लोन मार्केट के हुदैछ ?

The big news this weekend is the takeover of Fannie Mae and Freddie Mac. The takeover by the US Government will protect the mortgage market from the failure of the two companies. Between Fannie Mae and Freddie Mac - they control almost 45% of the $12 trillion dollar mortgage market – or $5.2 trillion of mortgage-backed securities, and they are writing approximately 70% of the new loans. (note: FHA has approximately the other 30%)
Treasury Secretary Henry Paulson said the plan was implemented because “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance.” What do Fannie Mae and Freddie Mac do? Fannie and Freddie provide an outlet for mortgage companies to sell their loans. They always have a price set for what they will pay for a conforming mortgage loan. Some call them the buyer of last resort – because their window to buy loans is always open. Mortgage companies are then more likely to lend money to consumers, because there is always a buyer for that loan. Essentially Fannie and Freddie provide liquidity for the mortgage markets. Consider if Fannie and Freddie did not exist – mortgage companies would be less likely to loan money, because the mortgage company could be stuck with the loan, as opposed to always having a buyer. Since this is a risk, the mortgage companies would only lend at higher mortgage interest rates. Higher mortgage rates would further slow the housing market. Thus – Fannie Mae and Freddie Mac help keep mortgage rates low and help our economy. Fannie and Freddie raise the money to buy the loans with Mortgage backed securities and bonds – essentially by issuing debt to the public markets. Their cost of borrowing money determines interest rates for mortgages. The higher their cost of borrowing, the higher mortgage rates will be.

What is causing this to happen? This plan followed a report Friday by the Mortgage Bankers Association that more than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June.

That confirmed what investors saw in Fannie and Freddie's recent financial results: trouble in the mortgage market has shifted to homeowners who had solid credit but took out exotic loans with little or no proof of their income and assets. In recent weeks, investors have been less willing to buy Fannie and Freddie debt. For the risk of buying Fannie and Freddie debt, they are demanding a higher rate of return. This means interest rates on the debt are higher for Fannie and Freddie. This has directly raised the costs for consumers taking out mortgage loans. While Fannie and Freddie still have capital above the minimum requirements set by the government, and even though the company’s financial picture was better than investors assumed, it has become clear the market would not accept that the stability is there. The concern is Fannie and Freddie’s cost of borrowing will continue to increase, and thus increase mortgage rates, which further depresses the housing market.

What is the Government’s plan?

The plan places the firms under a conservatorship, a legal status giving the government time to restructure and revive the companies. The conservatorship will be run by the Federal Housing Finance Agency, the new agency created by congress this summer to regulate Fannie Mae and Freddie Mac. Placing the companies in
conservatorship, rather than receivership, could signal that the government does not intend to nationalize or liquidate Fannie Mae and Freddie Mac. Instead, under the terms of a federal law passed this summer, conservatorship is designed to allow the government to restructure the companies and return them to private control. Treasury officials have previously compared the process to Chapter 11 bankruptcy. The goal of the plan is to provide confidence to the investors in the mortgage market, so the pipeline for lending continues. What does it mean for you? If the government plan succeeds, and it should, the uncertainty around Fannie and Freddie could ease, making it easier for the companies to access funds at lower rates – thus lowering mortgage rates. That will have a spillover effect on the housing market – lower interest rates will help the housing market. It’s estimated that mortgage rates are almost a point higher than they should be at this point in time due to increased borrowing costs by Fannie Mae and Freddie Mac. Since this plan has costs, and the desire of the government is not to pass on all these costs to the taxpayers, it is unknown if rates will come down, or if this will just prevent an abnormal rise in rates that would have been on the horizon had Fannie Mae and Freddie Mac collapsed.
If you are considering buying a home – now is a great time. Not only are there tax benefits, this may be the bottom of the housing market – so you can make a profit on your home. If rates drop, you can always refinance in the future. If you are considering a refinance to consolidate debt or to change the terms of your loan – it’s a good time to consider this move. If this plan has the desired affect, the housing market will pick up, as will the economy, and rates will start to rise. Consider a 15 year loan to pay off your home early, or perhaps a 5/1 ARM if you are thinking about moving in a few years. FHA Loans are available for consumers with less equity or a more challenged credit situation. It’s prudent to investigate your prospective mortgage lender. With the turmoil in the mortgage market, it’s smart to make sure your lender will be around to close your loan. - How long have they been in business? Longer is normally better. - Are they in multiple states? This means they are a more substantial entity. - Are they a Mortgage Broker or Mortgage Lender? If a broker – what lender do they write loans with? - Check with the Better Business Bureau (www.bbb.org). If they have complaints – are they an indication of business problems?

रियल इस्टेट Investment

As you know, I'm a real estate agent who specializes in helping buyers, representing their best interests throughout the home search and transaction process. However, something I haven't mentioned yet, but which might interest you, is that I can also help you to purchase property as an investment. With the market the way it is these days, investing in real estate could be a solid way for you to build up your equity in both the short and the long run.

There are many factors that have to be considered, so it would be best to speak about them in person if you decide that you'd like to do this। Please bear in mind that my comprehensive buyer services -- which are paid for by the seller and won't cost you anything -- will be able to help you through each stage of the process.

In any case, please keep this in mind as a possibility। Or if you hear that any family, friends or neighbors might be interested in real estate as an investment, please call or email me any time.

Thanks again.

जैक जीवन

Single-Family Housing Starts Sink to a New Low

Housing starts decreased 0.6% to a seasonally adjusted 1.065 million annual rate, after rising 7.1% in January to 1.071 million, the Commerce Department said Tuesday.
Originally, Commerce reported January starts 0.8% higher, at 1.012 million. Because of the big upward revision to the January figures, February's 0.6% decline was a mixed surprise to Wall Street, with the decrease larger than expected yet the pace of construction higher than expected. The median forecast of economists surveyed by Dow Jones Newswires had February starts down by 0.2% to a 1.010 million annual rate from the originally reported January level of 1.012 million.
Year-over-year, housing starts during February were 28.4% below the level of construction in February 2007.
On Monday, the National Association of Home Builders reported its index for sales of new, single-family homes held steady at 20 in March. The gauge is based on a survey of builders who were asked about prospects for sales. Analysts think a pullback in construction is necessary to better align bloated inventory of unsold homes with demand. The latest data, through January, show new-home sales had fallen by 33.9% in the past 12 months.
"The housing outlook has remained bleak," Lehman Brothers economist Michelle Meyer said in reaction to the NAHB report Monday. "Despite builders' efforts to stimulate demand through lower prices and greater incentives, sales have continued to decline."
A key indicator in Tuesday's starts data suggested a lower level of groundbreakings in the future. Building permits fell 7.8% to a 978,000 annual rate in February. January permits slid 1.8% to 1.061 million. The pace of 978,000 was the lowest since September 1991's 974,000. Permits are a precursor to actual building.
February single-family housing starts decreased 6.7% to 707,000. Construction of housing with two or more units rose 14.4% to 358,000; within that category, groundbreakings of homes with five or more units -- or multi-family -- were 14.5% higher.
Regionally, housing starts plunged 27.7% in the Northeast. Starts were flat in the Midwest. Construction rose 3.9% in the South and 5.1% in the West.
Nationwide, an estimated 75,300 houses were actually started in February, based on figures not seasonally adjusted. An estimated 72,900 building permits were issued last month, also based on unadjusted figures.

By Brian Blackstone and Jeff Bater From The Wall Street Journal Online

Back Listing Hits Sellers

In the nation's worst-hit real-estate markets, home sellers are suffering a new blow: They are being blacklisted by lenders.
As property values decline and credit markets contract, home lenders nationwide are growing ever more unwilling to finance home purchases in sharply declining housing markets, driving prices down further. In some cases, lenders have ruled out entire geographic regions and property types altogether, most notably high-rise condominiums in South Florida and Las Vegas.
Lenders including BankUnited, a unit of BankUnited Financial Corp., and Vertice, a wholesale lending unit of Wachovia Corp., have elected not to lend to some areas or properties because of declining prices. Countrywide Financial Corp., the nation's largest mortgage lender, considered a similar move last week before reversing course, and other lenders have tightened underwriting guidelines for slumping markets so as to make financing nearly unattainable.
There are "lists circulating" from banks, says Peter Zalewski, a broker with Condo Vultures Realty LLC, and those lists are pushing down prices when news of the black-marked properties spreads.
Moreover, the blacklisting isn't always obvious. "We don't call it blacklisting," said an official at a large bank. "We just don't write the loan."
The banks are acting to protect themselves in a steep downturn. But the drying up of loans threatens to create a self-perpetuating cycle.
"If mortgage credit dries up, then prices are going to fall more," says Morris Davis, a professor of real estate and urban land economics at the University of Wisconsin-Madison's School of Business and a former economist at the Federal Reserve Board.
Countrywide sent shudders through the ranks of mortgage brokers when it sent brokers an email recently under the heading "Urgent Product Elimination." The message announced the company would stop approving its Fast and Easy and Alt-A mortgages for all high-rise condominiums nationwide, effective almost immediately.
Countrywide's Fast and Easy loans don't require verification of income, brokers said. Alt-A loans are generally provided to buyers with good credit who lack full documentation.
Countrywide reversed its policy a day later without explanation, but the episode demonstrated lenders' reluctance to underwrite mortgages in the country's most uncertain real-estate markets. Countrywide didn't respond to multiple requests for comment.
Florida's largest bank, BankUnited Financial Corp.'s BankUnited FSB, drew up a "nonpermissible condominium project list" that identified addresses of 191 condominium developments in Florida and Las Vegas for which the bank won't provide financing. The list was reported by the South Florida Business Journal.
For more than half the properties listed in the memo, the bank cited "declining market value" as the reason it wouldn't provide financing. Melissa Gracey, a spokeswoman for BankUnited, confirmed that the list is still in force and said the bank's "very conservative" lending guidelines rule out mortgages for such properties.
In some cases, lenders have blacklisted not specific properties, but entire geographical areas.
In December, Wachovia's Vertice unit stopped writing mortgages for all condominiums in South Florida, says Kasey Emmel, a company spokeswoman.
Wachovia's main lending operation "continues to offer condo products in all markets, including Florida markets," says spokesman Don Vecchiarello.
Blacklisting isn't redlining -- the illegal practice of restricting lending on a socioeconomic basis -- so it doesn't run afoul of fair-lending laws, says Alexander Bono, a partner at Schnader Harrison Segal & Lewis, a law firm in Philadelphia. Banks are allowed "to identify a county when it's based upon something other than socioeconomic conditions" and then change its stipulations for lending there, Mr. Bono says.
Even when banks haven't officially ruled out entire markets, the stipulations they use before lending in such areas are becoming very stringent, and can leave mortgage credit all but off-limits.
"Companies won't lend" money for purchases in developments that aren't at least 60% filled, says Paul Miller, an analyst at Friedman Billings Ramsey & Co., a unit of FBR Capital Markets Corp. When vacancy rates in a development are higher than 40%, Mr. Miller says, "your condo fees go through the roof," since a development's minimum maintenance costs remain static, regardless of the number of residents. And if condo fees remain high -- as underwriting logic follows -- then homeowners may have a harder time making mortgage payments.
"We're very cognizant of the risks involved" with "condominium developments in particular," says Terry Francisco, a spokesman for Bank of America Corp.
Other larger lenders have also tightened standards for mortgages they write in declining regions.
In December, Fannie Mae, the nation's government-sponsored mortgage-lending behemoth, issued an announcement titled "Maximum Financing in Declining Markets."
"When a property is located in an area identified as declining," the announcement says, the lender originating the loan must reduce the maximum amount it could otherwise lend to that buyer by 5%.
In healthy markets, New York's J.P. Morgan Chase & Co. will currently lend borrowers a mortgage equal to as much as 90% of a property's value. For borrowers in states that have declining markets, however, the bank reduces that maximum, says Tom Kelly, a spokesman for the bank. J.P. Morgan then reduces that level even further for borrowers in the worst declining markets, Mr. Kelly says, though he declined to provide specifics.
CitiMortgage, a wholesale lending operation of another large Wall Street bank, Citigroup Inc., maintains a list of "declining market areas" that red-flags dozens of counties in more than 10 states. Citi reduces the amount it will lend for properties in those counties "by at least 5%," the document says.
"We routinely review our credit parameters, including maximum loan-to-value ratios, in declining markets," says Mark Rogers, a CitiMortgage spokesman.
One silver lining: For "all-cash buyers," Mr. Zalewski says, the lists are "heaven sent."
Buyers who have cash "can use that to negotiate," he says: "If you don't sell to us, who are you going to sell to?"

By Dawn Wotapka and Marshall Eckblad From The Wall Street Journal Online

TV Shows Offer Ideas on Fixing Homes

Avid watchers of HGTV, TLC and other cable networks with real estate programming assume they are learning important lessons that will help them buy, sell or improve a property. If you ask many local real estate agents, they would agree.
Shows such as "Curb Appeal," "Designed to Sell," "Flip That House," "Design on a Dime," "House Hunters" and "My House Is Worth What?" have garnered millions of loyal viewers nationwide. Do they paint an accurate picture?
While some programs may be a bit unrealistic in terms of appraised values or the ability of average adults to remodel their own kitchens, Washington-area real estate insiders say the overall message is worthwhile: Homeowners need to clean, maintain and neutralize their homes to improve their value.
"Real estate television shows are great because they let people know that you can't put your home on the market 'as-is' any more," says Maggie Britvec, a Realtor with Prudential Carruthers Realtors in Alexandria. "It's almost a given now that people know you need to do stuff to improve your home."
Mrs. Britvec says that while the shows are sometimes unrealistic about what home improvements cost and the time it takes to make sure quality work is done, the overall messages of neutralizing and updating homes are particularly valuable in the Washington area, which has many older homes.
"Some of these television programs are valuable because they give another perspective in addition to the perspective of the Realtor," says Brenda Lawson, a Realtor with RE/MAX One in Bowie.
"For instance, the show where sellers hear the comments made by visitors during an open house is great," she says. "The sellers make changes based on the comments, and then they bring the visitors back to get their reaction. That show reinforces the lesson that agents try to share with sellers when we delicately try to tell people how important it is to clean up their house."
Mrs. Lawson says people who watch a program like that are less likely to be offended by comments made by their real estate agent.

By Michele Lerner

Washington Times March 21,2008