Archive for the ‘mortgage’ Category

Everett Mortgage GSE Bailout Will Harm Seattle Mortgage Co

Tuesday, January 5th, 2010

Everett Real Estate Will Be Harder to Finance

Mortgage lenders and Everett real estate will see more difficulties in obtaining home loan financing. When the Treasury Department lifted the debt ceiling for Fannie Mae and Freddie Mac (GSE or Government sponsored entities) the Obama administration just made you liable for Hundreds of BILLIONS of dollars in more debt. Yes the most transparent administration yet did this on Christmas Eve hoping you wouldn’t notice it.

I’ll just bet you didn’t know you had already bought $111 BILLION of GSE preferred stock did you? Back in September 08 the Bush administration at least put a $200 BILLION ceiling on the debt. Now Obama has lifted that to least $400 BILLION. $400 BILLION would buy a lot of Everett real estate. But really there is no statutory ceiling.  Preferred stock must be paid dividends but in order to pay those dividends (to you the new stockholder) they now have to borrow the money (from you the taxpayer) to pay you the citizens of America dividends. Sound like a cluster you know what?

Now why do they need to borrow more money when they didn’t spend the original $200 BILLION? Good question. They did it because the Treasury Department has directed the GSE’s to invest in bad money losing strategies in loans modifications. The same loan mods that are impeading the recovery. The same loan mods that are actually hurting the borrowers.

Do you remember Enron? The energy company that had BILLIONS in bad “off the books” investments. They were off the books so the stockholders and bankers couldn’t see how bad the financials really were. I’ll be you guessed it already. Yup the GSE’s are keeping the bad debt loan mods off the books. That is so our political class doesn’t have to tell you they are now starting ANOTHER REAL ESTATE BUBBLE.  This is why mortgage lenders and Everett real estate will see more difficulties in obtaining home loan financing. Soon nobody in their right mind will invest in a mortgage backed security (MBS). If no one will buy a MBS then there will be no money to finance homes for sale Everett.

This is all being done to try and keep the democrats in power in Washington, D.C.

Since the Treasury Department has announced that as of the end of March 2010 they will no longer buy MBS I can see how the real estate market will tank on April 1st (great timing). Now because there is no ceiling on the GSE’s debt they can replace the Treasury Department and keep the market going at least until 2012. I’ll bet you can think of at least one thing scheduled to happen in November of 2012. And I’ll bet you didn’t know that Barney Frank and Chris Dodd have another surprise for you, the taxpayer. That’s right more debt. Soon the national debt will dry up all funds for any Seattle Mortgage Companies. Mortgage lenders and Everett real estate will have no money and we will have another major crash.

Posted in Homes for Sale Everett, Real Estate Everett, mortgage | No Comments »

Everett mortgage- lets start another RE bubble

Sunday, December 20th, 2009

This will definitely affect homes for sale in Everett. This will definitely affect homes for sale in Snohomish County. It will have an affect on mortgages in Everett and everywhere else in America.

Here’s the bogus idea of the year- Lets start another real estate bubble. We didn’t learn from the last one so lets do it again.

Democratic Representatives Al Green, Maxine Waters, Robert Wexler and nine others in Congress are backing a bill now that would restore zero down loans to buy homes for sale in Everett. This practice was banned as of last October, called “seller assisted down payments”. And can you believe it these loans will be backed by FHA mortgages so, Ya you guessed it, the taxpayer will be on the hook for more foreclosures.

Deja vu all over again

HR600 is about “Seller Assisted Down Payments,” which is a euphemism for a scheme that enables people who cannot save enough money to make a down payment, to qualify for FHA insured mortgages. Take a person who can’t save 3.5% of the purchase price and now what makes you think they will honor a mortgage?

Here’s how it works: A seller can make a 3.5% donation to a charity that in turns makes a donation back to the buyer of the 3.5%. The charity charges a fee for this. Now the seller can up his price or can take it from his proceeds. That will depend on what the market is like. The home must appraise for the new price. But here is one thing for sure; the buyer will have no real equity in the home.

The charities are big backer of this, and I’ll bet you just wonder why. Ya again there is big money in it. There are 11 democrats and one republican backing this. Oh lets not forget National Associations of Realtors, Homebuilders, and Mortgage Brokers lest you be surprised.

Last October the seller assisted down payment plans were eliminated because it was found that these mortgages defaulted at a MUCH higher rate than ones with a buyer who had real money in the deal. Ya I’ll bet that’s a big surprise too.

The supporters of this bill think it is a great time to buy real estate. And just who you think they want to buy? Ya you guessed it, those who can’t save up a lousy 3.5%. Don’t we already have enough of a problem with mortgages being underwater? Why would we want to create more of them?

Why would you the taxpayer want to reinstate a failed program just so the taxpayers can bail it out again? I guess somebody didn’t get the memo, zero down is not a good idea. It wasn’t between 2006 at 2008 and it will not be now.

Rep. Maxine Waters and her peers say the legislation is important because it helps African Americans and other minorities who cannot come up with a down payment to “realize the dream of home ownership”. Well I say that is as bogus a statement as I have ever heard. These loans have a 28% failure rate. That is an astronomical foreclosure rate. We would have to raise mortgage insurance rates on every existing FHA loan just to cover the expected loses.

Ya this will effect homes for sale in Everett but not in a good way.

Jim Johnson and comments are always welcome.

Posted in Homes for Sale Everett, Mortgage Everett, mortgage | 5 Comments »

Everett mortgage: Academic has no ethics but that is typical

Monday, November 30th, 2009

An Ivory Tower professor has no concept of ethics

Brent T White an Arizona law school professor has some disturbing things to say about California real estate and homes for sale Everett. He says to walk away from your home if you are underwater with your mortgage. He says go ahead and break the chains of guilt, shame and fear and simply walk away. No matter the ethics involved, no matter any morally just walk away.

First off he suggests that you would save hundreds of thousands of dollars doing this. He sites facts and figures that distort the problem. On page 8 of the abstract he claims that 51% of all home owners in Arizona are underwater. He also claims that 32% nationwide are underwater. But my research shows his numbers are a bit exaggerated but that is beside the point. The California real estate market has seen ups and downs. The same can be said for homes for sale in Everett. Both markets have gone up and down many times in the last 30 years.

Professor White claims that these home owners have no hope of ever recovering their equity. He thinks that the market will never recover and they will simply be paying forever. He seems to think that this market correction is the first of its kind and has no precedent. He claims that your credit score will take a hit but will recover to acceptable levels within 2 years. He claims that if you stay current with everything else you can get a decent score back within 2 years. By acceptable levels he means a 660 score or better.

This ethically challenged professor has a few other claims. In some states such as California and Arizona so called anti-deficiency states lenders can’t go after defaulting borrowers. That isn’t completely true. Also that in other states lenders will simply not pursue borrowers because its not worth it. I have heard that some borrowers will hire attorneys to see if some flaw can be found in the contract to make the mortgage invalid and therefore not enforceable. This can become as expensive as simply paying the mortgage.  White’s main point is that borrowers let emotions and ethics get in the way of clear financial thinking. To Whites way of thinking a contract is not deal if it doesn’t work out for the borrower. He thinks the bank should get stuck with the debt and the borrower let off the hook with no liability beyond a credit ding. White claims that there is an inherent imbalance in the relationship between the bank and the borrower.

Let’s examine his ideas and extend them out into the future. First Fannie Mae and Freddie Mac dispute Whites claims that your credit will recover in 2 years. In my experience a foreclosure will haunt you for at least 5 years unless there are extenuating circumstances. You had better be able to document those circumstances. And expect a rough road to obtain another mortgage within the next 2-5 years. Borrowers who simply walk away will face severely reduced credit scores for at least 5 years. And beyond the moral dimensions if many people actually start to do this think of the effects on future borrowers. Mortgages are already getting hard to get. Now if walking away happened on a large scale they will become extremely hard to get and much more expensive. Interest rates reflect the risk involved in full repayment. I consider Whites position completely lacking in ethical and moral standing. This is exactly what I expect to hear from a left wing nut from Academia. I came across this same point of view in a blog from a financial advisor also from Phoenix. He and I had quite a flame out going via email. I said the same to him as I do here. This stance is completely without merit.  The bank made this loan to the borrower expecting repayment. The bank didn’t ask you for any of your expected profit. And when you made that mortgage you expected to make a profit. The bank didn’t make the rules that created this mortgage crisis. Banks on a different level do have some responsibility for the mortgage bubble. But the real responsibility lies with the federal government.

What are your thoughts on this? I welcome all comments below.

Jim Johnson

Posted in California Real Estate, Homes for Sale Everett, mortgage | 1 Comment »

Everett mortgage: 5 Things to look for when buying your first Home

Monday, November 30th, 2009

The smart way to use your VA mortgage or your FHA mortgage

These ideas work for California real estate and Everett real estate. Before we even start looking for homes for sale Everett I will assume you have done what I call the 3 basic tasks you need to do before buying your first home.

  1. You have found a good loan officer and have qualified for a VA or FHA mortgage. The reason I suggest a VA mortgage is because it is the only true zero down mortgage available without heavy restrictions. Now if you don’t qualify for the VA mortgage you should be able to qualify for a FHA mortgage. The FHA mortgage has the lowest down payment (3.5% of the purchase price) and is the easy to qualify for.
  2. Next before anything else I suggest you see a qualified tax professional. The reason I suggest this is because if you have never owned a home before you will be surprised at the tax benefits of home ownership. Tax planning is always best done before the act not after.
  3. Find a good real estate agent. Be sure that the agent knows the area you are considering.

1) Ask you agent to look for a neighborhood in transition. Usually your best bargains for a home for sale in Everett are in neighborhoods in transition. Now what exactly is a neighborhood in transition? The first thing is how many of the homes look to be rental as opposed to owner occupied? If you really want to know that here is a simple way. Have your agent ask a title insurance company for an area report of owner occupied vs. non owner occupied homes. In the report they will have dates of sales recordings. This way you can get a feel for the way the neighborhood is going.

2) Next really look at the homes in the area. Look for well kept yards, signs of home remodeling, new paint, new roofs, etc. Does the neighborhood have CCR’s? CCR’s are codes, covenants and restrictions. In Everett there is the historic area. In this area you have to maintain your home in certain ways. In an larger area developed by a single developer you will usually find CCR’s. These can be minor to major restrictions. If you are buying a Condo there are ALWAYS CCR’s.

3) Another source of information is the local police records. These records can show which way crime is going. Usually owner occupied homes will have a lower crime rate than rentals, for obvious reasons. Look for bars on windows and doors.

4) Just because a home for sale in Everett isn’t listed doesn’t mean you can’t buy it. When I go shopping for real estate bargains I look for homes owned by very long term owners. Retired people who may be snowbirds or simply not able to keep a home up anymore just might be open to an offer.

5) How about expired listings, there are plenty in California real estate. In this market many homes haven’t sold for various reasons. Here is when you can find so interesting bargains. Here is when creative financing can occur. If the seller is wiling you can actually buy a home without a formal loan. I don’t recommend this unless you have the help of someone experienced in this. This is true sweat equity. This is the way I bought my very first home in West Lynn OR. I bought it then fixed it up and got formal financing later.

You are allowed only one VA mortgage at a time. The same is true with an FHA mortgage. Use them wisely and they will make you a lot of money.

Comment and suggestions are most welcome.

Jim Johnson

Posted in California Real Estate, FHA Mortgage, Homes for Sale Everett, Mortgage Everett, Mortgage Fraud, VA mortgages, mortgage | No Comments »

Everett mortgage: Why is my interest rate higher than going interest rate

Saturday, November 28th, 2009

Why is my interest rate higher than going interest rate

Why it that the TV and newspapers say the mortgage rate is 4.85% for a fixed 30 year loan but I am getting 5.25%? It seems like that is false advertising.

I contacted my Everett mortgage lender and he said that interest rates for a fixed 30 year loan were 4.85%. Then we met at his office and all of a sudden I am at 5.25%.

What I didn’t know was that rate is for a fixed 30 year mortgage with certain parameters. They are;

  1. At least 20% or more equity in my home. So if my home has a value of $300,000 and my loan amount with costs is less than $240,000 I just might get that 4.85% rate.
  2. But wait there are a few more hooks involved. How is my credit? If my credit score is under 620 I might not get any mortgage. If my score is between 620 and 680 there will probably be a few “hits”. What do you mean hits? Usually these are charges to the borrower because of a higher risk involved. There will probably range around .25% to .5% of the interest rate you receive.
  3. If I have had late payments on my credit I will probably have a combination of increased interest rate and additional fees.
  4. Even if I have these “dings” on my credit I can still get that very low rate but I may have to “buy” my rate down. If I have enough equity in my home I can use that equity to pay the fees and then I will get that super low interest rate.

Unless my credit is 720 or better and my total loan amount is less than 80% of the value of my home I can expect a few extra charges. So the next time I contact my Everett mortgage lender I will need to remember a few things. Do you have a comment?

Jim Johnson

Posted in Mortgage Everett, mortgage | No Comments »

Mortgage Everett: The Life of a Mortgage

Thursday, November 26th, 2009

How Does the Financial Market Really Work?

Or

The Fools March On and we pay for it.

An Everett mortgage originated right here in Everett doesn’t stay here. Wow what a surprise. Here is how it works.

Lets say I have am a mortgage bank. I don’t have my own money so I borrow $1,000,000. I am paying 1.5% on that money. Now I go and originate 4 mortgages each for $250,000.

On each of these mortgages I am charging 5%. You might think that’s the end but really it’s just the start. I sell these mortgages to an Investor. That investor may be another bank, a real person, some kind of institution or right now FHA. Because right now the only one buying these mortgage is the federal government. PS they have said as of next March they will stop buying these mortgages.

But back on track. I made 4 mortgages and now I’ve sold them to FHA. I get my $1,000,000 back and a bit of profit. Let’s say I got $12,500 for each loan. That’s a profit of $50,000. I can do this every single day of the week. Remember these mortgages will have an average life of about 5 years and produce interest for that time. At 5% if each loan produces and stays current FHA will make ($1 Mil X .05% X 5 = $250,000) $250,000 less the $50,000 FHA paid to me.

OK if I am a banker and I have my own money at risk I check to make sure that I am making good mortgage. But if I am lending out your money (tax dollars, bailout bucks) I might be a bit more lax about it.

This is how the market basically works until you get politicians involved. Once you get elected idiots involved they screw everything up. You see they don’t care how the market works all they care about is getting reelected.

So how can Mr. Politician use this to get reelected?  This is were it get Machiavellian. If I can change the rules and get more people into homes then I have more people who will vote for me. This is a simplified version but it all boils down to more votes for Mr. Politician. But here’s the problem Mr. Politician can’t keep the rules bankers would use because most of these new home owners will not qualify for an Everett mortgage. So what does Mr. Politician do he lowers the standards. Now when this all blows up what does Mr. Politician do he blames the bankers and gets reelected. I give you Barney Frank and Chris Dodd.

Do not think for one minute that I am absolving Mr. Banker here because he went along for the ride and got rich doing it. Tim Geithner is the Secretary of the Treasury. He is a Wall Street banker. He made deals with these banks that the US taxpayer will be paying for for years.

You my fellow taxpayer will be in debt over this until your grandkids are old.

I have simplified this down. There are parts I have left out because they only obscure the end.

I have left out how Mr. Politician forced the banks to lower their standards under Bill Clinton and Janet Reno. I also want you to know this problem has been in the making for almost 30 years. It starts with the Community Reinvestment Act of 1976 and Jimmy Carter. It builds steam under Clinton. In Bush 2 second term it was recognized that problems were occurring. At least 8 different times Bush administrations officials tried to rein this in. Chris Dodd and Barney Frank railed against any tightening of the rules. You can see this for yourself on Youtube.

http://www.youtube.com/watch?v=_MGT_cSi7Rs

http://www.youtube.com/watch?v=hxMInSfanqg&feature=PlayList&p=8B1B870D4C95652C&playnext=1&playnext_from=PL&index=37

Here is John McCain trying to rein in FANNIE MAE but stopped by Democrats Barney Frank and Nancy Pelosi

http://www.youtube.com/watch?v=63siCHvuGFg

In business if you fail you lose and are out of business. In politics if you fail you get reelected. Go figure.

Jim Johnson

Posted in Mortgage Everett, mortgage | No Comments »

Everett mortgage: More Government screw ups

Monday, November 23rd, 2009

More Government Interference in the Real Estate Market

or

The LAW of unintended consequences

HVCC (Home Valuation Code of Conduct) was supposed to help with inflated appraisals. It was supposed to keep appraisers from being pressured by lenders. Instead it killed the real estate market. It lead to fewer choices for the consumer, lower fees to appraisers, non certified non professional people doing appraisals and many more unforeseen consequences. It practically killed the conventional mortgage market.

Now we have more government interferences. And we will have more unforeseen consequences.

Since the real estate bubble collapse FHA mortgages have saved the American economy. The share of purchase applications for government-backed loans by the Federal Housing Administration and other agencies surpassed 40% in August, up from 38% in July and 32% in August 2008.  That’s the highest share that the MBA has measured since February 1991. That was just before the subprime mortgage boom.

Without the FHA mortgage there simply would be no real estate market. And now the fools in Washington want to “fix it”. The very people who are responsible for the mortgage meltdown are now going to fix the only thing that is keeping our economy going. Here’s what they are considering:

  • It is true that FHA mortgage insurance funds are below federal mandated minimums but this is really an accounting issue. It is not a solvency problem. It is true that some FHA mortgages are behind or into foreclosure. But so are many prime conventional loans. A vast majority of these bad loans were the result of a ZERO down scam type of FHA mortgage. These loans were called Nehemiah or Hart or some other name but allowed for a FHA mortgage to be used without any money from the buyer. These loans are no longer allowed.
  • Currently if you have at least 620 (and most lenders are going to 640) credit and 3.5% down you can buy a home with an FHA mortgage. Until early this year FHA rules allowed a buyer to qualify with a credit score as low as 560 in some cases. Now it’s 620 and more often 640. So now a buyer needs pretty good credit to buy. Critics say the credit score should be increased but that defeats FHA’s purpose and that is to serve the marginal buyer. A 620-640 score is not a bad score. Critics also say 3.5%  isn’t enough “skin in the game” and want to increase the down payment. Some want 5% and few even want 10%. I want you to know that raising the minimum down payment would defeat the basic idea of an FHA mortgage.
  • Currently there are 2 different types of mortgage insurance on every FHA mortgage. First there is UFMIP (Up Front Mortgage Insurance Premium) and is 1.75% of the loan amount. This is up from 1.5% at the end of last year. Next there is a MI (Monthly Insurance) and this is .5% or .55% of the monthly payment depending on the amount of down payment. Here I think we can tweak some. We can raise the UFMIP or increase the monthly MI or increase both. Please remember that increasing these fees will lower the loan amount that a buyer can qualify for. This will lower the amount of home they qualify for. I believe that minor adjustments here is the only way to improve the insurance coverage without screwing up an already fragile market.
  • Next some would cut the amount a seller can contribute to a buyer for closing costs. Again this is short sighted. Currently a seller can give back to a buyer up to 6% of the purchase price for closing costs. Usually closing costs will run around 3.5% +/-. Well any good loan officer will use the extra money to buy down the buyers’ interest rate and make the loan / home even more affordable to the buyer.
  • Next some say we should toughen the credit standards. Well the free market has already done that. Because the buyers of mortgage backed securities (MBS) will not buy a loan that has credit score of less than 620 there is no need to do this. In fact the market has said that unless the buyer has a 640 score most will not buy the MBS.

So I say to the guys who screwed this up in the first place keep your mitts off and let the free market do it. Just as they should have done right from the start. Every time the government gets involved they screw it up. I mean EVERY SINGLE TIME.

Jim Johnson

As Featured on ArticleCity.com

Posted in FHA Mortgage, Homes for Sale Everett, Mortgage Everett, VA mortgages, mortgage | 3 Comments »

Everett mortgage: The smart way to buy your first home.

Saturday, November 21st, 2009

I am going to suggest you see not one or two professionals at first.

I am suggesting three.

  1. The first person you should see is a professional lender. Find one you can trust. I believe that the lender who has to tell you everything is more trustworthily than one who doesn’t. I suggest you use a mortgage broker and not a mortgage banker. Here is why. Bankers don’t have to disclose nearly as much as a broker does. That means a banker can hide fees and YSP from you. I know you are asking what is a YSP? A Yield Spread Premium is a rebate the lender pays for your loan. If the going interest rate is 5.25% but the mortgage banker gets you to take a 5.5% loan he gets money on the backside of your loan. The mortgage banker doesn’t have to tell you about that money. If a mortgage broker has you take a 5.5% loan he at least has to tell you what he is making on the backside. You see mortgage bankers have a very powerful lobby in Washington DC. Brokers don’t. There really are very good reasons why YSP are allowed. For example suppose you have your down payment but not much more. Suppose your real estate agent wasn’t sharp and didn’t get the seller to pay your closing costs. A loan costs anywhere from $5000 to $10,000 and sometimes more. A good lender will use the YSP to pay those costs for you. There are other reasons for a YSP but we will save that for another time. Your lender will tell you how much you qualify for and thereby how much home you can afford. I suggest you might try one of two lenders. Cheapest is almost always just that the cheapest and nothing more. In lending just as in life you get what you pay for.
  2. The next person you should see is a tax professional. Tax planning is always best done before the fact and not after it. A tax pro will be able to tell you how a purchase will impact your personal tax return. A good tax pro will also be able to pick up the “fees” the lender will charge. You see many of the fees lenders charge on a purchase are named one thing but are really interest in disguise. That interest in disguise becomes a major deduction in the first year of your purchase. A good tax pro will tell you how to increase your take home pay to make buying your first home much easier. Because interest is deductible and rent isn’t a home payment is not the same as a rental payment. So $1800 in a home payment is usually about the same as $1500 in rent. A tax pro can explain and show that to you.
  3. Now you finally get to your real estate agent. A good agent will listen to you and show you a home you can afford. A good agent is more interested in making you happy than in their commission. There might be an exact home out there waiting for you. Then again there might not be. Pick a neighborhood in transition. If the right home isn’t available wait and it might appear. A proactive buyer might look at the cosmetic fixers in the right area. A proactive buyer might actually approach some of these absentee owners and make a lowball offer and find thereby find a heck of a bargain. Just because a home isn’t on the market right now doesn’t mean it’s not available for the right price. If you find an interested seller have your agent do the negotiating because that’s what they do. Just because you don’t find the right home right away don’t give up. Many buyers look for months to find the right bargain.

In previous posts I mention how to look for a neighborhood in transition.

Also how to tell if that neighborhood is actually in transition. Buying your first home should be an adventure, it should be fun. Have lots of fun.

Jim Johnson

Posted in FHA Mortgage, Mortgage Everett, Real Estate Agents, VA mortgages, mortgage | No Comments »

Everett mortgage: No Recovery Without Jobs

Thursday, November 19th, 2009

Foreclosures on prime mortgages insured by the Federal Housing Administration rose to three-decade highs in the third quarter, driven by the biggest job losses since the Great Depression.

One out of every six FHA mortgages was late by at least one payment and 3.32 percent were in foreclosure, the highest for both since at least 1979, the Mortgage Bankers Association said today. The delinquency rate for prime fixed-rate mortgages, considered home loans with the least risk, rose to 5.8 percent and the foreclosure inventory rose to 1.95 percent, the highest since at least 1972.

Homeowners are falling behind on their mortgages as the U.S. has lost more than 7 million jobs since December 2007, driving the unemployment rate to 10.2 percent in October, it’s the highest rate since 1983. Declining home prices in most markets also are preventing many owners from selling their properties. Many are just walking away and leaving the keys on the counter.

If you do not have a job you can’t pay the mortgage. Without a job even food becomes a problem. The bottom line is without jobs nothing happens.

The share of all types of mortgages with one or more payments overdue climbed to a record seasonally adjusted 9.64 percent in the third quarter. The foreclosure inventory increased to 4.47 percent from 4.3 percent. Both were the highest in 37 years of data. REO (Real Estate Owner by banks) property is a hidden force that will delay the recovery. Many estimate that more than 600,000 foreclosed homes fall into this category. These are properties that the banks took back and have not put on the Market yet. I think they are waiting to see if the markets recover so they can sell them at a better price. Thus avoiding showing the huge loses if they sold right now.

The percentage of mortgages on which foreclosure actions were started was a record 1.42 percent. New foreclosures on prime fixed-rate mortgages  increased to 0.71 percent from 0.67 percent, while FHA mortgage foreclosure rose to 1.31 percent from 1.15 percent.

Sub prime adjustable-rate foreclosures starts dropped to 4.92 percent from 5.52 percent and the total foreclosure inventory for the types of loans that sparked the global financial crisis rose to 24.7 percent from 24.4 percent.

Defaults on FHA mortgages, which require down payments as small as 3.5 percent, may create another lending crisis, Toll Brothers Inc. Chief Executive Officer Robert Toll said yesterday.

“It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money,” said Toll, the head of the largest U.S. builder of luxury homes. But I don’t think so. FHA mortgage requirements are much higher than the sub primes were.

FHA’s Reserve Ratio Falls but that is only part of the story

The FHA’s insurance reserve ratio fell to 0.53 percent, the lowest level in history, and more steps are needed to shore up the agency that guarantees one of every five single family loans. That ratio, the one in five, is growing larger ever day. But FHA has other reserves that are at all time highs.

While the insurance fund’s capital ratio is at an all-time low those who say FHA is the next sub prime- mortgage crisis are wrong. The quality of the loans FHA insures is actually very good.

A report yesterday showing an unexpected drop in housing starts. This highlighted how the property market remains reliant on government support to sustain a recovery. Just how unexpected could it be, the damn credit was set to expire at the end of November.  I always wonder why a drop or an increase in some economic indicator is so unexpected. Aren’t these the “experts”. Homebuilding virtually stopped as builders waited for the Obama administration to extend an $8,000 housing tax credit for first-time buyers. The credit helps but many think that the credit only accelerates purchases that would have been made regardless of the credit. The credit has been expanded to a $6500 credit for “move along buyers.” I see this as the only real tax benefit that our government has done that will help the economy.

Builders broke ground about 529,000 homes at an annualized pace in October, down 11 percent from the previous month and the fewest since April’s all-time low.

I think it is obvious that there will be no lasting improvement of our economy until we have a job recovery.

As Featured on ArticleCity.com

Posted in FHA Mortgage, Mortgage Everett, mortgage | 2 Comments »