MARKET UPDATE – JUNE 2009
HVCC UPDATE
What is the HVCC? A quick review:
In an attempt to reduce mortgage and appraisal fraud, the new Home Valuation Code of Conduct has received considerable blow back from those in the industry. The HVCC will prevent mortgage brokers and loan officers from ordering appraisals on conventional mortgages directly from the appraiser, in hopes of reducing value manipulation and fraud. The appraisals under the new HVCC would have to be ordered through a third party clearing house or through the lender directly. The HVCC went into effect May 1st, 2009.
“NAMB (National Association of Mortgage Brokers) is taking meetings this week with various officials to discuss potential avenues for removal of the HVCC. NAMB was successful in securing language in H.R. 1728 (passed by the House of Representatives) that called for an in-depth study of the effects of the HVCC. This bill has not yet been signed into law. NAMB has been requested by the Federal Housing Finance Agency (FHFA) to collect personal experiences from mortgage professionals and/or consumers of specific problems directly caused by the HVCC. NAMB is continuing to investigate other avenues by which to fight the HVCC. Please see below for what NAMB has been doing since April 2008 to fight the HVCC. NAMB will send weekly HVCC updates via News from NAMB (members only).”
“NAMB has been requested by the Federal Housing Finance Agency (FHFA) to collect personal experiences from mortgage professionals or consumers of problems directly caused by the HVCC. These problems can consist of increased costs, appraisal quality, portability issues, regulatory issues, etc. You must include specific, tangible evidence of how the HVCC has harmed your consumers and/or prevented you from conducting business.” – NAMB
A look at the first 30 days under the new HVCC rule:
Prior to HVCC: Under HVCC:
Appraisal Fee: $275-$300 $450-$550
Turn Times: 24-72 hours 5-10 days
Values: Market 10%-30% under Market
The HVCC has increased costs to consumers, drastically reduced values making it increasingly difficult for consumers to obtain mortgages, delayed lending turn times, and hurt legitimate appraisers ability to be in business. If you wish to voice a concern regarding the HVCC law, or have had a personal experience under the new HVCC law, please email me your thoughts, complaints and/or concerns. I will be forwarding all letters to our representatives in hopes to revise or eliminate the HVCC before it does any more damage.
Send to: aaron@genevafi.comHVCC UPDATE
What is the HVCC? A quick review:
In an attempt to reduce mortgage and appraisal fraud, the new Home Valuation Code of Conduct has received considerable blow back from those in the industry. The HVCC will prevent mortgage brokers and loan officers from ordering appraisals on conventional mortgages directly from the appraiser, in hopes of reducing value manipulation and fraud. The appraisals under the new HVCC would have to be ordered through a third party clearing house or through the lender directly. The HVCC went into effect May 1st, 2009.
“NAMB (National Association of Mortgage Brokers) is taking meetings this week with various officials to discuss potential avenues for removal of the HVCC. NAMB was successful in securing language in H.R. 1728 (passed by the House of Representatives) that called for an in-depth study of the effects of the HVCC. This bill has not yet been signed into law. NAMB has been requested by the Federal Housing Finance Agency (FHFA) to collect personal experiences from mortgage professionals and/or consumers of specific problems directly caused by the HVCC. NAMB is continuing to investigate other avenues by which to fight the HVCC. Please see below for what NAMB has been doing since April 2008 to fight the HVCC. NAMB will send weekly HVCC updates via News from NAMB (members only).”
“NAMB has been requested by the Federal Housing Finance Agency (FHFA) to collect personal experiences from mortgage professionals or consumers of problems directly caused by the HVCC. These problems can consist of increased costs, appraisal quality, portability issues, regulatory issues, etc. You must include specific, tangible evidence of how the HVCC has harmed your consumers and/or prevented you from conducting business.” – NAMB
A look at the first 30 days under the new HVCC rule:
Prior to HVCC: Under HVCC:
Appraisal Fee: $275-$300 $450-$550
Turn Times: 24-72 hours 5-10 days
Values: Market 10%-30% under Market
The HVCC has increased costs to consumers, drastically reduced values making it increasingly difficult for consumers to obtain mortgages, delayed lending turn times, and hurt legitimate appraisers ability to be in business. If you wish to voice a concern regarding the HVCC law, or have had a personal experience under the new HVCC law, please email me your thoughts, complaints and/or concerns. I will be forwarding all letters to our representatives in hopes to revise or eliminate the HVCC before it does any more damage.
PRICES CONTINUE TO FALL BUT SALES ARE UP
“The S&P/Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter. The Case-Shiller 20-city index dropped 18.7% year-over-year, also a record. It fell 18.5% during the last three months of 2008. This index has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months.” – CNNMoney.com
Since the peak of the housing boom, Phoenix, Arizona has recorded the largest decline of 53%, followed by Las Vegas at just over 50%.
Home sales were up 3.2% nationally in April. Housing inventory nationally is at 10 months, down from over 12 months in January. Again, one month does not make for a rebound, but it may be a sign of light at the end of the tunnel.
So where are the best deals on housing; Phoenix and Las Vegas? Not only are the values down over 50% from there highs, it is commonplace to find properties for sale that are 50% off the cost of construction.
In the greater Phoenix metropolitan market we are now seeing bidding wars over lower cost housing. It is common to see multiple offers on the same home hours after being listed on the MLS, with contracts being accepted tens of thousands of dollars over list price. Investors have returned to the market making it increasing difficult for first time home buyers to find inexpensive homes. For first time homeowners, do not despair. There are thousands of homes on the market that are priced extremely well; it just may take several offers before you have an accepted contract in hand. There are still hundreds of homes listed for well under $100K on the market.
TAX REVENUE DOWN
“U.S. income tax revenues plunged 44 percent in April, compared with a year ago, the American Institute for Economic Research said. The reason is easy to find. About 6 million U.S. jobs were lost in the 12 months prior to April, USA Today reported Wednesday.”
“Dropping revenues are "one of the drivers of the ongoing expansion of the federal budget deficit," said John Lonski, chief economist for Moody's Investors Service. The Congressional Budget Office estimates the 2009 budget gap will reach $1.7 trillion for the fiscal year.” – CNNFN.com
FAILING BANKS
Bank United of Florida became the 36th bank in 2009 to fail on May 21st. Bank United oversaw $13 billion in assets, of which most were sold to private equity groups.
Bank United will not likely be the last bank in 2009 to fail. The Federal Deposit Insurance Corp (FDIC) just released a report that there are over 300 banks on the “endangered” list to date.
To put this in to perspective over “1,900 financial institutions went under during 1987-1991, peaking with the failure of 534 banks in 1989.” – CNNFN.com
INTEREST RATE UPDATE
“Late last week the bond market started worrying about inflation and servicing the federal deficit, and one thing led to another and the 10-year Treasury yield shot from 3.4% last Thursday to above 3.7% during trading yesterday (Thursday) before closing lower at 3.67%. Plenty of market watchers are expecting the trend line on the 10-year Treasury to keep moving up.” – CNNFN.com
Do I refinance and lock in now, or continue to watch rates? If the Federal Reserve continues to purchase Treasuries and Mortgage Backed Securities, interest rates will likely drop once again. If not, interest rates will continue to climb. The days of rates under 5% may be a thing of the past. Anyone have a crystal ball?
Mortgage Type Interest Rate APR
30 Year Fixed 4.750% 5.034%
15 Year Fixed 4.375% 4.862%
Call today for your individual scenario rate quote.
*Interest rates as of 05/29/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.
For any additional information, call or email me at any time.
Sincerely,
Aaron VanTrojen
President
Geneva Financial, LLC.
Office: 480-368-2000
Email: aaron@genevafi.com
Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.
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