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The Associated Press
Pending home sales fall 4.7 percentAfter posting a sharp
gain in April, NAR’s Pending Home Sales Index for May slipped by 4.7
percent and was 14 percent below 2007 levels. While the decline reflects
continued softness in the market, there was some good news in the West,
which includes California. There, pending sales slipped only 1.3 percent in
May and were 2 percent higher than a year ago.
MAKING SENSE OF THE STORY FOR CONSUMERS
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The national index registered 84.7 on a scale
where 100 equals the rate of pending sales during 2001, when the
index was initiated. It stood at 98.5 in May 2007. The national
decline was driven by the South, where the index fell 7.1 percent
to 84.5, 22 percent below last year’s figure, and the Midwest,
which experienced a 6 percent decline to 78.6, 13.8 percent lower
than a year ago.
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Despite the higher-than-expected national
decline, the West region index fell to 97.5 in May led by
Sacramento, which experienced double-digit gains in pending sales
as homebuyers continued to take advantage of favorable home prices
and interest rates.
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NAR President and Long Beach REALTOR® Richard
(Dick) Gaylord noted that the current market offers short-term
benefits and long-term value for homebuyers. He warned that buyers
should consider the potential that interest rates may increase
slightly should inflationary fears arise.
To read the full story, please click here:
http://ap.google.com/article/ALeqM5jYhsxaJOLCURko2JR8R6NUDHRW2wD91PO5TO0
The New York Times
Fed to clamp down on exotic and subprime
loans
Signaling that it sees no end to the housing downturn in
the foreseeable future, the Federal Reserve Tuesday said it will issue new
lending rules next week that are expected to limit exotic mortgages and
loans to high-risk individuals, and that it may extend its program of
low-cost overnight loans to investment banks beyond September in a further
attempt to normalize the nation’s credit markets.
MAKING SENSE OF THE STORY FOR CONSUMERS
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On July 14, the Federal Reserve is expected to
present a revised set of rules governing mortgage lending. Proposed
rules issued in December drew significant criticism from lenders,
who fear that tougher standards at a time when credit already is
tight could make many mortgages more costly by increasing paperwork
and creating additional legal issues. At the same time, consumer
groups argue that the proposed rules already are too weak and that
efforts to alter the proposal could make it ineffective.
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Starting in March 2008 during the near-collapse
of Bear Stearns, the Fed initiated what was expected to be a
six-month program to avert further bank defaults among the 20 top
investment banks that regularly trade Treasury securities. Under
federal law, the program may continue beyond September 2008 only if
"unusual and exigent circumstances" exist in the financial markets.
Under the program, the government may hold a wide variety of
investments, including hard-to-sell mortgage-backed securities, as
collateral for the overnight loans.
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Speaking Tuesday, Fed Chairman Ben Bernanke
reiterated his support for the proposed overhaul of Fannie Mae and
Freddie Mac. "If these firms are strong, well-regulated,
well-capitalized and focused on their mission, they will be better
able to serve their function of increasing access to mortgage
credit, without posing undue risks to the financial system or the
taxpayer," Bernanke said.
To read the full story, please click here:
http://www.nytimes.com/2008/07/09/business/09housing.html?_r=1&ref=business&oref=slogin
Los Angeles Times
IndyMac Bank to exit most lending, slash 3,800
jobs
Pasadena-based IndyMac Bank, at one time a leader in
lending to "alt-A" homebuyers whose credit fell below prime mortgage
lending standards, Monday announced it will close nine regional loan
offices (including four in California) and shutter 150 retail outlets that
made direct loans to consumers. The company said it will discontinue
mortgage operations with the exception of its Financial Freedom unit, which
makes reverse mortgages, and will cut almost half its current
employees.
MAKING SENSE OF THE STORY FOR CONSUMERS
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During the real estate boom, IndyMac became a
leading lender by offering adjustable-rate mortgages with options
that allowed homeowners the flexibility to pay interest-only if
they wished. While some banks focused on providing loans to
sub-prime borrowers, IndyMac focused on the "alt-A market, which
allowed borrowers to qualify with minimal proof of income and
slightly lower than prime credit histories. When home prices began
to fall or interest adjusted upward from initial teaser rates, many
borrowers found their property was worth less than the mortgage
balance or were unable to cover higher payments.
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Recently, IndyMac had focused on making
conforming loans it could sell to Fannie Mae and Freddie Mac.
However, the volume of conforming loans was not enough to offset
$693 million in losses for the six months ending March 31.
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In the face of increasing bank losses and
tighter credit standards, FHA has become the mortgage lending
program of choice for California homebuyers. It also is playing a
key role in helping stave off defaults and foreclosures. This year
alone, more than 500,000 American homeowners will refinance from an
adjustable-rate mortgage into a more affordable fixed-rate FHA
loan.
To read the full story, please click here:
http://www.latimes.com/news/printedition/front/la-fi-indymac8-2008jul08,0,954496.story
In Other News
Bloomberg.com
Arson surges for foreclosed home lost to
subprime
To read the full story, please click here:
http://www.bloomberg.com/apps/news?pid=20601109&sid=aelStm0.FmYo&refer=home
CNNMoney.com
On the path to a housing rebound
To read the full story, please click here:
http://money.cnn.com/2008/06/24/news/economy/tully_housing.fortune/index.htm?postversion=2008062509
Forbes
Increasingly affordable U.S. housing
markets
To read the full story, please click here:
http://www.forbes.com/realestate/2008/07/03/housing-affordable-cities-forbeslife-cx_mw_0703realestate.html
Los Angeles Times
Builder incentives: Just marketing, or the real
deal?
To read the full story, please click here:
http://www.latimes.com/business/la-re-incentive6-2008jul06,0,364501.story
Palm Springs Desert
Sun
Expert: Valley is in a recession
Stronger housing market waits at other end, Realtor
says
To read the full story, please click here:
http://www.mydesert.com/apps/pbcs.dll/article?AID=/20080706/BUSINESS/807060315/1006/news01
San Francisco Chronicle
More banks are helping hurting homeownersTo read the
full story, please click here:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/02/BU7411HK85.DTL
Talking Points
Here's
what to tell consumers
-
Looking at trends in the average number of days
a home stays on the market before an offer is received is one way
to view the health of a real estate market. June figures from Altos
Research and RealIQ show that, with the exception of San Diego,
metro California markets are in better shape than those in many
other struggling cities around the country. San Francisco homes
over the past three months averaged 73.7 days on the market, less
than half of the 153 days a home was on the market in Miami and
well below the 131-day average in Detroit. San Jose averaged 79.3
days and Los Angeles remained steady at 94 days on average between
April and the end of June. The lone leap in time on the market
among the four California markets studied was San Diego, which
jumped from 89 days in May to 114 in June and boosted its
three-month average to 93.6 days.
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Continued stress in the housing market and a
slowing economy were behind a sharp increase in the percentage of
delinquent home equity lines of credit (HELOCs) during the first
quarter of 2008, according to the American Bankers Association.
HELOC payments more than 30 days past due increased 14 basis points
to 1.10 percent between the end of 2007 and March 31 – the highest
level since 1997 and the largest increase since the ABA began
tracking delinquencies about 20 years ago. The news wasn’t all bad,
however. Home equity loan delinquencies improved slightly from 2.39
percent at the end of 2007 to 2.34 percent in the first quarter of
2008, while late payments on property improvement loans fell from
1.81 percent to 1.78 percent. Bank credit card delinquencies,
meanwhile, increased 13 basis points to 4.51 percent, just above
the five-year average delinquency rate of 4.41 percent. The ABA
expects delinquencies of all types to remain elevated in future
quarters as higher gas and food prices eat away at consumer
paychecks.
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