FHA to Increase in Up-Front Mortgage Insurance - Again!

According to Bloomberg report, FHA is set to raise its mortgage insurance premiums again for the fourth time in 3 years.  Beginning April 1, the cost of up-front mortgage insurance premiums will increase by 75 basis points for new 30-year loans.  The change applies to new loans registered on, or after, April 1, 2012. “The  75 basis point increase will be in addition to a 35 basis point increase in the annual premium on loans up to $729,750 that was announced earlier last month as part of the agency’s 2013 budget”, said FHA Acting Commissioner Carol Galante. 

“For loans up to $625,000, the increase will be on top of a 10 basis point increase on annual premiums for smaller loans.   The increase will add about $5 per month to the cost of a typical FHA loan, which is about $150,000”, Galante said.

When buyers are approved for FHA loans, they are required to carry mortgage insurance.  That includes both a Mortgage Insurance Premium (MIP) and an Up Front Mortgage Insurance Premium payment into an escrow account set up by the US Treasury Department and the funds are used to protect the government in case the borrower defaults on the FHA loan.

Because the FHA backs many first-time and lower-income borrowers, the premium increases could have a negative effect on the housing market, particularly on homebuilders, according to Jaret Seiberg, senior policy analyst at Guggenheim Securities’ Washington Research Group.

“We believe this is a negative for housing as it will make it that much more expensive for first-time homebuyers to enter the market,” Seiberg said in a note to clients.

If you are planning to use FHA for your next home mortgage, get your loan application today.  If you wait, you’ll be subject to the FHA’S new premiums.  For a list of great deals in Alaska area, you may check out http://www.anchoragehomedeals.com/.

GAS PRICES ARE EXPECTED TO KEEP RISING! QUIT BURNING $$$ IN THE TANK AND LET THE HOUSING MARKET BE A POSITIVE INVESTMENT!

Why Gas Prices Are So High?

High gas prices are usually caused by high prices for crude oil, which accounts for 55% of the price of gasoline. Distribution and taxes influence the remaining 45% of gas prices. Usually, distribution and taxes are stable, so that the daily change in the price of gasoline directly reflects oil price fluctuations.


In February 2012, concerns about a potential military action by either Israel or even US against Iran caused high oil prices. Second, some oil refineries in the US were closing. Third, oil and gas prices tend to rise every spring, in anticipation of increased demand during the summer driving season. As a result, gas prices hit $3.50 a gallon by February 15.


LOOKING AT REAL ESTATE AS A POSITIVE INVESTMENT!


Oil prices are expected to continue rising so outside of selling or trying to trade in your vehicle for less than market value, especially our favorite gas guzzler vehicles, what can WE do?? Coincidentally, RENT prices are also rising so why not make the most of your hard earned money work for you and look into purchasing a home/property in the Anchorage area. Interest rates are LOW and housing market is coming into the "busy" season with spring approaching. Your primary residence, as well as an investment property (like a condo or crash pad for the work week), can have mortgage interest deducted from taxes and can be a positive investment. Not to mention we are very fortunate that our housing market in the Anchorage Bowl and surrounding areas have not taken a dive in property values. On the contrary, a vehicle is not a positive investment and depreciates quickly in value, with accelerated maintenance expenses, and to top it off (no pun intended!) the rising cost of fuel!!


Let’s say for example, your place of work is in Anchorage, and you are living in Wasilla. Your minimum monthly fuel cost may take up to $500 per month out of your monthly budget. While if you live in Anchorage, your monthly fuel cost would only take you up to over $100 per month. There is a huge savings and of course, you do not have to travel so long just to get to work. Gas prices may continue to rise up to as much as $5/gallon this summer. This may increase your gas expenses by 25% per month.  See table below for comparison.


Fuel Expenses at Current Prices

Summer Fuel Expenses at Forecasted $5/gallon

***If you want to reduce the impact of increasing gas prices and live closer to your work place, here is a resource to view the active Homes in Anchorage & Surrounding Area.  All or email JAMES TEAM REAL ESTATE for more information at 907-865-6594 or you may call me directly at 907-242-7653.***

Foreclosure Settlement to Flood the Market with More Foreclosures!

According to CNNMoney report, as the $26 billion foreclosure settlement deal helps the hundreds of thousands of troubled homeowners, it will also flood the market with new foreclosures.

Many lenders held off foreclosure procedures as they wait for the final decision of the complex negotiation between 49 state attorney generals and federal officials.

Daren Blomquist, Vice President of RealtyTrac, online marketer of foreclosed properties, estimates that new filings will climb from 1.9 million in 2011 to between 2.2 million and 2.5 million this year. A surge of home seizures may drive down values, at least for a while, in a fragile market.

Rich Sharga, Executive Vice President for Carrington Holdings, a real estate firm says, "The market needs to clear out a lot of the distressed inventory before prices start to come back."

According to the S&P/Case Shiller index of values taken in 20 U.S. metropolitan areas, home prices have dropped 33% from their July 2006 peak. In CoreLogic Inc report, a real estate data provider, about 11 million U.S. homeowners have negative equity, which means that they owe more on their mortgages than their homes are worth.

Investors are likely to buy many of the foreclosed homes that come on the market to take advantage of low prices and demand for rentals, said Mark Zandi, Chief Economist for Moody's Analytics Inc. According to National Association of Realtors (NAR), about 21%of home sales in December were investor purchases.

With the continuous falling of housing prices, the all-time low mortgage interest rates and the government programs that make it easier for the US citizens to own their home. Now, is definitely, the right time to buy!

If you want to discuss foreclosure deals, you may contact me for more information.

February Real Estate Update

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Patrick James http://www.anchoragehomedeals.com info@anchoragehomedeals.com 907-865-6594 (Office) Keller Williams Alaska Group 101 West Benson Blvd., Suite 503 Anchorage, AK 99503	February 2012 Market Update 2012 is off to a promising start. Mortgage rates continue to drop and have remained under 4% for nearly two months. Home sales are strengthening and pending home sales, a measure to gauge future sales, are at their highest levels since March 2010. Job growth has been increasing for most of 2011, with unemployment dropping to 8.4%. As more people are getting jobs, consumer confidence has also been increasing. However, underemployment continues to be a problem for a stronger recovery. The underemployment rate is 18.1%, and there are still a significant number of people working part time, who would like to have full-time work. Even with substantial national improvements, this continues to be a "one neighborhood at a time" recovery. Payroll jobs were up in 25 states, but down in 24, demonstrating the delicate state of the U.S. economy. Global factors such as the European debt crisis are also complicating a more robust recovery. Strong guidance is needed from local and global leaders to continue this growth, as well as allow for business to maintain momentum toward building and expanding upon the opportunities that exist. Sources: Bureau of Labor Statistics, National Association of Realtors
This Month's Video	Interest Rates
	Another slight drop for mortgage rates as they continue to set historically low records. With homes being so affordable and the economy continuing its recovery, home prices are stabilizing, as increased sales are expected. NAR President Moe Veissi stated, "The American dream of home ownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves. More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services."
Home Sales
Existing home sales continued their rise, up 5% in December, to a seasonally adjusted rate of 4.61 million. Lawrence Yun, chief economist for NAR, said, "The pattern of home sales in recent months demonstrates a market in recovery. Record-low mortgage interest rates, job growth, and bargain home prices are giving more consumers the confidence they need to enter the market."
Home Price
Homes prices for December were down 2.6% from a year ago, at a median price of $164,500. One factor contributing to lower prices has been the high level of distressed properties being sold. In December, these properties began to show signs of price stabilization and increase. Foreclosures were selling at 22%, a 2% increase from a year ago, and average prices for short sales prices had risen by 3%.
Inventory
The housing inventory dropped 9.2% in December to a 6.2-month supply, or 2.38 million homes, at the current level of sales. These are the lowest inventory levels of homes for sale since March of 2005. Lawrence Yun, chief economist for NAR, said, "The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future."
7 Tips for Buyers
Interest rates at favorable levels and a good selection of homes provide an opportunity for buyers. Here are a few things to for buyers to keep in mind: 1. Know what you can afford before you fall in love with your dream home. 2. Consider additional expenses that come with owning a home like property tax, insurance, and repairs. 3. Be flexible on the little things. It would be wonderful to find a home with everything you want, but those are hard to come by – distinguish nice-to-haves and must-haves early. 4. Have imagination and look beyond paint colors, wallpaper, or other easy and affordable things you can change. 5. Don't compromise on the big things, such as enough bedrooms to accommodate additions to the family or space for an office if you work from home. 6. Always inspect even if the surface looks great; it's important to know if anything major is wrong and what it will cost to fix. 7. Think about the future in regard to the neighborhoods, surroundings, schools, and developments.
Each Office is Independently Owned and Operated.

Brought to you by KW Research. For additional graphs and details, please see the This Month in Real Estate PowerPoint Report. The opinions expressed in This Month in Real Estate are intended to supplement opinions on real estate expressed by local and national media, local real estate agents and other expert sources. You should not treat any opinion expressed on This Month in Real Estate as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of opinion. Keller Williams Realty, Inc., does not guarantee and is not responsible for the accuracy or completeness of information, and provides said information without warranties of any kind. All information presented herein is intended and should be used for educational purposes only. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. All investments involve some degree of risk. Keller Williams Realty, Inc., will not be liable for any loss or damage caused by your reliance on information contained in This Month in Real Estate.

Foreclosure Settlement

According to CNNMoney.com report, States have until the close of the business day to agree to the foreclosure deal.

According to Reuters' report, a proposed $25 billion foreclosure settlement to resolve mortgage abuses by top U.S. banks will give states broad authority to punish firms that mistreat borrowers in the future.

Banks have been accused of robo-signing documents and other sloppy paperwork in unlawfully rushing to deal with all the foreclosures during the 2007-2009 financial crisis.

The 5 banks that are involved in the settlement talks are Bank of America Corp, Wells Fargo & Co., JPMorgan Chase & Co, Citigroup Inc. and Ally Financial Inc.

The settlement would set requirements for how the banks conduct foreclosures, provide mortgage refinancing for underwater borrowers -- people who owe more on their mortgages than their homes are worth, fund loan principal reductions and make payments to states and borrowers who lost their homes to foreclosure.

Under the latest draft, about 1 million US homeowners who are "underwater" on their mortgages -- with principal exceeding the home's value -- could be eligible for as much as $20,000 in relief of principal owed, according to US Housing and Urban Development Secretary Shaun Donovan.

In exchange of up to $25B, mortgage servicers in states that agree to the deal would get immunity from future state servicing and originating claims -- although homeowners could pursue claims against banks and states could still pursue criminal investigations, according to reports.

The settlement also states that banks will set up internal quality control groups to assess their mortgage servicing units' compliance with the terms of the agreement. The banks must also turn over quarterly reports to the monitor about servicing complaints.

If the monitor concludes that a servicer is engaged in a pattern of noncompliance, he can undertake a more thorough review, and impose even tougher standards.

If the servicer continues to violate any of the terms, any of the states or a monitoring committee can go to court and seek penalties of up to $1M for the first "uncurred" violation and up to $5 million for a second.

The monitoring committee is comprised of representatives of state attorneys general, the US Justice Department, and the U.S. Department of Housing and Urban Development, who will review the work of the monitor.

The big question is -- how much money would be available to help homeowners, but that depends on how many states agree to the deal. If all 50 states sign on, the mortgage servicing settlement has the potential to offer as much as $25 billion. But without California, the nation's largest state, the value may sink to $17 billion.

For best foreclosure deals in Alaska, please go to http://www.flexmls.com/link.html?wvlu947m27e%2C2%2C1. If you have any questions, please feel free to contact me.

US Government to Expand and Extend Foreclosure Program

According to CNBC report, the Obama administration will expand its signature foreclosure-prevention program to try to help with heavy debt home owners avoid losing their homes. Home owners can have more time to seek a mortgage modification under the Home Affordable Modification Program or HAMP.

The Treasury Department has announced last January 27, Friday, that the Home Affordable Modification Program (HAMP) will also be extended through 2013. The program was initially set to expire by the end of 2012. The following changes are to take effect too:

- Treasury will triple the incentives it pays to private lenders. They'll be reimbursed from 18% - 63% of the amount they take off the mortgage principal.

- Currently, Fannie Mae and Freddie Mac do not offer principal reduction plans as part of their HAMP modifications. To encourage the assistance, Treasury said it will pay the same principal reduction incentives to Fannie Mae or Freddie Mac if they allow servicers to forgive principal reduction in conjunction with a HAMP modification.

- Modification guidelines will be relaxed to take into account debt such as medical bills and home equity loans.

- Houses occupied by renters will also be eligible for HAMP modification.

No new funds are allocated for HAMP's expansion, since less than $10B of the $29B of the program has been spent so far. If you need more information on Home Affordable Modification Program or HAMP, please don't hesitate to contact me.

Freddie Mac Now Extends Up To 12 Months Forbearance To Unemployed Borrowers

According to Bloomberg report, to help unemployed borrowers keep their homes, Freddie Mac has announced on 6th of January that it is giving mortgage servicers authority to give unemployed borrowers with Freddie Mac owned or guaranteed mortgages six month of forbearance without prior approval from the giant mortgage lender. And an additional up to six months, or a full year, with Freddie mac's prior approval.

Previously, Freddie mac allowed servicers to grant only up to three months of forbearance with no payment and without prior approval, or six months at a reduced payment with prior approval. And the only reasons acceptable for the longer forbearance are natural disasters, permanent disability or long-term medical emergencies.

Under the new Freddie Mac's deal, delinquent borrowers in an existing short term forbearance plan can be considered for an extended forbearance under the new policy. According to the latest statistics, nearly 10% of delinquencies of Freddie Mac mortgages were tied to unemployment.

The new forbearance relief options were designed to effectively assist struggling borrowers through a period of unemployment, giving them more time to get back on their feet without worrying about losing their homes. 

The expanded forbearance is set to take effect on February 1, 2012.