"Worry often gives a small thing a great shadow."
-- Swedish Proverb
"I attribute my success to this: I never gave or took an excuse."
-- Florence Nightingale
"Optimism is the faith that leads to achievement. Nothing can be done
without hope and confidence."
-- Helen Adams Keller, American Author and Lecturer
"Effective leadership is putting first things first. Effective
management is discipline, carrying it out."
-- Stephen Covey, Author and Speaker
"The best teamwork comes from men who are working independently toward
one goal in unison."
-- James Cash Penney, Founder of J.C. Penney Stores
"We cannot become what we need to be by remaining what we are."
-- Max De Pree
"Every thought is a seed. If you plant crab apples, don't count on
harvesting golden delicious."
-- Bill Meyer
"It's our attitude in life that determines life's attitude toward us."
-- Earl Nightingale, Motivational Speaker
"If you would hit the mark, you must aim a little above it; every arrow
that files feels the attraction of earth."
-- Henry Wadsworth Longfellow, author
"Ideas are a dime a dozen. People who implement them are priceless."
-- Mary Kay Ash, Entrepreneur
"Courage is not limited to the battlefield. The real tests of courage
are much quieter. They are the inner tests, like enduring pain when the
room is empty or standing alone when you're misunderstood."
-- Charles Swindoll
"Dig the well before you are thirsty."
-- Chinese Proverb
"Progress always involves risks. You can't steal second base and keep
your foot on first."
-- Frederick Wilcox, writer
What lies behind us, and what lies before us, are tiny matters compared
to what lies within us."
-- Ralph Waldo Emerson, Poet
"The entrepreneur always searches for change, responds to it, and
exploits it as an opportunity."
-- Peter Drucker, Businessman
"Thought is the original source of all wealth, all success, all material
gain, all great discoveries and inventions, and of all achievement."
-- Claude M. Bristol
"We make a living by what we get. We make a life by what we give."
-- Winston Churchill, British prime minister
"Only passions, great passions, can elevate the soul to great things."
-- Denis Diderot, French Philosopher and Writer
"Most folks are about as happy as they make up their minds to be."
-- Abraham Lincoln, 16th U.S. president
Monday, November 2, 2009
Don't believe the hype
"Don't believe the hype!" The words from Public Enemy's hit song title rang true once again last week when the Commerce Department reported the Gross Domestic Product (GDP) for the 3rd Quarter. As you can see from the chart below, GDP rose by 3.5% for the first gain in a year and the strongest reading in two years.
While most media outlets were giddy about the news and started the hype that the recession is behind us, it's important to remember that there's more to the economic data than just the headlines.
The temporary "Cash for Clunkers" program has now expired, but was a big part of last quarter's GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary...
Also bolstering the economy has been the $8,000 first-time homebuyer tax credit - which is set to expire at the end of this month. Many home buyers have been taking advantage of this program - and wisely so.
New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month's 7.3 reading, it's still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply! The improvement in housing inventories has been due in large part to the $8,000 First Time Homebuyer Tax Credit, which is set to expire on November 30.
There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit.
Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers.
This week brings us new employment numbers...and a chance to see if the labor market is showing signs of recovery. The employment news begins Wednesday with the ADP National Employment Report. Sandwiched between that report and Friday's Jobs Report, is the Initial Jobless Claims report on Thursday.
The big news comes on Friday, when the all-important Jobs Report will be released. Last month's report underscored the struggling labor market, as the Labor Department reported 263,000 jobs lost in September and an increase in the unemployment rate to 9.8%. The report due out this week is expected to show 166,000 jobs lost in October, which would be significantly better than the previous month if it happens. However, the Unemployment Rate is expected to continue its climb to 9.9%.
In addition to employment news, we'll also see the ISM Index on Monday. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector.
Finally, the Federal Open Market Committee (FOMC) holds its two-day meeting this week, with an announcement of the Fed Rate Decision and Policy Statement due on Wednesday at 2:15 p.m. (ET).
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Mortgage Bonds were able to bounce back last week with help from weakness in the Stock markets.
Turning Back the Hands of Time
This weekend, the sun set on another season of Daylight Saving Time. The extra daylight we now enjoy was actually the result of the Energy Policy Act, which was enacted by Congress back in 2005. But did you know that throughout its long history, Daylight Saving Time has had a remarkable and sometimes unexpected impact?
A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time - not DST - was the official time for recording births. So he was technically born on the previous date--which had a much higher draft lottery number - and he was able to avoid being drafted.
In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs - but misunderstood the time change - and the bombs exploded early, killing the terrorists themselves, rather than the intended victims - two busloads of innocent citizens.
In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul - which are considered one metropolitan area - didn't agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!
To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks "fall back" in the fall, all trains that are running on time actually stop at 2 am - the official time of DST change - and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.
So Daylight Saving Time sure can have some unexpected impact.
As we enter the first week of Daylight Saving Time, be sure to double-check all of your electronic devices and confirm that the time is correct. Although you may be accustomed to your computer and maybe even your digital clock in your car automatically updating, the recent change of dates for Daylight Saving Time may require that these devices be manually changed, as they now may NOT be ready to update to the correct time on the correct date!
Call me if I can help you, your friends or family out! More news to come!
While most media outlets were giddy about the news and started the hype that the recession is behind us, it's important to remember that there's more to the economic data than just the headlines.
The temporary "Cash for Clunkers" program has now expired, but was a big part of last quarter's GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary...
Also bolstering the economy has been the $8,000 first-time homebuyer tax credit - which is set to expire at the end of this month. Many home buyers have been taking advantage of this program - and wisely so.
New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month's 7.3 reading, it's still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply! The improvement in housing inventories has been due in large part to the $8,000 First Time Homebuyer Tax Credit, which is set to expire on November 30.
There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit.
Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers.
This week brings us new employment numbers...and a chance to see if the labor market is showing signs of recovery. The employment news begins Wednesday with the ADP National Employment Report. Sandwiched between that report and Friday's Jobs Report, is the Initial Jobless Claims report on Thursday.
The big news comes on Friday, when the all-important Jobs Report will be released. Last month's report underscored the struggling labor market, as the Labor Department reported 263,000 jobs lost in September and an increase in the unemployment rate to 9.8%. The report due out this week is expected to show 166,000 jobs lost in October, which would be significantly better than the previous month if it happens. However, the Unemployment Rate is expected to continue its climb to 9.9%.
In addition to employment news, we'll also see the ISM Index on Monday. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector.
Finally, the Federal Open Market Committee (FOMC) holds its two-day meeting this week, with an announcement of the Fed Rate Decision and Policy Statement due on Wednesday at 2:15 p.m. (ET).
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Mortgage Bonds were able to bounce back last week with help from weakness in the Stock markets.
Turning Back the Hands of Time
This weekend, the sun set on another season of Daylight Saving Time. The extra daylight we now enjoy was actually the result of the Energy Policy Act, which was enacted by Congress back in 2005. But did you know that throughout its long history, Daylight Saving Time has had a remarkable and sometimes unexpected impact?
A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time - not DST - was the official time for recording births. So he was technically born on the previous date--which had a much higher draft lottery number - and he was able to avoid being drafted.
In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs - but misunderstood the time change - and the bombs exploded early, killing the terrorists themselves, rather than the intended victims - two busloads of innocent citizens.
In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul - which are considered one metropolitan area - didn't agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles!
To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks "fall back" in the fall, all trains that are running on time actually stop at 2 am - the official time of DST change - and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time.
So Daylight Saving Time sure can have some unexpected impact.
As we enter the first week of Daylight Saving Time, be sure to double-check all of your electronic devices and confirm that the time is correct. Although you may be accustomed to your computer and maybe even your digital clock in your car automatically updating, the recent change of dates for Daylight Saving Time may require that these devices be manually changed, as they now may NOT be ready to update to the correct time on the correct date!
Call me if I can help you, your friends or family out! More news to come!
For the week of November 2, 2009
INFO THAT HITS US WHERE WE LIVE
Last week September New Home Sales were reported down 3.6% for single-family units. But the supply of unsold new homes is just 7.5 months and inventories, at 251,000, are down 56.1% from their mid-2006 peak and at their lowest level since 1982. The sales drop followed five straight months of sales increases and some observers felt the decline may have come from more aggressive pricing by sellers, actually a bullish sign for the housing market.
Indeed, the median new home price was UP 2.5% for September, a bigger than usual gain for the time of year. The average price went UP 10.2%, the biggest September rise on record. Finally, the average price of new homes sold -- $282,600 -- was only 1.6% lower than last year. Speaking of prices, the Case-Shiller index reported home prices up in August for the fourth month in a row. The average of the 20 metro areas measured showed a 1.2% gain.
Finally, we had the good news covered in last week's Inside Lending Bulletin that the Senate passed an extension of the first-time homebuyer $8000 tax credit, with higher qualifying income limits and adding a $6500 credit to buyers who have owned their homes at least 5 years. Let's hope the House passes it too. Finally, the House and Senate extended the ability of Fannie Mae, Freddie Mac and the Federal Housing Administration to back conforming loans in high-cost areas, up to $729,750 through all of 2010. These higher limits would have expired at the end of this year.
Review of Last Week
CAUTIOUSLY RECOVERING... The government reported our first quarter of positive economic growth last week, indicating the recovery has begun. Yet investors kept the Dow moving up and down over 100 points four out of the five days, ending the week with a startling 249-point drop. Was this a bull market correction, or the return to a bear market? Who knows? The only thing certain is that investors aren't quite sure the economy is back on track.
Makes you wonder what it will take to convince them. The initial estimate for Q3 real GDP revealed the economy growing at a 3.5% annual rate -- way better than expected and the first rise in GDP in over a year. Happily, most of the advance was driven by consumption. Q3 GDP also showed home building UP at a 23.3% annual rate, its fastest rise since the '80's. Plus, Q3 corporate earnings reported so far show over 80% of the companies beating estimates, the highest rate in history.
On the jobs front, Initial Unemployment Claims dropped and the 4-week moving average hit a new low in the recovery of 526,000. Continuing Claims fell to 5.8 million. Positive news also included Durable Goods Orders UP for September, their fourth boost in six months. Most impressive of all, the Chicago PMI measuring Midwest manufacturing, shot up to its highest level in over a year. And the Richmond Fed index for Mid-Atlantic manufacturing logged its sixth straight month in expansion territory. All are favorable signs for U.S. manufacturing.
For the week, the Dow finished down 2.6%, to 9712.73; the S&P 500 was down 4.0%, to 1036.19; while the Nasdaq fell 5.1%, to 2045.11.
The bond market closed the week with a rally, helped in no small measure by the slide in stocks. The FNMA 30-year 4.5% bond we watch ended up from the previous week's close, finishing at $101.19. Mortgage rates inched up a bit but remain in historically low territory. For this year, the Freddie Mac survey of mortgage rates reported its lowest 10-month average going back to 1971.
This Week’s Forecast
FOCUS ON THE FED... Almost no one expects a rate change coming out of this week's Fed meeting, but economists will be looking at the Fed policy statement for any signs of when things may change. Other items of interest this week include Pending Home Sales on Monday and Friday's Employment Report, where we'll search for signs of a turnaround on the jobs front.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Last week September New Home Sales were reported down 3.6% for single-family units. But the supply of unsold new homes is just 7.5 months and inventories, at 251,000, are down 56.1% from their mid-2006 peak and at their lowest level since 1982. The sales drop followed five straight months of sales increases and some observers felt the decline may have come from more aggressive pricing by sellers, actually a bullish sign for the housing market.
Indeed, the median new home price was UP 2.5% for September, a bigger than usual gain for the time of year. The average price went UP 10.2%, the biggest September rise on record. Finally, the average price of new homes sold -- $282,600 -- was only 1.6% lower than last year. Speaking of prices, the Case-Shiller index reported home prices up in August for the fourth month in a row. The average of the 20 metro areas measured showed a 1.2% gain.
Finally, we had the good news covered in last week's Inside Lending Bulletin that the Senate passed an extension of the first-time homebuyer $8000 tax credit, with higher qualifying income limits and adding a $6500 credit to buyers who have owned their homes at least 5 years. Let's hope the House passes it too. Finally, the House and Senate extended the ability of Fannie Mae, Freddie Mac and the Federal Housing Administration to back conforming loans in high-cost areas, up to $729,750 through all of 2010. These higher limits would have expired at the end of this year.
Review of Last Week
CAUTIOUSLY RECOVERING... The government reported our first quarter of positive economic growth last week, indicating the recovery has begun. Yet investors kept the Dow moving up and down over 100 points four out of the five days, ending the week with a startling 249-point drop. Was this a bull market correction, or the return to a bear market? Who knows? The only thing certain is that investors aren't quite sure the economy is back on track.
Makes you wonder what it will take to convince them. The initial estimate for Q3 real GDP revealed the economy growing at a 3.5% annual rate -- way better than expected and the first rise in GDP in over a year. Happily, most of the advance was driven by consumption. Q3 GDP also showed home building UP at a 23.3% annual rate, its fastest rise since the '80's. Plus, Q3 corporate earnings reported so far show over 80% of the companies beating estimates, the highest rate in history.
On the jobs front, Initial Unemployment Claims dropped and the 4-week moving average hit a new low in the recovery of 526,000. Continuing Claims fell to 5.8 million. Positive news also included Durable Goods Orders UP for September, their fourth boost in six months. Most impressive of all, the Chicago PMI measuring Midwest manufacturing, shot up to its highest level in over a year. And the Richmond Fed index for Mid-Atlantic manufacturing logged its sixth straight month in expansion territory. All are favorable signs for U.S. manufacturing.
For the week, the Dow finished down 2.6%, to 9712.73; the S&P 500 was down 4.0%, to 1036.19; while the Nasdaq fell 5.1%, to 2045.11.
The bond market closed the week with a rally, helped in no small measure by the slide in stocks. The FNMA 30-year 4.5% bond we watch ended up from the previous week's close, finishing at $101.19. Mortgage rates inched up a bit but remain in historically low territory. For this year, the Freddie Mac survey of mortgage rates reported its lowest 10-month average going back to 1971.
This Week’s Forecast
FOCUS ON THE FED... Almost no one expects a rate change coming out of this week's Fed meeting, but economists will be looking at the Fed policy statement for any signs of when things may change. Other items of interest this week include Pending Home Sales on Monday and Friday's Employment Report, where we'll search for signs of a turnaround on the jobs front.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Last Week in the News
Last Week in the News
The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at an annual rate of 3.5% in the third quarter of 2009. The rebound ended four consecutive quarters of contracting economic activity, the longest period of decline since quarterly records began in 1947.
The Conference Board reported that its consumer confidence index fell to 47.7 in October from a revised 53.4 in September. Economists had expected a reading of 53.5. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
The Standard & Poor’s/Case-Shiller 20-city housing price index rose 1% in August. It was the third consecutive monthly gain and follows a 1.2% increase in July.
Orders for durable goods — items expected to last three or more years — rose 1% in September after falling a revised 2.6% in August. Among the areas of strong growth were orders for heavy machinery, up 7.9%, the best showing since an 8.5% increase in March 2008.
The Commerce Department reported new home sales fell 3.6% in September to a seasonally adjusted annual rate of 402,000 from a downwardly revised rate of 417,000 in August. It was the first decline since March.
Initial claims for unemployment benefits rose by 1,000 to 530,000 in the week ending October 24. The figure was higher than the 525,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending October 17 fell by 148,000 to 5.8 million.
Upcoming on the economic calendar are reports on construction spending and pending home sales on November 2, factory orders on November 3 and wholesale trade on November 6.
The Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at an annual rate of 3.5% in the third quarter of 2009. The rebound ended four consecutive quarters of contracting economic activity, the longest period of decline since quarterly records began in 1947.
The Conference Board reported that its consumer confidence index fell to 47.7 in October from a revised 53.4 in September. Economists had expected a reading of 53.5. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
The Standard & Poor’s/Case-Shiller 20-city housing price index rose 1% in August. It was the third consecutive monthly gain and follows a 1.2% increase in July.
Orders for durable goods — items expected to last three or more years — rose 1% in September after falling a revised 2.6% in August. Among the areas of strong growth were orders for heavy machinery, up 7.9%, the best showing since an 8.5% increase in March 2008.
The Commerce Department reported new home sales fell 3.6% in September to a seasonally adjusted annual rate of 402,000 from a downwardly revised rate of 417,000 in August. It was the first decline since March.
Initial claims for unemployment benefits rose by 1,000 to 530,000 in the week ending October 24. The figure was higher than the 525,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending October 17 fell by 148,000 to 5.8 million.
Upcoming on the economic calendar are reports on construction spending and pending home sales on November 2, factory orders on November 3 and wholesale trade on November 6.
Senate Said Yes! How about the House? Extend Homebuyer Tax Credit
Senators Agree to Extend Homebuyer Tax Credit
Legislation Pending Approval From Congress
Senators have agreed to extend the $8,000 first-time homebuyer tax credit originally set to expire on November 30. Once the Senate officially votes on the bill it will move to the House of Representatives, which strongly supports the extension. The Obama administration has also signaled its strong support for an extension of the tax credit.
Aside from the first-time homebuyer credit, the new plan would offer a $6,500 credit for repeat or move-up homebuyers who have lived in their primary residence for five years or more. The tax credits would be available to buyers who sign purchase agreements on a new or existing primary residence between December 1, 2009 and April 30, 2010. Buyers would have until June 30 to close on their new homes.
There is an $800,000 price limit on all homes eligible for the credit. The income limits for all buyers would rise to $125,000 per year for individuals and $225,000 for married couples. Under the current program, the limits are $75,000 and $150,000 respectively. The first-time homebuyer credit is also available to those who have not owned a home in the previous three years. The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years.
According to the Treasury Department, more than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the first-time homebuyer tax credit.
Please be advised that this legislation has not yet passed, but I will be sure to keep you informed as it moves through Congress toward approval. I’m committed to meeting your home financing needs.
Legislation Pending Approval From Congress
Senators have agreed to extend the $8,000 first-time homebuyer tax credit originally set to expire on November 30. Once the Senate officially votes on the bill it will move to the House of Representatives, which strongly supports the extension. The Obama administration has also signaled its strong support for an extension of the tax credit.
Aside from the first-time homebuyer credit, the new plan would offer a $6,500 credit for repeat or move-up homebuyers who have lived in their primary residence for five years or more. The tax credits would be available to buyers who sign purchase agreements on a new or existing primary residence between December 1, 2009 and April 30, 2010. Buyers would have until June 30 to close on their new homes.
There is an $800,000 price limit on all homes eligible for the credit. The income limits for all buyers would rise to $125,000 per year for individuals and $225,000 for married couples. Under the current program, the limits are $75,000 and $150,000 respectively. The first-time homebuyer credit is also available to those who have not owned a home in the previous three years. The credit does not have to be repaid unless the home is sold or ceases to be the primary residence within three years.
According to the Treasury Department, more than 1.2 million borrowers have claimed $8.5 billion of the $13.6 billion set aside for the first-time homebuyer tax credit.
Please be advised that this legislation has not yet passed, but I will be sure to keep you informed as it moves through Congress toward approval. I’m committed to meeting your home financing needs.
Breaking News! Not Voted Yet But Soon!
Breaking News
According to the Associated Press, Senators have agreed to extend the tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.
Reportedly, Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to buyers who have owned their current homes for at least five years.
The tax credits would be available to buyers who sign sales agreements by the end of April 2010. They would have until the end of June to close on their new homes.
This is a preliminary report, details and conditions may change as the legislation becomes finalized. We will give more details as they become available.
Thank you and please call if we can be of service.
According to the Associated Press, Senators have agreed to extend the tax credit for first-time homebuyers and to offer a reduced credit to some repeat buyers.
Reportedly, Senators agreed to extend the existing tax credit for first-time homebuyers while offering a reduced credit of up to $6,500 to buyers who have owned their current homes for at least five years.
The tax credits would be available to buyers who sign sales agreements by the end of April 2010. They would have until the end of June to close on their new homes.
This is a preliminary report, details and conditions may change as the legislation becomes finalized. We will give more details as they become available.
Thank you and please call if we can be of service.
Thursday, October 29, 2009
Quotes!
"When written in Chinese, the word 'crisis' is composed of two
characters - one represents danger and the other represents
opportunity."
-- John F. Kennedy, 35 President of the United States
"Nobody grows old by merely living a number of years. People grow old by
deserting their ideals. You are as young as your faith, as old as your
doubt; as young as your self-confidence, as old as your fear; as young
as your hope, as old as your despair."
-- Douglas MacArthur, General
"Feedback is the breakfast of champions."
-- Rick Tate
"A man cannot leave a better legacy to the world than a well-educated
family."
-- Thomas Scott
"Motivation is everything. You can do the work of two people, but you
can't be two people. Instead, you have to inspire the next guy down the
line and get him to inspire his people."
-- Lee Iacocca, Auto Executive
"Who begins too much accomplishes little."
-- German Proverb
"Success in business requires training and discipline and hard work. But
if you're frightened by these things, the opportunities are just as
great today as they ever were."
-- David Rockefeller, American Banker
"A journey of a thousand miles begins with a single step."
-- Chinese Proverb
"Life begins when you do."
-- Hugh Downs, American Brodcaster
"You'll always miss 100% of the shots you don't take."
-- Wayne Gretzky, Hockey Player
"The key is not to prioritize what is on the schedule, but to schedule
your priorities."
-- Stephen Covey, Author and Speaker
"When patterns are broken, new worlds emerge."
-- Tuli Kupferberg, Author
"All things are difficult before they are easy."
-- John Norley
"Luck is what happens when preparation meets opportunity."
-- Darrell Royal
"As I grow older, I pay less attention to what men say. I just watch
what they do."
-- Andrew Carnegie, Industrialist
"Choose a job you love, and you will never have to work a day in your
life."
-- Confucius, Philosopher
"Do the thing you fear, and the death of fear is certain."
-- Ralph Waldo Emerson, Poet
"Just as iron rusts from disuse, even so does inaction spoil the
intellect."
-- Leonardo da Vinci, Artist
"Our chief want in life is somebody who will make us do what we can."
-- Ralph Waldo Emerson, Poet
"Faith is taking the first step even when you don't see the staircase."
-- Martin Luther King, Jr., civil rights leader
"The miracle is this - the more we share, the more we have."
-- Leonard Nimoy, Actor
"You can't build a reputation on what you're going to do."
-- Henry Ford, Founder of the Ford Motor Company
"Vision without action is a daydream. Action without vision is a
nightmare."
-- Japanese Proverb
"The ability to simplify means to eliminate the unnecessary so that the
necessary may speak."
-- Hans Hoffmann
"Knowing is not enough; we must apply. Wishing is not enough; we must do."
-- Johann Wolfgang Von Goethe, Author
"Swing hard, in case they throw the ball where you're swinging."
-- Duke Snider, Baseball Player
"Envisioning the end is enough to put the means in motion."
-- Dorothea Brande, Writer
"Once you replace negative thoughts with positive ones, you'll start
having positive results."
-- Willie Nelson, Musician
"Self-respect is the fruit of discipline; and the sense of dignity grows
with the ability to say not to oneself."
-- Abraham Joshua Heschel, Leading Jewish theologian of the 20th century
characters - one represents danger and the other represents
opportunity."
-- John F. Kennedy, 35 President of the United States
"Nobody grows old by merely living a number of years. People grow old by
deserting their ideals. You are as young as your faith, as old as your
doubt; as young as your self-confidence, as old as your fear; as young
as your hope, as old as your despair."
-- Douglas MacArthur, General
"Feedback is the breakfast of champions."
-- Rick Tate
"A man cannot leave a better legacy to the world than a well-educated
family."
-- Thomas Scott
"Motivation is everything. You can do the work of two people, but you
can't be two people. Instead, you have to inspire the next guy down the
line and get him to inspire his people."
-- Lee Iacocca, Auto Executive
"Who begins too much accomplishes little."
-- German Proverb
"Success in business requires training and discipline and hard work. But
if you're frightened by these things, the opportunities are just as
great today as they ever were."
-- David Rockefeller, American Banker
"A journey of a thousand miles begins with a single step."
-- Chinese Proverb
"Life begins when you do."
-- Hugh Downs, American Brodcaster
"You'll always miss 100% of the shots you don't take."
-- Wayne Gretzky, Hockey Player
"The key is not to prioritize what is on the schedule, but to schedule
your priorities."
-- Stephen Covey, Author and Speaker
"When patterns are broken, new worlds emerge."
-- Tuli Kupferberg, Author
"All things are difficult before they are easy."
-- John Norley
"Luck is what happens when preparation meets opportunity."
-- Darrell Royal
"As I grow older, I pay less attention to what men say. I just watch
what they do."
-- Andrew Carnegie, Industrialist
"Choose a job you love, and you will never have to work a day in your
life."
-- Confucius, Philosopher
"Do the thing you fear, and the death of fear is certain."
-- Ralph Waldo Emerson, Poet
"Just as iron rusts from disuse, even so does inaction spoil the
intellect."
-- Leonardo da Vinci, Artist
"Our chief want in life is somebody who will make us do what we can."
-- Ralph Waldo Emerson, Poet
"Faith is taking the first step even when you don't see the staircase."
-- Martin Luther King, Jr., civil rights leader
"The miracle is this - the more we share, the more we have."
-- Leonard Nimoy, Actor
"You can't build a reputation on what you're going to do."
-- Henry Ford, Founder of the Ford Motor Company
"Vision without action is a daydream. Action without vision is a
nightmare."
-- Japanese Proverb
"The ability to simplify means to eliminate the unnecessary so that the
necessary may speak."
-- Hans Hoffmann
"Knowing is not enough; we must apply. Wishing is not enough; we must do."
-- Johann Wolfgang Von Goethe, Author
"Swing hard, in case they throw the ball where you're swinging."
-- Duke Snider, Baseball Player
"Envisioning the end is enough to put the means in motion."
-- Dorothea Brande, Writer
"Once you replace negative thoughts with positive ones, you'll start
having positive results."
-- Willie Nelson, Musician
"Self-respect is the fruit of discipline; and the sense of dignity grows
with the ability to say not to oneself."
-- Abraham Joshua Heschel, Leading Jewish theologian of the 20th century
Monday, October 26, 2009
Quotes!
"Happiness is not a goal; it is a by-product."
-- Eleanor Roosevelt, Former First Lady
"The unexamined life is not worth living."
-- Socrates
"The quality of our expectations determines the quality of our actions."
-- Andres Godin
"If you're not having problems, you are missing an opportunity for growth."
-- Anonymous
"Constant effort and frequent mistakes are the stepping stones to genius."
-- Elbert Hubbard, American Writer
"No great thing is created suddenly."
-- Epictetus, philosopher
"There is a time to let things happen and a time to make things happen."
-- Hugh Prather
"If you can find a path with no obstacles, it probably doesn't lead anywhere."
-- Frank A. Clark
"Destiny is not a matter of chance, it's a matter of choice; it is not a
thing to be waited for, it is a thing to be achieved."
-- William Jennings Bryan, 41st United States Secretary of State
"In order for you to profit from your mistakes, you have to get out and
make some."
-- Anonymous
"All the problems of the world could be settled easily if men were only
willing to think."
-- Thomas J. Watson, Former President of IBM
"The best time to plant a tree was 20 years ago. The next best time is now."
-- Chinese Proverb
"Today I will do what others won't, so tomorrow I can accomplish what
others can't."
-- Jerry Rice, Football Player
"Going into business for yourself, becoming an entrepreneur, is the
modern-day equivalent of pioneering on the old frontier."
-- Paula Nelson
"A pessimist sees the difficulty in every opportunity; an optimist sees
the opportunity in every difficulty."
-- Winston Churchill, British prime minister
"A good manager is a man who isn't worried about his own career but
rather the careers of those who work for him."
-- H.S.M. Burnes
"The purpose of our lives is to give birth to the best which is within us."
-- Marianne Williamson, Author and Spiritual Activist
"Bottom line: if you show a genuine interest in learning about how
others became successful, you can open up a world of opportunities."
-- Armstrong Williams, Political Commentator
"The harder you work, the harder it is to surrender."
-- Vince Lombardi
"Wake up with a smile and go after life... live it, enjoy it, taste it,
smell it, feel it."
-- Joe Knapp
-- Eleanor Roosevelt, Former First Lady
"The unexamined life is not worth living."
-- Socrates
"The quality of our expectations determines the quality of our actions."
-- Andres Godin
"If you're not having problems, you are missing an opportunity for growth."
-- Anonymous
"Constant effort and frequent mistakes are the stepping stones to genius."
-- Elbert Hubbard, American Writer
"No great thing is created suddenly."
-- Epictetus, philosopher
"There is a time to let things happen and a time to make things happen."
-- Hugh Prather
"If you can find a path with no obstacles, it probably doesn't lead anywhere."
-- Frank A. Clark
"Destiny is not a matter of chance, it's a matter of choice; it is not a
thing to be waited for, it is a thing to be achieved."
-- William Jennings Bryan, 41st United States Secretary of State
"In order for you to profit from your mistakes, you have to get out and
make some."
-- Anonymous
"All the problems of the world could be settled easily if men were only
willing to think."
-- Thomas J. Watson, Former President of IBM
"The best time to plant a tree was 20 years ago. The next best time is now."
-- Chinese Proverb
"Today I will do what others won't, so tomorrow I can accomplish what
others can't."
-- Jerry Rice, Football Player
"Going into business for yourself, becoming an entrepreneur, is the
modern-day equivalent of pioneering on the old frontier."
-- Paula Nelson
"A pessimist sees the difficulty in every opportunity; an optimist sees
the opportunity in every difficulty."
-- Winston Churchill, British prime minister
"A good manager is a man who isn't worried about his own career but
rather the careers of those who work for him."
-- H.S.M. Burnes
"The purpose of our lives is to give birth to the best which is within us."
-- Marianne Williamson, Author and Spiritual Activist
"Bottom line: if you show a genuine interest in learning about how
others became successful, you can open up a world of opportunities."
-- Armstrong Williams, Political Commentator
"The harder you work, the harder it is to surrender."
-- Vince Lombardi
"Wake up with a smile and go after life... live it, enjoy it, taste it,
smell it, feel it."
-- Joe Knapp
H1N1: Information is the Best Defense!
Despite predictions from researchers at Purdue University that the H1N1 outbreak will peak this week, the reality is that it won't be going away any time soon. Let's not forget that the news is filled with shortages of the vaccine, as the number of H1N1 cases continues to surge across the country. And federal officials have warned that a second, larger outbreak could occur in early January.
The reality is that the best way to stop the spread of H1N1 is to know the symptoms and to take steps to protect yourself-and others-from it. The following information can help.
What are the symptoms of H1N1... and how are they different from the common cold?
Symptom
1-Cold
2-H1N1 Flu
Fever
1-Fever is rare with a cold.
2-Fever is usually present with the flu in up to 80% of all flu cases. A temperature of 100°F or higher for 3 to 4 days is associated with the flu.
Coughing
1-A hacking, productive (mucus- producing) cough is often present with a cold.
2-A non-productive (non-mucus producing) cough is usually present with the flu (sometimes referred to as dry cough).
Aches
1-Slight body aches and pains can be part of a cold.
2-Severe aches and pains are common with the flu.
Stuffy Nose
1-Stuffy nose is commonly present with a cold and typically resolves spontaneously within a week.
2-Stuffy nose is not commonly present with the flu.
Chills
1-Chills are uncommon with a cold.
2-60% of people who have the flu experience chills.
Tiredness
1-Tiredness is fairly mild with a cold.
2-Tiredness is moderate to severe with the flu.
Sneezing
1-Sneezing is commonly present with a cold.
2-Sneezing is not common with the flu.
Sudden Symptoms
1-Cold symptoms tend to develop over a few days.
2-The flu has a rapid onset within 3-6 hours. The flu hits hard and includes sudden symptoms like high fever, aches and pains.
Headache
1-A headache is fairly uncommon with a cold.
2-A headache is very common with the flu, present in 80% of flu cases.
Sore Throat
1-Sore throat is commonly present with a cold.
2-Sore throat is not commonly present with the flu.
Chest Discomfort
1-Chest discomfort is mild to moderate with a cold.
2-Chest discomfort is often severe with the flu.
If you think you have the H1N1 flu, you should take a few common-sense steps to protect your friends, family members, and coworkers. For instance, if you feel sick, stay home until you feel better and have gone at least 24 hours without relying on medicine to break your fever.
In addition, wash your hands, linens, dishes, and so on thoroughly. And cover your mouth and nose with a tissue when you cough or sneeze--and then throw the tissue away immediately. Finally, if you have to share a small space with other people, consider wearing a facemask to help make sure you don't spread the flu to the people around you.
Follow these steps and monitor your symptoms to help stop the spread of H1N1...and remain happy and healthy!
The reality is that the best way to stop the spread of H1N1 is to know the symptoms and to take steps to protect yourself-and others-from it. The following information can help.
What are the symptoms of H1N1... and how are they different from the common cold?
Symptom
1-Cold
2-H1N1 Flu
Fever
1-Fever is rare with a cold.
2-Fever is usually present with the flu in up to 80% of all flu cases. A temperature of 100°F or higher for 3 to 4 days is associated with the flu.
Coughing
1-A hacking, productive (mucus- producing) cough is often present with a cold.
2-A non-productive (non-mucus producing) cough is usually present with the flu (sometimes referred to as dry cough).
Aches
1-Slight body aches and pains can be part of a cold.
2-Severe aches and pains are common with the flu.
Stuffy Nose
1-Stuffy nose is commonly present with a cold and typically resolves spontaneously within a week.
2-Stuffy nose is not commonly present with the flu.
Chills
1-Chills are uncommon with a cold.
2-60% of people who have the flu experience chills.
Tiredness
1-Tiredness is fairly mild with a cold.
2-Tiredness is moderate to severe with the flu.
Sneezing
1-Sneezing is commonly present with a cold.
2-Sneezing is not common with the flu.
Sudden Symptoms
1-Cold symptoms tend to develop over a few days.
2-The flu has a rapid onset within 3-6 hours. The flu hits hard and includes sudden symptoms like high fever, aches and pains.
Headache
1-A headache is fairly uncommon with a cold.
2-A headache is very common with the flu, present in 80% of flu cases.
Sore Throat
1-Sore throat is commonly present with a cold.
2-Sore throat is not commonly present with the flu.
Chest Discomfort
1-Chest discomfort is mild to moderate with a cold.
2-Chest discomfort is often severe with the flu.
If you think you have the H1N1 flu, you should take a few common-sense steps to protect your friends, family members, and coworkers. For instance, if you feel sick, stay home until you feel better and have gone at least 24 hours without relying on medicine to break your fever.
In addition, wash your hands, linens, dishes, and so on thoroughly. And cover your mouth and nose with a tissue when you cough or sneeze--and then throw the tissue away immediately. Finally, if you have to share a small space with other people, consider wearing a facemask to help make sure you don't spread the flu to the people around you.
Follow these steps and monitor your symptoms to help stop the spread of H1N1...and remain happy and healthy!
THE DEVIL IS IN THE DETAILS
"THE DEVIL IS IN THE DETAILS..."
Or so the famous saying goes. And when it comes to really understanding the various reports and events unfolding in the economy, it's important to take a look at the details - not just the headlines. Here's what you need to know.
On the inflation front, the Producer Price Index, which measures wholesale inflation, unexpectedly fell due to a drop in energy prices. While that seems like good news on the surface, keep in mind that next month's number could climb higher again, as oil and natural gas have both been on a tear higher lately.
In housing news, Housing Starts and Building Permits both came in a bit below expectations, but this may be a sign that builders are exercising some caution - particularly in the face of the $8,000 tax credit for first time homebuyers that is presently set to expire on November 30th. Existing Home Sales came in better than expected - and a whopping 45% of those homes were sold to first time homebuyers - rushing to move in on that credit. Recent studies have shown that many who qualify for this tax credit aren't even aware of it...so please let me know if you or someone you know needs more information - the clock is ticking!
Additionally, the level of existing homes inventory shrunk to a 7.8 month supply, down from a recent high of 10.1 months in April.
In other news, 3rd quarter earnings season continues, where companies report their status as of the end of September. While many companies are beating expectations, it's important to realize that many of those companies achieved better earnings by cost cutting and layoffs, not from increased sales. This is a big disconnect between Wall Street and "Main Street". Stocks are rocketing higher based on these "positive" reports, but the cost cutting and job cutting measures can only go so far...you can't simultaneously grow the ranks of unemployment - and then grow your business, hoping for increased sales to those same people who are without jobs.
Last week's Jobless Claims numbers seem to confirm this as Initial Jobless Claims rose more than expected. In addition, the number of individuals continuing to receive unemployment benefits fell to the lowest level since March, but this is likely the result of people's unemployment benefits expiring, without them having been able to find jobs.
Also worth noting is the news that ratings agency Moody's lead analyst, Steven Hess, said that the US needs to cut its deficit or it could lose its "AAA" rating in the next 3 to 4 years, which we have maintained since 1917! Think of all we've been through - two World Wars, the Depression, three Wall Street collapses and major terrorist attacks...yet our credit quality has maintained that AAA rating, allowing us to issue debt at the most favorable rates. Hess went on to say that if the US doesn't "get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy." And just like on a mortgage when the credit rating gets reduced, interest rates move higher. This will definitely be something we'll keep an eye on in the months ahead.
After all the week's action, Bonds and home loan rates ended the week slightly worse than where they began.
Another record sized round of Treasury auctions are on tap this week - and the massive amounts of supply that continue to flood the market can cause home loan rates to move higher, if there is ultimately not enough demand to sop up all the supply. Additionally, there are several economic reports which could be market movers. Tuesday brings both the Consumer Confidence and Durable Goods Reports, the latter of which gives us an update on consumer and business consumption and buying behavior via data on items that are non-disposable, such as cars, furniture, appliances, games, cameras, business equipment, etc.
On Wednesday, there will be more news on the housing front with the New Home Sales Report, while Thursday brings another Initial Jobless Claims Report. Thursday also brings a read on the economy with the Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. And the week could end with a bang, as Friday brings the Fed's favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, Bonds held their ground for most of the week but ultimately were unable to remain above a key technical support level. I'll be watching closely to see what happens in the week ahead - and as always, reach out to me if you or others in your network need more information or questions answered...I'm here to help.
Or so the famous saying goes. And when it comes to really understanding the various reports and events unfolding in the economy, it's important to take a look at the details - not just the headlines. Here's what you need to know.
On the inflation front, the Producer Price Index, which measures wholesale inflation, unexpectedly fell due to a drop in energy prices. While that seems like good news on the surface, keep in mind that next month's number could climb higher again, as oil and natural gas have both been on a tear higher lately.
In housing news, Housing Starts and Building Permits both came in a bit below expectations, but this may be a sign that builders are exercising some caution - particularly in the face of the $8,000 tax credit for first time homebuyers that is presently set to expire on November 30th. Existing Home Sales came in better than expected - and a whopping 45% of those homes were sold to first time homebuyers - rushing to move in on that credit. Recent studies have shown that many who qualify for this tax credit aren't even aware of it...so please let me know if you or someone you know needs more information - the clock is ticking!
Additionally, the level of existing homes inventory shrunk to a 7.8 month supply, down from a recent high of 10.1 months in April.
In other news, 3rd quarter earnings season continues, where companies report their status as of the end of September. While many companies are beating expectations, it's important to realize that many of those companies achieved better earnings by cost cutting and layoffs, not from increased sales. This is a big disconnect between Wall Street and "Main Street". Stocks are rocketing higher based on these "positive" reports, but the cost cutting and job cutting measures can only go so far...you can't simultaneously grow the ranks of unemployment - and then grow your business, hoping for increased sales to those same people who are without jobs.
Last week's Jobless Claims numbers seem to confirm this as Initial Jobless Claims rose more than expected. In addition, the number of individuals continuing to receive unemployment benefits fell to the lowest level since March, but this is likely the result of people's unemployment benefits expiring, without them having been able to find jobs.
Also worth noting is the news that ratings agency Moody's lead analyst, Steven Hess, said that the US needs to cut its deficit or it could lose its "AAA" rating in the next 3 to 4 years, which we have maintained since 1917! Think of all we've been through - two World Wars, the Depression, three Wall Street collapses and major terrorist attacks...yet our credit quality has maintained that AAA rating, allowing us to issue debt at the most favorable rates. Hess went on to say that if the US doesn't "get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy." And just like on a mortgage when the credit rating gets reduced, interest rates move higher. This will definitely be something we'll keep an eye on in the months ahead.
After all the week's action, Bonds and home loan rates ended the week slightly worse than where they began.
Another record sized round of Treasury auctions are on tap this week - and the massive amounts of supply that continue to flood the market can cause home loan rates to move higher, if there is ultimately not enough demand to sop up all the supply. Additionally, there are several economic reports which could be market movers. Tuesday brings both the Consumer Confidence and Durable Goods Reports, the latter of which gives us an update on consumer and business consumption and buying behavior via data on items that are non-disposable, such as cars, furniture, appliances, games, cameras, business equipment, etc.
On Wednesday, there will be more news on the housing front with the New Home Sales Report, while Thursday brings another Initial Jobless Claims Report. Thursday also brings a read on the economy with the Gross Domestic Product (GDP) Report, which is the broadest measure of economic activity. And the week could end with a bang, as Friday brings the Fed's favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) Index, found within the Personal Income Report.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.
As you can see in the chart below, Bonds held their ground for most of the week but ultimately were unable to remain above a key technical support level. I'll be watching closely to see what happens in the week ahead - and as always, reach out to me if you or others in your network need more information or questions answered...I'm here to help.
For the week of October 26, 2009
INFO THAT HITS US WHERE WE LIVE
The week ended with the terrific news that Existing Home Sales shot UP 9.4% in September to a 5.57 million annual rate. This was almost twice the increase the consensus expected and a nice boost coming off the slight drop we saw in August. Best of all, the inventory is now down to a 7.8 month supply, getting us closer and closer to the 6-month level of a normal housing market.
Earlier in the week, Housing Starts for September were UP 0.5% to an annual rate of 590,000 units. The consensus expected more, but the drag on the number all came from a drop in those volatile multi-unit starts. Single-family starts were up a strong 3.9%, their sixth gain in the last seven months and UP 40.3% since the January-February bottom. The rate of building is well below underlying demand, which some put at about 1.6 million units per year, based on population growth and the need for replacement because of fires, disasters and knock-downs.
The Mortgage Bankers Association reported that for 30-year fixed-rate mortgages, the average contract interest rate was 5.07% with 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. First time buyers have just five weeks to get in on these still great rates AND the $8,000 tax credit set to go away at the end of November.
Review of Last Week
CAN'T STAY ABOVE 10,000... It was a strange week in the stock markets, as the Dow shot past the "magic" 10,000 mark two days in a row, but a freaky Friday hammered that benchmark back down below 10,000. All three major indexes saw modest drops for the week. Some analysts said the seven-month rise in stock prices made us ready for a dive. Even analysts who are bullish long-term hinted we were due for a temporary pullback. We can be grateful these experts' wishes were fulfilled in such a modest way.
The negative yak was extra strange because Q3 corporate earnings continued to impress investors. We saw what some called "blowout results" from Apple and Amazon.com, while a long list of companies had very nice upside surprises -- outfits like American Express, AT&T, Capital One, Caterpillar, McDonald's, Texas Instruments, UPS and Yahoo! And let's not forget the strong single-family Housing Starts and very strong Existing Home Sales that show the housing recovery is moving along.
Initial Unemployment Claims inched up a bit last week, but Continuing Claims continue to fall, now down to 5.9 million. Gloomy pundits say this just shows people's unemployment benefits are expiring, but a few folks surely must be getting jobs to support the now recovering and growing economy! These pundits might want to consider Treasury Secretary Tim Geithner's prediction that we'll see "...positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate."
For the week, the Dow ended down 0.2%, to 9972.18; the S&P 500 was down 0.7%, to 1079.60; while the Nasdaq fell just 0.1%, to 2154.47.
It was an up-and-down week in the bond market, which ultimately ended down. Friday, investors were anticipating this week's record auctions, which could squeeze prices some more. The FNMA 30-year 4.5% bond we watch fell again from the previous week's close, ending at $100.59. Still, mortgage rates stay in historically low territory.
This Week’s Forecast
HOUSING? GDP? INFLATION?... We'll have new answers to all three questions, beginning Wednesday with New Home Sales, then Thursday we get our initial look at GDP for Q3, the first quarter that's expected to show the economy expanding again. Friday we get numbers for PCE and Core PCE, which are the Fed's favorite inflation indicators.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
The week ended with the terrific news that Existing Home Sales shot UP 9.4% in September to a 5.57 million annual rate. This was almost twice the increase the consensus expected and a nice boost coming off the slight drop we saw in August. Best of all, the inventory is now down to a 7.8 month supply, getting us closer and closer to the 6-month level of a normal housing market.
Earlier in the week, Housing Starts for September were UP 0.5% to an annual rate of 590,000 units. The consensus expected more, but the drag on the number all came from a drop in those volatile multi-unit starts. Single-family starts were up a strong 3.9%, their sixth gain in the last seven months and UP 40.3% since the January-February bottom. The rate of building is well below underlying demand, which some put at about 1.6 million units per year, based on population growth and the need for replacement because of fires, disasters and knock-downs.
The Mortgage Bankers Association reported that for 30-year fixed-rate mortgages, the average contract interest rate was 5.07% with 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. First time buyers have just five weeks to get in on these still great rates AND the $8,000 tax credit set to go away at the end of November.
Review of Last Week
CAN'T STAY ABOVE 10,000... It was a strange week in the stock markets, as the Dow shot past the "magic" 10,000 mark two days in a row, but a freaky Friday hammered that benchmark back down below 10,000. All three major indexes saw modest drops for the week. Some analysts said the seven-month rise in stock prices made us ready for a dive. Even analysts who are bullish long-term hinted we were due for a temporary pullback. We can be grateful these experts' wishes were fulfilled in such a modest way.
The negative yak was extra strange because Q3 corporate earnings continued to impress investors. We saw what some called "blowout results" from Apple and Amazon.com, while a long list of companies had very nice upside surprises -- outfits like American Express, AT&T, Capital One, Caterpillar, McDonald's, Texas Instruments, UPS and Yahoo! And let's not forget the strong single-family Housing Starts and very strong Existing Home Sales that show the housing recovery is moving along.
Initial Unemployment Claims inched up a bit last week, but Continuing Claims continue to fall, now down to 5.9 million. Gloomy pundits say this just shows people's unemployment benefits are expiring, but a few folks surely must be getting jobs to support the now recovering and growing economy! These pundits might want to consider Treasury Secretary Tim Geithner's prediction that we'll see "...positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate."
For the week, the Dow ended down 0.2%, to 9972.18; the S&P 500 was down 0.7%, to 1079.60; while the Nasdaq fell just 0.1%, to 2154.47.
It was an up-and-down week in the bond market, which ultimately ended down. Friday, investors were anticipating this week's record auctions, which could squeeze prices some more. The FNMA 30-year 4.5% bond we watch fell again from the previous week's close, ending at $100.59. Still, mortgage rates stay in historically low territory.
This Week’s Forecast
HOUSING? GDP? INFLATION?... We'll have new answers to all three questions, beginning Wednesday with New Home Sales, then Thursday we get our initial look at GDP for Q3, the first quarter that's expected to show the economy expanding again. Friday we get numbers for PCE and Core PCE, which are the Fed's favorite inflation indicators.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Home Sale Stats!
Existing home sales rose 9.4% in September to a seasonally adjusted annual rate of 5.57 million units from 5.1 million units in August. The increase was largely due to the tax incentive for first-time homebuyers.
According to the ICSC-Goldman Sachs index, retail sales rose 0.2% in the week ending October 17. On a year-over-year basis, retailers saw sales increase by 2.8%, the best showing in a year.
The producer price index, which tracks wholesale prices, rose 0.6% in September, following a 1.7% increase in August. For the year, wholesale prices are down 4.8%.
The Commerce Department reported that the combined construction of new single-family homes and apartments in September increased 0.5% to a seasonally adjusted annual rate of 590,000 units. That was less than the 610,000 economists had expected.
Initial claims for unemployment benefits rose by 11,000 to 531,000 in the week ending October 17. The figure was higher than the 515,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending October 10 fell by 98,000 to 5.92 million.
The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 1% in September after a revised 0.4% gain in August. It was the sixth straight monthly increase and marks the largest six-month gain in 26 years.
The National Association of Home Builders / Wells Fargo housing market index fell one point in October to 18. The decrease reflects the soon-to-expire tax credit for first-time homebuyers that boosted home sales earlier this year. An index reading below 50 indicates negative sentiment about the housing market.
Upcoming on the economic calendar are reports on consumer confidence on October 27, new home sales on October 28 and gross domestic product on October 29.
According to the ICSC-Goldman Sachs index, retail sales rose 0.2% in the week ending October 17. On a year-over-year basis, retailers saw sales increase by 2.8%, the best showing in a year.
The producer price index, which tracks wholesale prices, rose 0.6% in September, following a 1.7% increase in August. For the year, wholesale prices are down 4.8%.
The Commerce Department reported that the combined construction of new single-family homes and apartments in September increased 0.5% to a seasonally adjusted annual rate of 590,000 units. That was less than the 610,000 economists had expected.
Initial claims for unemployment benefits rose by 11,000 to 531,000 in the week ending October 17. The figure was higher than the 515,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending October 10 fell by 98,000 to 5.92 million.
The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 1% in September after a revised 0.4% gain in August. It was the sixth straight monthly increase and marks the largest six-month gain in 26 years.
The National Association of Home Builders / Wells Fargo housing market index fell one point in October to 18. The decrease reflects the soon-to-expire tax credit for first-time homebuyers that boosted home sales earlier this year. An index reading below 50 indicates negative sentiment about the housing market.
Upcoming on the economic calendar are reports on consumer confidence on October 27, new home sales on October 28 and gross domestic product on October 29.
Tuesday, October 20, 2009
Stolen Hotmail Passwords Demonstrate Need for Stronger Passwords
FINDING OUT THAT YOUR EMAIL OR ONLINE ACCOUNTS HAVE BEEN COMPROMISED IS ONE PRESSURE-FILLED SITUATION! SOME GREAT TIPS FOR CREATING STRONG PASSWORDS!
By now, you've probably heard that 30,000 passwords for Hotmail and Gmail accounts were stolen earlier this month
But did you know that a security group analyzed those passwords and found that the most commonly used password was 123456? If that wasn't bad enough, the second most common password that was used...yep, you guessed it...123456789.
In today's electronic environment, that's unbelievable. We no longer live in a world where we can use a simple string of numbers or a child's name as a password. They're just too easy to hack...and the results can be much more devastating than merely finding your emails made public.
The problem is that we all have so many passwords. So how do we make strong passwords that we can actually remember for every account?
The tips below can help you avoid the most common password pitfalls and even implement a few new ideas that will make your passwords easy to remember...and hard to break!
Don't Use a Password that's Easy to Guess
There's no way around it...a well-protected password is hard for other people to guess. How do you do that? It's pretty simple really. Just follow this advice:
Use a random string of characters. That means no sequential letters or numbers, like those Hotmail accounts that used 123456!
Make it looooong. The longer the better--even up to as many as 10 to 14 characters if space allows.
Switch things up. Use a combination of upper and lower case letters, along with a few numbers mixed in the middle or end.
Don't use substitute symbols in common words. Using "@" for "a" or "1" for "I" may look good to you, but most hackers are smart enough to break those substitutes rather quickly when the password consists of a common word.
For that matter, avoid easy targets like words straight out of the dictionary or things like family names and birthdays.
Don't Use the Same Password for All Accounts!
Most of us cheat when it comes to passwords. We have trouble remembering our passwords, so we come up with two or three that we can remember and use them everywhere.
But...you should avoid the temptation! That's because all of your accounts will be vulnerable if even one account is compromised. The reality is, you need to create and remember multiple passwords--a different one for each account! Fortunately, it's easier than you think. Just follow the steps below.
4 Simple Steps to Memorable, Yet Unique Passwords
Good passwords come down to two things: (1) they're easy for you to remember and (2) they're hard for others to break. Here's a sure-fire tip that can help you achieve both!
Think up a phrase. Instead of a common word or family member's name, think up a unique phrase that only you know. For example, you may think up something off the wall such as "I Like Short Hair Too."
Make it an acronym. In our example, "I Like Short Hair Too" would become ILSHT.
Add Complexity. Remember those substitutes you're not supposed to use with common dictionary words? Well, you CAN use them with your acronym. For example, "I Like Short Hair Too" can become "1 Like $hort Hair 2" which makes: 1L$H2. You can also use upper and lower letters to make it 1L$h2. The point is to be creative, but in a way that you can easily remember it.
Make it unique. A password is only really unique if you use it for one account and one account only. So you can't just use 1L$h2 for every account. And, in reality it's still too short. Here's the key to the whole process: Mix in additional letters and numbers that are unique to each account. For example, if you're logging into a "gmail account" you can use the "gm" and "@cct" (for acct) to make: 1L$h2gM@cct. Then, for a Netflix account, you may use: 1L$h2Nf@cct. That way, you're passwords will be hard for others to guess and unique to each account, but also easy for you to remember!
Of course, these are just examples. You'll want to be creative and think up your own acronym and ways to add unique characters for each account. And then keep that little secret to yourself so no one will be able to guess your account passwords.
Follow these simple steps and you'll have passwords that are tough to break, unique to every account, and easy to remember. And if you have children in your house who are starting to use passwords for email and IM accounts, teach them these steps to help educate them on the importance of strong passwords - they'll thank you later in life!
By now, you've probably heard that 30,000 passwords for Hotmail and Gmail accounts were stolen earlier this month
But did you know that a security group analyzed those passwords and found that the most commonly used password was 123456? If that wasn't bad enough, the second most common password that was used...yep, you guessed it...123456789.
In today's electronic environment, that's unbelievable. We no longer live in a world where we can use a simple string of numbers or a child's name as a password. They're just too easy to hack...and the results can be much more devastating than merely finding your emails made public.
The problem is that we all have so many passwords. So how do we make strong passwords that we can actually remember for every account?
The tips below can help you avoid the most common password pitfalls and even implement a few new ideas that will make your passwords easy to remember...and hard to break!
Don't Use a Password that's Easy to Guess
There's no way around it...a well-protected password is hard for other people to guess. How do you do that? It's pretty simple really. Just follow this advice:
Use a random string of characters. That means no sequential letters or numbers, like those Hotmail accounts that used 123456!
Make it looooong. The longer the better--even up to as many as 10 to 14 characters if space allows.
Switch things up. Use a combination of upper and lower case letters, along with a few numbers mixed in the middle or end.
Don't use substitute symbols in common words. Using "@" for "a" or "1" for "I" may look good to you, but most hackers are smart enough to break those substitutes rather quickly when the password consists of a common word.
For that matter, avoid easy targets like words straight out of the dictionary or things like family names and birthdays.
Don't Use the Same Password for All Accounts!
Most of us cheat when it comes to passwords. We have trouble remembering our passwords, so we come up with two or three that we can remember and use them everywhere.
But...you should avoid the temptation! That's because all of your accounts will be vulnerable if even one account is compromised. The reality is, you need to create and remember multiple passwords--a different one for each account! Fortunately, it's easier than you think. Just follow the steps below.
4 Simple Steps to Memorable, Yet Unique Passwords
Good passwords come down to two things: (1) they're easy for you to remember and (2) they're hard for others to break. Here's a sure-fire tip that can help you achieve both!
Think up a phrase. Instead of a common word or family member's name, think up a unique phrase that only you know. For example, you may think up something off the wall such as "I Like Short Hair Too."
Make it an acronym. In our example, "I Like Short Hair Too" would become ILSHT.
Add Complexity. Remember those substitutes you're not supposed to use with common dictionary words? Well, you CAN use them with your acronym. For example, "I Like Short Hair Too" can become "1 Like $hort Hair 2" which makes: 1L$H2. You can also use upper and lower letters to make it 1L$h2. The point is to be creative, but in a way that you can easily remember it.
Make it unique. A password is only really unique if you use it for one account and one account only. So you can't just use 1L$h2 for every account. And, in reality it's still too short. Here's the key to the whole process: Mix in additional letters and numbers that are unique to each account. For example, if you're logging into a "gmail account" you can use the "gm" and "@cct" (for acct) to make: 1L$h2gM@cct. Then, for a Netflix account, you may use: 1L$h2Nf@cct. That way, you're passwords will be hard for others to guess and unique to each account, but also easy for you to remember!
Of course, these are just examples. You'll want to be creative and think up your own acronym and ways to add unique characters for each account. And then keep that little secret to yourself so no one will be able to guess your account passwords.
Follow these simple steps and you'll have passwords that are tough to break, unique to every account, and easy to remember. And if you have children in your house who are starting to use passwords for email and IM accounts, teach them these steps to help educate them on the importance of strong passwords - they'll thank you later in life!
Higher CPI!
"THE HEAT IS ON." Glenn Frey. While cooler temperatures are beginning to descend on many parts of the country, Bonds and home loan rates are feeling the heat and pressure from several fronts. Here are some details...along with why it's important to act soon to take advantage of current home loan rates, as they may never be seen again.
Last week, the Core Consumer Price Index (CPI) was reported higher than expected, indicating that inflationary forces may already be underway. Remember, inflation erodes the value of the fixed return that a Bond provides - therefore, inflation is harmful to Bonds and home loan rates. Just the hint of inflation can cause home loan rates to worsen, which is what we saw last week.
And here's a very interesting and important note - when looking at these CPI numbers, it is important to understand the effect that the "Cash for Clunkers" program had on this index. The Cash for Clunkers program was very "creatively" accounted for as a reduction in the sales price of automobiles, which had to have a dramatic effect on lowering the CPI that was reported. Imagine how much higher CPI would have been had this "creativity" not been used. As even more inflationary fears creep into the economy, home loan rates will continue to rise.
Also adding pressure to Bonds and home loan rates is the Fed's plan to ration out their remaining purchases of Mortgage Backed Securities. The Fed has purchased around $950B year-to-date out of the $1.25T allotted for the program, which is now set to expire March 31, 2010. This means the Fed will be averaging about $14B a week in purchases, a lot less than $25B or so they had been doing up until recently. And anytime demand for an item slows down...including Mortgage Backed Securities...the price goes down. And in this case, it means that home loan rates will move higher.
The bottom line is that the heat is on...and home loan rates are starting to rise already. While home loan rates are still incredibly low, it is clear this won't last much longer - and we may not see rates at these levels again in our lifetimes. Give me a call if you want to discuss your own situation, or if you have a friend, family member, neighbor or coworker who might benefit from some information.
In other news, Retail Sales for September fell by 1.5% - and while the numbers were better than expected, they are still dismal at best. In addition, the flood of pre-holiday sales and layaway options that are already hitting - remember, it's still mid-October - also suggests a lack of pricing power for retailers. Stock earnings season continued with some mixed news: There were reasonably strong earnings reports from Intel and JPMorgan Chase, while there were weaker than expected reports from Johnson & Johnson, General Electric and IBM. Bank of America also posted its first loss for the year.
After all the week's heat and pressure, Bonds and home loan rates ended the week slightly worse than where they began.
More inflation news is ahead this week, with Tuesday's Producer Price Index (PPI) Report, which measures inflation at the wholesale level. Also this week, we'll get a double dose of housing news, first with Tuesday's Housing Starts and Building Permits Report and second with Friday's Existing Home Sales numbers for September. Some of the numbers have been looking better in recent months, as buyers move quickly to take advantage of the combination of low home loan rates, discounted home prices, and for first time home buyers, a juicy tax credit that is set to expire soon.
Given the state of the job market, Thursday's Initial Jobless Claims Report continues to be an important report to watch. Last week's Jobless Claims fell by 10,000 to 514,000 - and while this was lower than the 520,000 that was expected, it was still an enormous number of people applying for unemployment benefits, which highlights a weak labor market. Also, earnings season continues for Stocks, which could have a big impact on both Stocks and Bonds. The Dow had cracked the psychologically tough level of 10,000...but was unable to hold its ground, and was pressured back lower.
Remember: Weak or negative economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong or positive economic news normally has the opposite result.
As you can see in the chart below, Bond prices moved lower last week, meaning home loan rates moved higher. As discussed above - home loan rates are headed higher and are unlikely to return to similar levels anytime soon...and perhaps they never will again. Don't miss your opportunity to improve your own home loan situation, or make a suggestion to someone you know that might be in need of some solid advice.
Last week, the Core Consumer Price Index (CPI) was reported higher than expected, indicating that inflationary forces may already be underway. Remember, inflation erodes the value of the fixed return that a Bond provides - therefore, inflation is harmful to Bonds and home loan rates. Just the hint of inflation can cause home loan rates to worsen, which is what we saw last week.
And here's a very interesting and important note - when looking at these CPI numbers, it is important to understand the effect that the "Cash for Clunkers" program had on this index. The Cash for Clunkers program was very "creatively" accounted for as a reduction in the sales price of automobiles, which had to have a dramatic effect on lowering the CPI that was reported. Imagine how much higher CPI would have been had this "creativity" not been used. As even more inflationary fears creep into the economy, home loan rates will continue to rise.
Also adding pressure to Bonds and home loan rates is the Fed's plan to ration out their remaining purchases of Mortgage Backed Securities. The Fed has purchased around $950B year-to-date out of the $1.25T allotted for the program, which is now set to expire March 31, 2010. This means the Fed will be averaging about $14B a week in purchases, a lot less than $25B or so they had been doing up until recently. And anytime demand for an item slows down...including Mortgage Backed Securities...the price goes down. And in this case, it means that home loan rates will move higher.
The bottom line is that the heat is on...and home loan rates are starting to rise already. While home loan rates are still incredibly low, it is clear this won't last much longer - and we may not see rates at these levels again in our lifetimes. Give me a call if you want to discuss your own situation, or if you have a friend, family member, neighbor or coworker who might benefit from some information.
In other news, Retail Sales for September fell by 1.5% - and while the numbers were better than expected, they are still dismal at best. In addition, the flood of pre-holiday sales and layaway options that are already hitting - remember, it's still mid-October - also suggests a lack of pricing power for retailers. Stock earnings season continued with some mixed news: There were reasonably strong earnings reports from Intel and JPMorgan Chase, while there were weaker than expected reports from Johnson & Johnson, General Electric and IBM. Bank of America also posted its first loss for the year.
After all the week's heat and pressure, Bonds and home loan rates ended the week slightly worse than where they began.
More inflation news is ahead this week, with Tuesday's Producer Price Index (PPI) Report, which measures inflation at the wholesale level. Also this week, we'll get a double dose of housing news, first with Tuesday's Housing Starts and Building Permits Report and second with Friday's Existing Home Sales numbers for September. Some of the numbers have been looking better in recent months, as buyers move quickly to take advantage of the combination of low home loan rates, discounted home prices, and for first time home buyers, a juicy tax credit that is set to expire soon.
Given the state of the job market, Thursday's Initial Jobless Claims Report continues to be an important report to watch. Last week's Jobless Claims fell by 10,000 to 514,000 - and while this was lower than the 520,000 that was expected, it was still an enormous number of people applying for unemployment benefits, which highlights a weak labor market. Also, earnings season continues for Stocks, which could have a big impact on both Stocks and Bonds. The Dow had cracked the psychologically tough level of 10,000...but was unable to hold its ground, and was pressured back lower.
Remember: Weak or negative economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong or positive economic news normally has the opposite result.
As you can see in the chart below, Bond prices moved lower last week, meaning home loan rates moved higher. As discussed above - home loan rates are headed higher and are unlikely to return to similar levels anytime soon...and perhaps they never will again. Don't miss your opportunity to improve your own home loan situation, or make a suggestion to someone you know that might be in need of some solid advice.
For the week of October 19, 2009
INFO THAT HITS US WHERE WE LIVE
For the third week in a row, rates on 30-year fixed-rate mortgages remained below 5% in Freddie Mac's Primary Mortgage Market Survey. The average for conforming mortgages was 4.92% with an average of 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit.
The Mortgage Bankers Association reported applications down 1.8% for the week, although re-financings were up, as more people took advantage of historically low mortgage rates. The MBA also projected double-digit growth for home sales next year. They see 2010 existing home sales up 11.2% to 5.57 million and new home sales up a healthy 21% from 2009 levels. Another encouraging stat came from the National Association of Realtors which reported 3.6 million existing homes for sale at the end of August, nicely down from 4.3 million 12 months ago.
First time buyers may still be able to get the $8,000 tax credit expiring at the end of November. That's six weeks away, which is not a lot of time, but not impossible. Fence-sitters should get pre-qualified now.
Review of Last Week
FLIRTING WITH 10,000... Investors focused on corporate earnings saw enough encouraging signs to push the Dow past 10,000 on Wednesday. It was last at that magical mark on October 7 a year ago. The market closed above 10,000 again on Thursday, but Friday was a different story. GE and IBM reported quarterly results that were less than expected and University of Michigan Consumer Sentiment fell 3.9 points, after a 7.8 point rise in September, so the week ended below 10,000, but still with an overall gain.
But don't fret over consumers -- they're clearly showing up at the stores. Retail sales for September fell just 1.5%, way less than expected after the end of the Cash for Clunkers program. In fact, "core" retail sales (take out autos, building materials and gas) were UP 0.5% and are UP three of the last four months. Ignore the pundits -- consumers ARE participating in this recovery. Other good indicators included the Empire State Manufacturing Index rising to its highest level in over five years and initial unemployment claims falling to 514,000, their lowest level since the start of the year.
But the best news for investors was on the earnings front, with JPMorgan Chase, Goldman Sachs and Citigroup all beating estimates. Tech darling Google blew everyone away with earnings of almost $6 a share and an optimistic economic outlook. The week ended with Treasury Secretary Tim Geithner telling CNBC: "... you're going to see the economy growing at a significant rate...the rest of this year. [And] Positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate."
For the week, the Dow ended UP 1.3%, to 9995.91; the S&P 500 was UP 1.5%, to 1087.68; while the Nasdaq rose 0.8%, to 2156.60.
The bond market saw prices under pressure in the shortened week. This included the FNMA 30-year 4.5% bond we watch, which dropped a tad from the previous week's $100.91 close, ending at $100.72. But, as reported above, mortgage rates stayed low, keeping us in "the golden age of mortgage rates", as one observer described it.
This Week’s Forecast
HOME SWEET HOMES... This week is full of news on the subject we love most. Tuesday we get Housing Starts and Building Permits for September, Friday delivers Existing Home Sales. For a gauge of the broader economy, the PPI looks at producer prices, while the LEI consolidates a group of indicators. We will all keep watching Initial and Continuing Unemployment numbers as we wait for Secretary Geithner's prediction to come true.
Corporate earnings will stay big in the picture as 12 companies who are part of the Dow Jones Industrial Average share Q3 results.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
For the third week in a row, rates on 30-year fixed-rate mortgages remained below 5% in Freddie Mac's Primary Mortgage Market Survey. The average for conforming mortgages was 4.92% with an average of 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit.
The Mortgage Bankers Association reported applications down 1.8% for the week, although re-financings were up, as more people took advantage of historically low mortgage rates. The MBA also projected double-digit growth for home sales next year. They see 2010 existing home sales up 11.2% to 5.57 million and new home sales up a healthy 21% from 2009 levels. Another encouraging stat came from the National Association of Realtors which reported 3.6 million existing homes for sale at the end of August, nicely down from 4.3 million 12 months ago.
First time buyers may still be able to get the $8,000 tax credit expiring at the end of November. That's six weeks away, which is not a lot of time, but not impossible. Fence-sitters should get pre-qualified now.
Review of Last Week
FLIRTING WITH 10,000... Investors focused on corporate earnings saw enough encouraging signs to push the Dow past 10,000 on Wednesday. It was last at that magical mark on October 7 a year ago. The market closed above 10,000 again on Thursday, but Friday was a different story. GE and IBM reported quarterly results that were less than expected and University of Michigan Consumer Sentiment fell 3.9 points, after a 7.8 point rise in September, so the week ended below 10,000, but still with an overall gain.
But don't fret over consumers -- they're clearly showing up at the stores. Retail sales for September fell just 1.5%, way less than expected after the end of the Cash for Clunkers program. In fact, "core" retail sales (take out autos, building materials and gas) were UP 0.5% and are UP three of the last four months. Ignore the pundits -- consumers ARE participating in this recovery. Other good indicators included the Empire State Manufacturing Index rising to its highest level in over five years and initial unemployment claims falling to 514,000, their lowest level since the start of the year.
But the best news for investors was on the earnings front, with JPMorgan Chase, Goldman Sachs and Citigroup all beating estimates. Tech darling Google blew everyone away with earnings of almost $6 a share and an optimistic economic outlook. The week ended with Treasury Secretary Tim Geithner telling CNBC: "... you're going to see the economy growing at a significant rate...the rest of this year. [And] Positive growth in 2010 at a level that will begin to gradually bring down the unemployment rate."
For the week, the Dow ended UP 1.3%, to 9995.91; the S&P 500 was UP 1.5%, to 1087.68; while the Nasdaq rose 0.8%, to 2156.60.
The bond market saw prices under pressure in the shortened week. This included the FNMA 30-year 4.5% bond we watch, which dropped a tad from the previous week's $100.91 close, ending at $100.72. But, as reported above, mortgage rates stayed low, keeping us in "the golden age of mortgage rates", as one observer described it.
This Week’s Forecast
HOME SWEET HOMES... This week is full of news on the subject we love most. Tuesday we get Housing Starts and Building Permits for September, Friday delivers Existing Home Sales. For a gauge of the broader economy, the PPI looks at producer prices, while the LEI consolidates a group of indicators. We will all keep watching Initial and Continuing Unemployment numbers as we wait for Secretary Geithner's prediction to come true.
Corporate earnings will stay big in the picture as 12 companies who are part of the Dow Jones Industrial Average share Q3 results.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
LISTEN TO WHAT THE MAN SAID
"LISTEN TO WHAT THE MAN SAID." And those aren't just the words from Paul McCartney's hit song of the same title...they're also words of advice for anyone who's considering buying a home or refinancing. Last week, Federal Reserve Chairman Ben Bernanke said that as the economy heals, the Fed will be very vigilant to protect against inflation. While inflation is not a problem at present...it will most certainly become a problem down the road. So why does this matter if you are considering purchasing or refinancing? Because inflation is the arch-enemy of Bonds and home loan rates, and just the knowledge of it coming has been causing both Bonds and home loan rates to worsen in recent days. Along with the fear of inflation, the Fed's purchasing program of Mortgage Backed Securities is already slowing down, with the end of their buying in sight - and the reduced demand for these Bonds is also driving home loan rates higher.
Bottom line: home loan rates are already on the rise, and we won't likely see these low historic levels again.
Interest rates are still very near historic lows - George Washington couldn't have gotten a better interest rate - and the opportunity these low rates present is huge for homebuyers or people looking to refinance. If we haven't talked recently about your own home loan situation - or if you have a friend, family member, neighbor or coworker who needs advice - please call or send me an email. There's no time to waste.
Bottom line: home loan rates are already on the rise, and we won't likely see these low historic levels again.
Interest rates are still very near historic lows - George Washington couldn't have gotten a better interest rate - and the opportunity these low rates present is huge for homebuyers or people looking to refinance. If we haven't talked recently about your own home loan situation - or if you have a friend, family member, neighbor or coworker who needs advice - please call or send me an email. There's no time to waste.
For the week of October 12, 2009
INFO THAT HITS US WHERE WE LIVE
At the end of September, the supply of homes for sale was reported down 1.8% from the previous month in 27 major metropolitan areas. We all know the factors. Home prices are very affordable, mortgage rates are very favorable and first-time homebuyers are taking advantage of the $8,000 tax credit set to expire at the end of November, now just seven weeks away.
The Mortgage Bankers Association saw loan applications for home purchases rise 13.2% last week, as the MBA's Purchase Index hit its highest level since last January. The average rate on 30-year fixed rate mortgage slid to 4.89% with an average 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Freddie Mac's weekly survey of conforming mortgage rates put the average 30-year fixed rate mortgage at 4.87% with an average 0.7 point for 80% loan-to-value ratio loans to borrowers with good credit.
Review of Last Week
BOUNCING BACK... The markets had lost ground for two weeks straight, but last week they got back on track with a vengeance. Hints at good Q3 corporate earnings helped. Some retailers also reported September sales that indicate the consumer is ready to step up to the plate and contribute to the recovery.
We also had the ISM Services index increasing to 50.9 in September, putting it in territory that signals expansion for the non-manufacturing part of our economy. Corporate earnings season got off to a nice start with Alcoa breaking its string of three straight quarterly losses with a surprise profit for Q3, and not just from cost cutting but also from higher sales. We even had good news from retailers encouraged by better-than-expected September numbers. Target, Kohl's, J.C. Penney and TJX all raised their Q3 or second half profit outlooks.
Initial claims for unemployment came in at 521,000, their lowest level since the first week of the year and continuing claims dropped 72,000, to 6.04 million. There are now economists who expect at least one month with net payroll gains before the year is out. The week ended with the trade deficit declining to $30.7 billion for August. Experts feel this solid showing for U.S. exports supports the case for a strong global recovery, with the U.S. helping supply capital goods to the rest of the world.
For the week, the Dow ended UP 4.0%, to 9864.94; the S&P 500 was UP 4.5%, to 1071.49; while the Nasdaq also rose 4.5%, to 2139.28.
The soaring stock market and a weak auction of Treasuries sent the bond market reeling, putting pressure on prices, including some mortgage backed securities. This included the FNMA 30-year 4.5% bond we watch, which was hammered down from the previous week's $101.66 close, dropping to $100.91. But, as reported above, mortgage rates stayed in super low territory.
This Week’s Forecast
MORE ON CONSUMERS, INFLATION AND MANUFACTURING... In spite of everything being squeezed into three days, it's a pretty full week of economic reports. Retail Sales give us an update on the consumer's willingness to contribute to the recovery and CPI readings keep an eye on inflation. The Philadelphia Fed Index, Industrial Production and Capacity numbers gauge manufacturing. The FOMC Minutes give us more on the Fed's view of the economy from their meeting on September 23.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
At the end of September, the supply of homes for sale was reported down 1.8% from the previous month in 27 major metropolitan areas. We all know the factors. Home prices are very affordable, mortgage rates are very favorable and first-time homebuyers are taking advantage of the $8,000 tax credit set to expire at the end of November, now just seven weeks away.
The Mortgage Bankers Association saw loan applications for home purchases rise 13.2% last week, as the MBA's Purchase Index hit its highest level since last January. The average rate on 30-year fixed rate mortgage slid to 4.89% with an average 1.13 points (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Freddie Mac's weekly survey of conforming mortgage rates put the average 30-year fixed rate mortgage at 4.87% with an average 0.7 point for 80% loan-to-value ratio loans to borrowers with good credit.
Review of Last Week
BOUNCING BACK... The markets had lost ground for two weeks straight, but last week they got back on track with a vengeance. Hints at good Q3 corporate earnings helped. Some retailers also reported September sales that indicate the consumer is ready to step up to the plate and contribute to the recovery.
We also had the ISM Services index increasing to 50.9 in September, putting it in territory that signals expansion for the non-manufacturing part of our economy. Corporate earnings season got off to a nice start with Alcoa breaking its string of three straight quarterly losses with a surprise profit for Q3, and not just from cost cutting but also from higher sales. We even had good news from retailers encouraged by better-than-expected September numbers. Target, Kohl's, J.C. Penney and TJX all raised their Q3 or second half profit outlooks.
Initial claims for unemployment came in at 521,000, their lowest level since the first week of the year and continuing claims dropped 72,000, to 6.04 million. There are now economists who expect at least one month with net payroll gains before the year is out. The week ended with the trade deficit declining to $30.7 billion for August. Experts feel this solid showing for U.S. exports supports the case for a strong global recovery, with the U.S. helping supply capital goods to the rest of the world.
For the week, the Dow ended UP 4.0%, to 9864.94; the S&P 500 was UP 4.5%, to 1071.49; while the Nasdaq also rose 4.5%, to 2139.28.
The soaring stock market and a weak auction of Treasuries sent the bond market reeling, putting pressure on prices, including some mortgage backed securities. This included the FNMA 30-year 4.5% bond we watch, which was hammered down from the previous week's $101.66 close, dropping to $100.91. But, as reported above, mortgage rates stayed in super low territory.
This Week’s Forecast
MORE ON CONSUMERS, INFLATION AND MANUFACTURING... In spite of everything being squeezed into three days, it's a pretty full week of economic reports. Retail Sales give us an update on the consumer's willingness to contribute to the recovery and CPI readings keep an eye on inflation. The Philadelphia Fed Index, Industrial Production and Capacity numbers gauge manufacturing. The FOMC Minutes give us more on the Fed's view of the economy from their meeting on September 23.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Growth In U.S. Manufaturing!
The U.S. non-manufacturing sector grew for the first time since August 2008. The Institute for Supply Management reported the monthly index of non-manufacturing activity rose to 50.9 in September from 48.4 in August. A reading above 50 signals expansion. Big gains were made in new orders, up more than four points to 54.2; backlog of orders, up 10.5 points to 51.5; and productivity, up nearly four points to 55.1.
According to the ICSC-Goldman Sachs index, retail sales rose 0.3% in the week ending October 3. On a year-over-year basis, retailers saw sales increase by 1%, the second-best showing in a year.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending October 2 rose 16.4% to 756.3, the highest level since May. Purchase volume rose 13.2% to 306.1. Refinancing applications increased 18.2% to 3,377.1.
According to the Federal Reserve, consumer credit debt fell for the seventh straight month in August by $12 billion, an annual rate of 5.8%. Economists had forecast consumer debt would drop $10 billion. Total consumer credit debt in August was $2.46 trillion.
Initial claims for unemployment benefits fell by 33,000 to 521,000 in the week ending October 3. The figure was lower than the 540,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending September 26 fell by 72,000 to 6.04 million.
The Commerce Department said wholesalers reduced their inventories by 1.3% in August, following a revised 1.6% drop in July. It was the 12th straight monthly decline. Meanwhile, sales at the wholesale level rose 1% in August, the largest increase since June 2008.
According to the ICSC-Goldman Sachs index, retail sales rose 0.3% in the week ending October 3. On a year-over-year basis, retailers saw sales increase by 1%, the second-best showing in a year.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending October 2 rose 16.4% to 756.3, the highest level since May. Purchase volume rose 13.2% to 306.1. Refinancing applications increased 18.2% to 3,377.1.
According to the Federal Reserve, consumer credit debt fell for the seventh straight month in August by $12 billion, an annual rate of 5.8%. Economists had forecast consumer debt would drop $10 billion. Total consumer credit debt in August was $2.46 trillion.
Initial claims for unemployment benefits fell by 33,000 to 521,000 in the week ending October 3. The figure was lower than the 540,000 that economists had forecast. The number of people continuing to claim jobless benefits in the week ending September 26 fell by 72,000 to 6.04 million.
The Commerce Department said wholesalers reduced their inventories by 1.3% in August, following a revised 1.6% drop in July. It was the 12th straight monthly decline. Meanwhile, sales at the wholesale level rose 1% in August, the largest increase since June 2008.
The Perfect Home Office!
Creating the Perfect Home Office
These days, more and more people are working all or part of the time from home, making a home office a necessity. Here are some tips for creating the perfect home office.
Layout - There is no bigger mistake you can make than purchasing office furniture or equipment without knowing exactly where you'll be placing it in the room. Before you buy any new furniture, make sure you measure and plot where each piece will go, and don't forget to account for electrical and cable outlets.
Furniture - A desk that's roughly 60-inches wide, 30-inches deep, and 29-inches high is not only conducive to work, but it's highly functional in terms of storing the items you use regularly. Your chair should be comfortable, but its primary function should be to promote healthy posture. Good posture will facilitate strong mental focus and will help to alleviate back and neck pain.
Lighting - Don't underestimate the importance of quality lighting. If you're lucky enough to have a window in your office, this should serve as your primary light source during the day. Natural light is easy on the eyes and promotes physical energy as well as a good mood. It's also free. Large lights like floor lamps and ceiling lights should have the ability to be dimmed. Also, make sure your desk lamp is equipped with a light bulb that's easy on the eyes. These "soft" light bulbs can be found anywhere, from office supply stores to grocery stores.
Storage - Identifying the type of items you need to store, as well as the quantity, will help you to determine an appropriate course of action. Here are a few helpful hints.
Closets are great for storage. Not only can they house filing cabinets, but they are also perfect for storing the items you don't need to access on a regular basis. This helps to maximize the actual workspace of your office.
Shelving is one of the most versatile options for storage. Shelves can be purchased cheaply and come in a variety of sizes. They are easily installed and take up zero floor space.
Don't forget about your garage. When it comes to older files or anything that is rarely accessed, a garage can provide ample storage space. Word to the wise, however, the garage can be a dirty place. Plan accordingly by storing paper items in boxes and wrapping equipment in protective plastic.
Visit a store that's dedicated to home organization. Nowadays it seems like nearly every mall has a store of this kind. You'd be surprised at some of the inexpensive, space-saving storage options available.
Wall Organizers - Dry erase boards, chalkboards, corkboards, and magnetic boards are fantastic tools for keeping clutter off your desk. They are inexpensive and available everywhere in a variety of sizes. There are even combination boards that provide countless options.
Cords - Never underestimate the importance of power strips as they provide the ability to plug multiple devices into one outlet. The better power strips also provide surge protection to the equipment that's plugged into them. In addition, cord covers are a great way to not only hide cords but to keep them from becoming a tangled mess. They can be purchased quite cheaply at any electronics store.
Décor - Last but not least, once you've got all the necessities in, don't overlook decor. Certificates, diplomas, awards, trophies, and pictures not only complement an office, but they also help to personalize it.
Follow these simple steps, and more organization, function, and focus could be right around the corner.
These days, more and more people are working all or part of the time from home, making a home office a necessity. Here are some tips for creating the perfect home office.
Layout - There is no bigger mistake you can make than purchasing office furniture or equipment without knowing exactly where you'll be placing it in the room. Before you buy any new furniture, make sure you measure and plot where each piece will go, and don't forget to account for electrical and cable outlets.
Furniture - A desk that's roughly 60-inches wide, 30-inches deep, and 29-inches high is not only conducive to work, but it's highly functional in terms of storing the items you use regularly. Your chair should be comfortable, but its primary function should be to promote healthy posture. Good posture will facilitate strong mental focus and will help to alleviate back and neck pain.
Lighting - Don't underestimate the importance of quality lighting. If you're lucky enough to have a window in your office, this should serve as your primary light source during the day. Natural light is easy on the eyes and promotes physical energy as well as a good mood. It's also free. Large lights like floor lamps and ceiling lights should have the ability to be dimmed. Also, make sure your desk lamp is equipped with a light bulb that's easy on the eyes. These "soft" light bulbs can be found anywhere, from office supply stores to grocery stores.
Storage - Identifying the type of items you need to store, as well as the quantity, will help you to determine an appropriate course of action. Here are a few helpful hints.
Closets are great for storage. Not only can they house filing cabinets, but they are also perfect for storing the items you don't need to access on a regular basis. This helps to maximize the actual workspace of your office.
Shelving is one of the most versatile options for storage. Shelves can be purchased cheaply and come in a variety of sizes. They are easily installed and take up zero floor space.
Don't forget about your garage. When it comes to older files or anything that is rarely accessed, a garage can provide ample storage space. Word to the wise, however, the garage can be a dirty place. Plan accordingly by storing paper items in boxes and wrapping equipment in protective plastic.
Visit a store that's dedicated to home organization. Nowadays it seems like nearly every mall has a store of this kind. You'd be surprised at some of the inexpensive, space-saving storage options available.
Wall Organizers - Dry erase boards, chalkboards, corkboards, and magnetic boards are fantastic tools for keeping clutter off your desk. They are inexpensive and available everywhere in a variety of sizes. There are even combination boards that provide countless options.
Cords - Never underestimate the importance of power strips as they provide the ability to plug multiple devices into one outlet. The better power strips also provide surge protection to the equipment that's plugged into them. In addition, cord covers are a great way to not only hide cords but to keep them from becoming a tangled mess. They can be purchased quite cheaply at any electronics store.
Décor - Last but not least, once you've got all the necessities in, don't overlook decor. Certificates, diplomas, awards, trophies, and pictures not only complement an office, but they also help to personalize it.
Follow these simple steps, and more organization, function, and focus could be right around the corner.
For the week of October 5, 2009
INFO THAT HITS US WHERE WE LIVE
Another good week for the housing market. The S&P/Case Shiller home price index was up for the third month in a row and the rate of annual decline fell for the sixth month in a row! Price increases were reported in 18 of 20 metro areas measured. Many now feel this data indicates the worst of the price declines are behind us. David M. Blitzer, chairman of the index committee at Standard & Poor's, said: "These figures continue to support an indication of stabilization in national real estate values."
Later in the week, Pending Home Sales came in UP 6.4% for August, their seventh straight monthly gain, UP 12.4% from a year ago and at their highest level since March 2007. Many see this boost in sales coming from first-time homebuyers rushing to make the deadline for their $8,000 tax credit which expires at the end of next month!
On the mortgage front, Freddie Mac's weekly survey showed the 30-year fixed-rate mortgage below 5% for the first time since May. The average rate was 4.94% with an average 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Finally, residential construction spending also rose in August, UP 4.7%!
Review of Last Week
CORRECTION?... Friday ended with the stock markets down for the second week in a row, so pundits wondered if the bull market is over, or just correcting itself as it does after the kind of big run-up it's had. Or maybe investors were fearing the recovery's in jeopardy, given a few disappointing economic indicators, capped by a still problematic employment report for September.
Yes, we did get lower than expected numbers for Consumer Confidence and ISM Manufacturing. But that manufacturing number is now above 50 two months in a row, showing expansion. The business media jumped all over a rise in initial claims for unemployment, but ignored the fact that the four-week moving average dropped to 548,000, its lowest level since January, and continuing claims dropped another 70,000, to 6.09 million, the lowest level since April. The major placement firm of Challenger, Gray, & Christmas reported that layoffs announced in September were down 30.2%, compared to last year. Some economists see unemployment falling by the end of the year.
But for the moment employment lags the rest of the recovery. Non-farm payrolls fell more than expected in September and unemployment inched up 0.1% from the month before. Yet we are clearly in recovery. Personal income increased 0.2% in August and small business earnings were up 0.7%, hitting a 7.6% annual rate for the past three months. Final Q2 GDP was revised upward to –0.7% and virtually all economists expect Q3 to show positive growth.
Nevertheless, for the week, the Dow ended down 1.8%, to 9487.67; the S&P 500 was off 1.8%, to 1025.21; while the Nasdaq fell 2.0%, to 2048.11.
Once again, as stock prices sank, bonds soared. The FNMA 30-year 4.5% bond we watch finished up decisively from the previous week's $101.12 close, moving to $101.66. As detailed above, mortgage rates slid down a bit more, back to the super low territory they were in last May. Fence-sitters should take note.
This Week’s Forecast
PRETTY QUIET... Not much going on this week on the economic front. We'll get the ISM reading on how the services sector is recovering, plus our weekly look at the jobs story. The week ends with the Trade Balance figure showing the state of our export-import situation.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Another good week for the housing market. The S&P/Case Shiller home price index was up for the third month in a row and the rate of annual decline fell for the sixth month in a row! Price increases were reported in 18 of 20 metro areas measured. Many now feel this data indicates the worst of the price declines are behind us. David M. Blitzer, chairman of the index committee at Standard & Poor's, said: "These figures continue to support an indication of stabilization in national real estate values."
Later in the week, Pending Home Sales came in UP 6.4% for August, their seventh straight monthly gain, UP 12.4% from a year ago and at their highest level since March 2007. Many see this boost in sales coming from first-time homebuyers rushing to make the deadline for their $8,000 tax credit which expires at the end of next month!
On the mortgage front, Freddie Mac's weekly survey showed the 30-year fixed-rate mortgage below 5% for the first time since May. The average rate was 4.94% with an average 0.7 point (including the origination fee) for 80% loan-to-value ratio loans to borrowers with good credit. Finally, residential construction spending also rose in August, UP 4.7%!
Review of Last Week
CORRECTION?... Friday ended with the stock markets down for the second week in a row, so pundits wondered if the bull market is over, or just correcting itself as it does after the kind of big run-up it's had. Or maybe investors were fearing the recovery's in jeopardy, given a few disappointing economic indicators, capped by a still problematic employment report for September.
Yes, we did get lower than expected numbers for Consumer Confidence and ISM Manufacturing. But that manufacturing number is now above 50 two months in a row, showing expansion. The business media jumped all over a rise in initial claims for unemployment, but ignored the fact that the four-week moving average dropped to 548,000, its lowest level since January, and continuing claims dropped another 70,000, to 6.09 million, the lowest level since April. The major placement firm of Challenger, Gray, & Christmas reported that layoffs announced in September were down 30.2%, compared to last year. Some economists see unemployment falling by the end of the year.
But for the moment employment lags the rest of the recovery. Non-farm payrolls fell more than expected in September and unemployment inched up 0.1% from the month before. Yet we are clearly in recovery. Personal income increased 0.2% in August and small business earnings were up 0.7%, hitting a 7.6% annual rate for the past three months. Final Q2 GDP was revised upward to –0.7% and virtually all economists expect Q3 to show positive growth.
Nevertheless, for the week, the Dow ended down 1.8%, to 9487.67; the S&P 500 was off 1.8%, to 1025.21; while the Nasdaq fell 2.0%, to 2048.11.
Once again, as stock prices sank, bonds soared. The FNMA 30-year 4.5% bond we watch finished up decisively from the previous week's $101.12 close, moving to $101.66. As detailed above, mortgage rates slid down a bit more, back to the super low territory they were in last May. Fence-sitters should take note.
This Week’s Forecast
PRETTY QUIET... Not much going on this week on the economic front. We'll get the ISM reading on how the services sector is recovering, plus our weekly look at the jobs story. The week ends with the Trade Balance figure showing the state of our export-import situation.
The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
For the week of September 28, 2009
INFO THAT HITS US WHERE WE LIVE
Well, it had to happen. After a four-month winning streak, Existing Home Sales dropped in August by 2.7% to an annual sales pace of 5.10 million. This offsets the big sales increase we had in July but the overall trend is still up by 3.4% over a year ago and the supply of existing homes is now down to 8.5 months.
Good news came from the Federal Housing Finance Agency, which monitors prices of homes financed with conforming mortgages. They reported prices UP 0.3% in July, their third straight monthly rise. The week ended with single-family New Home Sales for August UP 0.7%. This was slightly less than expected, but 30% above their January low. Best of all, the supply of unsold new homes, down five months in a row, is now at just 7.3 months!
Mortgage applications for purchase loans were up 5.6% from the week before. Applications for government-backed purchase loans were at their highest level ever. It seems many first-time homebuyers are making sure they get that $8,000 tax credit before it expires on November 30! All this was happening as the average interest rate for prime borrowers went below 5% on 30-year fixed-rate mortgages for the first time since May. Average points inched up to 1.12 (including the origination fee) for 80% loan-to-value ratio loans.
Review of Last Week
TAKING A BREATHER... After a nice run up in prior weeks, the stock markets were down three days in a row, ending down for the week overall. But we have to point out that for the year, the Dow is still UP 10.1%, the S&P 500 is UP 15.6% and the tech-heavy Nasdaq is UP a whopping 32.6%! Pretty bullish performance. Problems worrying investors included the slip in Existing Home Sales covered above and Durable Goods Orders down 2.4% for August. That's actually less problematic than it appears, since the decline came mostly from a 30% drop in volatile aircraft orders –– in July, aircraft were up 25%.
The Fed did not raise the rate at their meeting (no surprise) and came out with an FOMC statement that observed "economic activity has picked up" and "activity in the housing sector has increased." These indications of economic recovery were followed with the announcement the Fed would continue through the end of March 2010 their purchases of mortgage-backed securities, which help keep mortgage rates low.
Initial claims for unemployment fell yet again last week, this time by 21,000, to 530,000. The four-week average of continuing claims dropped as well. Meanwhile, the Richmond Fed Index, which gauges manufacturing in the mid-Atlantic region, stayed at +14 in September, the fifth straight month it's been positive. The week ended with the boost in New Home Sales mentioned above, plus University of Michigan Consumer Sentiment at 73.5 for September, its highest reading since January a year ago!
For the week, the Dow ended down 1.6%, to 9665.19; the S&P 500 was off 2.2%, to 1044.38; while the Nasdaq fell 2.0%, to 2090.92.
As usually happens when stock prices sink, bonds soar. The FNMA 30-year 4.5% bond we watch finished up strongly from the previous week's $100.44 close, finishing at $101.12. It was no surprise that mortgage rates moved down a bit more, hitting levels they haven't seen since last May, as noted above.
This Week’s Forecast
CONFIDENCE, SPENDING, JOBS... The week begins with Consumer Confidence and ends with the September Jobs Report. Along the way, on the day Q3 ends, we get the final number on Q2 GDP plus the Chicago PMI take on manufacturing in the Midwest. Thursday, we'll be looking at Pending Home Sales, while the Fed will be focusing on the personal spending PCE number to keep an eye on inflation.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Well, it had to happen. After a four-month winning streak, Existing Home Sales dropped in August by 2.7% to an annual sales pace of 5.10 million. This offsets the big sales increase we had in July but the overall trend is still up by 3.4% over a year ago and the supply of existing homes is now down to 8.5 months.
Good news came from the Federal Housing Finance Agency, which monitors prices of homes financed with conforming mortgages. They reported prices UP 0.3% in July, their third straight monthly rise. The week ended with single-family New Home Sales for August UP 0.7%. This was slightly less than expected, but 30% above their January low. Best of all, the supply of unsold new homes, down five months in a row, is now at just 7.3 months!
Mortgage applications for purchase loans were up 5.6% from the week before. Applications for government-backed purchase loans were at their highest level ever. It seems many first-time homebuyers are making sure they get that $8,000 tax credit before it expires on November 30! All this was happening as the average interest rate for prime borrowers went below 5% on 30-year fixed-rate mortgages for the first time since May. Average points inched up to 1.12 (including the origination fee) for 80% loan-to-value ratio loans.
Review of Last Week
TAKING A BREATHER... After a nice run up in prior weeks, the stock markets were down three days in a row, ending down for the week overall. But we have to point out that for the year, the Dow is still UP 10.1%, the S&P 500 is UP 15.6% and the tech-heavy Nasdaq is UP a whopping 32.6%! Pretty bullish performance. Problems worrying investors included the slip in Existing Home Sales covered above and Durable Goods Orders down 2.4% for August. That's actually less problematic than it appears, since the decline came mostly from a 30% drop in volatile aircraft orders –– in July, aircraft were up 25%.
The Fed did not raise the rate at their meeting (no surprise) and came out with an FOMC statement that observed "economic activity has picked up" and "activity in the housing sector has increased." These indications of economic recovery were followed with the announcement the Fed would continue through the end of March 2010 their purchases of mortgage-backed securities, which help keep mortgage rates low.
Initial claims for unemployment fell yet again last week, this time by 21,000, to 530,000. The four-week average of continuing claims dropped as well. Meanwhile, the Richmond Fed Index, which gauges manufacturing in the mid-Atlantic region, stayed at +14 in September, the fifth straight month it's been positive. The week ended with the boost in New Home Sales mentioned above, plus University of Michigan Consumer Sentiment at 73.5 for September, its highest reading since January a year ago!
For the week, the Dow ended down 1.6%, to 9665.19; the S&P 500 was off 2.2%, to 1044.38; while the Nasdaq fell 2.0%, to 2090.92.
As usually happens when stock prices sink, bonds soar. The FNMA 30-year 4.5% bond we watch finished up strongly from the previous week's $100.44 close, finishing at $101.12. It was no surprise that mortgage rates moved down a bit more, hitting levels they haven't seen since last May, as noted above.
This Week’s Forecast
CONFIDENCE, SPENDING, JOBS... The week begins with Consumer Confidence and ends with the September Jobs Report. Along the way, on the day Q3 ends, we get the final number on Q2 GDP plus the Chicago PMI take on manufacturing in the Midwest. Thursday, we'll be looking at Pending Home Sales, while the Fed will be focusing on the personal spending PCE number to keep an eye on inflation.
>> The Week’s Economic Indicator Calendar
Weaker than expected economic data tends to send bond prices up and interest rates down, while positive data points to lower bond prices and rising loan rates.
Quotes!
"Purpose and laughter are the twins that must not separate. Each is
empty without the other."
-- Robert K. Greenleaf, Founder of the modern Servant leadership
movement
"Life is 10 percent what you make it, and 90 percent how you take it. "
-- Irving Berlin, American Composer and Lyricist
"Many attempts to communicate are nullified by saying too much."
-- Robert Greenleaf, Founder of the modern servant leadership movement
"We are all, right now, living the life we choose."
-- Peter McWilliams, Author
"When nothing seems to help, I go and look at a stonecutter hammering
away at his rock perhaps a hundred times without as much as a crack
showing in it. Yet at the hundred and first blow it will split in two,
and I know it was not that blow that did it - but all that had gone
before."
-- Jacob Riis, Photographer and Journalist
"Very often a change of self is needed more than a change of scene."
-- Arthur Christopher Benson, British Author
"Give the world the best you have and the best will come back to you."
-- Madeline Bridges
"Nothing in life is more important than the ability to communicate
effectively."
-- Gerald R. Ford, 38th President of the United States
"Until we can manage time, we can manage nothing else."
-- Peter F. Drucker, Author and Management Expert
"Samson killed a thousand men with the jaw bone of an ass. That many
sales are killed every day with the same weapon."
-- Anonymous
"Confidence is contagious. So is lack of confidence."
-- Michael O'Brien
"The success of every major executive depends on the men under him.
Really successful men are pushed up, not pulled up."
-- Thomas J. Watson, Former President of IBM
"In a moment of decision the best thing you can do is the right thing.
The worst thing you can do is nothing."
-- Theodore Roosevelt, 26th President of the United States
"Determination is the down payment on sales achievement."
-- Anonymous
"Chance favors those in motion."
-- James H. Austin, Professor of Neurology and Author
"Man was created as a being who should constantly keep improving, a
being who on reaching one goal sets a higher one."
-- Ralph Ransom
"The most important thing in communication is to hear what isn't being
said."
-- Peter F. Drucker, Author and Management Expert
"Learning is a treasure that will follow its owner everywhere."
-- Proverb
"If you want to achieve a high goal, you're going to have to take some
chances."
-- Alberto Salazar, American Marathon Runner
"I am a great believer in luck, and I find that the harder I work, the
more I have of it."
-- Thomas Jefferson, 3rd President of the United States of America
"The only thing even in this world are the number of hours in a day. The
difference in winning or losing is what you do with those hours."
-- Woody Hayes, Football Coach
"Many of life's failures are people who do not realize how close they
were to success when they gave up."
-- Thomas Edison, Inventor
"We all die. The goal isn't to live forever, the goal is to create
something that will."
-- Chuck Palahniuk, Author
"A dream becomes a goal when action is taken toward its achievement."
-- Bo Bennett
"Great minds have purpose, others have wishes."
-- Washington Irving, American Author
"Asking questions will get you the performance you are after far better
than dictating demands."
-- Dan James
"When you do the things you have to do when you have to do them, the day
will come when you can do the things you want to do when you want to do
them."
-- Zig Ziglar, Author
"Success and failure. We think of them as opposites, but they're really
not. They're companions - the hero and the sidekick."
-- Laurence Shames
"The difference in winning and losing is most often... not quitting."
-- Walt Disney, Animator, Film Producer
"The simple act of paying positive attention to people has a great deal
to do with productivity."
-- Thomas J. 'Tom' Peters
I hope you enjoyed these Quotes!
To See All Homes All The Time Go To
www.BettsHomes.com
empty without the other."
-- Robert K. Greenleaf, Founder of the modern Servant leadership
movement
"Life is 10 percent what you make it, and 90 percent how you take it. "
-- Irving Berlin, American Composer and Lyricist
"Many attempts to communicate are nullified by saying too much."
-- Robert Greenleaf, Founder of the modern servant leadership movement
"We are all, right now, living the life we choose."
-- Peter McWilliams, Author
"When nothing seems to help, I go and look at a stonecutter hammering
away at his rock perhaps a hundred times without as much as a crack
showing in it. Yet at the hundred and first blow it will split in two,
and I know it was not that blow that did it - but all that had gone
before."
-- Jacob Riis, Photographer and Journalist
"Very often a change of self is needed more than a change of scene."
-- Arthur Christopher Benson, British Author
"Give the world the best you have and the best will come back to you."
-- Madeline Bridges
"Nothing in life is more important than the ability to communicate
effectively."
-- Gerald R. Ford, 38th President of the United States
"Until we can manage time, we can manage nothing else."
-- Peter F. Drucker, Author and Management Expert
"Samson killed a thousand men with the jaw bone of an ass. That many
sales are killed every day with the same weapon."
-- Anonymous
"Confidence is contagious. So is lack of confidence."
-- Michael O'Brien
"The success of every major executive depends on the men under him.
Really successful men are pushed up, not pulled up."
-- Thomas J. Watson, Former President of IBM
"In a moment of decision the best thing you can do is the right thing.
The worst thing you can do is nothing."
-- Theodore Roosevelt, 26th President of the United States
"Determination is the down payment on sales achievement."
-- Anonymous
"Chance favors those in motion."
-- James H. Austin, Professor of Neurology and Author
"Man was created as a being who should constantly keep improving, a
being who on reaching one goal sets a higher one."
-- Ralph Ransom
"The most important thing in communication is to hear what isn't being
said."
-- Peter F. Drucker, Author and Management Expert
"Learning is a treasure that will follow its owner everywhere."
-- Proverb
"If you want to achieve a high goal, you're going to have to take some
chances."
-- Alberto Salazar, American Marathon Runner
"I am a great believer in luck, and I find that the harder I work, the
more I have of it."
-- Thomas Jefferson, 3rd President of the United States of America
"The only thing even in this world are the number of hours in a day. The
difference in winning or losing is what you do with those hours."
-- Woody Hayes, Football Coach
"Many of life's failures are people who do not realize how close they
were to success when they gave up."
-- Thomas Edison, Inventor
"We all die. The goal isn't to live forever, the goal is to create
something that will."
-- Chuck Palahniuk, Author
"A dream becomes a goal when action is taken toward its achievement."
-- Bo Bennett
"Great minds have purpose, others have wishes."
-- Washington Irving, American Author
"Asking questions will get you the performance you are after far better
than dictating demands."
-- Dan James
"When you do the things you have to do when you have to do them, the day
will come when you can do the things you want to do when you want to do
them."
-- Zig Ziglar, Author
"Success and failure. We think of them as opposites, but they're really
not. They're companions - the hero and the sidekick."
-- Laurence Shames
"The difference in winning and losing is most often... not quitting."
-- Walt Disney, Animator, Film Producer
"The simple act of paying positive attention to people has a great deal
to do with productivity."
-- Thomas J. 'Tom' Peters
I hope you enjoyed these Quotes!
To See All Homes All The Time Go To
www.BettsHomes.com
Are you in Foreclosure? You are not alone! Read this Article!
Foreclosures of Rich and Famous People
Foreclosures of Rich and Famous People
Although the rich and famous are rich and famous, it doesn't mean that they are impervious to the popping of the real estate bubble. Many have succumbed to real estate woes as of late.
Ed McMahon had tabloids a talking when his real estate troubles became front page news last year. The now deceased celebrity attributed his dollar difficulties to alimony paid out to ex-wives and the economic downturn.
Aretha Franklin set the record straight about her exclusive Detroit suburban home. It went into foreclosure due to non-payment of property tax. She could have lost her $400,000 home to foreclosure due to $445 in back property taxes that accumulated into $20,000, since 2005. She said it was an oversight by her attorney. Once alerted of the situation, the Queen of Soul satisfied the debt.
Amber Frey, infamous ex-mistress of convicted murderer Scott Peterson lost her home northern California home to foreclosure. At auction, the asking price was over $200,000 less than the original purchase price. No one snatched up the deal at a low $305,000. She ended up surrendering the property to the bank.
Fantasia of American Idol fame came close to losing her home in Charlotte, North Carolina. The R&B singer settled with her Florida lender just days before the auction was scheduled to sell her pond-front home.
Extreme Makeover scandal hit the Harper family home in Atlanta, Georga when it went into foreclosure and would have been sold had it not been for ... even more ... generous donations. The most expansive Extreme Makeover ever seen was completed with much dedication, sweat and effort by volunteers, along with a deluge of donated dollars. Taking out a $400,000+ loan for a construction business that went belly up put the Harper's home in harm's way.
Laura Richardson, California Congresswoman, fell behind on property tax and mortgage payments in 2008. To the disdain of Sharon Helmar who sold it to her, the Long Beach home went into foreclosure and was sold. Neighbors noted that she did not keep up the lawn or take out her garbage.
Sports figures are not unfamiliar with foreclosure, either. Latrell "Spree" Sprewell, former NBA guard known for choking his then Coach P. J. Carlesimo, lost his 70-foot yacht and his Milwaukee home to foreclosure. Assessed at a mere $668,000, the home's value was nowhere near what most other sports professionals in his pay range own.
Jose Conseco experienced women woes, which caused him to lose his expansive 7,300 square foot Encino, California mansion. At least, that's his story. He said he lost $7 to $8 million on his two divorces that left him hard up for cash and was unable to pay his mortgage.
Not to anyone's surprise, Michael Vick's home was in foreclosure, since he was in prison and no longer could come up with the cash. Once NFL's highest paid player, the dog-fight diva was convicted and was to serve 23 months in prison. He was released earlier this year to serve out the rest of his sentence in home confinement.
Evander Holyfield, famous for his fight with Mike "I'll Bite Your Ear Off" Tyson, had his Fairburn, Georgia home in foreclosure. He was also behind on child support payments to a mother of one of his eleven children, and being sued for not paying $550,000 he loaned he owed to a consulting company.
Michael Jackson (King of Pop), MC Hammer (Hammertime fame), Veronica Hearst (Randolph Hearst widow), Scott Storch (previous hip-hop producer), Damon Dash (hip-hop mogul), Doug E. Fresh (rap icon), Vin Baker (former NBA star), Wyclef Jean (Fugees' frontman) and other famous actors, performers and sports professionals have all experienced foreclosure.
Foreclosures of Rich and Famous People
Although the rich and famous are rich and famous, it doesn't mean that they are impervious to the popping of the real estate bubble. Many have succumbed to real estate woes as of late.
Ed McMahon had tabloids a talking when his real estate troubles became front page news last year. The now deceased celebrity attributed his dollar difficulties to alimony paid out to ex-wives and the economic downturn.
Aretha Franklin set the record straight about her exclusive Detroit suburban home. It went into foreclosure due to non-payment of property tax. She could have lost her $400,000 home to foreclosure due to $445 in back property taxes that accumulated into $20,000, since 2005. She said it was an oversight by her attorney. Once alerted of the situation, the Queen of Soul satisfied the debt.
Amber Frey, infamous ex-mistress of convicted murderer Scott Peterson lost her home northern California home to foreclosure. At auction, the asking price was over $200,000 less than the original purchase price. No one snatched up the deal at a low $305,000. She ended up surrendering the property to the bank.
Fantasia of American Idol fame came close to losing her home in Charlotte, North Carolina. The R&B singer settled with her Florida lender just days before the auction was scheduled to sell her pond-front home.
Extreme Makeover scandal hit the Harper family home in Atlanta, Georga when it went into foreclosure and would have been sold had it not been for ... even more ... generous donations. The most expansive Extreme Makeover ever seen was completed with much dedication, sweat and effort by volunteers, along with a deluge of donated dollars. Taking out a $400,000+ loan for a construction business that went belly up put the Harper's home in harm's way.
Laura Richardson, California Congresswoman, fell behind on property tax and mortgage payments in 2008. To the disdain of Sharon Helmar who sold it to her, the Long Beach home went into foreclosure and was sold. Neighbors noted that she did not keep up the lawn or take out her garbage.
Sports figures are not unfamiliar with foreclosure, either. Latrell "Spree" Sprewell, former NBA guard known for choking his then Coach P. J. Carlesimo, lost his 70-foot yacht and his Milwaukee home to foreclosure. Assessed at a mere $668,000, the home's value was nowhere near what most other sports professionals in his pay range own.
Jose Conseco experienced women woes, which caused him to lose his expansive 7,300 square foot Encino, California mansion. At least, that's his story. He said he lost $7 to $8 million on his two divorces that left him hard up for cash and was unable to pay his mortgage.
Not to anyone's surprise, Michael Vick's home was in foreclosure, since he was in prison and no longer could come up with the cash. Once NFL's highest paid player, the dog-fight diva was convicted and was to serve 23 months in prison. He was released earlier this year to serve out the rest of his sentence in home confinement.
Evander Holyfield, famous for his fight with Mike "I'll Bite Your Ear Off" Tyson, had his Fairburn, Georgia home in foreclosure. He was also behind on child support payments to a mother of one of his eleven children, and being sued for not paying $550,000 he loaned he owed to a consulting company.
Michael Jackson (King of Pop), MC Hammer (Hammertime fame), Veronica Hearst (Randolph Hearst widow), Scott Storch (previous hip-hop producer), Damon Dash (hip-hop mogul), Doug E. Fresh (rap icon), Vin Baker (former NBA star), Wyclef Jean (Fugees' frontman) and other famous actors, performers and sports professionals have all experienced foreclosure.
Monday, October 5, 2009
Fed Decision Shakes Things Up
Fed Decision Shakes Things Up!
"BE WILLING TO MAKE DECISIONS." General George Patton. And that's exactly what the Fed did last week at their regularly scheduled Federal Open Market Committee meeting. But just what did they decide...and what do their decisions mean for home loan rates?
The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.
It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher...most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise. This means that waiting to purchase or refinance will very likely mean a higher interest rate.
Their decision also means that the Fed's remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term.
In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life.
Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you've been considering a purchase or refinance. Or do you have a family member, neighbor, friend or coworker who might benefit from getting some good home loan advice? I'm always glad to get your referrals, so simply let me know who I might be able to help.
"BE WILLING TO MAKE DECISIONS." General George Patton. And that's exactly what the Fed did last week at their regularly scheduled Federal Open Market Committee meeting. But just what did they decide...and what do their decisions mean for home loan rates?
The Fed said they are going to ration out the remaining commitment of Mortgage Backed Security purchases through the first quarter of 2010. There will be no additional buying, but instead, a longer weaning off of the program. There was some speculation about the Fed increasing the amount of buying above the $1.25T committed to, and last week's statement is the Fed's nice way of saying "no." They will not be buying more in quantity, but what they will do is attempt to provide a smoother transition to normal market conditions.
It is a given that once the Fed ceases its purchases, that interest rates will climb significantly higher...most likely back above the 6% area. So instead of a hard transition with a large bump in rates, the Fed is attempting to allow rates to gradually rise. This means that waiting to purchase or refinance will very likely mean a higher interest rate.
Their decision also means that the Fed's remaining purchases will all be lower in quantity, as the remaining allotment for purchases will be spread over a longer period of time - and additionally, will not necessarily be spread out as evenly as their past purchases - which could lead to more volatility for rates in the near term.
In other news, Existing Home Sales and New Home Sales were reported slightly less than expected, but both reports continue to show signs of an improving housing market. The inventory of unsold existing homes fell to its lowest inventory level since April 2007, while the inventory of unsold new homes dropped to its lowest level since January 2007. While some of the decline in new home inventory may be due to builders constructing fewer homes - these reports indicate that the housing market is indeed showing signs of life.
Remember, with home loan rates still low - but slated to increase with the Fed's recent decision - as well as a juicy tax credit for First Time Home Buyers that is going to expire on November 30th, it makes sense to get off the fence if you've been considering a purchase or refinance. Or do you have a family member, neighbor, friend or coworker who might benefit from getting some good home loan advice? I'm always glad to get your referrals, so simply let me know who I might be able to help.
Week of September 21, 2009
INFO THAT HITS US WHERE WE LIVE
Housing starts for new single-family homes and apartments continued their steady rise, up 1.5% for August, their strongest pace in nine months. This puts housing starts at a seasonally adjusted annual rate of 598,000, their highest level since November of last year. This sign of steady improvement in home building made economists even more confident Q3 growth will be positive, signaling the recession is over.
Mortgage rates continue to remain at three-month lows. Freddie Mac's weekly Primary Mortgage Market Survey showed average long-term mortgage rates down for the third week in a row! The 30-year fixed rate mortgage is just above 5% with an average 0.7 point (including the origination fee). And the average rate for 15-year fixed rate mortgages hit a new record low in the Survey. These rates are for prime borrowers with an 80% or lower loan-to-value ratio on loans eligible for purchase by Freddie Mac.
Finally, please remember the $8,000 tax credit for first-time homebuyers is set to expire in just over two months. Those eligible need to close by November 30!
Review of Last Week
HAPPY DAYS ARE NEAR AGAIN... The stock markets continued their upward moves last week, posting gains in four of five sessions and for the week overall. The big news of the week was Fed chief Ben Bernanke announcing, "From a technical perspective, the recession is very likely over." This was followed by billionaire Warren Buffet effectively calling the recession's end, commenting that the economy has "sort of plateaued at the bottom right now." The world's most successful investor added: "I think we're certainly... through the worst of it in residential real estate in all probability."
In addition to these positive pronouncements, investors had some solid economic developments to ponder. Tuesday we had August Retail Sales shooting up 2.7%, easily beating expectations. Excluding the auto sales boost from the government's Cash for Clunkers program, we still had a 1.1% hike for the rest of retail. Retail in fact is up at a 14.3% annual rate over the last three months and up 5.1% if you take out auto sales.
Initial claims for unemployment fell again last week, this time by 12,000, to 545,000. The four-week average of continuing claims dropped too. Meanwhile, the Philadelphia Fed Index, which gauges manufacturing in that region, shot up to +14.1 in September from 4.2 in August. This harmonized nicely with Industrial Production now up two months in a row, at a 10.4% annual rate.
For the week, the Dow ended UP 2.2%, at 9820.20; the S&P 500 shot UP 2.5%, to 1068.30; while the Nasdaq also pushed UP 2.5%, to 2132.86.
Bond prices declined in thin trading, with the market anticipating the record supply that will be on tap at next week's Treasury auctions. The FNMA 30-year 4.5% bond we watch finished down from the previous week's $100.78 close, settling at $100.44. Nonetheless, mortgage rates inched down a bit more, continuing at their historically low levels.
This Week’s Forecast
THE FED AND HOUSING WEIGH IN... The Fed meets this week and although there's no drama around whether they'll raise the rate (they won't), there's will be more than the usual interest in their FOMC statement, coming out Wednesday at 2:15. That's all because of Fed chief Bernanke's recession-ending comments last week. More key housing data comes with the Federal Housing Finance Agency's July Housing Price Index Tuesday, then August Existing Home Sales Thursday and New Home Sales Friday.
Housing starts for new single-family homes and apartments continued their steady rise, up 1.5% for August, their strongest pace in nine months. This puts housing starts at a seasonally adjusted annual rate of 598,000, their highest level since November of last year. This sign of steady improvement in home building made economists even more confident Q3 growth will be positive, signaling the recession is over.
Mortgage rates continue to remain at three-month lows. Freddie Mac's weekly Primary Mortgage Market Survey showed average long-term mortgage rates down for the third week in a row! The 30-year fixed rate mortgage is just above 5% with an average 0.7 point (including the origination fee). And the average rate for 15-year fixed rate mortgages hit a new record low in the Survey. These rates are for prime borrowers with an 80% or lower loan-to-value ratio on loans eligible for purchase by Freddie Mac.
Finally, please remember the $8,000 tax credit for first-time homebuyers is set to expire in just over two months. Those eligible need to close by November 30!
Review of Last Week
HAPPY DAYS ARE NEAR AGAIN... The stock markets continued their upward moves last week, posting gains in four of five sessions and for the week overall. The big news of the week was Fed chief Ben Bernanke announcing, "From a technical perspective, the recession is very likely over." This was followed by billionaire Warren Buffet effectively calling the recession's end, commenting that the economy has "sort of plateaued at the bottom right now." The world's most successful investor added: "I think we're certainly... through the worst of it in residential real estate in all probability."
In addition to these positive pronouncements, investors had some solid economic developments to ponder. Tuesday we had August Retail Sales shooting up 2.7%, easily beating expectations. Excluding the auto sales boost from the government's Cash for Clunkers program, we still had a 1.1% hike for the rest of retail. Retail in fact is up at a 14.3% annual rate over the last three months and up 5.1% if you take out auto sales.
Initial claims for unemployment fell again last week, this time by 12,000, to 545,000. The four-week average of continuing claims dropped too. Meanwhile, the Philadelphia Fed Index, which gauges manufacturing in that region, shot up to +14.1 in September from 4.2 in August. This harmonized nicely with Industrial Production now up two months in a row, at a 10.4% annual rate.
For the week, the Dow ended UP 2.2%, at 9820.20; the S&P 500 shot UP 2.5%, to 1068.30; while the Nasdaq also pushed UP 2.5%, to 2132.86.
Bond prices declined in thin trading, with the market anticipating the record supply that will be on tap at next week's Treasury auctions. The FNMA 30-year 4.5% bond we watch finished down from the previous week's $100.78 close, settling at $100.44. Nonetheless, mortgage rates inched down a bit more, continuing at their historically low levels.
This Week’s Forecast
THE FED AND HOUSING WEIGH IN... The Fed meets this week and although there's no drama around whether they'll raise the rate (they won't), there's will be more than the usual interest in their FOMC statement, coming out Wednesday at 2:15. That's all because of Fed chief Bernanke's recession-ending comments last week. More key housing data comes with the Federal Housing Finance Agency's July Housing Price Index Tuesday, then August Existing Home Sales Thursday and New Home Sales Friday.
Week of September 14, 2009
INFO THAT HITS US WHERE WE LIVE
Last week mortgage applications surged 17%, according to the Mortgage Bankers Association. And it wasn't just re-financings taking advantage of the latest dip in our already low interest rates. Applications for purchase loans were up a very healthy 9.5% from the week before. According to the MBA, the average contract interest rate for a 30-year fixed-rate mortgage was down to just over 5%, with average points inching up to 1.23 (including the origination fee) for 80% loan-to-value mortgages. These rates are of course for prime borrowers with 20% downpayment.
Freddie Mac's weekly survey of conforming mortgages showed rates dropping to similar levels, which is very nice considering a 30-year fixed-rate conforming mortgage averaged 6.35% just a year ago. The benefit to the real estate market is clear. As Freddie Mac chief economist Frank Nothaft put it, "Low mortgage rates are helping to keep housing very affordable." First-time homebuyers enjoy even more affordability, thanks to the $8,000 tax credit, but be sure to remind them they need to close by November 30!
Prices may even be stabilizing. The listing and valuation site Zillow.com reported buyers are getting smaller discounts off seller's listing prices. July purchasers paid just 3.3% below list price vs. an average of 3.5% for June and 4.6% back in January.
Review of Last Week
SHORT WEEK HITS NEW HEIGHTS...There were just four trading days last week, but the stock market made gains on three of them, sending the Dow to a fresh high for the year. The S&P 500 and Nasdaq indexes were also UP for the week, as investors seemed ready to accept more risk in what increasingly appears to be a recovering economy.
But all is not well just yet, as the Fed's Beige Book on Wednesday alleged that employment, consumer spending and construction remain weak. This of course justifies the Fed keeping the funds rate low. But the Beige Book did note the rate of economic decline is slowing and manufacturing shows improvement, as reported here last week. The Trade Balance offered an interesting mixed message. The trade deficit expanded the most in a year. Economists say this shows trade won't add as much to Q3 GDP growth as it has in the past. On the other hand, exports and the overall volume of international trade are up now three months in a row. This revival in exports, some economists feel, signals the US economy is in recovery.
Initial claims for unemployment dropped 26,000 for the week, to 550,000, the second lowest level in the recovery. Continuing unemployment claims dropped by 159,000 to 6.09 million, the lowest level in five months. Both FedEx and Texas Instruments raised their earnings outlooks for the current quarter. Treasury Secretary Geithner told Congress to remove bank bailout money from his budget! And Friday saw the University of Michigan's Consumer Sentiment Index registering a way-higher-than-expected 70.2.
For the week, the Dow ended UP 1.7%, to 9605.41; the S&P 500 shot UP 2.6%, to 1042.73; while the Nasdaq pushed UP 3.1%, to 2080.90.
The bond market held up for the week, with the auctions that went on helping to support prices. The FNMA 30-year 4.5% bond we watch finished up from the previous week's $100.50 close, ending at $100.78. As mentioned above, mortgage rates dipped a trifle more, to near historic levels.
This Week’s Forecast
BUYING AND BUILDING... On the buy side, we'll have August Retail Sales telling us how the all-important consumer is aiding the economic recovery. The August Consumer Price Index (CPI) will show if inflation is hurting that consumer's buying power. Building will be measured on Thursday with August Housing Starts and Building Permits revealed to all
Last week mortgage applications surged 17%, according to the Mortgage Bankers Association. And it wasn't just re-financings taking advantage of the latest dip in our already low interest rates. Applications for purchase loans were up a very healthy 9.5% from the week before. According to the MBA, the average contract interest rate for a 30-year fixed-rate mortgage was down to just over 5%, with average points inching up to 1.23 (including the origination fee) for 80% loan-to-value mortgages. These rates are of course for prime borrowers with 20% downpayment.
Freddie Mac's weekly survey of conforming mortgages showed rates dropping to similar levels, which is very nice considering a 30-year fixed-rate conforming mortgage averaged 6.35% just a year ago. The benefit to the real estate market is clear. As Freddie Mac chief economist Frank Nothaft put it, "Low mortgage rates are helping to keep housing very affordable." First-time homebuyers enjoy even more affordability, thanks to the $8,000 tax credit, but be sure to remind them they need to close by November 30!
Prices may even be stabilizing. The listing and valuation site Zillow.com reported buyers are getting smaller discounts off seller's listing prices. July purchasers paid just 3.3% below list price vs. an average of 3.5% for June and 4.6% back in January.
Review of Last Week
SHORT WEEK HITS NEW HEIGHTS...There were just four trading days last week, but the stock market made gains on three of them, sending the Dow to a fresh high for the year. The S&P 500 and Nasdaq indexes were also UP for the week, as investors seemed ready to accept more risk in what increasingly appears to be a recovering economy.
But all is not well just yet, as the Fed's Beige Book on Wednesday alleged that employment, consumer spending and construction remain weak. This of course justifies the Fed keeping the funds rate low. But the Beige Book did note the rate of economic decline is slowing and manufacturing shows improvement, as reported here last week. The Trade Balance offered an interesting mixed message. The trade deficit expanded the most in a year. Economists say this shows trade won't add as much to Q3 GDP growth as it has in the past. On the other hand, exports and the overall volume of international trade are up now three months in a row. This revival in exports, some economists feel, signals the US economy is in recovery.
Initial claims for unemployment dropped 26,000 for the week, to 550,000, the second lowest level in the recovery. Continuing unemployment claims dropped by 159,000 to 6.09 million, the lowest level in five months. Both FedEx and Texas Instruments raised their earnings outlooks for the current quarter. Treasury Secretary Geithner told Congress to remove bank bailout money from his budget! And Friday saw the University of Michigan's Consumer Sentiment Index registering a way-higher-than-expected 70.2.
For the week, the Dow ended UP 1.7%, to 9605.41; the S&P 500 shot UP 2.6%, to 1042.73; while the Nasdaq pushed UP 3.1%, to 2080.90.
The bond market held up for the week, with the auctions that went on helping to support prices. The FNMA 30-year 4.5% bond we watch finished up from the previous week's $100.50 close, ending at $100.78. As mentioned above, mortgage rates dipped a trifle more, to near historic levels.
This Week’s Forecast
BUYING AND BUILDING... On the buy side, we'll have August Retail Sales telling us how the all-important consumer is aiding the economic recovery. The August Consumer Price Index (CPI) will show if inflation is hurting that consumer's buying power. Building will be measured on Thursday with August Housing Starts and Building Permits revealed to all
Week of September 7, 2009
INFO THAT HITS US WHERE WE LIVE
We had more good news for housing last week with Pending Home Sales UP 3.2% for July, gaining ground for the sixth month in a row!This positive number should point to yet another hike when August Existing Homes Sales numbers come out. There was also encouraging construction data, as July single-family home building was UP 7% – the largest monthly increase since 1983, when housing boomed coming out of the 1981–1982 downturn. The combination of affordability, low mortgage rates and the $8,000 tax credit for first-time homebuyers is having a terrific effect on the housing market. Unfortunately, that tax credit will expire November 30 unless Congress elects to extend it. Let's hope they do.
Speaking of mortgage rates, these dropped nicely last week, according to Freddie Mac's Primary Mortgage Market Survey. Nationally, the 30-year fixed rate mortgage averaged 5.08% with an average of 0.7 point. That was down from 6.35% a year ago! These rates are for prime borrowers who can put 20% down and who qualify for loans eligible to be purchased or guaranteed by Freddie Mac or Fannie Mae.
Review of Last Week
OFF FOR THE HOLIDAY... The market took a break from its steady move upward, dropping on good economic news, then rallying despite some negative employment data, but still closing a bit down for the week. For the year, the Dow is still UP 7.6%, the S&P 500 UP 12.5% and the Nasdaq UP a whopping 28.0%.
The good news that oddly sent stock prices south included the fantastic Pending Homes Sales and single-family home construction numbers mentioned above. You can add to that BOTH Chicago PMI and ISM Manufacturing readings showing US manufacturing is now expanding. That's right. Manufacturing is starting to grow. The ISM Services Index did not yet indicate growth but it did rise for August, showing business activity in the non-manufacturing sector increasing for the first time since September 2008.
August employment hit Friday. We'll do the worst first. The unemployment rate went to 9.7%, a new high we haven't seen since 1982, but still well below that year's 10.8%. But the 216,000 drop in non-farm payrolls was better than expected. And private-sector payrolls fell by 198,000, their smallest decline in a year. Other good signs included average hourly earnings up for the second straight month, registering their largest gains so far this year. Some economists feel payrolls could start expanding by year's end. They observe that with corporate profits up 24% annually in the first six months, businesses are now able to expand payrolls. We hope so.
For the week, the Dow was down 1.1%, to 9441.27; the S&P 500 dropped 1.2%, to 1016.40; while the Nasdaq slid just 0.5%, to 2018.78.
Bond prices did OK most of the week, then sunk a bit Friday as the stock market rallied in spite of the not-so-great jobs report. Nevertheless, the price of the FNMA 30-year 4.5% bond we watch finished up from the previous week's $100.19 close, ending at $100.50. As noted above, mortgage rates were down for the week, to very nice levels.
This Week’s Forecast
SHORT AND SWEET... With Labor Day on Monday, we have just four days of trading and not a whole lot of economic news. The jobs story will continue, as we monitor weekly initial jobless claims and take a look to see if continuing claims will drop. The Trade Balance will tell us how we're doing in the global marketplace, then the week ends with another reading of the mind of the all-important consumer, this time using the University of Michigan Consumer Sentiment Index
Call me for any Help you need!
We had more good news for housing last week with Pending Home Sales UP 3.2% for July, gaining ground for the sixth month in a row!This positive number should point to yet another hike when August Existing Homes Sales numbers come out. There was also encouraging construction data, as July single-family home building was UP 7% – the largest monthly increase since 1983, when housing boomed coming out of the 1981–1982 downturn. The combination of affordability, low mortgage rates and the $8,000 tax credit for first-time homebuyers is having a terrific effect on the housing market. Unfortunately, that tax credit will expire November 30 unless Congress elects to extend it. Let's hope they do.
Speaking of mortgage rates, these dropped nicely last week, according to Freddie Mac's Primary Mortgage Market Survey. Nationally, the 30-year fixed rate mortgage averaged 5.08% with an average of 0.7 point. That was down from 6.35% a year ago! These rates are for prime borrowers who can put 20% down and who qualify for loans eligible to be purchased or guaranteed by Freddie Mac or Fannie Mae.
Review of Last Week
OFF FOR THE HOLIDAY... The market took a break from its steady move upward, dropping on good economic news, then rallying despite some negative employment data, but still closing a bit down for the week. For the year, the Dow is still UP 7.6%, the S&P 500 UP 12.5% and the Nasdaq UP a whopping 28.0%.
The good news that oddly sent stock prices south included the fantastic Pending Homes Sales and single-family home construction numbers mentioned above. You can add to that BOTH Chicago PMI and ISM Manufacturing readings showing US manufacturing is now expanding. That's right. Manufacturing is starting to grow. The ISM Services Index did not yet indicate growth but it did rise for August, showing business activity in the non-manufacturing sector increasing for the first time since September 2008.
August employment hit Friday. We'll do the worst first. The unemployment rate went to 9.7%, a new high we haven't seen since 1982, but still well below that year's 10.8%. But the 216,000 drop in non-farm payrolls was better than expected. And private-sector payrolls fell by 198,000, their smallest decline in a year. Other good signs included average hourly earnings up for the second straight month, registering their largest gains so far this year. Some economists feel payrolls could start expanding by year's end. They observe that with corporate profits up 24% annually in the first six months, businesses are now able to expand payrolls. We hope so.
For the week, the Dow was down 1.1%, to 9441.27; the S&P 500 dropped 1.2%, to 1016.40; while the Nasdaq slid just 0.5%, to 2018.78.
Bond prices did OK most of the week, then sunk a bit Friday as the stock market rallied in spite of the not-so-great jobs report. Nevertheless, the price of the FNMA 30-year 4.5% bond we watch finished up from the previous week's $100.19 close, ending at $100.50. As noted above, mortgage rates were down for the week, to very nice levels.
This Week’s Forecast
SHORT AND SWEET... With Labor Day on Monday, we have just four days of trading and not a whole lot of economic news. The jobs story will continue, as we monitor weekly initial jobless claims and take a look to see if continuing claims will drop. The Trade Balance will tell us how we're doing in the global marketplace, then the week ends with another reading of the mind of the all-important consumer, this time using the University of Michigan Consumer Sentiment Index
Call me for any Help you need!
Thursday, September 10, 2009
FHA Approval Process for Condos
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSINGFEDERAL
HOUSING COMMISSIONER
June 12, 2009 MORTGAGEE LETTER 2009-19
TO: ALL APPROVED MORTGAGEES
ALL FHA ROSTER APPRAISERS
SUBJECT: Condominium Approval Process – Single Family Housing
In accordance with the passage of the Housing and Economic Recovery Act (HERA) of
2008, the Federal Housing Administration (FHA) is implementing a new approval process for Condominium Projects to insure mortgages on individual units under Section 203(b) of the National Housing Act. FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations. HUD will continue to maintain a list of Approved Condominium Projects. The requirements of this Mortgagee Letter are effective for all case numbers assigned on or after October 1, 2009 except as noted.
The purpose of this Mortgagee Letter is to provide guidelines and instructions on options available to lenders to receive mortgage insurance on condominium units which are located in a project. The lender will be required to retain all the project legal documents, contracts, conveyances, plats, plans, insurance coverage, presale and owner occupancy conditions and other documentation in connection with their review and approval of the condominium project.
When requested, the lender must provide such documentation to HUD staff for verification of compliance with HUD’s regulations.
I. Approval Processing Options
A. The lender will have two condominium project approval processing options. The
applicable documentation requirements will be the same for each option:
1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined
in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.
B. The processing options stated above will be applicable to condominium developments that are:
1. Proposed/Under Construction;
2. Existing Construction; or
3. Conversions.
II. Eligible Projects The Condominium Project has been created and exists in full compliance with applicable State law requirements of the jurisdiction in which the Condominium Project is located, and with all other applicable laws and regulations.
III. Ineligible Projects
A. Condominium Hotel or “Condotels”
B. Timeshares or segmented ownership projects
C. Houseboat projects
D. Multi-dwelling unit condominiums [i.e. more than one dwelling per condominium
unit]
E. All projects not deemed to be used primarily as residential
IV. General Requirements
A. Site Condominiums
Site Condominiums are single family detached dwellings encumbered by a declaration of
condominium covenants or condominium form of ownership. Condominium Project approval is not required for Site Condominiums; however, the Condominium Rider must be included in the FHA case binder submitted for insurance endorsement. Manufactured housing condominium projects (MHCPs) may not be processed as site condominiums; these projects will require approval under HRAP.
NOTE: Site Condominiums requirements are effective immediately with issuance of
this Mortgage Letter.
B. “Spot Loan” Approval Process
The Spot Loan Approval process as defined in Mortgage Letter 1996-41 is eliminated
with issuance of this guidance. The DELRAP and HRAP processes have been
streamlined to allow for uncomplicated condominium project approvals eliminating the
need to approve units on a “spot loan” basis.
C. FHA-to-FHA Transactions
Project Approval is not required for:
a. FHA-to-FHA streamline refinance transactions; or
b. FHA/HUD Real Estate Owned (REO) Division sales.
D. Environmental Review Requirements
If a lender elects to use the HRAP option, then environmental reviews will not be
required for projects that, at the time that condominium project approval is requested, have progressed beyond that stage of construction where HUD has any influence over the remaining uncompleted construction. This occurs when:
• a condominium plat or similar development plan and any phases delineated
therein have been reviewed and approved by the local jurisdiction and, if
applicable, recorded in the land records, and
• the construction of the project’s infrastructure (streets, stormwater management,
water and sewage systems, utilities, facilities (e.g., parking lots, community
building, swimming pools, golf course, playground, etc.) and buildings containing
the condominium units has proceeded to a point that precludes any major
changes.
Environmental reviews will not be required for condominium projects approved using the DELRAP option. If the appraiser identifies an environmental condition or the lender is aware of an existing environmental condition through remarks provided on the Builder’s Certification, form HUD-92541, the appraisal or other known documentation, the lender must avoid or mitigate the following conditions before completing its review process:
1. The project is located in a Special Flood Hazard Area designated on a Federal
Emergency Management Agency flood map.
2. Potential noise issues, where the property is located within 1000 feet of a highway,
freeway, or heavily traveled road, within 3000 feet of a railroad, or within one mile of
an airport or five miles of a military airfield.
3. The property has an unobstructed view, or is located within 2000 feet, of any facility
handling or storing explosive or fire-prone materials.
4. The property is located within 3000 feet of a dump or landfill, or of a site on an EPA Superfund (NPL) list or equivalent state list, or a Phase I Environmental Site
Assessment indicates the presence of a Recognized Environmental Condition or
recommends further (Phase II) assessment for the presence of contaminants that could
affect the site.
5. The property has any hazards or adverse conditions listed in Section 1.f. of the
Builder’s Certification, including, but not limited to, high ground water levels,
unstable soils, or earth fill.
6. The project is located in a wetland designated on National Wetlands Inventory maps or designated by State or local authorities.
7. The project is on the National Register of Historic Places or is within a historic district listed on the Register.
8. The appraiser or DE lender is aware of any other condition that could adversely affect
the health or safety of the residents of the project.
V. Project Eligibility Requirements
A. The following requirements apply to all Condominium Project approvals:
• Projects consist of two units or more.
• Projects must be covered by hazard and liability insurance and, when applicable,
flood insurance.
• Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.
• No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a
nature that is homogenous with residential use, which is free of adverse
conditions to the occupants of the individual condominium units.
• No more than 10 percent of the units may be owned by one investor. This will
apply to developers/builders that subsequently rent vacant and unsold units. For
two and three unit condominium projects, no single entity may own more than
one unit within the project; all units, common elements, and facilities within the
project must be 100 percent complete; and only one unit can be conveyed to nonowner
occupants.
• No more than 15 percent of the total units can be in arrears (more than 30 days
past due) of their condominium association fee payment.
• At least 50 percent of the total units must be sold prior to endorsement of any
mortgage on a unit. Valid presales include an executed sales agreement and
evidence that a lender is willing to make the loan.1
• At least 50 percent of the units of a project must be owner-occupied or sold to
owners who intend to occupy the units.2 For proposed, under construction or
projects still in their initial marketing phase, FHA will allow a minimum owner
occupancy amount equal to 50 percent of the number of presold units (the
minimum presales requirement of 50 percent still applies).
• Legal Phasing is permitted for condominium processing. It is recommended that
developers submit all known phases for initial project approval. For purposes of
calculating the owner-occupancy percentage:
a. On multi-phased projects the owner-occupancy percentage is calculated on
the first declared phase and cumulatively on subsequent phases if the
ownership of the condominium project remains the same;
1 Secondary residences can only be included if it meets the requirements of 24 CFR 203.18(f)(2).
2 If the owner-occupancy ratio includes presales, FHA requires an executed sales agreement and corresponding evidence that a lender is willing to make the loan and the buyer intends to occupy the unit. A separate owneroccupancy certification is also required in the FHA case binder for loans where the Individual Condominium Unit
Appraisal Report, Fannie Mae Form 1073, does not contain the required data or the condominium project is proposed or under construction.
b. If multi-phasing includes separate ownership per phase, each phase is
calculated individually; or
c. Single-phase condominium project approval requests must meet the
owner-occupancy percentage requirement.
• FHA Concentration
a. Projects consisting of three or less units will have no more than one unit
encumbered with FHA insurance.
b. Projects consisting of four or more units will have no more than 30
percent of the total units encumbered with FHA insurance.
• Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that
information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.
VI. Manufactured Housing Condominium Projects
Pursuant to HERA, manufactured housing condominium projects are now eligible for
FHA mortgage insurance. Accordingly, all outstanding and current FHA Manufactured
Housing individual unit requirements remain applicable for both Home Equity
Conversion Mortgages (HECM) and forward mortgages, including elevations in flood
zones and foundation requirements. MHCPs must be submitted to the applicable
Homeownership Center for review and approval – these projects are ineligible for
DELRAP processing. MHCPs may not be processed as site condominiums; these
projects will require approval under HRAP.
1. Appraisal reporting requirements for condominium manufactured homes:
a. Appraisal must be reported on the Manufactured Home Appraisal Report
(Fannie Mae Form 1004C).
b. Subject condominium project must be inspected and the Project
Information section of the Individual Condominium Unit Appraisal
Report (Fannie Mae Form 1073) must be completed and included as an
addendum to the appraisal report.
c. Comparable sales must be condominium manufactured homes. Detailed
explanations must be provided when search parameters are expanded due
to the lack of comparable sales in subject market area.
VII. Condominium Conversions
Conversion to condominiums occurs in those projects which involve changing the title of an existing structure generally under one title, to property that is separated into units so that the title to most units can be held separately. Changes to condominium conversion requirements are defined below:
1. The one-year waiting period requirement for conversions is eliminated;
2. In the event that FHA is insuring a mortgage on a unit and an undivided interest in the common elements on a project undergoing remodeling or rehabilitation, the
entire condominium project, including the common facilities, must be 100 percent
completely built before any mortgage may be endorsed. Escrow provisions will
be permitted for weather related delays for common areas only.
VIII. FHA Connection (FHAC)
System modifications will be made to capture additional information, remove obsolete
fields, and identify points of contacts. Major planned system modifications are:
1. Establishment of a Condominium Project Approval screen in FHAC that will be
used by DE lenders and HUD staff to enter approval, rejection and recertification
data.
2. System generated condominium project identification numbers based on the HOC
of jurisdiction.
NOTE: While major system modifications have been identified, other modifications will
be made and released as necessary to ensure collection of all valid information.
IX. Condominium New Construction Pre-approval and Inspection Requirements
Mortgagee Letter 2001-27 prohibited condominium processing under those guidelines.
This Mortgagee Letter now permits condominium processing under the policy as
established below.
In cases where a building permit and a certificate of occupancy (or its equivalent) are issued by a local jurisdiction that performs a minimum of three inspections (typically the footing, framing and final) neither an Early Start Letter nor a HUD approved ten-year warranty plan is required. For those jurisdictions that do not issue a building permit (or its equivalent) prior to construction and a Certificate of Occupancy (or its equivalent) upon completion of construction, a condominium unit that is one year old or less must have either an Early Start Letter (with a minimum of three inspections by an FHA Roster Inspector) or be covered by a HUD-approved ten-year warranty plan (with a final inspection by a FHA Roster Inspector) to be eligible for high-ratio mortgage insurance. All condominium types are eligible to follow this process (e.g. Multi-family). Projects are still required to be on the FHA-approved condominium list. FHA will require the completion and retention of the following documents when processing new construction condominium project approvals:
• Builder’s Certification of Plans, Specifications and Site, form HUD-92541
• Builder’s Warranty, form HUD-92544
• Building Permit (or its equivalent)
• Final Certificate of Occupancy (or its equivalent)
FHA will not accept a temporary Certificate of Occupancy; all units within the building (where the specific unit that is security for the insured financing is located) must be complete.
X. General Processing Steps for DELRAP or HRAP
A. Determine acceptability of the site and location of the project. Refer to Attachment A, Condominium Project Approval Matrix.
B. Review the project’s financial and legal documents; if acceptable, authorized
personnel will sign and date the Lender Certification of Condominium Requirements
C. Place the Lender Certification of Condominium Requirements and other required
certifications in the FHA case binder.
D. Retain and maintain all documents used to review and approve the project for a
period of three years from the date of project approval.
E. Mixed condominium review and processing is not permitted. If a lender opts to
participate in the DELRAP process, all future processing submissions must be
processed, accordingly, in that sole and particular manner with the exception of
manufactured housing condominium project approvals (these must be submitted to
the applicable Homeownership Center for review and approval).
F. If a project is listed as Rejected or Withdrawn on the FHA-approved condominiums list, the only approval process accepted is HRAP.
G. Second and subsequent lenders that submit a unit for insurance in a project that is listed on the FHA-approved condominium list are not required to complete any further approval process. At the lender’s discretion, they may seek any additional information to satisfy their own requirements and/or perform their own due diligence. FHA will require the lender to certify it has no knowledge of circumstances or conditions that might have an adverse effect on the project or cause a mortgage secured by a unit in the project to become delinquent.
H. Subsequent phases being approved by a different lender must follow the general
procedures listed here in Section X. The original lender must also follow these general procedures but will have already satisfied some of the steps listed.
I. All required certifications, as applicable, must be included in the FHA case binder submitted for insurance endorsement.
J. For both new construction and conversions if the developer intends to market five or more units within the next 12 months with FHA mortgage insurance, an Affirmative Fair Housing Marketing Plan (AFHMP) or a Voluntary Affirmative Marketing
Agreement (VAMA) must be in place. Form HUD-935.2C, Affirmative Fair Housing
Marketing Plan – Condominium or Cooperatives, is to be used for condominium
projects. This completed form must be submitted to the Director of the Processing
and Underwriting Division in the jurisdictional HOC for approval. If “a, b, c, or d” is checked on response to Question 2 in the Applicability section, the developer is not required to complete an AFHMP. The developer should complete block 11 on form
HUD-92541, Builder’s Certification of Plans, Specification and Site.
K. Environmental reviews will be required for proposed and under construction project approvals submitted under the HRAP option consistent with the Environmental
Review Requirements listed in Section IV. D. Environmental review is not required
under DELRAP, but the lender must take necessary actions to avoid or mitigate
identified environmental conditions prior to completing its project review.
L. Transfer of control of the Homeowners Association shall pass to the owners of units within the project no later than the earlier of the following:
1. 120 days after the date by which 75 percent of the units have been conveyed
to the unit purchasers, or
2. One year after completion of the project evidence by the first conveyance to a
unit purchaser.
XI. Certification for Initial Approval
Lenders must provide certifications on company letterhead signed by a company
authorized representative (signature stamps or electronic signatures are not authorized) that:
1. The eligible condominium project complies with applicable FHA requirements
addressed within this Mortgagee Letter;
2. All condominium legal documents meet HUD regulations, state and local
condominium laws; and
3. Pre-sale and owner occupancy ratios per loan are met.
NOTE: FHA will not require an attorney's certification; however, lenders may obtain
this as part of their due diligence process. Lenders are reminded that this document will not replace other condominium certifications required from the lender.
XII. Certification of Projects Previously Approved
If a project has been previously approved, lenders must certify that they are not aware of any change in circumstances since initial approval of the project that would result in the project no longer complying with FHA requirements.
XIII. Recertification of Project Approvals
Condominium Project approvals will expire two years from the date it has been placed on the list of approved condominiums. This will also apply to all projects currently on the list of approved condominiums. Further participation in the program after this two-year period has expired will require recertification to determine that the project is still in compliance with HUD’s owner-occupancy requirement and that no conditions currently exist which would present an unacceptable risk to FHA. Items that should be given consideration are:
1. Pending special assessments,
2. Pending legal action against the condominium association, or its officers or
directors,
3. Hazard, liability insurance and when applicable flood insurance.
XIV. Quality Assurance
Monitoring the condominium approval process is critical to the success of theprogram.
Lenders who approve condominium projects utilizing the DELRAP option will be
required to submit a copy of the complete condominium project approval package to the
applicable Homeownership Center within five business days of approval. Lenders are
required to submit the first five DELRAP approvals for review. Further, to manage
FHA’s risk, and ensure compliance with all condominium project policy requirements,
additional condominium project approvals will be selected for review. The criteria for selection of the additional approvals will be determined and lenders will be notified in future guidance.
XV. False Certifications
Title 18 U.S.C. 1014, provides in part that whoever knowingly and willfully makes or
uses a document containing any false, fictitious, or fraudulent statement or entry, in any matter in the jurisdiction of any department or agency of the United States, shall be fined not more than $1,000,000 or imprisoned for not more than 30 years or both. In addition, violation of this or others may result in debarment and civil liability for damages suffered by the Department.
XVI. Insurance of Individual Units
All applicable, outstanding and any additional FHA insurance requirements not defined
in this guidance must be met for individual units.
If you have questions regarding this Mortgagee Letter, please call the FHA’s Resource
Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments
may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).
Sincerely,
Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner
WASHINGTON, DC 20410-8000
ASSISTANT SECRETARY FOR HOUSINGFEDERAL
HOUSING COMMISSIONER
June 12, 2009 MORTGAGEE LETTER 2009-19
TO: ALL APPROVED MORTGAGEES
ALL FHA ROSTER APPRAISERS
SUBJECT: Condominium Approval Process – Single Family Housing
In accordance with the passage of the Housing and Economic Recovery Act (HERA) of
2008, the Federal Housing Administration (FHA) is implementing a new approval process for Condominium Projects to insure mortgages on individual units under Section 203(b) of the National Housing Act. FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations. HUD will continue to maintain a list of Approved Condominium Projects. The requirements of this Mortgagee Letter are effective for all case numbers assigned on or after October 1, 2009 except as noted.
The purpose of this Mortgagee Letter is to provide guidelines and instructions on options available to lenders to receive mortgage insurance on condominium units which are located in a project. The lender will be required to retain all the project legal documents, contracts, conveyances, plats, plans, insurance coverage, presale and owner occupancy conditions and other documentation in connection with their review and approval of the condominium project.
When requested, the lender must provide such documentation to HUD staff for verification of compliance with HUD’s regulations.
I. Approval Processing Options
A. The lender will have two condominium project approval processing options. The
applicable documentation requirements will be the same for each option:
1. HUD Review and Approval Process (HRAP).
2. Direct Endorsement Lender Review and Approval Process (DELRAP), outlined
in this Mortgagee Letter. This option is only available to lenders who have unconditional Direct Endorsement authority and staff with knowledge and expertise in reviewing and approving condominium projects.
B. The processing options stated above will be applicable to condominium developments that are:
1. Proposed/Under Construction;
2. Existing Construction; or
3. Conversions.
II. Eligible Projects The Condominium Project has been created and exists in full compliance with applicable State law requirements of the jurisdiction in which the Condominium Project is located, and with all other applicable laws and regulations.
III. Ineligible Projects
A. Condominium Hotel or “Condotels”
B. Timeshares or segmented ownership projects
C. Houseboat projects
D. Multi-dwelling unit condominiums [i.e. more than one dwelling per condominium
unit]
E. All projects not deemed to be used primarily as residential
IV. General Requirements
A. Site Condominiums
Site Condominiums are single family detached dwellings encumbered by a declaration of
condominium covenants or condominium form of ownership. Condominium Project approval is not required for Site Condominiums; however, the Condominium Rider must be included in the FHA case binder submitted for insurance endorsement. Manufactured housing condominium projects (MHCPs) may not be processed as site condominiums; these projects will require approval under HRAP.
NOTE: Site Condominiums requirements are effective immediately with issuance of
this Mortgage Letter.
B. “Spot Loan” Approval Process
The Spot Loan Approval process as defined in Mortgage Letter 1996-41 is eliminated
with issuance of this guidance. The DELRAP and HRAP processes have been
streamlined to allow for uncomplicated condominium project approvals eliminating the
need to approve units on a “spot loan” basis.
C. FHA-to-FHA Transactions
Project Approval is not required for:
a. FHA-to-FHA streamline refinance transactions; or
b. FHA/HUD Real Estate Owned (REO) Division sales.
D. Environmental Review Requirements
If a lender elects to use the HRAP option, then environmental reviews will not be
required for projects that, at the time that condominium project approval is requested, have progressed beyond that stage of construction where HUD has any influence over the remaining uncompleted construction. This occurs when:
• a condominium plat or similar development plan and any phases delineated
therein have been reviewed and approved by the local jurisdiction and, if
applicable, recorded in the land records, and
• the construction of the project’s infrastructure (streets, stormwater management,
water and sewage systems, utilities, facilities (e.g., parking lots, community
building, swimming pools, golf course, playground, etc.) and buildings containing
the condominium units has proceeded to a point that precludes any major
changes.
Environmental reviews will not be required for condominium projects approved using the DELRAP option. If the appraiser identifies an environmental condition or the lender is aware of an existing environmental condition through remarks provided on the Builder’s Certification, form HUD-92541, the appraisal or other known documentation, the lender must avoid or mitigate the following conditions before completing its review process:
1. The project is located in a Special Flood Hazard Area designated on a Federal
Emergency Management Agency flood map.
2. Potential noise issues, where the property is located within 1000 feet of a highway,
freeway, or heavily traveled road, within 3000 feet of a railroad, or within one mile of
an airport or five miles of a military airfield.
3. The property has an unobstructed view, or is located within 2000 feet, of any facility
handling or storing explosive or fire-prone materials.
4. The property is located within 3000 feet of a dump or landfill, or of a site on an EPA Superfund (NPL) list or equivalent state list, or a Phase I Environmental Site
Assessment indicates the presence of a Recognized Environmental Condition or
recommends further (Phase II) assessment for the presence of contaminants that could
affect the site.
5. The property has any hazards or adverse conditions listed in Section 1.f. of the
Builder’s Certification, including, but not limited to, high ground water levels,
unstable soils, or earth fill.
6. The project is located in a wetland designated on National Wetlands Inventory maps or designated by State or local authorities.
7. The project is on the National Register of Historic Places or is within a historic district listed on the Register.
8. The appraiser or DE lender is aware of any other condition that could adversely affect
the health or safety of the residents of the project.
V. Project Eligibility Requirements
A. The following requirements apply to all Condominium Project approvals:
• Projects consist of two units or more.
• Projects must be covered by hazard and liability insurance and, when applicable,
flood insurance.
• Right of first refusal is permitted unless it violates discriminatory conduct under the Fair Housing Act regulation in 24 CFR 100.
• No more than 25 percent of the property’s total floor area in a project can be used for commercial purposes. The commercial portion of the project must be of a
nature that is homogenous with residential use, which is free of adverse
conditions to the occupants of the individual condominium units.
• No more than 10 percent of the units may be owned by one investor. This will
apply to developers/builders that subsequently rent vacant and unsold units. For
two and three unit condominium projects, no single entity may own more than
one unit within the project; all units, common elements, and facilities within the
project must be 100 percent complete; and only one unit can be conveyed to nonowner
occupants.
• No more than 15 percent of the total units can be in arrears (more than 30 days
past due) of their condominium association fee payment.
• At least 50 percent of the total units must be sold prior to endorsement of any
mortgage on a unit. Valid presales include an executed sales agreement and
evidence that a lender is willing to make the loan.1
• At least 50 percent of the units of a project must be owner-occupied or sold to
owners who intend to occupy the units.2 For proposed, under construction or
projects still in their initial marketing phase, FHA will allow a minimum owner
occupancy amount equal to 50 percent of the number of presold units (the
minimum presales requirement of 50 percent still applies).
• Legal Phasing is permitted for condominium processing. It is recommended that
developers submit all known phases for initial project approval. For purposes of
calculating the owner-occupancy percentage:
a. On multi-phased projects the owner-occupancy percentage is calculated on
the first declared phase and cumulatively on subsequent phases if the
ownership of the condominium project remains the same;
1 Secondary residences can only be included if it meets the requirements of 24 CFR 203.18(f)(2).
2 If the owner-occupancy ratio includes presales, FHA requires an executed sales agreement and corresponding evidence that a lender is willing to make the loan and the buyer intends to occupy the unit. A separate owneroccupancy certification is also required in the FHA case binder for loans where the Individual Condominium Unit
Appraisal Report, Fannie Mae Form 1073, does not contain the required data or the condominium project is proposed or under construction.
b. If multi-phasing includes separate ownership per phase, each phase is
calculated individually; or
c. Single-phase condominium project approval requests must meet the
owner-occupancy percentage requirement.
• FHA Concentration
a. Projects consisting of three or less units will have no more than one unit
encumbered with FHA insurance.
b. Projects consisting of four or more units will have no more than 30
percent of the total units encumbered with FHA insurance.
• Reserve Study - a current reserve study must be performed to assure that adequate funds are available for the funding of capital expenditures and maintenance. A current reserve study must be no more than 12 months old – if recent events or market conditions have affected the finished condition of the property that
information must be included. When reviewing the reserve study, consideration must be given to items that have been replaced after the time that the reserve study was completed.
VI. Manufactured Housing Condominium Projects
Pursuant to HERA, manufactured housing condominium projects are now eligible for
FHA mortgage insurance. Accordingly, all outstanding and current FHA Manufactured
Housing individual unit requirements remain applicable for both Home Equity
Conversion Mortgages (HECM) and forward mortgages, including elevations in flood
zones and foundation requirements. MHCPs must be submitted to the applicable
Homeownership Center for review and approval – these projects are ineligible for
DELRAP processing. MHCPs may not be processed as site condominiums; these
projects will require approval under HRAP.
1. Appraisal reporting requirements for condominium manufactured homes:
a. Appraisal must be reported on the Manufactured Home Appraisal Report
(Fannie Mae Form 1004C).
b. Subject condominium project must be inspected and the Project
Information section of the Individual Condominium Unit Appraisal
Report (Fannie Mae Form 1073) must be completed and included as an
addendum to the appraisal report.
c. Comparable sales must be condominium manufactured homes. Detailed
explanations must be provided when search parameters are expanded due
to the lack of comparable sales in subject market area.
VII. Condominium Conversions
Conversion to condominiums occurs in those projects which involve changing the title of an existing structure generally under one title, to property that is separated into units so that the title to most units can be held separately. Changes to condominium conversion requirements are defined below:
1. The one-year waiting period requirement for conversions is eliminated;
2. In the event that FHA is insuring a mortgage on a unit and an undivided interest in the common elements on a project undergoing remodeling or rehabilitation, the
entire condominium project, including the common facilities, must be 100 percent
completely built before any mortgage may be endorsed. Escrow provisions will
be permitted for weather related delays for common areas only.
VIII. FHA Connection (FHAC)
System modifications will be made to capture additional information, remove obsolete
fields, and identify points of contacts. Major planned system modifications are:
1. Establishment of a Condominium Project Approval screen in FHAC that will be
used by DE lenders and HUD staff to enter approval, rejection and recertification
data.
2. System generated condominium project identification numbers based on the HOC
of jurisdiction.
NOTE: While major system modifications have been identified, other modifications will
be made and released as necessary to ensure collection of all valid information.
IX. Condominium New Construction Pre-approval and Inspection Requirements
Mortgagee Letter 2001-27 prohibited condominium processing under those guidelines.
This Mortgagee Letter now permits condominium processing under the policy as
established below.
In cases where a building permit and a certificate of occupancy (or its equivalent) are issued by a local jurisdiction that performs a minimum of three inspections (typically the footing, framing and final) neither an Early Start Letter nor a HUD approved ten-year warranty plan is required. For those jurisdictions that do not issue a building permit (or its equivalent) prior to construction and a Certificate of Occupancy (or its equivalent) upon completion of construction, a condominium unit that is one year old or less must have either an Early Start Letter (with a minimum of three inspections by an FHA Roster Inspector) or be covered by a HUD-approved ten-year warranty plan (with a final inspection by a FHA Roster Inspector) to be eligible for high-ratio mortgage insurance. All condominium types are eligible to follow this process (e.g. Multi-family). Projects are still required to be on the FHA-approved condominium list. FHA will require the completion and retention of the following documents when processing new construction condominium project approvals:
• Builder’s Certification of Plans, Specifications and Site, form HUD-92541
• Builder’s Warranty, form HUD-92544
• Building Permit (or its equivalent)
• Final Certificate of Occupancy (or its equivalent)
FHA will not accept a temporary Certificate of Occupancy; all units within the building (where the specific unit that is security for the insured financing is located) must be complete.
X. General Processing Steps for DELRAP or HRAP
A. Determine acceptability of the site and location of the project. Refer to Attachment A, Condominium Project Approval Matrix.
B. Review the project’s financial and legal documents; if acceptable, authorized
personnel will sign and date the Lender Certification of Condominium Requirements
C. Place the Lender Certification of Condominium Requirements and other required
certifications in the FHA case binder.
D. Retain and maintain all documents used to review and approve the project for a
period of three years from the date of project approval.
E. Mixed condominium review and processing is not permitted. If a lender opts to
participate in the DELRAP process, all future processing submissions must be
processed, accordingly, in that sole and particular manner with the exception of
manufactured housing condominium project approvals (these must be submitted to
the applicable Homeownership Center for review and approval).
F. If a project is listed as Rejected or Withdrawn on the FHA-approved condominiums list, the only approval process accepted is HRAP.
G. Second and subsequent lenders that submit a unit for insurance in a project that is listed on the FHA-approved condominium list are not required to complete any further approval process. At the lender’s discretion, they may seek any additional information to satisfy their own requirements and/or perform their own due diligence. FHA will require the lender to certify it has no knowledge of circumstances or conditions that might have an adverse effect on the project or cause a mortgage secured by a unit in the project to become delinquent.
H. Subsequent phases being approved by a different lender must follow the general
procedures listed here in Section X. The original lender must also follow these general procedures but will have already satisfied some of the steps listed.
I. All required certifications, as applicable, must be included in the FHA case binder submitted for insurance endorsement.
J. For both new construction and conversions if the developer intends to market five or more units within the next 12 months with FHA mortgage insurance, an Affirmative Fair Housing Marketing Plan (AFHMP) or a Voluntary Affirmative Marketing
Agreement (VAMA) must be in place. Form HUD-935.2C, Affirmative Fair Housing
Marketing Plan – Condominium or Cooperatives, is to be used for condominium
projects. This completed form must be submitted to the Director of the Processing
and Underwriting Division in the jurisdictional HOC for approval. If “a, b, c, or d” is checked on response to Question 2 in the Applicability section, the developer is not required to complete an AFHMP. The developer should complete block 11 on form
HUD-92541, Builder’s Certification of Plans, Specification and Site.
K. Environmental reviews will be required for proposed and under construction project approvals submitted under the HRAP option consistent with the Environmental
Review Requirements listed in Section IV. D. Environmental review is not required
under DELRAP, but the lender must take necessary actions to avoid or mitigate
identified environmental conditions prior to completing its project review.
L. Transfer of control of the Homeowners Association shall pass to the owners of units within the project no later than the earlier of the following:
1. 120 days after the date by which 75 percent of the units have been conveyed
to the unit purchasers, or
2. One year after completion of the project evidence by the first conveyance to a
unit purchaser.
XI. Certification for Initial Approval
Lenders must provide certifications on company letterhead signed by a company
authorized representative (signature stamps or electronic signatures are not authorized) that:
1. The eligible condominium project complies with applicable FHA requirements
addressed within this Mortgagee Letter;
2. All condominium legal documents meet HUD regulations, state and local
condominium laws; and
3. Pre-sale and owner occupancy ratios per loan are met.
NOTE: FHA will not require an attorney's certification; however, lenders may obtain
this as part of their due diligence process. Lenders are reminded that this document will not replace other condominium certifications required from the lender.
XII. Certification of Projects Previously Approved
If a project has been previously approved, lenders must certify that they are not aware of any change in circumstances since initial approval of the project that would result in the project no longer complying with FHA requirements.
XIII. Recertification of Project Approvals
Condominium Project approvals will expire two years from the date it has been placed on the list of approved condominiums. This will also apply to all projects currently on the list of approved condominiums. Further participation in the program after this two-year period has expired will require recertification to determine that the project is still in compliance with HUD’s owner-occupancy requirement and that no conditions currently exist which would present an unacceptable risk to FHA. Items that should be given consideration are:
1. Pending special assessments,
2. Pending legal action against the condominium association, or its officers or
directors,
3. Hazard, liability insurance and when applicable flood insurance.
XIV. Quality Assurance
Monitoring the condominium approval process is critical to the success of theprogram.
Lenders who approve condominium projects utilizing the DELRAP option will be
required to submit a copy of the complete condominium project approval package to the
applicable Homeownership Center within five business days of approval. Lenders are
required to submit the first five DELRAP approvals for review. Further, to manage
FHA’s risk, and ensure compliance with all condominium project policy requirements,
additional condominium project approvals will be selected for review. The criteria for selection of the additional approvals will be determined and lenders will be notified in future guidance.
XV. False Certifications
Title 18 U.S.C. 1014, provides in part that whoever knowingly and willfully makes or
uses a document containing any false, fictitious, or fraudulent statement or entry, in any matter in the jurisdiction of any department or agency of the United States, shall be fined not more than $1,000,000 or imprisoned for not more than 30 years or both. In addition, violation of this or others may result in debarment and civil liability for damages suffered by the Department.
XVI. Insurance of Individual Units
All applicable, outstanding and any additional FHA insurance requirements not defined
in this guidance must be met for individual units.
If you have questions regarding this Mortgagee Letter, please call the FHA’s Resource
Center at 1-800-CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments
may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).
Sincerely,
Brian D. Montgomery
Assistant Secretary for Housing-
Federal Housing Commissioner
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