KeNo's Housing and Economic Portal: Saturday August 13 Housing and Economic stories

Friday, August 12, 2011

Saturday August 13 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

FHA May Be Next in Line for Bailout - (www.bloomberg.com) The nationwide decline in house prices has created a vacuum in the U.S. mortgage market. Private financing for home loans has all but dried up and the U.S. government is now guaranteeing almost every new mortgage. Fannie Mae and Freddie Mac have received most of the media’s attention, but policy makers need to focus on the third leg of the housing- support stool: the Federal Housing Administration. The FHA has some major accounting problems. Left unaddressed, they could spook the markets, lead the FHA to seek a federal cash infusion and further enrage taxpayers. These outcomes can be avoided -- but only if policy makers are more transparent about the risks involved in guaranteeing mortgages. The FHA provides private lenders with a 100 percent guarantee against defaults on home mortgages that meet certain underwriting criteria, such as a minimum down payment and credit score. Traditionally, the FHA has served first-time homebuyers and low- to moderate-income families who pay an insurance premium for this loan guarantee. As private-financing options have disappeared, the role of the FHA has grown. Its market share has increased to about 30 percent today from 3-4 percent in 2007. That’s because the agency is now practically the only game in town, accepting borrowers with down payments of as low as 3.5 percent.

National Association of Realtors downsizing by 10% - (www.agentgenius.com) Rumors of layoffs have been flying for months, quietly echoing in the halls of the National Association of Realtors (NAR), the largest trade association in the world. Chicago computers have been humming with updating of resumes as NAR staff anxiously awaits the possibility of their job on the guillotine. NAR Chief Executive Officer, Dale Stinton informed us that internally, leadership and staff were told in March that as part of the annual budget process for 2012, NAR was going to “reduce headcount (mostly through attrition) by about 10 percent.” Stinton indicated the cuts would not have a major impact on programming and that NAR is already “well on [their] way to achieve this reduction this year so that the benefit of the savings will be realized going into 2012.” Stinton also notes that this move is “sound fiscal and program management – nothing more nothing less.”

62% Say Troubled Owners Should Buy Cheaper Houses - (www.rasmussenreports.com) The federal government Friday extended its deadline to apply to the Emergency Homeowners Loan Program, but most Americans believe troubled homeowners should sell their homes rather than receive government assistance to keep them. The latest Rasmussen Reports national telephone survey of American Adults shows that 62% believe it's better for homeowners who can’t afford to make increased mortgage payments to sell their homes and find less expensive ones. Twenty-five percent (25%) think it’s better for the government to assist those homeowners in making their payments. Thirteen percent (13%) are undecided. (To see survey question wording, click here.)

Ireland Weighs Debt Forgiveness in Europe's Worst Housing Market - (www.sfgate.com) Allied Irish Banks Plc, the nation's biggest mortgage lender, may use money from its taxpayer bailout to rescue homeowners unable to pay their mortgages, opening the door to debt forgiveness in Europe's worst real-estate market. Irish home prices have fallen by 40 percent from their peak in 2007, according to figures from the country's statistics office. More than one in 10 home loans are in arrears or have been restructured, typically by shifting borrowers to paying interest only on loans for a period, central bank data show. "People who are unemployed can't pay back their debts and that puts them into arrears and potentially default," said Conall Mac Coille, an economist at Dublin-based securities firm Davy. "In Las Vegas, you can just throw the keys back in the door and you're done, whereas here you go bankrupt."

Almost half of mortgages in Arizona are underwater - (www.azcentral.com) Just under half of all Arizona mortgages were "under water" in spring of this year, the second-highest percentage in the nation, according to a report from a private research firm. CoreLogic said only Nevada, at 63 percent, had a higher rate of homes under water at the end of the first fiscal quarter of 2011, the most recent period for which it had a report. An underwater mortgage is a home with negative equity -- when a person owes more on their mortgage than their home is worth. Arizona homeowners who were under water averaged $60,000 in negative equity, according to the report, below the national average of $65,000. New York borrowers held the highest negative equity with an average of $120,000, but only 6.2 percent of mortgages in that state were under water. Phoenix was the third-highest metro area in the nation, with 55 percent of its mortgages under water, according to CoreLogic, trailing Las Vegas and Stockton, Calif.