Latest From : Atlanta RE 5 by 5

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• Fannie Mae Passes New, Tougher Mortgage Guidelines
• What's Ahead For Mortgage Rates This Week : September 28, 2009
• Existing Home Supply Falls By Nearly A Month
• A Simple Explanation Of The Federal Reserve Statement (September 23, 2009 Edition)
• Home Prices Still On The Rise
• Should You Lock Your Mortgage Rate In Advance Of Tomorrow's Federal Reserve Announcement?
• What's Ahead For Mortgage Rates This Week : September 21, 2009

Fannie Mae Passes New, Tougher Mortgage Guidelines Posted: 29 Sep 2009 07:45 AM PDT Getting approved for a mortgage is about to harder. For the second time in less than 3 months, Fannie Mae announced changes to its mortgage guidelines. In its official announcement, Fannie Mae details the updates, meant to reduce the mortgage firm's overall risk. The first major change is with respect to credit scoring. All Fannie Mae loans -- whether underwritten electronically or manually -- require a 620 credit score minimum. There are very few exceptions. A second change relates to loans with private mortgage insurance. Homeowners whose loan-to-value exceeds 80 percent now have a choice: Accept higher mortgage insurance premiums month-after-month Accept a one-time fee paid at closing to compensate for higher risk Both options pass higher costs to consumers. Then, a third change relates to maximum debt-to-income ratio. As announced in a separate document, Fannie Mae will no longer approve expense ratios exceeding 45 percent except with very strong assets and credit to back it up. In no case can expense ratios exceed 50 percent. There are other changes, too, including the elimination of seldom-used mortgage products and new risk-based pricing on "expanded level" approvals. Fannie Mae implements its updates during the weekend of December 12. Therefore, if you're going to need (or want) a new mortgage later this year, consider moving up your timeframe to October or November. Once the guidelines change, getting approved for a mortgage is going to be tougher.

What's Ahead For Mortgage Rates This Week : September 28, 2009 Posted: 28 Sep 2009 07:45 AM PDT The mortgage market resumed its winning streak last week after a 1-week hiatus. Markets rallied into the weekend and mortgage rates eased lower overall. It's the third week out of four that rates improved and, ironically, rates may have dropped last week because traders were watching the wrong metrics. With respect to housing, analysts found August's Existing Home Sales and New Homes Sales reports disappointing. Both posted weaker-than-expected sales volume, sparking a stock market sell-off that led bond markets higher. It was the wrong reaction. Versus home supply, the number of monthly sales isn't nearly as important to the national housing recovery and the supply of homes fell in August. If Wall Street had been paying better attention, mortgage rates may have risen instead. The supply of homes for resale fell nearly a month, and of new homes by 0.3 months. This week will be heavy with data so don't expect rates to stay low for long. Early in the week we'll get the Case-Shiller Index, a few consumer confidence surveys, and the Personal Consumption Expenditures report. Late in the week, it's the September jobs report. With mortgage rates are trolling near their lowest levels of the quarter, it may be prudent to lock something in to avoid the risk of rates rising.

Existing Home Supply Falls By Nearly A Month Posted: 25 Sep 2009 07:45 AM PDT As reported by the National Association of REALTORS®, the number of Existing Home Sales dipped last month, ending the metric's 5-month winning streak. Newspaper headlines today are overwhelmingly negative on housing. You'd almost believe this year's housing recovery had ended. That's hardly the case. See, the other side of the Existing Home Sales story is that -- while the number of units sold did fall by 3 percent -- the existing supply fell by nearly an entire month. To home buyers and home sellers, this is huge. Home prices are based on supply and demand and with supplies plummeting, it means that home prices are poised to rise. Indeed, dwindling inventory isn't "news" to today's buyers. Multiple offer situations have been common since the start of the summer and, should supplies fall further, they may soon be the home-buying rule rather than the exception. Since peaking in November 2008, existing home supplies are down 23%.

A Simple Explanation Of The Federal Reserve Statement (September 23, 2009 Edition) Posted: 23 Sep 2009 01:37 PM PDT The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent. It also reiterated plans to support the mortgage market to the tune of $1.5 trillion. In its press release, the FOMC noted that the U.S. economy is "picking up following its severe downturn" and that financial markets have "improved further". It's the second consecutive post-FOMC statement in which the Fed appears somewhat optimistic -- a signal that the recession will end soon, or has already ended. That said, the economy still has some soft spots and the Fed made a point to single them out. Each poses a distinct threat to economic recovery. Ongoing job losses Sluggish income growth Tight credit conditions Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent "for an extended period" and to honor its $1.25 trillion commitment to the mortgage bond market. However, the FOMC changed its timeframe on the mortgage-backed bond buys, extending its deadline to March 2010. This move should help the Fed keep mortgage rates from rising too high as the economic expansion takes hold. Market reaction to the Fed's press release is positive. After an early day sell-off that drove rates higher by about a quarter-percent, most of the pressure is easing. Pricing is worse on the day overall, but well off its lows. The FOMC's next scheduled meeting is November 3-4, 2009.

Home Prices Still On The Rise Posted: 23 Sep 2009 07:45 AM PDT As reported by the government, home prices are rising nationwide, up 0.3 percent in July. Furthermore, versus November 2008, the Home Price Index has clawed back to unchanged. The housing market appears to be holding its own. However, we have to be careful about putting our full faith in the Federal Housing Finance Agency's data. It's somewhat flawed. The Home Price Index is a national statistic and all real estate is local The Home Price Index's methodology specifically excludes key housing demographics As an obvious example, HPI only accounts for homes with Fannie Mae- or Freddie Mac-backed mortgage. Lately, the percentage of homes meeting that description is shrinking. As FHA financing rises in popularity, Fannie and Freddie back far fewer loans than in the past. Furthermore, the HPI sample set also excludes newly-built homes and multi-unit properties. Because of these exclusions, some analysts call the HPI incomplete. The same could be said of all home price metrics, however -- including the venerable Case-Shiller Index. Therefore, what should be of interest to today's buyers and sellers is that all of "popular" home valuation models seem to be telling the same story -- home prices have stopped falling and look like they're beginning to rebound. For a region-by-region breakdown of the Home Price Index, visit the FHFA website.

Should You Lock Your Mortgage Rate In Advance Of Tomorrow's Federal Reserve Announcement? Posted: 22 Sep 2009 07:45 AM PDT The Federal Open Market Committee starts a 2-day meeting today in Washington. The scheduled get-together ends at 2:15 PM ET Wednesday after which the FOMC will issue a press release to the markets. Consider locking your mortgage in advance of the press release. The FOMC meets 8 times annually and its adjournments are among the biggest market-movers of the year. The Fed's post-meeting press release is a direct look into the mind of the Federal Reserve and Wall Street is looking for clues anywhere it can find them. After its August 2009 meeting, the FOMC said in its press release: Financial markets have improved, relative Household spending remains constrained Although weak, the economy is "leveling off" Since then, however, credit risks have lessened on Wall Street, consumer spending has shown signs of life and Fed Chairman Ben Bernanke said the recession is "very likely over". This is why tomorrow's FOMC press release is so important. Markets don't expect the Fed to raise or lower the Fed Funds Rate, but they do expect the Fed to shed light on its next series of moves. If the Fed alludes to inflation and stronger growth ahead, mortgage rates should rise. By contrast, reference to slower growth ahead should help keep rates steady. The FOMC is expected to leave the Fed Funds Rate within its target range of 0.000-0.250 percent -- the lowest it's been in history. However, it's what the Fed says Wednesday that will matter more than what the its does. If you're floating a mortgage rate or wondering if the time is right to lock, the safe approach is to lock prior to 2:15 PM ET Wednesday.

What's Ahead For Mortgage Rates This Week : September 21, 2009 Posted: 21 Sep 2009 07:45 AM PDT After improving in the two prior weeks, mortgage markets finished last week unchanged overall. Mortgage rates were down early in the week but managed to give up all of their gains late-Friday afternoon. It's the same volatility variety we've seen in most weeks this year. Markets moved on to both positive- and negative-type news last week. On the positive side: Fed Chairman Ben Bernanke said the recession is "very likely over" Retail Sales were much stronger than expected Warren Buffett confirmed to CNBC that he was back in the market On the negative side, Housing Starts idled and corporate earnings fell flat. This week, the market moves on. Investors will watch several key releases including Existing Home Sales on Thursday, and Consumer Sentiment and New Homes Sales on Friday. The most important event of the week by far, however, is the scheduled, 2-day meeting of the Federal Open Market Committee. The FOMC is the policy-setting group of the Federal Reserve and each time it meets, markets have a tendency to get volatile. Markets expect the FOMC to leave the Fed Funds Rate within its current "target range" of 0.000-0.250 percent but that doesn't mean mortgage rates will remain unchanged as well. Depending on the verbiage of the FOMC's post-meeting press release, mortgage rates could rise or fall by a lot. The FOMC adjourns from its 2-day meeting Wednesday at 2:15 PM. (Image courtesy: Wikipedia, licensed under Creative Commons)

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