. 30, said the person, who didn’t want to be named because the plans haven’t been made public.”
Bloomberg - “Negative Bond Returns Converge With Mortgage Miracle” (9-28-09)
“Federal Reserve Chairman Ben S. Bernanke has some good news for investors: Treasury bondholders will lose money for the first time in 10 years amid an unprecedented decline in the gap between the interest rate on 30-year mortgages and government notes, signaling an end to the worst financial crisis since the Great Depression.”
Orange County Register – “Calif. has nation’s highest mortgage burdens” (9-28-09)
“Do we need a Census Bureau survey to tells us how costly it is to own a home in California? Well, the 2008 edition of the American Community Survey does deeply detail California’s steep homeowning costs.”
Orange County Register – “Buying non-foreclosed homes surges in O.C.” (9-28-09)
“But the Southern California Multiple Listing Service estimated that short sales accounted for around 18% of all Orange County resales from February through July. Overall, “distressed” sales (foreclosures and short sales combined) accounted for four out of every 10 sales in July, by SoCal MLS’s math.”
Inman - “Loan shoppers: their own worst enemy?” (9-28-09)
“The proposed new disclosures will be required at the point of application. This is a great idea, if it is properly implemented. Proper implementation means that the information lenders must submit at the point of application will help consumers select from among loan providers. Stated somewhat differently, the information must reveal differences between lenders that will cause borrowers to prefer one over another.”
Looking Back:
One year ago, Citigroup chose to buy Wachovia’s banking business. Morgan Stanley sold 21 percent of its stock to Japan’s Misubishi UFJ. Permits for new housing construction in Orange County dropped by 94 percent in one month.
Tags: American Community Survey, Bernanke, Census, Commerce Department, condo, fannie mae, Federal Reserve, freddie mac, home, homeowner association, MLS, mortgage, real estate, sales, Treasury Department