Weekly Recap (9/20/10 – 9/25/10)by Tim Manni
Here’s just a taste of every blog post we published this week (click on the titles to read the entire post):
Beginning on November 1, 2010, Fannie Mae will no longer consider unemployment benefits as income for borrowers applying for HAMP. Fannie hopes that the new restriction will serve to curb the large number of HAMP redefaults. This will also mean that fewer borrowers will qualify for the federal modification effort.
Earlier this month, Fannie Mae told servicers that they need to speed up their handling of troubled loans. Fannie warned servicers that they will fine them if they fail to deal with the troubled mortgages in a swift and timely manner.
So while even those who championed the hardest for these homebuying incentives to begin with no longer think they have a place in the market, we wonder the opposite — maybe we need another tax credit.
Given the fact that the credits have disturbed the market to such a great degree, and twice nonetheless, would a third credit produce better results than the first two?
If we hadn’t already distorted the natural function of the market so greatly (and twice), the answer would probably be no. While there is little doubt that there have been some benefits, the resounding criticism is that the tax credits probably only incentivized borrowers who would have bought anyway, tax credit or not. Still, having gone to this well twice already, and with the market still in such difficult shape, the answer is probably a reluctant “yes”.
Last month, both Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan said that the government needs to begin to play a smaller role in the housing and mortgage markets. Well, here’s their chance…
The federal loan limits on Fannie Mae, Freddie Mac and FHA-backed loans — currently $729,750 — are set to expire at the end of this year. Nick Timiraos of the Wall Street Journal writes that, when they expire, the limits will fall to around $625,500.
To some, this seems like the perfect opportunity for Washington to begin to scale back their deep involvement in the markets. However, critics of the lower federal loan limits say that doing so will immediately cause an already-fragile housing market to suffer some more.
It’s hard to get away from the overwhelming skepticism and pessimism surrounding the present and future state of the housing market. Studies, surveys, articles and reports have all highlighted the challenges facing the market, adding to the atmosphere of negativity. Just this morning I read about a recent survey that found that real estate professionals are significantly more pessimistic than homeowners about the future direction of home prices.
A recent TIME magazine cover story plainly revealed what they think about owning a home. “Homeownership has let us down,” is the very first line of the article. There’s absolutely no sugar coating of opinions there, and it is a sentiment no doubt echoed by many people.
While the pessimistic opinions of many are well documented, some of us are wondering, “Who’s driving these negative opinions?” If homeowners are less pessimistic about the market than real estate professionals are, if the majority of homeowners maintain that walking away from your mortgage is still “unacceptable,” why do the headlines continue to be so bleak?
I believe at least a portion of the skepticism in the housing market is being driven by Washington.
HSH.com consistently publishes new, educational articles for consumers. Whether you are a first-time homebuyer, an existing homeowner, an FHA borrower or a struggling homeowner looking for a loan modification, each of our latest articles has something for you.
Let’s take a brief look at the latest content in our Library…
This summer was quite an interesting time for mortgage rates. Mortgage rates fell a little more than one-third of a percentage point during the summer, seemingly reaching all-new lows every week. Yet as summer has begun to wind down, so have the declines.
For the last six weeks or so, rates have wandered in a very narrow range and seem to be finding some consistency. According to our latest Market Trends Newsletter, “Provided the economy gets no worse, and there is no return of financial panic, mortgage rates don’t really have much place to go.”