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Wednesday, July 27, 2016

3 Best Vanguard Funds for Dividend Lovers


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Some of the best Vanguard funds kick off steady income, which makes them top choices for dividend lovers.


See Also from Kiplinger: Best Fidelity Index Funds for the Money


In a low-rate environment, smart investors looking for dividends will do their best to find mutual funds with low expenses because every bit of return that can be squeezed out of a fund is just as important as the yield.


Also, when searching for the best funds that pay dividends, don’t just look for the highest yields. It’s smart to have a balance of risk, return and yield. As I said in my article, 7 Best Dividend Mutual Funds to Count On: “Dividend funds with the highest yields, if they come along with high expense ratios and with excessive market risk, can ironically reduce your investment income by putting a big dent in your principal” when stock prices take a dive.


See Also from InvestorPlace: 7 Stocks to Buy in the Healthcare Sweet Spot


So, with the idea of keeping costs low and getting decent yields without exposing your income portfolio to excessive market risk, here are the best Vanguard funds for dividend lovers.



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Vanguard High Dividend Yield Index (VHDYX)


SEC Yield: 3.10%


Expenses: 0.16%, or $16 annually per $10,000 invested


Minimum Initial Investment: $3,000


For investors that love passive management and low expenses just as much as their dividends, there’s arguably not a better mutual fund to buy than Vanguard High Dividend Yield Index (VHDYX).


VHDYX tracks the FTSE High Dividend Yield Index, which consists of U.S. companies, such as Microsoft Corporation (MSFT), Exxon Mobil Corporation (XOM), and Johnson & Johnson (JNJ), that consistently pay above-average dividends.


On top of the dividends, VHDYX shareholders get potential for market-beating returns, as evidenced by the one-, three- and five-year performance ranks that place the fund ahead of at least 85% of funds that invest in large value stocks.


And when the market turns negative, large value funds like VHDYX tend to see lower price declines than the major market indices.


Vanguard Real Estate Index (VGSIX)


SEC Yield: 3.41%*


Expenses: 0.26%


Minimum Initial Investment: $3,000


The real estate sector is known for high dividend payouts and Vanguard Real Estate Index (VGSIX) is one of the best funds to buy in this category.


Although the near-term potential for rising interest rates can create headwinds for real estate investment trusts, a low-interest-rate environment keeps borrowing costs low for homebuyers and developers. This explains the market-crushing returns in 2016, which is a nice bonus to add to the yields.


Some of the top real estate names you’ll find in VGSIX include Simon Property Group Inc (SPG), Public Storage (PSA) and Welltower Inc (HCN).


See Also from InvestorPlace: 7 Junior Gold Miners That Will Climb 20% or More


*Note: VGSIX pays quarterly dividends. Vanguard does not quote a 30-Day SEC Yield, but calculates an unadjusted effective yield, which is 3.41% as of June 30, 2016, and is based on the full amount of REIT distributions (dividend income, as well as return of capital and capital gain).


Vanguard Dividend Appreciation Index (VDAIX)


SEC Yield: 2.05%


Expenses: 0.19%


Minimum Initial Investment: $3,000


A solid portfolio of dividend funds is not complete without a fund like Vanguard Dividend Appreciation Index (VDAIX).


VDAIX tracks the Nasdaq U.S. Dividend Achievers Select Index, which focuses on high quality companies like Johnson & Johnson, The Coca-Cola Co (KO), and PepsiCo, Inc. (PEP) that have the potential to increase their dividends over time.


Investors seeking dividends love funds like VDAIX because they get the potential for growing dividends in a passive way without actively seeking higher dividends on their own.


See Also from Kiplinger: Best Vanguard Funds for Your 401(k)


Investors seeking dividends love funds like VDAIX because they get the potential for growing dividends in a passive way without actively seeking higher dividends on their own.


This article is from Kent Thune of InvestorPlace.


More From InvestorPlace




3 Best Vanguard Funds for Dividend Lovers

Deutsche Bank Said It Has Started MBS Settlement Talks


Deutsche Bank is nearing an agreement with the U.S. Department of Justice to settle a long-running investigation into its mortgage-backed securities business.




Deutsche Bank Said It Has Started MBS Settlement Talks

Tuesday, July 26, 2016

Home Prices in U.S. Cities Climbed Less Than Forecast in May


Home prices in 20 U.S. cities rose less than projected in May from a year earlier, signaling both buyers and sellers had the potential to benefit during the busy selling season.




Home Prices in U.S. Cities Climbed Less Than Forecast in May

study-surprising-number-of-veterans-are-using-the-va-loan-program


100 Percent Financing For Today's Veterans

VA Loans Are The Clear Choice For Military Home Buyers


Veterans are embracing the VA home loan.


According to a recent study by the National Association of REALTORS® (NAR), active-duty military members use zero-down financing seven times more often than non-military home buyers.


Most home buyers put something down. For instance, FHA loans require 3.5 percent down, and emerging conventional loans require just 3 percent. But VA loans require zero downpayment.


This is probably why seven-in-10 active duty service persons and five-in-ten veterans use a VA loan to finance their home purchase.


VA loan advantages are hard to pass up.


Along with no downpayment requirement, the program is lenient about credit scores. And mortgage insurance is never required.


With today’s low rates and easier financing terms, veterans and active service persons are taking advantage of this benefit like few times in history.


Click to see today’s rates (Jul 26th, 2016)


What Are The Top VA Loan Advantages?


The VA Loan program comes with a number of advantages that set it apart from any other loan type.


VA applicants can qualify with lower credit scores, for one. Some lenders today offer VA loans down to a 580 credit score.


VA loans also adhere to less stringent debt-to-income requirements. This means applicants can qualify for more house with less income.


Applicants enjoy lower VA loan rates. According to a recent survey by loan software company Ellie Mae, veterans enjoyed rates that were 0.28% lower than rates for conventional loans. This is a difference of about $17 per month, per $100,000 borrowed.


The bigger monthly savings, however, may come from the fact that VA borrowers pay no mortgage insurance. This expense is typically required on any other loan type when the applicant puts down less than 20 percent.


But VA loans eliminate this cost, which can total hundreds of dollars per month.


By far the most significant advantage is the ability to buy without making a downpayment.


Under the program, eligible veterans and active military can borrow up to $417,000, and sometimes more according to local VA loan limits.


VA Loans never require a downpayment, and approximately 90% of VA borrowers do not make one at all.


Very few VA borrowers say that saving up for the downpayment was the hardest part of buying a home.


In fact, about three times as many people who finance home purchases by other means said saving up the downpayment was the most difficult part of the entire process. Military home buyers skip that concern almost completely.


Click to see today’s rates (Jul 26th, 2016)


Where Did VA Loans Come From?


The VA Loan program started off in 1944 as a way to help World War II veterans buy their own homes. More than seven decades later, it is still on mission, providing the same service to the country’s military members.


Since its inception, the program has guaranteed more than 22 million home loans, worth more than $1.7 trillion.


And it’s increasingly popular. In 2015 alone, the VA guaranteed more than 631,000 loans, valued at more than $153 billion.


The VA loan “guarantee” doesn’t mean that applicants are guaranteed to receive approval. Rather, it means VA backs the loans so that lenders can offer better terms to veterans.


Other than having access to VA Loans, veterans and active-service military are much like other home buyers.


More than 20 million Americans have served in the military in some fashion, according to the Department of Veterans Affairs. And they come from all walks of life, live in all parts of the country and may be of any age, from teen to centenarian.


People eligible for VA Loans may have served in any period, from World War II to the Iraq and Afghanistan conflicts. According to VA guidelines, eligible borrowers may have been in the Army, Navy, Air Force, Marines, Coast Guard — including the National Guard or Reserves.


Service requirements vary, but generally follow these basic guidelines:


  • 90 days of service during wartime

  • 181 days of service during peacetime

  • 6 years in the National Guard or Reserves

Requirements for the minimum service are not set in stone.


For instance, former military members who were discharged due to hardship, certain medical conditions, service-connected disability or a force reduction may be exempt from the length-of-service requirements.


VA encourages borrowers who think they might be eligible to apply for a VA Certificate of Eligibility or COE. This can be done online at no cost or by a VA-approved lender.


Click to see today’s rates (Jul 26th, 2016)


How VA Loans Benefit Veterans


Most other major loan programs, including Federal Housing Administration (FHA) and conventional loans, require downpayments. FHA requires at least 3.5 percent and conventional loans required at least 3 percent.


And, these low-downpayment loans require mortgage insurance. This can add thousands of dollars in costs over the life of the loan. In fact, FHA mortgage insurance is due for the entire 30-year loan term.


VA loan holders also enjoy extra protections that have resulted in lower foreclosure rates for veterans.


The VA actively helps keep borrowers from defaulting on their loans. It will look for a pattern of late or missing payments and contact borrowers and lenders to work to avoid foreclosure.


America’s military service veterans are everywhere, tens of millions strong. They look no different from anyone else. But in one important way they are very different. That is through access to the benefits extended to them by a grateful nation via the Department of Veterans Affairs.


One of the most important of these benefits is the ability to buy a home with 100 percent financing thanks to the VA Loan program.


What Are Today’s VA Rates?


VA loan rates are extremely low, and are spurring today’s veteran to consider becoming a homeowner.


Get a rate quote for your VA home loan, and see how much you can afford. No social security number is required to start, and quotes can be completed in minutes.


Click to see today’s rates (Jul 26th, 2016)



The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.






study-surprising-number-of-veterans-are-using-the-va-loan-program

Little-Known Ways to Save Hundreds Year-Round With Your Student ID


Hey, we all like free things from time to time. But for college students living on part-time wages and handouts from Mom and Dad, free is a way of life. The lure of free food brings many teenagers to events they wouldn’t typically attend, and the endless supply of free T-shirts is half the fun of arriving at school during orientation week.



See Also: How to Cut Your Textbook Costs in Half — Or More


Good news: The free or discounted services you can receive as a student don’t end on campus. By showing your student ID or providing a university e-mail address, you can save money on everything from laptops to museum tickets.


And if you’ve graduated, don’t assume that you can’t still receive discounts. Taking even one course at a community college will grant you student status.



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Score deals in these 18 categories and more:


Everything. With the Amazon Student program, your university e-mail address gets you free two-day shipping on eligible items from Amazon’s vast selection, unlimited digital photo storage and exclusive offers for students during a free six-month trial. After the trial is up, you can upgrade to Amazon Student Prime for 50% off.


For your bulk purchases, try Sam’s Club. If you pay $40 for a yearlong college membership, you’ll receive a $15 gift card, as well as special savings on electronics, dorm-room essentials and more.


Clothes. Many clothing stores offer student discounts, which may be especially appealing to soon-to-be graduates assembling a wardrobe for job interviews, internships and their first full-time gigs. Club Monaco offers the best student discount we’ve found: 20% off full-price or sale items, online or in-store. Banana Republic and Ann Taylor offer a 15% discount on in-store, full-price purchases, and the 15% discount at J. Crew and Madewell applies to all in-store purchases. For stores with online-only discounts, look to Levi’s (15% off) or Topshop (10% off).


Computers.Apple offers varying discounts—as much as $100 in savings on the purchase of Mac computers and as much as $20 in savings on the purchase of an iPad. Microsoft offers 10% off or more in its Education Store, which sells products such as PCs, Surface tablets and Xboxes. At Best Buy, students save $100 on all MacBook Air and MacBook Pro computers, as well as $150 on select Microsoft Surface devices. Lenovo discounts laptops upward of 22%. HP encourages students to sign up for HP Academy, a program that includes up to 20% product discounts and free shipping.


Software. If you’re looking for software to load onto your new computer, you have several options. Many colleges offer their students free Microsoft Office 365 (check here to see if you’re eligible), which includes program installation on as many as five laptops or mobile devices. Microsoft’s Visual Studio Community developer tool is free for all students. Those interested in graphic design will enjoy getting 60% off Adobe Creative Cloud, which includes programs such as Photoshop and InDesign. If you’re trying to learn a new language, try Rosetta Stone at a 10% discount. And save 50% on Norton software that will protect your computer from viruses.


Phone plans. To save on your monthly phone bill, check with your provider to see if you qualify for a student discount. Sprint and AT&T offer discounts to students at eligible schools. Sprint’s discount is typically between 10% and 23%, and AT&T’s is about 17%.


Food. Although most national chains don’t advertise their student discounts, some restaurants, such as Dairy Queen, deduct about 10% off your purchase. Check with your local franchises, as not all locations offer a discount.



Local restaurants may also have student discounts. Check online, or ask in person.


Movie tickets. With discounts that vary by location, student movie buffs can visit participating AMC theaters for a lower price every day after 4 p.m. Cinemark theaters also offer student discounts that vary by location.



See Also: 10 Best College Majors for a Lucrative Career


Newspaper and magazine subscriptions. Student readers receive a discount on subscriptions to the New York Times, the Wall Street Journal and the Economist. You can also receive a free digital subscription to the Washington Post.


Music. Student music lovers can access Spotify Premium for 50% off per month.


Shows and events. Cities across the country have discounts on entertainment for students. In New York, students can save with $25 weekday tickets to the Metropolitan Opera or $29 day-of orchestra tickets to the American Ballet Theatre. Normally, these tickets cost more than $100, and sometimes closer to $200. For Broadway tickets and other performances in the area, try Student Rush, a website that offers up-to-date savings tips.


You can also find a variety of entertainment discounts in the nation’s capital. The Kennedy Center and Wolf Trap, two popular performance venues, sell tickets to students for 50% off.


The Houston Ballet sells $10 “rush” tickets to students 90 minutes before select performances, and the Memphis Symphony Orchestra offers $5 concert tickets to students. Check with your local venues to see what discounts they offer.


Museums. Big-city museums offer discounts, too. For example, New York City’s Metropolitan Museum of Art has $12 student tickets, and the American Museum of Natural History has $17 student tickets.


In D.C., the Newseum, a journalism museum, has a 10% ticket discount, and the Phillips Collection, an art gallery, offers student tickets for $10 Tuesday through Sunday.


Sporting events. If you’re a baseball fan, you can find discounted tickets to Major League games. Teams such as the Washington Nationals, the Boston Red Sox and the New York Yankees sell student tickets for as much as 50% off. If you can’t make it to a live game, you can subscribe to MLB.TV instead at a 35% discount.


Gym memberships. If you’re starting a new fitness regime to fight the effects of college dining hall food, try joining Gold’s Gym, which has a student membership discount at select locations, or Core Power Yoga, which offers specialty rates for students.



Travel. If you’re planning on studying or traveling abroad, consider buying an International Student ID card ($25). Cardholders earn discounts on services in 125,000 locations across 130 countries, including up to 60% off tickets to West End theater performances, 25% off a graffiti and street art walking tour in Brooklyn, and 50% off a subscription to the Financial Times. To keep track of discounts on the go, download the ISIC Benefits app.


For cheaper global travel arrangements, you can use Student Universe or STA Travel, two free websites with a variety of student rates on flights and hotels. Eurail, a European train service, offers a 35% discount on passes for anyone between 12 and 26.


For travel within the U.S., consider buying a Student Advantage card ($22.50). It gives you discounts on Greyhound tickets and Choice Hotel bookings, as well as breaks at an assortment of places unrelated to travel, such as Lenovo, AMC and Foot Locker. For those who prefer traveling by train, Amtrak offers a 15% discount. Students at certain New York schools, including Cornell University, Ithaca College and Vassar College, have access to Shortline bus tickets at discounts of 15%.



See Also: 10 Best Colleges With the Lowest Average Graduating Debt


Cars. Being a student can even help you buy your own car. The GM College Discount Program allows students to purchase or lease vehicles at a reduced price—for example, you could save $2,297 off the MSRP on a 2016 Chevrolet Equinox.


Insurance. To protect your car, consider Allstate, State Farm or Geico insurance. All three offer discounts to full-time students with good grades, and the discounts are available even if the policy is under your parents’ names. Allstate also gives a 35% discount to students who attend college 100 or more miles away from where their car is garaged. State Farm offers a similar discount if a student uses his or her car only during school breaks.


Local food and entertainment. New York University offers specially priced tickets for events around the city (including Broadway shows), and the College of William & Mary provides students with free Collegiate Passes to historic sites in Colonial Williamsburg.


Students bearing a University of Michigan ID card have access to a whopping 400+ discounts on local products and services, ranging from scuba equipment to organic pizza. Rice University’s Hedgehopper program encourages local businesses to offer discounts that help students experience Houston. About 20 restaurants, boasting fare as varied as Turkish food and a “chocolate bar,” give students 10% to 25% off, and several non-food businesses participate, too.


Savings websites. If you would like to hear about daily student deals, sign up for websites such as Save the Student, UNiDAYS and StudentRate. These sites inform members about discounts on everything from clothing to technology. You can also use non-student-focused websites such as RetailMeNot; simply search “student discounts.”


The best rule for finding student discounts is to ask. Look for deals at restaurants, clothing stores, museums and more. Even if a discount isn’t advertised by a business, one may be available.




Little-Known Ways to Save Hundreds Year-Round With Your Student ID

Chimera Investment Corporation to Sponsor Residential Mortgage Loan Securitization - Business Wire (press release)


NEW YORK–()–On July 26, 2016, Freddie Mac announced that Chimera Investment Corporation (NYSE:CIM) was the winning bidder for Freddie Mac’s pilot structured sale of seasoned mortgage loans that Freddie Mac currently guarantees and holds in its mortgage-related investments portfolio. This transaction is part of Freddie Mac’s guaranteed re-performing loan (RPL) securitization program (approximately $24 billion securitized to date) and non-performing loan (NPL) sales program ($4.3 billion sold and settled through March 31, 2016).




Chimera, either directly or through a wholly-owned subsidiary, is expected to acquire and simultaneously securitize the seasoned re-performing residential mortgage loans with an unpaid principal balance of up to $199 million. Freddie Mac is expected to guarantee and purchase the senior tranches of the securitization and Chimera, or an affiliate, will retain the first loss subordinate tranche which will be subject to the risk retention requirements. Chimera expects the transaction will close in October 2016.


“We are pleased to work with Freddie Mac on this pilot program and look forward to additional opportunities to expand our portfolio of risk retention investments” said Matthew Lambiase, Chimera’s President and CEO.


Other Information


Chimera Investment Corporation invests in residential mortgage loans, residential mortgage-backed securities, real estate-related securities and various other asset classes. The Company’s principal business objective is to generate income from the spread between yields on its investments and its cost of borrowing and hedging activities. The Company is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”).


Disclaimers


This press release shall not constitute an offer to sell or the solicitation of an offer to buy Chimera’s common stock or any other securities, and there shall not be any offer, solicitation or sale of securities mentioned in this press release in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.


This press release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and, consequently, readers should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “target,” “assume,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believe,” “predicts,” “potential,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results, including, among other things, the ultimate structure and terms of any sale of loans by Freddie Mac to the Company.


Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Chimera does not undertake or accept any obligation to release publicly any updates or revisions to any forward-looking statement to reflect any change in its expectations or any change in events, conditions or circumstances on which any such statement is based. Additional information concerning these and other risk factors is contained in Chimera’s most recent filings with the Securities and Exchange Commission (SEC). All subsequent written and oral forward-looking statements concerning Chimera or matters attributable to Chimera or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above.




Chimera Investment Corporation to Sponsor Residential Mortgage Loan Securitization - Business Wire (press release)

Monday, July 25, 2016

check-out-the-pricey-man-cave-matt-leblanc-is-selling


Realtor.com


Price: $8.75 million


Pacific Palisades, California




Amenities

  • 3,930 square feet

  • 4 bedrooms

  • 5 bathrooms

  • Santa Monica Canyon views



“Friends” star Matt LeBlanc’s hilltop Pacific Palisades man cave can be there for you, if you’ve got the money. The 1930s Spanish-style villa on a half-acre of prime woodlands has features that Joey Tribbiani would love, including an outdoor hot tub.


How’s Matt doin’? According to Variety, the winner of a Golden Globe award for the Showtime series “Episodes” owns side-by-side homes in Encino and a 1,000-acre parcel north of Santa Barbara.





check-out-the-pricey-man-cave-matt-leblanc-is-selling

FDIC Warns Bankers About High Concentrations of CRE Loans - National Mortgage News


Federal regulators are becoming alarmed at the rapid expansion of multifamily construction that is being fueled by bank lending.


“Multifamily might be approaching the supply/demand equilibrium point in some areas — suggesting that prices may weaken and vacancy rates might rise,” the Federal Deposit Insurance Corp. warned in a presentation to bankers on Thursday.


The presentation, which was authored by the agency’s New York regional office, highlights concerns about emerging risks.


“CRE lending has increased, but concentrations are below those of bubble years,” the presentation said.


The FDIC appears to be concerned about high concentration levels of CRE loans on the books of mid-size banks, according to John Kanas, chairman and chief executive of BankUnited, which is based in Miami Lakes, Fla. The bank also has branch offices in New York.


“We are not seeing any evidence of deterioration,” Kanas said Friday morning in an interview with Bloomberg-TV.


FDIC officials declined to comment for this story.


In December, federal regulators warned about credit and interest rate risk on multifamily loans. They also warned that high concentrations of commercial real estate loans on bank balance sheets, including multifamily loans, could lead to a greater risk of loss and failure.


But the warning did not have much of an impact. “The multifamily market has seen a lot of construction and some areas may be approaching oversupply” and the ability to absorb new units, according to the FDIC presentation.


In June, developers completed construction of 386,000 multifamily units, up 21% from a year ago.


However, multifamily starts have fallen nearly 24% from June 2015 to 392,000 in June of this year. But multifamily starts have been rising since February, according to the latest Census Bureau data.


The regulators attribute some of overbuilding to strong flows of investment from foreign countries.


Despite the regulators concerns, the 30-day to 89-day delinquency rate on multifamily loans is just 0.13% and 0.27% for CRE loans.


On one slide, FDIC points out that past-due rates on CRE loans are higher in many eastern states.


“Commercial property values have recently exceeded pre-crisis peaks. Despite positive rent growth, net operating income has not kept pace with price appreciation, pushing capitalization rates below pre-crisis troughs” according to the FDIC.




FDIC Warns Bankers About High Concentrations of CRE Loans - National Mortgage News

Friday, July 22, 2016

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July 19, 2016


Economic Growth Outlook Unchanged for Second Half of 2016, but Post-Brexit Uncertainty Casts Shadow


Consumer Spending Lifts Growth as Businesses Face Headwinds



Katie Penote




202-752-2261



WASHINGTON, DC – The economic growth outlook for the second half of the year remains unchanged from the prior forecast at about 2.0 percent, according to Fannie Mae’s (FNMA/OTC) Economic & Strategic Research (ESR) Group’s July 2016 Economic and Housing Outlook. Consumer spending is expected to drive growth for the rest of 2016 as businesses face headwinds from shrinking profits, weak productivity, and rising labor costs in the face of uncertainty stemming from Brexit and the U.S. presidential election. Government spending and residential investment should be positive contributors to economic growth this year, while nonresidential and inventory investment and net exports are expected to drag on growth. Although job creation picked up at the end of the second quarter, the hiring trend has slowed considerably from the start of the year.


“Financial volatility resulting from Brexit has created some uncertainty among investors as yields on government bonds have dropped sharply, Treasury yield curves have flattened over the past month, and the Chinese Yuan has depreciated to a six-year low against the dollar,” said Fannie Mae Chief Economist Doug Duncan. “In addition, our view on interest rates continues to be ‘low for long’ as we believe a Fed decision to raise interest rates will likely be on hold until June of 2017. Brexit’s economic impact on the U.S. will likely be limited, especially from a trade perspective, and should be a near-term positive for the housing and mortgage market as falling mortgage rates have prompted new refinance demand.” The ESR Group now projects a 2.2 percent rise in mortgage origination volume in 2016 from 2015 to $1.75 trillion, versus a 2.8 percent drop in the prior forecast.


“We still expect moderate housing expansion for 2016. While new home sales have pulled back from their expansion-best, existing home sales rose to the highest level in more than nine years amid the largest year-over-year drop in for-sale inventory since October of 2015,” said Duncan. “Without relief from new construction, housing inventory will likely remain tight, boosting home prices and constraining affordability.”


Visit the Economic & Strategic Research site at www.fanniemae.com to read the full July 2016 Economic Outlook, including the Economic Developments Commentary, Economic Forecast, Housing Forecast, and Multifamily Market Commentary. To receive e-mail updates with other housing market research from Fannie Mae’s Economic & Strategic Research Group, please click here.


Opinions, analyses, estimates, forecasts, and other views of Fannie Mae’s Economic & Strategic Research (ESR) Group included in these materials should not be construed as indicating Fannie Mae’s business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.

Fannie Mae enables people to buy, refinance, or rent homes.


Visit us at: http://www.fanniemae.com/progress


Follow us on Twitter: http://twitter.com/FannieMae





economic-growth-outlook-unchanged-for-second-half-of

Thursday, July 21, 2016

mgic-revenues-increase-more-than-expected


In the second quarter, Mortgage Guaranty Insurance Corporation posted earnings of $0.26 per share, $0.06 better than Capital IQ consensus. The company’s revenues rose by 8.4% annually to $263.5 million, an increase from the predicted $254.42 million.


New insurance written in the second quarter increased to $12.6 billion, up from $11.8 billion last year.





“I am pleased to report that our insurance in force continued to grow as we added $12.6 billion of high quality new insurance, the delinquent inventory continued to decline while newer books of business continue to generate low level of new delinquent notices, and we maintained our traditionally low expense ratio,” MGIC CEO Patrick Sinks said.


“As expected, during the quarter MGIC received approval for, and paid, another $16 million dividend to the holding company and I am optimistic that we will continue to receive approval from our regulator to pay dividends of at least this amount in subsequent quarters,” Sinks said. “Additionally, we repurchased $50.2 million of our 5% convertible senior notes due in 2017.”


As of June 30, 2016, the percentage of loans that were delinquent, excluding bulk loans, was 4.2%, a decrease from last year’s 5.5%.


The company’s net income came in at $109.2 million, down from $113.7 million from the second quarter last year.




mgic-revenues-increase-more-than-expected

sec-busts-two-men-for-7m-collateralized-mortgage-obligation-ponzi-scheme


Earlier this week, the U.S. District Court for the District of Utah, at the behest of the Securities and Exchange Commission, handed down final judgments against two men that the SEC accused of running a scheme that defrauded investors out of more than $7 million.


The SEC’s complaint, which was filed in 2014, accused Tyson Williams and Stanley Parrish of raising more than $7 million from approximately 50 investors through the fraudulent and unregistered sale of securities in ST Ventures.





According to the SEC, Williams and Parrish allegedly told investors that ST Ventures would purchase collateralized mortgage obligations, a type of mortgage-backed security, and then leverage the CMOs to produce a “large return” for the investor within 30 to 90 days.


The SEC’s complaint further alleged that Williams and Parrish made “material misrepresentations and omissions” regarding the investment including the risk of the investment and the use of investor funds.


According to the SEC, Williams and Parrish allegedly told investors that their investment principal would “never be at risk of loss” because investing in CMOs is a “very safe and liquid investment.”


Williams and Parrish also allegedly told the investors that the investors’ funds would be used only to purchase CMOs.


But that was not the case.


Instead of using investors’ funds as represented, the SEC’s complaint alleged that virtually all payments made to investors, which totaled more than $1.5 million, came from new investor money.


Additionally, Williams and Parrish allegedly misappropriated over $3.5 million of investors’ proceeds for their personal use.


And earlier this week, the U.S. District Court for the District of Utah ordered Williams and Parrish to pay a disgorgement of $3,111,484.89; prejudgment interest of $1,067,778.29; and a civil penalty in the amount of $130,000.


According to the SEC, both Williams and Parrish consented to the judgment, without admitting or denying the allegations in the SEC’s complaint.




sec-busts-two-men-for-7m-collateralized-mortgage-obligation-ponzi-scheme

nmhc-apartment-market-tightness-index-remained-negative-in-july-survey


From the National Multifamily Housing Council (NMHC): Apartment Markets Remain Mixed According to the Latest NMHC Quarterly Survey


Apartment markets continued to show mixed conditions in the July 2016 National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. For the third quarter in a row, the Market Tightness (43) and Equity Financing (44) Indexes remained below the breakeven level of 50. Conversely, the Debt Financing Index came in at 62 and the Sales Volume Index landed right at 50.


Apartment markets remain strong, but the surge of new apartment construction is starting to shift the supply-demand balance, particularly in the market for upscale apartments,” said Mark Obrinsky, NMHC’s Senior Vice President of Research and Chief Economist. “Given that most new supply is class A, we’re not seeing the same shift in class B and C apartments. In addition, some weakness in the Market Tightness Index may be just seasonality.”


For the third quarter in a row, the Market Tightness Index, which was unchanged at 43, showed supply a bit stronger than demand. Almost one-third of respondents (31 percent) reported looser conditions than three months ago. At the other end, 18 percent noted tighter conditions, while over half (51 percent) reported no change.

emphasis added



Apartment Tightness Index

Click on graph for larger image.


This graph shows the quarterly Apartment Tightness Index. Any reading below 50 indicates looser conditions from the previous quarter. This indicates market conditions were looser over the last quarter.


As I’ve mentioned before, this index helped me call the bottom for effective rents (and the top for the vacancy rate) early in 2010.


This is the third consecutive quarterly survey indicating looser conditions – it appears supply has caught up with demand – and I expect rent growth to slow (the vacancy rate is generally rising too).







nmhc-apartment-market-tightness-index-remained-negative-in-july-survey

Low-Down Payment Mortgage Loans Boost Housing Starts - The Mortgage Reports (blog)


Single-Family Housing Starts continue to move higher nationwide

Housing Starts Helped By Low Down Payment Loans


Single-family housing starts climbed in June, and remain above year-ago levels.


As compared to last year, starts are up 13% percent on a seasonally-adjusted, annualized basis, reaching 778,000 units nationwide. Starts are also up four percent from the month prior.


A “started” home is one on which ground has been broken.


May starts are roughly flat from the month prior, and home builder confidence remains high with demand for homes outpacing supply. Housing starts have been fueled by rising rents, cheap mortgage rates, and an abundance of low- and no-downpayment mortgages.


The 80/10/10 piggyback loan has been in high demand of late, and buyers are finding the Fannie Mae HomeReady™ home loan to be a worthwhile alternative to FHA lending.


The math for “Should I rent or should I buy?” has shifted and this month’s housing starts data reflects that.


It’s an excellent time to shop for a home.


Click to see today’s rates (Jul 21st, 2016)


“Single-Family” Housing Starts Matter Most


Each month, the U.S. Census Bureau and HUD co-publish the Housing Starts report.


Housing starts are broken in three categories, by property type.


  • 1-Unit: Single-family homes, including row homes and town homes

  • 2-4 Unit: Multi-unit, residential residences with two-to-four units total

  • 5+ Unit: Multi-unit, residential buildings with five or more units total

Structures with five or more units are more commonly known as “apartment buildings”. Apartment buildings are characterized by a common basement, heating system, entrance, water supply and sewage disposal.


Each apartment unit is considered a “start”. An apartment building with 150 planned units, therefore, is tallied as 150 housing starts.


The government reports that Single-Faily Housing Starts rose 13% last month from the year-ago period, and that apartment starts also rose ten percent.


Changes in apartment building construction, however, is of little importance to buyers like you and me.


This is because apartments are typically built by, and owned by, developers to use for rental housing. The majority of U.S. buyers don’t operate in this market. Everyday buyers don’t build or purchase entire apartment buildings — we live in single-family homes.


Tracking single-family housing starts, then, can be a better way to gauge the U.S. new construction.


Single-family starts remain above their 6-month and 12-month average; and, suggest continued strength through 2016 and into 2017.


Click to see today’s rates (Jul 21st, 2016)


Builders May Soon Raise Home Prices


With last month’s housing starts data, the data follows an upward trend line. It’s no wonder U.S. builders are optimistic for the future.


According to the National Association of Homebuilders, on a scale of 1-100, builder confidence read 59 this month.


Readings over 50 are significant because when homebuilder confidence is 50 or better, it suggests “good” conditions for selling new homes. The market has been “good” for 24 straight months.


New construction remains concentrated in southern states.


The South Region, which includes Delaware, District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, Louisiana, Oklahoma, and Texas accounted for 54% of last month’s U.S. single-family housing starts.


The Northeast Region, which includes Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont accounted for just 10 percent of single-family starts.


Click to see today’s rates (Jul 21st, 2016)


Mortgage Loans For New Homes


The 2015 housing market was a good one. 2016 is proving to be even better.


Demand for homes is outpacing supply and mortgage rates have started the year in a downward spiral. Furthermore, nationwide, unadjusted home values have surpassed last decade’s peak.


Multiple-offer situations are common and homes are selling quickly.


If you’ve been in the market for a home, no doubt you’ve noticed. It’s a competitive market and putting your best foot forward is essential if you want to “get the house”.


The good news is that mortgage approvals are getting simpler.


In addition to reducing their loan approval standards, mortgage lenders have recently lowered minimum credit score requirements, made concessions for self-employed income, and granted leniency on loans which “make sense”.


Furthermore, there are more low- and no-down payment loans available than during any period this decade.


In addition to the Conventional 97 program and HomeReady™ programs, which are backed by Fannie Mae and require just 3% down, demand for the FHA 96.5% LTV program is high, as are requests for “piggyback loans”.


There are also the VA and USDA loan programs — both of which allow 100% financing.


VA loans are available to eligible active-duty military personnel, veterans of the armed services, members of the national guard and reserves, and surviving spouses. They are optionally no money down and require no mortgage insurance.


USDA loans are also no money down, backed by the U.S. Department of Agriculture. USDA loans can be used in many rural and suburban areas nationwide.


USDA mortgage rates are typically the lowest of all government-backed loans, and mortgage insurance rates are minuscule compared to other low-downpayment programs.


With home prices expected to rise through the end of 2016, the availability of low- and no-downpayment mortgages will be a boon to U.S. buyers — especially if current mortgage rates remain low.


What Are Today’s Mortgage Rates?


The housing market appears to be growing and mortgage rates remain cheap. If you’re planning to buy new construction, the best opportunities may be the ones you find now.


Get today’s live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.


Click to see today’s rates (Jul 21st, 2016)



The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.






Low-Down Payment Mortgage Loans Boost Housing Starts - The Mortgage Reports (blog)

Wednesday, July 20, 2016

is-a-mortgage-with-no-closing-costs-for-you

No-closing-cost mortgages are attractive to borrowers who don’t have the cash to pay fees upfront. Waiving the closing costs may be the ticket to getting a mortgage for a new home or a refinance.


If you don’t plan to stay in your home for more than 5 years, a no-closing-cost mortgage also makes sense. With a traditional mortgage, it could take more than 5 years to recoup the closing costs.


The slightly higher mortgage rate associated with a no-closing-cost mortgage is still likely to be less expensive over 5 years than what you would pay upfront in closing costs.


“You have to look at the break-even,” says Cameron Findlay, chief operating officer for Roseville, California-based Paramount Equity Mortgage.


“Say, for example, you had a loan for a while at 6.5% and are only looking at being in the house for another 4 years. Then, you are probably a good candidate. You don’t want to put money down if you are going to be there for 4 years.”


Paying a slightly higher interest rate to forgo closing costs may also make sense if you need the cash to do renovations on your home.


When it doesn’t pay


Do you plan to stay in your home more than 5 years? If so, a no-closing-cost loan likely will end up costing you more than a loan with closing costs. That’s true whether you’re taking out a mortgage for a new purchase or refinancing an existing loan.


Typically, you’ll break even on your closing costs in a few years. Going with a no-closing-cost loan saddles you with a higher interest rate over the rest of the home loan. That could end up costing you a lot more than the upfront fees if you keep the mortgage for a long time.


Take the hypothetical example of 2 choices for a $150,000 loan. One has a rate of 3.75% with $3,500 in closing costs; the other has a rate of 4.25%, with no closing costs.


Going with the higher-rate, no-closing-cost option runs $43.24 a month more, or $15,567 more over 30 years. In this scenario, it takes 6 years and 9 months to break even and recoup the closing costs via the lower monthly house payments.


“It’s not something that every lender will offer, but it doesn’t hurt to ask about that option,” says Frank Nothaft, the chief economist at CoreLogic, a firm that analyzes real estate and other financial data. “It’s up to consumers to decide if the trade-off makes sense.”




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is-a-mortgage-with-no-closing-costs-for-you

A Reverse Mortgage to Buy a Home? Here's How - Wall Street Journal






ENLARGE
Illustration: Chris Gash





By



Reverse mortgages are typically seen as a way for seniors to remain in their homes while drawing income from their property. But a reverse mortgage can also be used to buy a home.


Here’s how it works: Seniors 62 or older buying a primary residence make a down payment and pay closing costs. They then get a lump-sum loan that goes toward the home purchase. No monthly payments are required to pay down the debt. Instead, interest accrues on the loan, and the principal and interest are usually due when the last co-borrower or spouse on the loan moves out or dies.



Most reverse mortgages are FHA-insured loans called home-equity conversion mortgages, or HECMs. The loan amount is a percentage of the home’s appraised value, up to $625,500. That percentage starts at about 52% of the purchase price and rises with a borrower’s age, going up to about 75%.


In general, interest rates on lump-sum HECMs range from 4.25% to over 5%, says Peter H. Bell, president and CEO of the National Reverse Mortgage Lenders Association, a trade group.


If desired, a senior with a reverse mortgage can leave a portion of the proceeds in a line of credit for future use. Interest is charged only on money that is drawn from the line of credit. HECMs that are lines of credit have interest rates starting in the 3% range, but these are adjustable rates that may change throughout the life of the loan, Mr. Bell adds.


Retirees often have trouble meeting underwriting requirements for regular mortgages, which are based on income more than assets, says Richard Mandell, CEO of One Reverse Mortgage, a subsidiary of Quicken Loans. A reverse mortgage “gives retirees the opportunity to move to a different home that better suits their needs, be closer to family or live in a warmer climate,” he adds.






If desired, a senior with a reverse mortgage can leave a portion of the proceeds in a line of credit for future use.






A top concern has been that seniors will draw down their home equity too rapidly, forcing them to exhaust other savings, says Jamie Hopkins, co-director of the New York Life Center for Retirement Income at the American College of Financial Services in Bryn Mawr,BMTC-1.15% Pa. But used strategically, buying a home with a reverse mortgage allows seniors to invest in higher-yield investments than their home.


Ray and Janet Massey wanted a 3,300-square-foot house with a pool in Katy, Texas, a suburb of Houston, but it was listed at about $533,000. Their previous home, also in the Houston area, was worth only $370,000, with a mortgage that had to be paid off, Mr. Massey says.


The Masseys made a $240,000 down payment, and their reverse mortgage paid for the home. They put down another $250,000 to qualify for a line of credit with a variable rate, currently 5.73%, says Mr. Massey, a 72-year-old retired sales manager at an auto-dealership. He and Janet, who at 71 still works as a packaging-sales executive, have access to money if they need it. But any amount they don’t draw grows annually at the current adjustable-rate—even if home values drop, he adds.


“We’re happy because we don’t have a monthly payment and we can put our money in a safe [federally insured] investment,” Mr. Massey says.


If senior borrowers want to tap more equity from their home than an HECM can provide, two lenders offer jumbo reverse mortgages. Finance of America Reverse offers a loan that typically goes up to $2.25 million and is available in 14 states. The American Advisors Group has a loan that is usually capped at $3 million and is currently available in eight states. Qualification rules and terms of the loan vary by the lender. More considerations:


• Foreclosure possible. Even though the homeowner is not making mortgage payments, a lender could foreclose if certain required expenses, such as property taxes, homeowners’ insurance premiums and homeowners’ association fees, aren’t paid.


• Not under construction. Currently HECM loans cannot be used to pay a builder for a home that is not completed. The FHA is considering a proposed rule that could lift that restriction, Mr. Bell says.


• Non-recourse loan. Reverse-mortgage loan amounts are based solely on the home value at the time of underwriting, which in the case of a purchase is the purchase price. So if the home loses value, neither borrower nor heir is responsible for making up the difference upon a sale.


Corrections & Amplifications:

In an earlier version of this article, American Advisors Group was incorrectly referred to as American Advisor Group. (7/20/16)




A Reverse Mortgage to Buy a Home? Here's How - Wall Street Journal

Monday, July 18, 2016

la-area-port-traffic-mostly-unchanged-in-june


Special note: Now that the expansion to the Panama Canal has been completed, some of traffic that used the ports of Los Angeles and Long Beach will probably go through the canal. This could impact TEUs on the West Coast.


Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.


The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).


To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.


LA Area Port TrafficClick on graph for larger image.


On a rolling 12 month basis, inbound traffic was unchanged compared to the rolling 12 months ending in May. Outbound traffic was down 0.1% compared to 12 months ending in May.


The downturn in exports over the last year was probably due to the slowdown in China and the stronger dollar.


The 2nd graph is the monthly data (with a strong seasonal pattern for imports).


LA Area Port TrafficUsually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).


In general exports are moving sideways and imports are gradually increasing.







la-area-port-traffic-mostly-unchanged-in-june

Some Czech banks expect tighter mortgage loan conditions in Q3-c.bank survey - Reuters

PRAGUE, July 18 Part of the Czech banking sectorexpects credit standards for mortgage loans to tighten in thethird quarter, the central bank said in a regular lending surveyreleased on Monday.



Banks also see easier credit standards in the quarter forcorporate and consumer credit lending and expect demand for allloans to further increase, according to the survey.



It said corporate and consumer loan conditions had eased inthe second quarter driven by competition and low financingcosts. Mortgage lending conditions were almost unchanged,although part of the market reduced the loan-to-value ratio andincreased interest margins on riskier loans, the survey said.



(Reporting by Jason Hovet; Editing by Jan Lopatka)




Some Czech banks expect tighter mortgage loan conditions in Q3-c.bank survey - Reuters

Saturday, July 16, 2016

feds-beige-book-economic-activity-continued-to-expand-at-a-modest-pace-in-most-districts


Fed’s Beige Book “Prepared at the Federal Reserve Bank of St. Louis and based on information collected on or before July 1, 2016.”


Reports from the twelve Federal Reserve Districts indicate that economic activity continued to expand at a modest pace across most regions from mid-May through the end of June. Business contacts in Cleveland reported a steady level of activity, while Minneapolis reported that activity increased at a moderate pace. Labor market conditions remained stable as employment continued to grow modestly since the previous report and wage pressures remained modest to moderate. Price pressures remained slight. Consumer spending was generally positive but with some signs of softening. Manufacturing activity was mixed but generally improved across Districts. Real estate activity continued to strengthen, and banks reported overall increases in loan demand. Agricultural activity was mixed but generally improving. The natural resources and energy sector has remained weak. The outlook was generally positive across broad segments of the economy including retail sales, manufacturing, and real estate. Districts reporting on overall growth expect it to remain modest.


And on real estate:

Residential real estate activity continued to strengthen since the previous period. Single-family home sales increased at a moderate pace overall, with Boston, Cleveland, and St. Louis reporting strong growth. Many Districts indicated that inventories continue to be low. Despite this persistent inventory issue, Boston, Atlanta, Kansas City, and Dallas all report that contacts have a positive outlook for the market in the next few months. Districts generally reported that house prices increased. Residential construction activity was mostly positive across Districts. Cleveland and Kansas City indicated strong growth in housing starts. Conversely, New York reported that single-family construction tapered off through most of the District, and Chicago reported little change in residential construction activity. Philadelphia, Richmond, St. Louis, and San Francisco noted a lack of available lots to build on.

Commercial sales and leasing activity remained stable or improved in almost all Districts. Absorption rate and rent increases were documented in Atlanta and Kansas City. Improving industrial real estate markets were noted in New York, Richmond, and Dallas. Several contacts in Richmond also reported robust retail leasing activity. Office market conditions were mixed among reporting Districts. Commercial construction activity grew modestly from the previous reporting period. Construction activity picked up in New York, and Cleveland continued to report project pipelines are strong. Reports on multifamily construction were mixed in Richmond, Atlanta, and Dallas. New York noted that multifamily construction has tapered off through most of the District.

emphasis added



Decent Real Estate growth in most districts …







feds-beige-book-economic-activity-continued-to-expand-at-a-modest-pace-in-most-districts

todays-home-buyers-making-smaller-mortgage-down-payments


Ellie Mae: Home buyers are making smaller down payments

Homebuyers’ Down Payments Shrink


U.S. home buyers are putting down less to purchase homes anymore.


According to Ellie Mae, whose mortgage software handles more than 3.7 million applications annually, the average downpayment is shrinking as more first-time home buyers enter the market; and, as mortgage guidelines ease nationwide.


Low- and no-down payment loans, including FHA loans, HomeReady™ loans, and the Conventional 97 program, remain widely-available for borrowers of all credit-types.


Today’s buyers also have access to USDA loans and VA loans — both of which require no downpayment whatsoever — and piggyback mortgages, which have made a comeback with buyers.


With mortgage rates still below 4% and home values rising in many U.S. markets, it’s an excellent time to be a buyer. The market may be less favorable to buyers in 2017.


Click to see today’s rates (Jul 16th, 2016)


What Is A Mortgage Downpayment?


A mortgage downpayment is the money you pay at settlement which goes toward the cost of your new home.


Mathematically, it’s the dollars between your home’s purchase price and your size of mortgage loan.


As an illustration, if you buy a home for $200,000 and your beginning mortgage balance is $190,000, your downpayment amount is $10,000.


Making a downpayment of ten thousand dollars is also known as “putting $10,000 down” or, in this example, “putting 5 percent down”.


The larger your downpayment, the smaller your loan size and, when you borrow less money, your monthly mortgage payments are less.


However, the money for making a downpayment has to come from somewhere.


Some consumers are fortunate and have ample savings for a deposit; or, have a family member willing to gift cash for a down payment. Others use proceeds from the sale of a former residence, or borrow against a 401(k) retirement plan.


For everyone else, “How much downpayment should I make?” becomes a question about risk and personal tolerance.


You Don’t Want To Ever Be “House-Poor”


Nobody wants to find themselves house-poor.


When you’re “house-poor”, it means that the majority of your wealth is tied up in your home; and, that you have little cash in the bank or in savings.


Bring house-poor can be dangerous — especially when life’s emergencies occur, such as sickness or job loss.


With all your money locked up in home equity, and with little or no money in the bank, coping with a sudden increase in expenses or loss of household income can put your finances in a downward spiral and result in the loss of your home.


You can’t just ask the bank to give your down payment back, after all, when you need those monies to help you pay your monthly bills.


The only way to get your down payment back from the bank is via a cash-out refinance. But, even then, there’s no guarantee that your request gets approved.


This is why home buyers sometimes prefer to make small downpayments. It leaves money in the bank for when emergencies occur.


And, in life, emergencies always occur.


Click to see today’s rates (Jul 16th, 2016)


Low-Down Payment Mortgage Options


According to Ellie Mae’s Origination Insight Report, in April, home buyer downpayments varied by loan program but, nearly all cases, downpayments were near the minimums.


For FHA loans, for example, which mandate a downpayment of at least 3.5 percent, downpayments averaged four percent.


For VA loans, which require no downpayment at all, downpayments averaged two percent.


Inclusive of these two programs, today’s home buyers have a multitude of low- and no-down payment mortgage options from which to choose.


Conventional 97


Available via Fannie Mae and Freddie Mac, the Conventional 97 is a 3% downpayment product available for the purchase of 1-unit, primary residence properties.


In general, the Conventional 97 program is best-suited for buyers with excellent credit, but it can make sense for buyers with average credit, too.


HomeReady™ Mortgage


The HomeReady™ mortgage program is another Fannie Mae-backed product. HomeReady™ allows for a 3% down payment, and offers discounts on mortgage rates and private mortgage insurance to borrowers who qualify for the program.


HomeReady™ is targeted toward multi-generation households in which multiple persons contribute to “family income”, but the program can be used by anybody living in a low-income census tract; or with an income which is below the average for the area.


FHA Loan Program


The FHA loan program allows downpayments of just 3.5% and can be used for primary residences with 1-4 units.


The main advantages of the FHA loan are that FHA mortgage rates tend to beat conventional rates; and, that FHA loans are assumable, which means that a future buyer can purchase your home and your mortgage rate, no matter what the then-current market rate happens to be.


Click to see today’s rates (Jul 16th, 2016)


VA Loan Guaranty Program


The VA Loan Guaranty program is a benefit available to military borrowers via the Department of Veterans Affairs. VA loans have no downpayment requirement and the agency never charges mortgage insurance — no matter how little you choose to put down.


VA mortgage rates are often the lowest among all of the low- and no-downpayment loan types. Like FHA loans, VA loans are assumable by future buyers of your home.


USDA Home Loan


Sometimes called “Rural Development Loans“, USDA home loans are backed by the U.S. Department of Agriculture and are available to buyers in less-dense parts of the country. This includes rural areas and many U.S. suburbs, as well.


USDA loans allow for 100% financing and offer reduced mortgage insurance costs as compared to other low- and no-downpayment loan types.


Piggyback Mortgages


The piggyback mortgage is not a loan program, per se — it’s more of a loan strategy. When you “piggyback” your mortgage, you use two mortgages, actually to maximize your borrowing at the lowest possible cost.


The typical piggyback strategy is to get a first mortgage for 80% of your home’s purchase price, and a second mortgage for up to 10% of the price.


Together, these two loans leave you with a ten percent downpayment and no private mortgage insurance (PMI) requirement.


What Are Today’s Mortgage Rates?


Home buyers are making smaller downpayments on homes as compared to one year ago. This is partly because first-time home buyers are a growing share of the market; and, partly because of looser mortgage guidelines nationwide.


Take a look at today’s real mortgage rates now. Your social security number is not required to get started, and all quotes come with instant access to your live credit scores.


Click to see today’s rates (Jul 16th, 2016)



The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.






todays-home-buyers-making-smaller-mortgage-down-payments

Friday, July 15, 2016

earlier-preliminary-consumer-sentiment-at-89-5-in-july


The preliminary University of Michigan consumer sentiment index for July was at 89.5, down from 93.5 in June:


“The early July decline in consumer sentiment was due to increased concerns about prospects for the national economy that were mainly voiced by high income households. Prior to the Brexit vote, virtually no consumer thought the issue would have the slightest impact on the U.S. economy. Following the Brexit vote, it was mentioned by record numbers of consumers, especially high income consumers. Nearly one-in-four (24%) households with incomes in the top third mentioned Brexit when asked to identify any recent economic news that they had heard. For these households, the initial impact on domestic stock prices translated Brexit into personal wealth losses. While stock prices quickly rebounded, an underlying sense of uncertainty about global prospects as well as the outlook for the domestic economy have not faded. To be sure, the overall decline in the Sentiment Index was rather minor, and could be anticipated to recover some of those losses in late July or early August. Importantly, the least affected components have been personal finances and buying plans.”

emphasis added


Consumer Sentiment

Click on graph for larger image.







earlier-preliminary-consumer-sentiment-at-89-5-in-july

first-look-at-2017-cost-of-living-adjustments-and-maximum-contribution-base


The BLS reported this morning:


The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 0.6 percent over the last 12 months to an index level of 235.308 (1982-84=100).


CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and is not seasonally adjusted (NSA).


• In 2014, the Q3 average of CPI-W was 234.242. In the previous year, 2013, the average in Q3 of CPI-W was 230.327. That gave an increase of 1.7% for COLA for 2015.


• In 2015, the Q3 average of CPI-W was 233.278. That was a decline of 0.4% from 2014, however, by law, the adjustment is never negative so the benefits remained the same this year (in 2016).


Since the previous highest Q3 average was in 2014 (not 2015), at 234.242, we have to compare Q3 this year to two years ago.


CPI-W and COLA AdjustmentClick on graph for larger image.


This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.


Note: The year labeled for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).


CPI-W was up 0.6% year-over-year in June, and although this is very early – we need the data for July, August and September – my current guess is COLA will be positive this year, and will probably be around 1% this year.


Contribution and Benefit Base


The law prohibits an increase in the contribution and benefit base if COLA is not greater than zero, so there was no change in the contribution and benefit base for 2016. However if the there is even a small increase in COLA (seems likely this year), the contribution base will be adjusted using the National Average Wage Index (and catch up for last year).


From Social Security: Cost-of-Living Adjustment Must Be Greater Than Zero


… … any amount that is directly dependent for its value on the COLA would not increase. For example, the maximum Supplemental Security Income (SSI) payment amounts would not increase if there were no COLA.


… if there were no COLA, section 230(a) of the Social Security Act prohibits an increase in the contribution and benefit base (Social Security’s maximum taxable earnings), which normally increases with increases in the national average wage index. Similarly, the retirement test exempt amounts would not increase …



The contribution base will be adjusted using the National Average Wage Index. This is based on a one year lag. The National Average Wage Index is not available for 2015 yet, but wages probably increased again in 2015. If wages increased the same as last year, then the contribution base next year will increase to around $127,000 from the current $118,500.


Remember – this is an early look. What matters is average CPI-W for all three months in Q3 (July, August and September).







first-look-at-2017-cost-of-living-adjustments-and-maximum-contribution-base

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