The Cost of Falling

Fannie/Freddie will cost billions

Propping up Fannie Mae and Freddie Mac will cost taxpayers $154 billion under the most likely scenario for home prices, the mortgage giants' regulator said yesterday. But the bill could end up much greater—nearly double the $135 billion already spent—if grimmer projections prove true and the economy slides back into recession. The projections, based on the results of a home-price "stress test" by the Federal Housing Finance Agency, offered the first public estimates of the final cost of the government's rescue of the mortgage-finance firms, which is on track to become the most expensive legacy of the 2008 financial crisis. Under the regulator's most positive home-price scenario, Fannie and Freddie would lose $6 billion over the next three years and they would still have to ask the government for 11 times that amount to make dividend payments.

On its most likely projection—which assumes an end to the housing crisis is close and that home prices will stop falling soon—it will lose $19 billion in the same period. On the other hand, if the economy slides back into recession and home prices fall by another 20% to 25%, the companies could cost taxpayers an additional $124 billion, before dividend payments. Another drop in values could lead to more delinquent borrowers with fewer options to avoid foreclosure. Price declines could also lead to losses on the nearly 200,000 homes the firms have taken back through foreclosure. Fannie and Freddie own or guarantee around half of the nation's $10.6 trillion in mortgages. While the Obama administration has said the $700 billion Troubled Asset Relief Program could ultimately cost taxpayers a fraction of the initial investment, the tab for Fannie and Freddie has swelled as mortgage delinquencies have mounted. Federal policymakers have relied heavily on the firms to help,
stabilize the housing sector, which together with the FHA have backed or bought nine in ten new loans this year, according to Inside Mortgage Finance.

Commercial NOD mixed

Commercial delinquencies mixed

According to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report, delinquency rates were mixed in the second quarter for commercial/multifamily mortgage investor groups. The delinquency rate for loans held in commercial mortgage-backed securities (CMBS) is the highest since the series began in 1997. Delinquency rates for other groups remain below levels seen in the early 1990’s, some by large margins. Between the first quarter and second quarter 2010, the 30+ day delinquency rate on loans held in CMBS rose 1.39 percentage points to 8.22%. The 60+ day delinquency rate on loans held in life company portfolios decreased 0.02 percentage points to 0.29%.

The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.01%age points to 0.80%. The 60+ day delinquency rate on multifamily loans held or insured by Freddie Mac increased 0.03 percentage points to 0.28%. The 90+ day delinquency rate on loans held by FDIC-insured banks and thrifts remained unchanged at 4.26%. Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the second quarter were as follows:

• CMBS: 8.22% (30+ days delinquent or in REO);
• Life company portfolios: 0.29% (60+days delinquent);
• Fannie Mae: 0.80% (60 or more days delinquent)
• Freddie Mac: 0.28% (60 or more days delinquent);
• Banks and thrifts: 4.26% (90 or more days delinquent or in non-accrual).

7 Million Mortgages: late

~ 7 million mortgages past due ~

There are 7,018,000 mortgages in the United States that are 30 or more days delinquent or in the process of foreclosure, according to new data from Lender Processing Services (LPS). The Florida-based analytics and technology firm offered the media a preview Friday of its September month-end mortgage performance figures, derived from the company’s loan-level database of nearly 40 million mortgage loans. Of the more than 7 million home loans in the country currently going unpaid, 2,055,000 have already commenced foreclosure proceedings. LPS reports that 4,963,000 are in the pre-foreclosure default stages, with nearly half of these falling into the 90-plus-days delinquent bucket. LPS’ measurement of the U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure) rose to 9.27 percent as of the end of September. That’s a 0.6 percent increase over the previous month, but down 7.8 percent compared to last September.

The nation’s pre-sale foreclosure inventory rate stands at 3.84
percent, according to LPS’ market data – up 1.1 percent from the August reading and 3.6 percent above a year earlier. LPS says the states with the highest percentage of non-current loans (defined as the total number of foreclosures and delinquencies as a percent of all active loans in that state) include: Florida, Nevada, Mississippi, Georgia, and Louisiana. The lowest percentage of non-current loans can be found in: Montana, Wyoming, Arkansas, South Dakota, and North Dakota.

Freddie Mac- Mortgage Rates

Freddie Mac - mortgage rate hits new record [low as they GO]

The 30-year, fixed-rate mortgage hit its lowest point in more than 50 years. The Freddie Mac Primary Mortgage Market Survey reported the average rate for a 30-year, fixed-rate mortgage at 4.19% with an average 0.8 origination point for the week ending Oct. 14, down from last week's average of 4.27%. A year ago the average was 4.92%. This is the lowest rate the survey has recorded since its inception in 1971. Mortgage rates were last at this level in April 1951, according to Freddie Mac. The Bankrate survey of large banks and thrifts reported the average rate for a 30-year, fixed mortgage is 4.47% with a 0.32 origination point, slightly above the 25-year-old survey's record low of 4.45% posted last month. Rates for 15-year FRMs are falling steeply, setting a new low for Freddie Mac.

The GSE said the rate was down to 3.62% with an average origination point of 0.8. The rate for a 15-year FRM was 4.37% a year earlier. Bankrate said the average rate for 15-year, FRMs of 3.85% is a new record low and down from 3.87% a week earlier. Frank Nothaft, vice president and chief economist at Freddie Mac, attributed the declining rates to the loss of 95,000 nonfarm payroll jobs in September. The GSE said the average for a 5-year, adjustable-rate mortgage is 3.47% with an average 0.6 origination point, down from 4.38% a year ago. The average remained flat with last week. Bankrate reported the average rate for a 5-year, ARM fell last week to 3.62% from 3.64% previously. The one-year Treasury-indexed ARM averaged 3.43% with an average 0.7 point up slightly from 3.4%. At this time last year, the one-year ARM averaged 4.6%.

Foreclosures and short sales at 26% discount

Foreclosures and short sales at 26% discount

According to RealtyTrac, nearly 250,000 residential properties in some stage of foreclosure changed hands during the second quarter. They sold for about 26% less than non-foreclosed homes, compared to 35% less in the first quarter. A little more than half of these deals were of properties repossessed by banks, and the remainder came from short sales. There was regional variation in the foreclosure sales data. Rust Belt states like Ohio and Michigan had moderately or high levels of foreclosure sales, but the former bubble states is where foreclosures really dominate. In Nevada, they accounted for 56% of all transactions, the highest percentage in the nation. Arizona (47%) and California (43%) also had very high levels. Foreclosure sales were much rarer in Iowa (4.4%), the District of Columbia (5.6%), Montana (6.4%) and New York (7.5%). The best foreclosure deals were to be found in Ohio, where foreclosure properties sold for 43% less than non-foreclosed homes. Kentucky's
discount was 41%, and California's 39%.

Foreclosures and short sales at 26% discount

Foreclosures and short sales at 26% discount

According to RealtyTrac, nearly 250,000 residential properties in some stage of foreclosure changed hands during the second quarter. They sold for about 26% less than non-foreclosed homes, compared to 35% less in the first quarter. A little more than half of these deals were of properties repossessed by banks, and the remainder came from short sales. There was regional variation in the foreclosure sales data. Rust Belt states like Ohio and Michigan had moderately or high levels of foreclosure sales, but the former bubble states is where foreclosures really dominate. In Nevada, they accounted for 56% of all transactions, the highest percentage in the nation. Arizona (47%) and California (43%) also had very high levels. Foreclosure sales were much rarer in Iowa (4.4%), the District of Columbia (5.6%), Montana (6.4%) and New York (7.5%). The best foreclosure deals were to be found in Ohio, where foreclosure properties sold for 43% less than non-foreclosed homes. Kentucky's
discount was 41%, and California's 39%.

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Year Built 2004
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Bedrooms 3
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Floors 2
Parking 2 Car garage
Lot Size 3,800 sqft
HOA/Maint $174 per month

DESCRIPTION
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