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Keep the $8000 tax credit, say realtors

A large majority of the nearly 1,000 real estate agents surveyed in a recent Weichert poll say the first-time homebuyer tax credit of up to $8,000 has had a significant impact on spurring consumer interest in getting into the housing market. Some even called for an expansion of the program past its current expiration date and to homeowners that do not yet qualify. 71% indicated the credit was the single largest factor motivating the buyers they’ve worked with so far in 2009, 20% of respondents said affordable home prices were the motivating factor, and 8% indicated low interest rates played a major motivating role. 92% said the market will decline if the tax credit expires at the end of November while 97% of respondents favored extending the credit through Dec. 31, 2010. “The tax credit is working to restore confidence and stimulating the overall economy but we still have a long way to go before we return to a normal market,” said James Weichert, president and founder of Weichert. “As this survey shows, many in our industry are concerned that we will lose much of the ground that has been made toward a recovery if the tax credit is not extended.”

30-Year Mortgage Rate Falls to 4.94%

According to Freddie Mac’s latest survey of data through October 1, the average 30-year fixed-rate mortgage (FRM) had a 4.94% interest rate with an average 0.7 points, down 10 basis points (bps) from 5.04% last week. The 15-year FRM averaged 4.36% with an average 0.6 points, down 10 from 4.46% last week. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.42% with an average 0.6 points this week, down from 4.51% last week. The one-year FRM averaged 4.49% with an average 0.5 points this week, also down from 4.52% last week. A separate rate survey conducted by Bankrate.com of major US banks and thrifts indicated rates fell for a fifth week, dipping to their lowest levels since spring. The 30-year FRM slipped 11bps to 5.25%, while the benchmark 15-year FRM fell 10bps to 4.65% this week. “This is as good a time as any to refinance because Uncle Sam will make it more difficult and more expensive to refi in a few months,” said Bankrate’s Holden Lewis in weekly commentary.

Unemployment hits 9.8%

The national unemployment rate inched up to 9.8%, another 26-year high. The Labor Department said there was a net loss of 263,000 jobs in the month, up from a revised loss of 201,000 jobs in August. Economists surveyed by Briefing.com had forecast losses would fall to 175,000 jobs. The labor market had shown slow but relatively steady improvement since a record loss of 741,000 jobs in January, and this is only the second time this year that job losses rose from the previous month. However, September marked the 21st consecutive month that the number of workers on payrolls has shrunk, a period during which 7.2 million jobs have been lost. Even though many economists, including those at the Federal Reserve, say there are signs that the economy is growing once again, today’s jobs report shows that job losses could continue well into the recovery, limiting the strength of any economic turnaround.

GSE REO Portfolio Near 100,000

According to 10-Q filings with the Securities and Exchange Commission (SEC), Freddie Mac’s portfolio is nearly 35,000 properties, while Fannie Mae’s is closing in on double that figure at nearly 64,000. Fannie’s REO portfolio nearly doubled from the first half of 2008 compared to H109. Fannie held 33,729 properties during H108. The number of properties increased in all regions of the US except the Midwest, which experienced a decrease from 15,265 to 14,626 properties, but the rate of growth in the two portfolios has declined. Freddie acknowledges it expects to experience further losses from REO properties: “While temporary suspensions of foreclosure transfers and recent loan modification efforts reduced the rate of growth in our charge-offs and REO acquisitions during the second quarter of 2009, our provision for credit losses includes expected losses on those foreclosures currently suspended,” the Freddie filing said. Freddie said its pool of Alt-A interest-only loans, as well as 2006 and 2007 vintage loans comprise the biggest share of its portfolio and “continue to be larger contributors to our worsening credit statistics than other, more traditional loan groups,” because of factors like declining home prices. Freddie’s REO properties are concentrated in the West region of the country, and homes there comprised 27% of the unpaid principal balances of Freddie’s single-family mortgage portfolio as of June 30, 2009, but accounted for 46% of its REO acquisitions in the first half of 2009.

Regulation Z statutes in effect5

The Federal Reserve’s long awaited Regulation Z statutes went into effect yesterday after more than a year of preparations by the mortgage industry. Regulation Z is a truth-in-lending regulation to protect consumers who buy higher-priced mortgages with annual percentage rates (APR) above the average prime offer rate for a comparable transaction by at least 1.5 percentage points for first mortgages, or 3.5 percentage points for second mortgages. Lenders now have to provide additional disclosures when their customers purchase these loans. In addition, lenders will now evaluate the borrower’s ability to repay, verify income and assets, establish escrow accounts for taxes and insurance, and won’t have prepayment penalties for two years on most loans.

Taxes looming?

Remember the taxes the President promised no one but “the rich” (making over $250,000/yr) would have to pay? Well, no matter how much you make, reach for your wallet. An increasing number of influential Democrats and fiscal-policy experts have signaled that lawmakers will have to get a handle on the deficit, and they recommend seriously considering the creation of a value-added tax (VAT) on top of the federal income tax. That would mean more money out of everyone's pockets when buying virtually anything -- sweaters, school books, furniture, pottery classes, and dinners out. A VAT is tax on consumption similar to a national sales tax, but it's not just paid at the cash register. It's levied at every stage of production, so all businesses involved in making a product or performing a service would pay a VAT. And then the retail customer gets hit as well. Paul Volcker, the former chairman of the Federal Reserve who heads President Obama's tax reform panel, (among others, including liberal think tanks, of course) said that when it comes to getting control of the country's debt burden, "I think if we can't do it on the cost side, we've got to go on the revenue side. And it's too early to do it, but it's not too early to begin wondering.” Well, we all knew deep down that the “no new taxes” shtick was too good to be true, didn’t we?