Last Week in the News
Pending home sales, a forward-looking indicator based on signed contracts, fell 3.5% in December after a 7.3% increase in November. On a year-over-year basis, pending home sales are up 5.6%.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending January 20 fell 5%. Refinancing applications decreased 5.2%. Purchase volume fell 5.4%.
Orders for durable goods — items expected to last three or more years — rose $6.2 billion or 3% to $214.5 billion in December. This increase surpassed the 2.2% economists had anticipated and follows a 4.3% surge in November. Excluding volatile transportation-related goods, orders posted a monthly increase of 2.1%.
New home sales fell 2.2% in December to a seasonally adjusted annual rate of 307,000 units from a revised rate of 314,000 units in November. Compared to a year ago, new home sales are down 7.3%.
Retail sales fell 1.4% for the week ending January 21, according to the ICSC-Goldman Sachs index. On a year-over-year basis, retailers saw sales increase 2.8%.
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 2.8% in the fourth quarter of 2011. This follows a 1.8% pace of growth in the third quarter of 2011. For all of 2011, initial reports indicate the economy expanded 1.7%.
Initial claims for unemployment benefits rose by 21,000 to 377,000 for the week ending January 21. Continuing claims for the week ending January 14 rose by 88,000 to 3.554 million.
FHA Throws Lifeline to Jobless Loaners
Thursday, 14 July 2011 14:48
By Carl Medford, CRS
Special to The Times
If you own a home with an FHA-backed mortgage, are out of work, cannot make your payments and are concerned about losing your home, hope may be on the horizon.
As of August 1, 2011, the Federal Housing Administration (FHA) will change their rules, allowing unemployed homeowners to miss mortgage payments up to a full year.
This is an increase from the three to four months currently allowed. This change will allow qualifying homeowners to go up to 12 months without making a payment before foreclosure begins.
While this reprieve only includes those with FHA-backed loans, Housing and Urban Development Secretary Shaun Donovan stated last Thursday that government officials are hoping Fannie Mae and Freddie Mac will adopt comparable policies.
Together, Fannie and Freddie back about 90 percent of all new mortgages. In a conference call, Donovan reiterated, “Our hope is that this (move by FHA) will have broader effects.”
It’s no secret that the continued housing crisis and accompanying record mortgage defaults are playing havoc with the government’s attempts to restart the beleaguered economy. In a Twitter town-hall meeting last Wednesday, President Obama acknowledged what has been obvious to many for some time, stating that the housing market has “been most stubborn to us trying to solve the problem.”
It is not known how many Central Alameda County home- owners this will actually affect: FHA loans weren’t viable in the Bay Area until about five years ago because of the limits placed on the loans. With the collapse of the housing market a few years ago, the government raised FHA loan limits so local buyers could qualify.
Because of FHA’s previous low ceiling and high Bay Area home values, most local Realtors in the business 20 years or less had never seen an FHA loan until just a few short years ago. In other words, FHA came into the local market after the crisis began in an attempt to prop up the tumbling market. Consequently, the number of FHA-backed loans in the Central County is actually very low compared to other parts of the country and the default rate is substantially lower as well.
Qualifying homeowners* will receive interest rates as low as 2 percent for five years. Loans can be repaid, with interest, over a longer period. Although the local numbers may actually be low, any help is appreciated: some help is better than no help at all.
*For additional information on the program, including eligibility and requirements, visit www.