FHA Rates

Well I warned you, and not it is too late, FHA is increasing their fees as of Monday.  Their upfront fee will increase from 1.0% to 1.75% and their monthly fee will increase from 1.15% to 1.25%.

So this means about $30 more per month for every $100,000 borrowered, and another $750 per $100,000.

So if your lender didn't pull a case number BEFORE today, you are going to have some very unhappy clients.  And case numbers are good for 90 days, so even if a client is building, it would been good to get a case number today.

Rates

Well starting out this week, all economic news coming from the US has been good to GREAT.  So rates have started to tick up, ever so slowly:
-ISM manufacturing index, up to a 53.4
-Auto sales were all WAY up, way to be a car maker after a government bail out.
-Factory orders up 1.3%

And then on Wednesday the big shoe dropped with the Fed releasing their statements indicating they are not going to do any more easing.  This caused the stocks to bounce up and traders sold bonds like there was no tomorrow.

Rates actually ticked up a whole .125% that day, which is very unusual for that much jump in 1 day.

The chart above is a 3 month chart of the Fannie Mae Bond.  Green line going up means rates are going down (GOOD) Red lines going down mean interest rates are going up (BAD).  And this is what I look at each and every day.  So you can see that in mid March, rates started to tick up, then last week and early this week rates continued to trend down, Fed announcement this week is that 1st RED dive going from right to left.  OUCH.

But today, which is the last Green line, you can see is taking rates back to where they were in Mid March.  (GOOD) so what happend today, well.. PIIGS came back into the picture.

Spain over the last couple of days has been announcing some concerns about their economy.  Can you say 23% unemployment...Just think if the US had 23% unemployment, there would be a revolution.

Now Greece, which took the european union $119 Billion Euors to cure, was just a small cure.  The comparable difference would be the difference of the US government Bailing out a City, such as Boston, or bailing out a whole state such as California.

Basically most people don't feel the EU can bail out Spain.

So to bring this all together, Spain goes Bust, EU collapses, Europe goes into a deep recession, US gets hit with another mild recession, Interest rates stay low.

Rates have been VERY volatile as you can see.

National News

In reading the national news lately, there has been some optimism about the RE market.  Well let me tell you, the local market isn't anything like the National Market...Welcome to a Seller Market!

In speaking with quite a few RE people in the know, it was the last week in February when we switched from a Buyer's Market to a Sellers Market, and yep it was just that fast.  The Perfect Storm.

And don't let anyone tell you there is a Phantom Inventory, I have had conservation with the 3 major title companies who handle a majority of the Bank REO out there, and there is nothing happening.

Now don't get me wrong, there are still people short saling and foreclosing (that will be dying up too, see my next article)  But home prices are raising, and fast.  And I am hearing people complain that they can't find anything and that the builders are raising prices!

Short Sales and Foreclosures will be drying up!

Why you might ask, well we will still have those people who who have to do a SS or FC, but for those people just don't  want their home, either because they are just too upside down, divorce, or they just want to walk away, they are in for a very rude awaking.

Back in 2007, a law was passed called the Mortgage Relief Act.  Normally, when a home is SS or FC, the deficiency is forgiven.  That forgiven amount by the bank is income, income is taxed by the IRS.  So the government passed the Act that said if you received a deficiency and it was forgiven, the IRS would not tax you on that money.  Well....

That Act is set to expire on 12/31/2012, so for all those people that do a FC or SS, and it closes after 12/31/2012, Uncle Sam will be calling you!  And taxes can't be discharged in a Bankruptcy.

Now as of right now, there is nothing in Congress to extend this Law, and I don't think anything will happen until after the November Election.

So for those people who wanted to SS or FC their home, and wanted to get it done under the 12/31/2012 deadline, you should of started the process LAST MONTH.