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Posts Tagged ‘Interest Rates’

Federal Reserve may Taper Stimulus Program this Year

June 14th, 2013 Comments off

With concerns growing over when the Federal Reserve Bank will slow its quantitative easing and the subsequent effect on the economy, of 39 economists and investment advisors surveyed, nearly two-thirds do not think it will begin before Dec. 2013, and some not till 2014. As MHProNews has learned from CNNMoney, while the intent of the Fed’s policy has been to keep interest rates low in order to allow businesses and consumers to borrow money, it has also provided meager returns on savings. Federal Reserve Chief Ben Bernanke is scheduled to speak at a press conference Wed. afternoon and may give hints as to the Fed’s plans. “The markets don’t like uncertainty,” said Allen Sinai, chief global economist for Decision Economics. “The Federal Reserve should clarify the uncertainty as soon as possible –which would be Wednesday.” In the past the Fed has suggested it intends to keep rates low until the unemployment rate reaches 6.5 percent.

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Federal Reserve’s Bond-Buying May End by Next Year

May 2nd, 2013 Comments off

According to nationalmortgagenews, a survey of economists by Bloomberg reports Federal Reserve Chairman Ben Bernanke is expected to reduce the quantitative easing that has been used to bolster the economy from $85 billion monthly to $50 billion by year’s end. That would be followed by a second cut to $30 billion next year and then an end to bond buying altogether, providing interest rates do not suddenly shoot up. Former Fed economist Joseph LaVorgna, noting the accommodation withdrawal is unprecedented territory, says, “You want to see how the market is going to digest a cut in purchases so you want to do it in a way that minimizes the disruption.” The Fed started purchasing $40 billion a month of mortgage-backed securities is Sept., 2012 and then increased it by $45 billion in Dec. Sixty-one percent of the 47 economists in the survey say they expect the bond-buying to end in the first half of 2014. As MHProNews has learned after its last meeting March 20, the Fed pledged to keep buying securities until there is substantial improvement in the job market.

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Both Parties in Congress Favor Revising Dodd-Frank

April 24th, 2013 Comments off

MHProNews has learned from the Wall Street Journal there is rare bipartisan support in Congress to roll back a provision in the Dodd-Frank Act that could produce a decline in manufactured home lending, thereby hurting builders, lenders, and owners. A part of Dodd-Frank sets a threshold for interest rates beyond which loans are considered “high cost” by the Consumer Financial Protection Bureau (CFPB) and do not offer legal protections. Many of the loans for manufactured homes fall into this category because they carry interest rates above ten percent, and since purchasers of manufactured homes generally have lower incomes, they are more likely to default. In addition, manufactured homes may lose value over time in some scenarios, and if the home goes into foreclosure the lender will recover less money. Tim Williams, CEO of 21st Mortgage, the largest lender to MH buyers, says a third of his loans from 2010 to 2011 would have landed beyond the CFPB’s threshold. He says the bureau’s restrictions will harm those of modest means in rural areas and will also make it more difficult for individuals to sell their homes. House and Senate lawmakers are working on legislation to make fewer loans “high cost.” Sen. Sherrod Brown (D-OH), noting manufactured homes represent a different consumer base than buyers of traditional homes, says the measure he will introduce would “bring regulations for manufactured housing in line with their place in the market.” Joe Stegmeyer, CEO of Cavco Homes, Inc., the second largest producer of manufactured and modular homes, noting companies are already having tough time, says, “If we see that financing dwindle…it certainly will mean closure of a number of plants.”

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Construction Jobs Adding Up

March 11th, 2013 Comments off

U.S. employers added 236,000 jobs in February, including 48,000 construction jobs, reflecting the upswing in the housing market. As MHProNews has learned from CNNMoney, the unemployment rate dropped to 7.7 percent, its lowest level since 2008. In the last five months builders have added 151,000 construction jobs, the highest number in seven years. Home prices, sales and building permits are up, foreclosures and interest rates are down, and the National Association of Home Builders (NAHB) says residential construction employment will be five times the rate in 2012. Still, the industry remains one million workers short of the levels seen in 2003. Meanwhile, the real estate industry added 13,400 employees in the last three months.

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Minimum Downpayment not Specified by CFPB

January 21st, 2013 Comments off

As the nationalmortgagenews tells MHProNews, while the much-awaited Consumer Financial Protection Bureau’s (CFPB) Qualified Mortgage rule issued Jan. 10 covers rules to determine borrowers’ ability to repay loans and lenders’ protection from liability, it fails to address a required minimum downpayment. Regulators had originally proposed a 20% minimum, but need to decide what if any requirement will be added, and what share of the risk, in any, lenders will need to hold. Meanwhile, the CFPB issued 1,600 pages governing mortgage servicer regulations, setting new limits on foreclosures while borrowers are simultaneously undergoing loan modifications. The regulations apply to servicers who handle 5,000 loans annually. The rules also require borrowers to be notified before their interest rates adjust.

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Fed to Continue Buying Securities

January 15th, 2013 Comments off

Speaking at the University of Michigan’s Ford School of Public Policy, HousingWire reports Federal Reserve Chairman Ben Bernanke defended the Federal Open Market Committee’s open-ended quantitative easing, saying holding interest rates down keeps budget debts lower. Raising rates would complicate Congress’ upcoming budget negotiations. As MHProNews has learned, the committee chose to continuing purchasing agency mortgage-backed securities to the tune of $40 billion a month. The report says, “Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.”

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Ten Million Borrowers Remain Eligible to Lower Rates

January 14th, 2013 Comments off

NationalMortgageNews tells MHProNews Lender Processing Services (LPS) estimates 2.6 million Fannie Mae and Freddie Mac loans may yet be eligible for financing through the Home Affordable Refinance Program (HARP). 50 percent of these have credit scores of 720 or above, including 670,000 with interest rates above six percent. Since the inception of the HARP 2.0 program Jan. 2012, 790,600 HARP refinances have been complete, including 160,400 GSE loans with loan-to-value ratios above 125%. Mortgage and analytics firm LPS estimates another ten million borrowers may be eligible for traditional financing.

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Senator Brown to CFPB: Relax High Cost Mortgage Rules

January 10th, 2013 Comments off

HousingWire reports Sen. Sherrod Brown’s (D-OH) letter to Consumer Financial Protection Bureau’s (CFPB) Director Richard Cordray asserts manufactured homes may become less attainable under the newly defined CFPB’s regulations that deal with high-cost mortgages. For mortgages on properties under $50,000, a high-cost mortgage is now defined as a first mortgage with interest rates of 6.5% (or 8.5% or more). Since MH mortgages are often low value and have more compliance requirements and penalties, lenders will be less likely to offer these loans, he said. “While these disincentives will help alleviate bubbles in the general housing market, they could also prove devastating to low-income families looking to purchase manufactured housing,” Sen. Brown asserted in his letter. Noting the new rules may smack of abusive lending practices, he asked Cordray to alter the high cost mortgage regulation, MHProNews has been informed. Last year, Kevin Clayton, president of Clayton Homes, testifying at the U.S. House Financial Services committee, noted, “The ability for lenders to securitize manufactured home loans in the secondary market, particularly those secured by personal property, has been very limited.”

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Stock Advice from Chairman Buffett

January 1st, 2013 Comments off

Benzinga brings forward resolutions for 2013 that have sustained and magnified Warren Buffett’s wealth over the years, especially in light of his Berkshire Hathaway (NYSE:BRKA) stock having gained 1700 percent since 1990, much better than the 290 percent gain of the S&P 500 over the same period. Not attracted by the latest fad, Buffett is more drawn by a steady track record and balance sheet. Based on interviews and buying habits of the Oracle of Omaha, he compares a firm’s debt-to-equity ratio, noting the lower the debt on a company’s balance sheet the more fiscally responsible management is apt to be. If interest rates are higher than investment returns, by all means avoid taking on debt, and invest in companies with little or no debt. Known for being incredibly thrifty, and having lived in the same house he purchased for $31,500 in 1958, MHProNews has learned that he once said his family eats Christmas dinners at McDonalds, and that he prefers hamburgers to more exotic fare. Berkshire Hathaway owns Clayton Homes, the largest producer of manufactured homes in North America.

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Positive Housing Predictions for 2013

December 31st, 2012 Comments off

BusinessInsider tells MHProNews John Burns Real Estate Consulting offers the following five predictions of what will happen in the New Year in the housing market, “Assuming our leaders in DC come to some sort of agreement that keeps the economy growing and interest rates low, which seems like the most reasonable assumption.”

  • Investors and flippers will be more prominent as they realize the potential return on real estate investing.
  • Foreclosed borrowers who are now renting will return en masse because they are paying more in rent than a house payment. The Federal Housing Administration (FHA) and the Dept. of Veterans Affairs offer low down payments loans around 5%.
  • First-time homeowners who have been waiting for the bottom will now see prices rise in their desired neighborhood and begin to buy.
  • Seniors who have sufficient equity in their current homes will purchase a home better suited to their lifestyle, possibly including room for an adult child or aging parent.
  • This past year’s price appreciation has raised one million borrowers from under the water, and continuing appreciation will raise them more.

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