Wow, I never thought about this one. “Unoccupied, these homes would be defenseless in a storm; there will be no one to put up shutters, batten down garage doors and otherwise secure homes. But that’s not all. Nearby homes and their residents would also be at risk from wind-propelled debris.”
Archive for May, 2009
A Housing Update
This is from John Mauldin’s weekly newsletter. It is very interesting and I would recommend reading the whole thing. Click on the link and then you will have to enter your email address http://www.frontlinethoughts.com/gateway.asp
$8,000 First-Time Homebuyers Tax Credit
We are still waiting on more details but this is great news. “On Friday, the U.S. Department of Housing and Urban Development (HUD) announced that first-time homebuyers using FHA-approved lenders can now get an advance on the $8,000 tax credit created by the stimulus package and apply it toward their down payments or closing costs.”
What’s In Store For Interest Rates?
It’s anyone’s guess. This morning on CNBC they were talking about traders losing money and then Joe Kernen said “aren’t we losing money then too?” He is exactly right the government is losing money on their investment (tax payer monies). The articles below talk about how higher rates will affect the housing market and that the Fed needs to step up their purchases of mortgage-backed securities. One reason they may not get more aggressive right now is that they don’t want traders buying and selling based on what the Fed is doing. It sounds as though the Fed may just continue to be steady with their buying and then come June 23rd and 24th at the next Fed meeting we might hear more.
“Federal Reserve officials believe the recent sharp rise in yields on U.S. Treasury bonds could reflect a mending economy and a receding risk of financial catastrophe, suggesting the central bank won’t rush to react — even though some investors see danger in the government’s rising cost of borrowing.” http://online.wsj.com/article/SB124355477324764533.html#mod=rss_whats_news_us
“The spike in rates has the potential to derail a lot of things,” said Mahesh Swaminathan, a mortgage strategist at Credit Suisse Group in New York. Higher rates make it less likely that homeowners will be able to lower their monthly payments by refinancing, which could put a crimp on consumer spending. They could also mean lower earnings for banks, which have profited from increased refinancing. http://online.wsj.com/article/SB124352408197662869.html#mod=rss_economy
Are April Homes Sales A Sign Of A Bottom?
No one knows the answer to that but some economists feel the worst of the housing crisis may be over. I certainly hope they are right and they maybe for the rest of the country but not Florida. Florida will still probably give up some more value, maybe 10%. Remember, low rates and the $8,000 tax credit can offset any downward adjustments.
http://money.cnn.com/2009/05/28/real_estate/new_home_sales/index.htm?section=money_realestate
How Many Homeowners Are Behind On their Mortgage?
This is a scary statistic from The Associated Press. “An industry report shows that a record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit.”
Is It Smart To Start A Bank Now?
I have spoken about this before and thought that it is b/c you borrow money at practically zero and lend it out at much higher rates. Also, you are much more diligent in your underwriting and are making “smarter” loans. In theory this makes sense but an article from The Wall Street Journal shows something different. However, it does concentrate on banks who have been around for awhile with bad loans on their balance sheets.
“For banks, even free money may have its drawbacks.
A key part of the bank-recovery story is that this interest-rate environment will let certain banks enjoy big margins on loan portfolios.
The Federal Reserve’s zero-interest-rate policy was expected to fatten those margins as banks funded themselves at low rates and lent at higher ones. Funding was going to get a boost at banks amassing new deposits, either from weaker rivals or through acquisitions.
But the numbers suggest a less-compelling story. While margins have been respectable, they are hardly knocking the cover off the ball. Banks with over $10 billion in assets had a net interest margin, or NIM, of 3.21% in the first quarter, according to SNL Interactive. That is below 3.4% in the fourth quarter and under the 3.34% average since 2000.”
http://online.wsj.com/article/SB124345260251059475.html#mod=todays_us_money_and_investing
Are Banks Still In Trouble?
It depends on what you read. I saw an article from CNBC that said the big banks are fine but the smaller community banks face trouble. The Wall Street Journal reported that “Though banks were profitable, there were signs that the credit crisis continues to take its toll. The number of banks on the FDIC’s “problem” list climbed to 305, the highest level since 1994, and the number of loans more than 90 days past due climbed across all major loan categories.”
http://online.wsj.com/article/SB124343337462058677.html#mod=testMod
Interest Rates Update
Mortgage-backed securities and Treasuries plummeted today due to concerns over hedging against higher interest rates, inflation, and the US’s AAA rating. Hopefully this trend is reversed. “As Treasury yields continue to climb — Treasurys have been on a track to higher yields since March — expectations continue to grow that the Fed may have to up its purchasing of government securities to keep consumer borrowing and namely mortgage rates low. It has committed up to $1.75 trillion to the program.
Higher Treasury rates, though, threaten to throw a wrench in the Fed’s work, if they translate into higher mortgage rates. If the rate rise “translates into the prime mortgage rate creeping up to close to 5% or over 5%, we could see more Fed mortgage buying,” said UBS mortgage strategist Jeana Curro. The prime rate was at 4.82% as of last week, up from the 4.78% low hit twice in April. A rate in the mid-4.90s “could cause concern,” Curro said, with the Fed maybe then stepping up its mortgage purchases.”
Located in South Florida, Justin Miller has established himself as a leader in the mortgage community for his expert advice and understanding of the current real estate climate. 
Jonathon Becker (Coastal Credit Clinic): Justin- GREAT blog post! This is a HUGE questions many of my clients h...
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