Assembly Committee Passes California Homeowner Bill

California Attorney General Kamala Harris announced Tuesday that the Assembly Public Safety Committee passed a piece of the California Homeowner Bill of Rights designed to protect the state’s homeowners from scams.

SB 1474, authored by Sen. Loni Hancock (D-Berkeley), would allow Harris to convene a special grand jury to investigate and indict perpetrators of financial crimes involving victims in more than one county, as well as crimes committed by a single defendant or multiple defendants who worked together. Under current law, fraud involving victims in different counties requires separate grand juries, and charges must be filed in every county where the crime was committed. SB 1474 would provide for the option of a special grand jury that can produce indictments for financial crimes beyond the scope of single-county grand juries.

The bill passed unanimously with bipartisan support. It had previously passed out of the California Senate May 31, also with unanimous and bipartisan support. It will next be heard in the Assembly Appropriations Committee.

“Scammers continue to prey on vulnerable Californians who simply want to stay in their homes,” said Attorney General Harris. “This legislation will create a more cohesive legal process to prosecute those who prey on Californians across county lines.”

By: Tory Barringer

Market News Update - Mortgage Applications on the Rise!

At long last it seems that homeowners and homebuyers alike are listening to the news and realizing that they need to take advantage of the record low mortgage rates.  In the last two weeks almost every day you would hear that mortgage rates have hit new lows.  Well…the people are responding.  Mortgage applications for refinancing and purchases had the largest increase in a single week than we have seen in over a year.

Purchase applications jumped 13% and refinances went up by 19%.  The purchase increase, which for me is the most telling, indicates that home buyers are realizing that the time may never be better to purchase.  When you combine the interest rates with low home prices, home affordability is once again at record levels.  The refinance jump is hard to read because a good portion of the applications now coming in are for borrowers that may have refinanced within the last few years.  Because rates are so ridiculously low, they are opting to do it again.

Next week starts what I call Housing Week.  There will be 3 different reports on the housing market which will give us an indicator on the health and recovery of the market.  The reports scheduled to be released are Housing Starts, Existing Home Sales, and the FHFA House Price Index.  Although these are not all of the housing reports, these are major ones which will certainly make headlines and can have an impact on the stock market.  It is important to remember that these reports are for the prior month.  Housing can change week by week and what is the latest report may not necessarily reflect what is happening today.

Mortgage rates, although they have risen off of their record lows, continue to remain far below where anyone ever expected them to be.  The likely hood of them remaining low is high for now because demand for government securities remains strong.  The government’s 10YR Treasury Auction this week drew more demand than was expected.  This demand demonstrates that investors are still very weary of what is happening in Europe and continue to remain on the sidelines of the U.S. stock market.  Although mortgage rates do not tie in directly to the government treasury prices, they certainly are an indicator on the movement of mortgage rates.

The rumor mill and speculation was in full swing on Thursday in the stock market.  With yet another poor unemployment report, someone started the talk that the government is more likely to act on providing more stimulus to help move the economy towards recovery.  I don’t know who started the rumor, but I do know it was NOT Fed Chairman Ben Bernake.

The irony of the speculation is that it was only based upon the First Time Jobless Claims that rose again by 6,000.  The claims for the prior week were 387,000 which is moving closer to the artificial crisis benchmark of 400,000 that we saw during the recession. 

Please keep in mind, that last week Bernake gave no indication that another round of stimulus was coming any time soon.  Yesterday nothing was said, either, despite the poor employment report.   However investors have taken it upon themselves to guess what the Fed may do, and that is driving the stock market.

Inflation continues to remain well under control.  The Producer Price Index declined .1% which was a larger decline than was expected by analysts.  The Consumer Price Index also dropped due to the dropping energy prices.  When you remove energy from the equation, the CPI actually increased by .2%, which is considered a moderate increase but well under control.

Next week’s economic reports are:

• Tuesday June 19^th – Housing Starts
• Wednesday June 20^th - MBA Applications, FOMC Announcement and Forecasts
• Thursday June 21^st - First Time Jobless Claims, Existing Home Sales & FHFA House Price Index

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 
Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Market News Update - Housing Prices Rise Even As Unemployment Rises

Wow it has been many months that I had to search high and low for good news on the economy, and I hate to say it, this week I really couldn’t find much.  After many months of economic indicators heading in a positive direction, it seems that almost every one of them has reversed course. 

The biggest headline this week is the National Unemployment figures which came in far worse than expected.  Unemployment increased .1% up to 8.2%.  What makes the report even worse is that the number of people that obtained jobs in April was revised downward by 73,000 and in May the economy only added 69,000.

The housing market which seemed to be showing signs of life has appeared to have reverted back to its old ways of bouncing along what most people consider is the bottom of the market.  Although we are not seeing a decline in housing values the way we experienced at the height of the recession, we are seeing the slow but steady improvement fade away.

Mortgage rates have once again hit all time lows yet housing purchases and refinances both have been slowing.  Pending Home Sales which steadily rose for three straight months reversed course in April with an unexpected 5.5% drop.  This report does not bode well for the May and June existing home sales reports. 

Despite the record low mortgage rates, the Mortgage Bankers Association reported that applications for refinancing and purchases dropped 1.5% and .6% respectively.  Many believe that the uncertainty in housing is more related to the jobs market and consumer confidence than anything really related to housing itself.

The single bright spot in the housing reports this week is the S&P Case-Shiller Home Value Index.  The S&P reported that home prices in the 20 major cities measured rose for the second straight month.  The increase may be small, but an increase is an increase.  Additionally, home values are only 2.6% lower than they were a year ago which is the closest margin we have had since the recession started.

As you already read, the improvement of the job market in recent months has stalled out and is turning for the worse.  I don’t want to make a judgment based upon this month’s report alone, however we have been seeing a steady slowing in the hiring sector and more people have been heading to the unemployment lines to file.

Thursday the stock market finished its worst month since December 2010.  The DOW and S&P 500 both declined by 6% where as the NASDAQ dropped an even larger 7%.  The scary part is the market is being gripped by the fear of what is happening in Europe versus anything going on in the U.S.

First we had Italy, then Portugal, followed by Greece, and now Spain joined the fray of European countries that is having major financial issues.  Last week it came to light that the Spanish banking system may have more to worry about than first thought.  This all came up when it was reported that the Spanish government had to bail out one of the nation’s largest banks.  More news from Spain is coming out daily and many investors feel very insecure about how the ripple effect of the European debt crisis is going to impact the U.S.

Reports for next week are:

• Monday June 4^th – Factory Orders
• Tuesday June 5^th  - ISM Non Manufacturing Index
• Wednesday June 6^th - MBA Applications
• Thursday June 7^th - First Time Jobless Claims

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851   

PS… FOLLOW ME on Facebook for the latest Mortgage updates

Expanding HARP to Prevent Defaults and Stimulate Economy

By: Esther Cho

While seeming to recover, the housing market is still undoubtedly fragile, and there are millions of underwater borrowers who continue to struggle with making payments. While HARP proposes to address these concerns, the program has been limited in its ability to reach the masses.

Through the Responsible Homeowner Refinancing Act of 2012 introduced by Democratic Sens. Bob Menendez (D-New Jersey) and Barbara Boxer (D-California), a new HARP 3.0 would break down barriers preventing millions more from refinancing.

During a hearing on Thursday before a senate subcommittee, industry experts and leaders offered testimony on how the proposed legislation could impact the economy.

Mark Zandi, chief economist for Moody’s Analytics, delivered a testimony in which he said, “Policymakers should act to substantially increase mortgage refinancing activity.”

When first introduced, the Obama administration expected HARP to refinance between 4 and 5 million homeowners, but FHFA estimates show that since its 2009 inception, the program has refinanced close to 1.1 million borrowers as of February 2012.

In late 2011, HARP underwent an expansion to allow borrowers with loan-to-value (LTV) ratios higher than 125 percent to apply, among other changes.

Acknowledging that it takes time for servicers to implement new changes, Zandi said in his written testimony that HARP refinancings in early 2012 appear to have run close to 50,000 per month, up from 30,000 per month since the program began. Zandi also noted reports from the Mortgage Banks Association showing a pickup in applications for refinancing.

While these changes have helped to encourage more activity, Zandi expressed his support for more changes.

“More refinancing will mean fewer borrower defaults and more money in the pockets of homeowners, supporting the recovery through a quick and sizable cash infusion at no meaningful cost to taxpayers,” he said.

If the proposed expansions are fully implemented, Zandi said the legislation would increase eligibility to nearly 21.5 million borrowers.

Under the Responsible Homeowners Act, borrowers with LTVs lower than 80 percent and non-GSE loans would be eligible for the program. Currently, HARP only includes Fannie Mae and Freddie Mac loans.

Overall, Zandi said the broader economy, taxpayers, and homeowners, who are expected to save $2,500 to $3,000 a year, will benefit from refinancing.

Though, Zandi does acknowledge a loss for one segment: investors in mortgage backed securities.

“While the agencies would lose some interest income on their $1.2 trillion in mortgage securities and whole mortgage loans, under reasonable assumptions that would be offset by lower default rates on refinanced loans,” he said.

In a calculation, Zandi said HARP refinancings totaled 4.2 million, private investors would receive about $6.5 billion less in annual interest income.

While investors may not be pleased with their return due to low interest rates, Zandi said, “they were aware of this prepayment risk when they purchased their securities.”

Market News Update - Home Buyers are Hitting the Streets!

How long has it been since housing was the featured bright spot in the economy?   I don’t know exactly, but it is certainly longer than I can remember.

So many areas of the economy are deteriorating with the exception of housing.  With mortgage rates once again dropping to record lows, buyers are taking notice and hitting the streets.  We are receiving reports of stabilizing home prices, as well as realtors across the country that are continuing to report increased buyer activity.  In some areas of the country, especially the south, we are even seeing bidding wars on properties.

The National Home Builders Association that releases the monthly Housing Market Index reported that builders have seen a significant increase in demand for new construction in the month of April.  Housing Starts also increased 2.6% in April after having been down by the same amount in March.

There is a lot of concern about Europe again, especially Greece, and that has been weighing heavily on the minds of investors.  If you look at a graph of the stock market for the month of May, it looks like a car rolling down hill without any breaks.  The DOW Jones Industrial Average has dropped 837 points since the 1^st of the month.  Investors are running from the markets and placing their money in the safe haven of government securities.  It is this panic that has the mortgage rates reaching all time lows.

Inflation continues to remain a non factor as consumers have maintained their frugal ways and refuse to pay higher prices.  Many industries have attempted to increase prices on a wholesale or retail level and, as soon as they do, they immediately see a drop in sales.  Consumers simply refuse to pay higher prices.  I am a consumer and I know that since the recession, I have completely changed my spending habits to be more conservative and I see no reason to change this regardless of how the economy improves.

Retail Sales improved, however, at a much slower pace than before.  In March, sales increased .7% whereas the month of April only realized a slight increase of .1%.  None the less, an increase is an increase.

First Time Jobless Claims remained virtually unchanged for another week.  Some believe this is a sign of employment stability however others seem to believe that there is cause for concern.  Typically at this time of year there is an increase in hiring and that has simply not materialized.  Claims remain constant at a slightly elevated level of 370,000.

With the economy slowing, combined with the concerns from the Greek financial crisis, the Federal Open Market Committee is beginning to warm up to the idea that they may have to launch a 3^rd round of economic stimulus, known as QE3.

 

By no means is the Fed even in the planning stage of providing more stimulus, they are simply at a point where more members are stating that if necessary they will consider it.  You may remember that just a few months ago, many of the members were staunchly against providing any more help to the economy.  It appears that the deterioration in the markets is beginning to move some of the members to realize that the economy may be in fact slowing down far more than first thought.

Reports for next week are:

• Tuesday May 22^nd – Existing Home Sales
• Wednesday May 23^rd - MBA Applications, New Home Sales and MBA Applications
• Thursday May 24^th - First Time Jobless Claims and Durable Goods Orders

I appreciate your business and look forward to talking to you soon! Have a great day!!!
 

Sincerely,

Cindy Tomlinson
Loan Officer

USLending Company

DRE Lic # 01520422
NMLS # 214851