Mortgage markets worsened last week in see-saw trading. By the time Friday's market closed, mortgage rates were higher across the board -- ARMs, fixed rates, FHA and conventional. The biggest stories of last week were actually non-stories.  First, the ash cloud from Iceland’s Eyjafjallajökull volcano dissipated, allowing warehouses to move inventory, airlines to move people, and businesses to move product.  In addition, Greece moved closer to securing emergency funding that will help it stave off default. When these two issues were threats earlier in the month, mortgage bonds rallied on safe haven buying, driving rates down. As the threats lessened over the course of last week, however, mortgage bonds sold off and mortgage rates rose. By contrast, this week features lots of stories. Eco... 04/26/2010

  Mortgage rates and home affordability have improved lately, thanks to an unlikely ally -- Mother Nature. In the 7 days since Iceland's Eyjafjallajökull erupted, ash clouds have grounded planes, disrupted businesses, and stranded exports in warehouses worldwide. It's a drag on commerce that's spilled over onto Wall Street. As experts debate the potential for future seismic activity, traders are taking some of their investment risk off the table.  In trading circles, it's called "safe haven buying". When the market gets cloudy, investors often move their cash into relatively safe assets.  This includes government-backed securities -- mortgage-bonds among them. Demand for bonds rise, pushing up prices and driving down rates. Conforming and FHA mortgage rates touched a 3-week low earlier ... 04/21/2010

California homeowner defaults down 40% April 20, 2010, by Jeff Collins, O. C. Register More evidence surfaced today that home-loan defaults and foreclosures are receding from historic peaks seen a year ago. However, the pace of defaults and foreclosures remain high, especially in areas where lower-cost homes predominate.MDA DataQuick reported that lenders filed 81,054 notices of default in California during the first quarter of 2010, down 4.2% from the previous quarter and down 40.2% from the first quarter of 2009. DataQuick’s analysis shows that the greatest year-over-year declines occurred in areas with cheaper homes, with smaller declines occurred in pricier areas.“We are seeing signs that the worst may be over in the hard-hit entry-level markets, while problems are slowly spreading ... 04/20/2010

Below is the latest Orange County Market Report from my friend Steven Thomas, the President of Altera Real Estate. Steven’s reports are cited and discussed in most of Southern California’s media, as an authoritative source of local real estate information. I have slightly altered his report to make it a bit easier to read, but the context and content remains true to Steven’s report. “The Orange County Market Report – This Market is Taxing! Talk to an Orange County buyer, especially a first time home buyer, and you will quickly find that the real estate market is simply crazy.  Let’s first establish that there are two different markets - below $1 million, HOT, and above $1 million, COLD. The below $1 million market accounts for 77% of the total active inventory, and 94% of demand. The lo... 04/20/2010

After a strong March showing and a surprise upward-revision for February, Housing Starts are, once again, trending better. It's yet another signal that the housing market nationwide is stabilized. A Housing Start is a new home on which construction has started and, over the last 6 months, home builders are averaging one half-million starts per month. This marks the highest 6-month average since 2008 and a reading one-fifth percent better from 12 months ago.  Revisions to prior data have all been higher, too. Even more interesting, though, is that the number of newly-issued building permits is exploding. Permits were up more than 5 percent last month and have climbed back to the levels of late-2008. Housing permits are an important data point in housing because permits are precursors to... 04/20/2010

Each week, government-led Freddie Mac publishes a weekly mortgage rate survey based on data from 125 banks across the country.  According to this week's results, the relative rate of a 5-year ARM is extremely low versus its 30-year fixed-rate cousin. Consider this comparison: In April 2009, the two products ran neck-and-neck with respect to rates In April 2010, the two products are split by 0.99 percent On a $200,000 home loan, that's a difference of $117 per month to a mortgage payment. Adjustable-rate mortgages aren't suitable for everyone, but they can be a terrific fit given your individual circumstance.  For example, any one of the following scenarios could warrant a 5-year ARM: Buying a home with an intent to sell within 5 years Currently financed with a 30-year fixed mortgage wi... 04/19/2010

  Mortgage markets improved last week for the second week in a row.  And, also for the second week in a row, rates were down on "safe haven" buying -- just not for the same safe haven reasons as before. If you'll remember, safe haven buying is when investors sense market risk, then move money toward less risky investments. Well, because the U.S. government backs the bonds of Fannie Mae and Freddie Mac, mortgage bonds tend to fit the "less risky" description and as Iceland's volcanoes shut down air traffic in Europe, mortgage bonds benefited. That was early in the week. Then, on Friday, when the SEC announced fraud charges against Goldman Sachs, a second wave of bond buying began as Wall Street fled the stock market. Mortgage rates fell a second time and the improvement carried through t... 04/19/2010

  Foreclosure filings rose close to 20 percent nationwide last month versus February, according to foreclosure-tracking firm RealtyTrac.com, and for the 13th straight month, total filings topped 300,000. In addition, bank repossessions reached an all-time, quarterly record. Through the first three months of 2010, banks reclaimed more than 257,000 homes. Nonetheless, 4 states dominated foreclosure activity nationwide. California, Florida, Arizona and Georgia accounted for more than half of all bank repossessions. It's a disproportionate distribution of foreclosures. Together, the 4 states represent just 23 percent of the overall U.S. population. The RealtyTrac report revealed some other interesting statistics, too. Foreclosure activity was up in 40 out of 50 states last month Bank reposs... 04/15/2010

  The federal home buyer tax credit expires April 30 and the deadline is sparking a home sale surge. It figures to burden real estate, mortgage and title offices nationwide over the next 60 days so plan your closing date accordingly. Especially because the last Friday in May is the Friday before Memorial Day. Now, if the connection between the tax credit and Memorial Day is not immediately clear, think of your own office on a 3-day weekend's Friday. Some of your colleagues take a half-day at work, others take the entire day off. Office-wide, productivity drops. The same is true in the real estate space. Offices are short-handed ahead of a holiday so, if you're under contract for a home and plan to close in May, consider a closing date other than Friday May 28, 2010.  And meanwhile, wit... 04/14/2010

Not all home improvements are created equal. Especially if you're looking for "resale value" back from your work. An article from the Wall Street Journal lays it out cleanly. Function beats flash these days so be wary of where you spend. Environmental upgrades such as home insulation and energy-efficient steel entry doors are recovering a much greater percentage of their cost these days than major remodels including kitchens or bathrooms.  This is especially true for homes that are already "over-improved" relative to the neighborhood. Upgrading the biggest and best homes on the block can be a losing proposition. The article's findings include data from groups such as the National Association of Home Builders, Remodeling Magazine, and Consumer Reports.  It lists the following home improv... 04/14/2010

  Mortgage markets improved last week to the delight of rate shoppers. Against a sparse economic calendar, Wall Street turned its attention to geopolitics in Greece and the Eurozone.  It didn't like what it saw. Safe haven buying buoyed mortgage bond markets last week as pricing recaptured two-thirds of its monumental losses from the week prior. Despite last week's surge, however, conforming and FHA mortgage rates remain near their worst levels of the year and appear poised to increase throughout the summer months. The U.S. economy is improving. From last week: Pending Home Sales posted a strong monthly improvement Wholesale Trade data pointed to higher consumer spending ahead Inflationary threats on the economy are receding, according to the Fed Furthermore, continuing jobless claims w... 04/12/2010

  As the federal home buyer tax credit nears its April 30 end-date, there's a lot of would-be home buyers still working to get under contract. A piece of advice for all of them : If your pre-qualification and/or pre-approval letter is more than 8 weeks old, it would be prudent to have your lender "re-pre-approve" you.  Mortgage guidelines have been in flux and your original lender letter may now be invalid. For example, over the past half-dozen months, the majority of mortgage lenders have reduced their risk tolerance with respect to: Maximum debt-to-income ratios Minimum allowable credit scores Calculation of "assets in reserve" For buyers of condominiums and co-ops, even the subject property itself is coming under tougher scrutiny. Today's mortgage applicants need to be a complete pac... 04/09/2010

  Mortgage markets improved yesterday after the Federal Reserve released its March 16, 2010 meeting minutes. It's good news for home buyers and rate shoppers -- rates could have just as easily gone the other way. The Fed Minutes is a detailed recap of the debate and discussion that shapes the nation's monetary policy. The notes are dense; it takes 3 weeks to compile them for publication. As compared to the more well-known, post-meeting press release, the Fed Minutes are extremely lengthy. For example: March 16 press release : 451 words March 16 meeting minutes : 6,152 words If the press release is the executive summary, the Fed Minutes are the novel. The extra words matter.The minutes recount what the Fed did, how the Fed did it, and what the Fed plans to do next. And, in the minutes, W... 04/07/2010

  As expected, the Pending Home Sales shot higher in February, boosted by the federal home buyer tax credit's April 30 deadline. Versus the month prior, February's index rose 8 percent but remains well off the highs set last October. For today's home buyers and seller, the Pending Home Sales Index is an important measurement. This is because a "pending home" is a property that is under contract to sell, but not yet closed. According to the National Association of Realtors®, 80% of homes under contract close within 60 days, historically. Therefore, a higher Pending Sales figure in February projects that April's Existing Home Sales will be higher, too. If you're a home buyer today, no doubt you've noticed the extra market activity. On right-priced homes, multiple offer situations are more... 04/06/2010

Mortgage markets performed terribly last week as losses piled up day by day.  It marked the second straight week of sell-offs. Pricing was influenced on several fronts including better-than-expected economic data, the end of the Federal Reserve's mortgage buyback program, and a short trading week. Mortgage rates rose to their highest levels since late-December last week. The data from the most anticipated story from last week -- the jobs report -- included a few good-for-the-economy surprises. Although payrolls fell 22,000 short of expectations in March, they were boosted by +62,000 in net revisions from January and February "Temporary Employment" -- a leading jobs indicator -- is up 313,000 in the last 6 months The average work-week and factory overtime both rose in March -- a sign tha... 04/05/2010

In its 12-month home price forecast issued Wednesday, Veros Real Estate Solutions said it had “continued bad news for Florida.” Markets in the Sunshine State claimed the top five spots on the collateral valuation company’s list of areas where prices are expected to drop the most over the next year. The Deltona-Daytona Beach-Ormond Beach market has the farthest to fall when it comes to price depreciation. There, Veros projects prices will plunge another 10 percent between now and March 2011. In Palm Bay-Melbourne-Titusville, the forecast is a decline of 8.9 percent. Naples-Marco Island will likely see prices drop another 8.8 percent, Veros says. The company expects Orlando-Kissimmee to suffer price depreciations of 8.7 percent over the next year. And Port St. Lucie-Fort Pierce is project... 04/02/2010

In its 12-month home price forecast issued Wednesday, Veros Real Estate Solutions said it had “continued bad news for Florida.” Markets in the Sunshine State claimed the top five spots on the collateral valuation company’s list of areas where prices are expected to drop the most over the next year. The Deltona-Daytona Beach-Ormond Beach market has the farthest to fall when it comes to price depreciation. There, Veros projects prices will plunge another 10 percent between now and March 2011. In Palm Bay-Melbourne-Titusville, the forecast is a decline of 8.9 percent. Naples-Marco Island will likely see prices drop another 8.8 percent, Veros says. The company expects Orlando-Kissimmee to suffer price depreciations of 8.7 percent over the next year. And Port St. Lucie-Fort Pierce is project... 04/02/2010

HOPE NOW announced Wednesday that its members completed an estimated 95,586 proprietary loan modifications in February 2010, which is almost double the 52,905 modifications completed under the government’s Home Affordable Modification Program (HAMP) during the same month. Of the proprietary loan modifications completed in February, approximately 78 percent included a reduction of principal and interest payments. HOPE NOW’s data also showed that foreclosure starts and sales dropped 17 percent for the month, along with a 4 percent decrease in the number of 60-plus day delinquencies. “Our data shows that mortgage servicers are continuing a strong effort on proprietary and HAMP modifications in the first two months of 2010,” said Faith Schwartz, executive director of HOPE NOW, the private s... 04/02/2010

There's just 30 days remaining to use the federal home buyer tax credit. The credit ranges up to $8,000 for first-time homebuyers, and up to $6,500 for existing homeworkers who have lived in their main home for 5 of the last 8 years. Claiming the federal tax credit is a two-step process. First, you must be under contract for a new home on or before April 30, 2010.  Then, you must close on said home on or before June 30, 2010.  There are no exceptions on the dates. Timeline aside, homebuyers and the subject property must also meet minimum requirements in order to be tax credit-eligible: You can't purchase the home from a parent, spouse, or child You can't purchase the home from an entity in which the seller is a majority owner You can't acquire the home by gift or inheritance Each buyer ... 04/01/2010

A surprisingly strong rebound in California's real estate market helped lift a key home price index for the eighth month in a row. That's good news for people who plan to sell their homes this spring. Prices are now up almost 4 percent from the bottom in May 2009, but still almost 30 percent below the May 2006 peak. Prices rose 0.3 percent from December to January on a seasonally adjusted basis, according to the Standard & Poor's/Case-Shiller 20-city home price index released Tuesday. Prices increased in 12 cities in the index. The biggest monthly gain was in Los Angeles, where prices rose 1.8 percent from December. And real estate agents say there's a distinct sense the worst of the downturn is over. Buyers are "seeing that prices are creeping up," said Tony Middleton, a real estate a... 03/31/2010