Fast Internet Service Has Become a Must-Have

For today's home buyers, speedy Internet service ranks right up there with good schools, low crime rates, and accessible public transportation.

"Buyers ask what broadband services are available, who cable providers are and whether [Verizon's] FiOS is in place," said Tania Gonda, an associate with Weichert Realtors in Reston, Va.

She said a savvy practitioner should be familiar with the available services, including the advantages and disadvantages of each vendor, and whether the local neighborhood association or zoning laws restrict satellite antennas.

Seller who have installed a range of high-tech services should be able to provide specific information about the systems they have installed, Gonda added.

Source: The Washington Post, Gabe Goldberg (12/13/2008)

Greening Your Business

Tips on how to start making your business operations easier on the planet -- and on your bottom line.

Use Better Paper, and Less of It
The average office tosses out about 350 pounds of paper per employee, per year. Reducing your waste and purchasing paper with postconsumer recycled content can help save trees and nudge the pulp and paper industry, one of the most environmentally destructive industries in the world, toward a less damaging path.

Cut Water Waste
One billion people on our planet can't get safe drinking water. In the United States, some rivers are being drawn down faster than nature can fill them up. Using water efficiently today will help ensure that future generations have access to the water they need.

• Install faucet aerators and low-flow toilets
• Check for and fix leaks
• Recycle water
• Landscape for maximum water efficiency

Create a Greener Working Environment
Employees are on the front lines of any sustainability initiatives your company chooses to make. Participation from all levels of your staff is a crucial part of any greening effort.

• Buy less toxic cleaners to improve indoor air quality and reduce risks to employee health.
  
• Create a green team with members from all divisions of your organization to help implement plans and bring new ideas to the table.

Stay Tuned
NRDC offers comprehensive getting-started guides to green building and to smart paper-use practices. If you are a business owner or manager and you'd like to hear from us when we add resources to help you green your business, sign up here.

Get Energy Efficient
Using less energy reduces the demand on power plants, the nation's leading contributors to global warming pollution and mercury pollution. And it saves a bundle on your energy bills.

• Contact your utility company to arrange for a free (or inexpensive) energy audit. An engineer will examine your operations and provide you with a detailed report about how your firm can save on energy costs, from rebates to improved maintenance.
• Turn off lights and unplug electronics after hours -- computers and other electronics use energy while they're plugged in, even when they're switched off. (Plug all your appliances into a power strip and you'll only have to flip one switch at the end of the day.)
• Set computers to sleep and hibernate when inactive, and lose the screen savers. Flying toasters and slideshows can use up about $50 of electricity in a year. Look for power management or energy saving features on the control panel for Windows, or system preferences under the apple menu for Macs.
• Use Energy Star office equipment -- most major brands carry energy-saving models marked with the Energy Star label.

Best Cars for the Money

The numbers don't look good. November car sales were down 30 percent from last year. While shoppers are used to doom and gloom sales numbers coming out of Detroit, the declines are now industry-wide, with Honda posting a 32 percent decline, Toyota sales dropping 34 percent, and even venerable Porsche reporting a nearly 50 percent drop in sales.

While these numbers obviously spell trouble for automakers, what they mean for car shoppers isn't immediately clear. The credit crisis has continued for months and with belt-tightening becoming the new American pastime, car shoppers are finding themselves adrift in a sea of bad industry news, rising new car incentives, and little advice for consumers.

More from U.S. News & World Report » Award Winning Deals: Snag an Award-Winning Car at a Discount » More 2009 Top Picks for the Money

That's where this year's U.S. News Best Car for the Money awards come in. Car shoppers face an uncertain economy and a shrinking ability to borrow. The key to surviving the current marketplace is to stretch your dollars as far as they'll go -- but that doesn't mean flocking to the biggest incentives. It means focusing on cars that are proven winners and offer a great value over the entire life of the car.

The Awards

The Best Car for the Money awards use data from U.S. News' online automotive rankings (at www.rankingsandreviews.com) to find cars that are among the best in their class. The rankings are based on the collective opinion of the automotive press, which helps to eliminate subjectivity and elevate expert opinion about each car. The awards also take initial price into account, but more importantly, they incorporate the five-year total cost of owning the car. Using data from IntelliChoice, an industry leader in determining new car values and ownership costs, the awards include how much buyers can expect to spend on maintenance and fuel, as well as how much of a hit they'll take from the car's depreciation. As a result, the awards tell you which cars are the best for your money over the long haul. Read more on the awards methodology.

The Winners

Across 14 new car classes, the clear winner is Toyota. Five Toyotas won Best Car for the Money in their classes, with Lexus, Toyota's luxury marquee, pulling in another three. Chevrolet and Mazda each claim two awards and Honda and Korean upstart Hyundai each claim one. Five of the award winners are even available as hybrids - most of which are also great values.

Despite ranging in size from the tiny Honda Fit to the hulking Chevrolet Tahoe, the winners have a lot in common. They share a high level of build quality that makes for worry-free and low-cost ownership. One of the reasons Toyota models take so many of the awards is because of their bulletproof quality. That not only lowers the cost of maintaining Toyotas -- it means that they retain value better than most other cars.

The winners have something else in common: they are favorites in the automotive press. Not because they tear up drag strips or star in music videos, but because they are extremely livable. Each winner occupies an automotive sweet spot that makes it an attractive choice for the vast majority of car shoppers. Take the Lexus ES, the Best Upscale Car for the Money: it doesn't drive as sharp as the BMW 3-Series and doesn't look as sharp as the Mercedes Benz C-Class, but taken as a total package, it's very comfortable to drive and easy to live with on a daily basis -- not to mention easier on your wallet.

Some winners, like the Mazda5, the Best Compact Crossover for the Money, take the best of what class leaders like the Toyota RAV4 and Honda CR-V have to offer, but pack in an appealing lower price. The case of the Hyundai Elantra, the Best Compact Car for the Money, proves what many have been saying for years: Honda and Toyota should watch their backs because Hyundai is making not just economical cars, but very good ones.

Time to Buy

It's a confusing time to be shopping for a new car. While there are some incredible deals to be had, many of those incentives are for cars that don't offer a lot of value in the long term. Worse, a car with thousands of dollars in cash-back offers may be tough to drive, and laden with features you don't need.

The U.S. News Best Car for the Money awards cut through fog surrounding the auto industry to point out the cars that combine value with day-to-day livability. As scary as it is to part with thousands of dollars in this economy, by sticking with the cars that offer maximum satisfaction at a minimal cost, your money will go further and your driving will be happier. And, who knows? Happy new car buyers may be just the stimulus this economy needs.

2009 Award Winners

Toyota Camry

Best Midsize Car for the Money

Honda Fit

Best Subcompact Car for the Money

Mazda Mazda5

Best Compact Crossover for the Money

Hyundai Elantra

Best Compact Car for the Money

Toyota Highlander

Best Midsize Crossover for the Money

Lexus RX

Best Luxury Crossover for the Money

Chevrolet Tahoe

Best Full Size SUV for the Money

Mazda Miata

Best Sports Car for the Money

Lexus GS

Best Luxury Car for the Money

Toyota Tacoma

Best Compact Truck for the Money

Chevy Silverado

Best Full Size Truck for the Money

Toyota Sienna

Best Minivan for the Money

Toyota Avalon

Best Large Car for the Money

Lexus ES

Best Upscale Car for the Money

Los Angeles Has Worst Ozone Pollution

The American Lung Association's 2008 State of the Air report ranks cities most affected by three types of pollution: short-term particle pollution, year-round particle pollution and ozone pollution.

The association found that 42 percent of Americans live in 216 counties where they are exposed to unhealthful levels of air pollution in the form of either ozone or short-term or year-round levels of particles.

About 30.4 million Americans ­– about 10 percent – live in 18 counties with unhealthful levels of all three pollutants, ozone, short-term and year-round particle pollution.

Here are the 10 most ozone-polluted cities:

• Los Angeles/Long Beach/Riverside, Calif.
• Bakersfield, Calif.
• Visalia/Porterville, Calif.
• Houston, Texas
• Fresno/Madera, Calif.
• Sacramento, Calif.
• Dallas-Fort Worth, Texas
• New York, N.Y./Newark, N.J.
• Baltimore, Md./Washington, D.C./Northern Virginia
• Baton Rouge, La.

Song Captures Glow of Homeownership

When Charles Fox composed the theme song for the REALTORS®' Tournament of Roses parade float, which will be celebrating homeownership at the Rose Bowl Parade in Pasadena, Calif., Jan. 1, , his inspiration wasn't houses but the people who live in them. "It's people that make a house a home," Fox says in a video interview on the Web site of the NATIONAL ASSOCIATION OF REALTORS®. "What is a home but where we live our lives?"

Fox, a widely celebrated arranger who has worked with Roberta Flack among other musical legends, tapped lyricists Marilyn and Alan Bergman to help him bring out the special place of homes in people's lives. They came up with the memorable line, "See the chair, it waits with open arms for you/years of wear from hands that held you near, with laughter you still can hear, memories that you hold dear/No place that you would rather be than comfortable and happily at home."

"We didn't have to do much [to bring out the essence of home]," says Alan Bergman. "The feeling of home is universal and what one brings to it when one steps inside that door."

To bring the words and music alive, Fox and the Bergmans tapped singer Steve Tyrell, the highly-regarded balladist. "He has a smile in his voice," says Alan Bergman, "a welcoming feel to it."

"It's homey, comfortable," says Marilyn Bergman.

The conversation with the musical artists is one in a series of videos looking at the REALTORS®' Tournament of Roses parade float on REALTOR.org. Other videos look at the design and construction of the float. Watch the videos and listen to the song, composed exclusively for REALTORS®, at REALTOR.org. Learn more about the Tournament of Roses parade on REALTOR.org, too.

Source: NAR

Amid Rate Drops, Mortgage Applications Soar

With interest rates approaching reaching historic lows, the application volume for mortgages jumped a seasonally adjusted 48 percent last week compared with the previous week, according to the Mortgage Bankers Association's weekly survey.

Application activity for the week ending December 19th was 124.6 percent over the same period a year ago, the Washington, D.C-based MBA said. The spike in applications coincided with another drop in mortgage rates, as the government's efforts to unfreeze the residential-mortgage market show further signs of having the desired effect.

Applications to refinance existing mortgages increased 62.6 percent on a week-to-week basis, while applications filed for mortgages to buy homes increased a seasonally adjusted 10.6 percent.

Refinancings made up 83.2 percent of all applications filed last week, up from 76.9 percent the previous week.

According to the MBA survey, interest rates fell across the board:

• Rates on 30-year fixed-rate mortgages averaged 5.04 percent last week, their lowest level in more than five years.

• Fifteen-year fixed-rate mortgages averaged 4.91 percent, down from 4.93 percent the week before.
• One-year ARMs averaged 6.36 percent, down from 6.63 percent.

Unemployment Hurts Commercial Sector

Shrinking employment is reducing the demand for commercial real estate, and the Urban Land Institute, an industry trade group, is predicting that the bottom of the commercial market is still six to 12 months away.

"There is a psychological component to all this," said Robert Gardner, managing director of real estate consulting firm Robert Charles Lesser & Co. "Exuberance on the upside is being compounded on the downside and markets will overshoot in the other direction."

Financing is almost impossible for developers to obtain in many parts of the country, even for modest projects. “The mega deal is done” at least for now, Gardner said.

"Usually some markets perform better than others," said Delores Conway, director of the Casden Economic Forecast at University of Southern California, "but demand is weak everywhere."

Source: Los Angeles Times, Roger Vincent (12/15/08)

Fast Internet Service Has Become a Must-Have

For today's home buyers, speedy Internet service ranks right up there with good schools, low crime rates, and accessible public transportation.

"Buyers ask what broadband services are available, who cable providers are and whether [Verizon's] FiOS is in place," said Tania Gonda, an associate with Weichert Realtors in Reston, Va.

She said a savvy practitioner should be familiar with the available services, including the advantages and disadvantages of each vendor, and whether the local neighborhood association or zoning laws restrict satellite antennas.

Seller who have installed a range of high-tech services should be able to provide specific information about the systems they have installed, Gonda added.

Source: The Washington Post, Gabe Goldberg (12/13/2008)

Press Release

Release Date: December 22, 2008

For immediate release

The Federal Reserve Board on Monday announced its approval of the application under section 3 of the Bank Holding Company Act ("BHC Act") submitted by CIT Group Inc., New York, New York, to become a bank holding company on conversion of CIT Bank, Salt Lake City, Utah, to a state bank.  The Board also approved the notices by CIT Group Inc. under section 4 of the BHC Act to retain certain nonbanking subsidiaries.

Attached is the Board's Order relating to this action.

Attachment (37 KB PDF)

Press Release

Release Date: December 24, 2008

For immediate release

 

The Federal Reserve Board on Wednesday announced its approval of the application and notices under sections 3 and 4 of the Bank Holding Company Act by GMAC LLC and IB Finance Holding Company, LLC, both of Detroit, Michigan, to become bank holding companies on conversion of GMAC Bank, a Utah industrial loan company, to a commercial bank and to retain certain nonbanking subsidiaries.

Attached is the Order relating to this action.

Attachment (73 KB PDF)

Mortgage Applications Surge on Falling Rates

Mortgage lenders are seeing a deluge of applications for refinancings as borrowing costs decline due to a recent cut in the federal funds rate by the Federal Reserve, and many are hiring temporary workers or reassigning employees to handle the swelling volume.

Some experts believe the jump in refis could signal a turning point in the market and reduce pressure on banks by the U.S. government to bolster lending following the distribution of millions of dollars in assistance.

However, it remains uncertain how many borrowers will qualify for loans, how long it will take to process loans under new documentation and credit standards, and whether borrowers will back down in hopes that mortgage rates will fall further.

Source: Wall Street Journal, Dan Fitzpatrick (12/22/08)

Press Release

Release Date: December 22, 2008

For immediate release

The Federal Reserve Board on Monday announced its approval of the application under section 3 of the Bank Holding Company Act ("BHC Act") submitted by CIT Group Inc., New York, New York, to become a bank holding company on conversion of CIT Bank, Salt Lake City, Utah, to a state bank.  The Board also approved the notices by CIT Group Inc. under section 4 of the BHC Act to retain certain nonbanking subsidiaries.

Attached is the Board's Order relating to this action.

Attachment (37 KB PDF)

2008 Orders on Banking Applications

Joint Press Release

Press Release

Release Date: December 22, 2008

For immediate release

The Federal Reserve Board on Monday announced the execution of a Written Agreement by and among Michigan Heritage Bank, Farmington Hills, Michigan, a state chartered member bank, the Federal Reserve Bank of Chicago, and the Michigan Office of Financial and Insurance Regulation.

A copy of the Agreement is attached.

 

Attachment (87 KB PDF)

2008 Enforcement Actions

Press Release

Release Date: December 19, 2008

For immediate release

 

The Federal Reserve Board on Friday adopted revisions to its Payment System Risk (PSR) policy that are designed to improve intraday liquidity management and payment flows for the banking system, while also helping to mitigate the credit exposures of the Federal Reserve Banks from daylight overdrafts. The Board has spent several years reviewing long-term developments in intraday liquidity, operational risk, and risk management in financial markets and the payments system, including the increased use of daylight overdrafts at the Federal Reserve Banks and increased Fedwire funds transfers late in the day. The Board published a consultation paper on these issues in 2006 and proposed major changes to the PSR policy in early 2008. 

Based on the comments on the proposed changes, the Board adopted changes to the PSR policy that are substantially the same as those proposed for comment. The revised PSR policy will adopt a new approach that explicitly recognizes the role of the central bank in providing intraday balances and credit to healthy depository institutions predominately through collateralized daylight overdrafts. To avoid significantly disrupting the operation of the payment system and increasing the cost burden on a large number of institutions that incur small amounts of daylight overdrafts, the Board approved a voluntary collateral regime that would encourage the pledging of collateral to cover daylight overdrafts by providing collateralized daylight overdrafts at a zero fee and by raising the fee for uncollateralized daylight overdrafts to 50 basis points (annual rate). The Board also sought to minimize the effect of the policy changes on institutions that use small amounts of daylight overdrafts and approved a substantial increase in the biweekly fee waiver to $150 from $25.

In addition, the Board approved changes to other elements of the PSR policy dealing with daylight overdrafts, including adjusting net debit caps, streamlining maximum daylight overdraft capacity (max cap) procedures for certain foreign banking organizations, eliminating the current deductible for daylight overdraft fees, and increasing the penalty daylight overdraft fee for ineligible institutions to 150 basis points (annual rate). The implementation of the revised PSR policy will take effect either in the fourth quarter of 2010 or the first quarter of 2011. A specific date will be announced by the Board at least 90 days in advance. 

The Board also approved for eligible foreign banking organizations an interim policy change. The interim policy relates to the calculation of the deductible amount from daylight overdraft fees under the existing policy, which will be discontinued with the elimination of the deductible under the revised PSR policy. The interim policy also allows for the early implementation of the streamlined procedure for max caps, which will remain under the revised PSR policy. The interim policy change for the deductible and streamlined max cap procedure will be effective on March 26, 2009. 

Lastly, the Board endorsed a four-prong strategy, which includes these policy changes, through which the Federal Reserve and industry will address related intraday liquidity, operational, and credit risks in the wholesale payment system. Industry and Federal Reserve efforts are ongoing with these initiatives.

To assist depository institutions in assessing the impact of the revised PSR policy on their institution, the Board has created a simple fee calculator that will allow institutions to estimate their new daylight overdraft fees. The fee calculator is located on the Board’s website at https://www.federalreserve.gov/apps/RPFCalc/.

The Board's notice is attached.

Federal Register notice (249 KB PDF)

2008 Other Announcements

Press Release

Release Date: December 19, 2008

For immediate release

 

The Federal Reserve Board on Friday released revised terms and conditions and questions and answers detailing operational aspects of the Term Asset-Backed Securities Loan Facility (TALF). The revised terms and conditions were determined after consultation with asset-backed securities (ABS) issuers, investors, and dealers, and include an extension of the TALF loan maturity from one to three years and additional specification of eligible ABS collateral. In addition, to provide more certain investor access, TALF loans will be provided to all eligible borrowers with eligible collateral rather than distributed through an auction. The documents will be subject to further refinement in coming weeks based on continued market analysis and consultation and on clarification of operational details. 

The Board authorized the TALF on November 24, 2008 under section 13(3) of the Federal Reserve Act. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business asset-backed securities (ABS). The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans, but conditions in ABS markets have caused issuance of such securities to come to a standstill in recent months.

Under the TALF, the Federal Reserve Bank of New York will finance the purchase of eligible ABS by investors. The TALF will finance only certain newly issued, highly rated ABS collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration.

Terms and conditions
Frequently asked questions

2008 Monetary Policy Releases

FREDDIE MAC REQUIRES GENWORTH TO SUBMIT REMEDIATION PLAN AFTER RATINGS DOWNGRADE

McLean, VA – Genworth Mortgage Insurance Corporation (Genworth), a Freddie Mac-approved mortgage insurer, has recently notified Freddie Mac that it was downgraded by Standard & Poor's from AA+ to A+.

Under Freddie Mac policies announced on February 13, 2008, the eligibility status of any downgraded mortgage insurer will not automatically change from a Type I to a Type II Insurer. Instead, Genworth has committed to submit to Freddie Mac a complete remediation plan within 45 days of the downgrade for restoring a minimum AA- rating.

Freddie Mac will then determine, at its sole discretion, whether or not to impose additional requirements and the nature of those requirements. Freddie Mac will notify the mortgage insurer of its determination in writing.

Both Type I and Type II mortgage insurers are eligible to insure loans that Freddie Mac already owns as well as loans to be sold to Freddie Mac. Private mortgage insurance enables Freddie Mac to buy mortgages when the borrower makes a downpayment of less than 20 percent of the purchase price.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

FDIC: No Mortgage Modifications, No Recovery

Modifying mortgages to make them affordable is key to a recovery, says Sheila Bair, chair of the Federal Deposit Insurance Corp.

Bair, who spoke Wednesday at an event sponsored by the New America Foundation, emphasized that regulators’ top priority must be to stop the housing crisis.

"Using a combination of interest rate reductions – capped at a prime, conforming rate -– amortization extensions and, in some cases, principal deferment produces modifications that will last and, we believe, dramatically lower the re-default rate," Bair said

Source: Dow Jones Business News, Ruth Mantell (12/17/2008

Press Release

Release Date: December 19, 2008

For release at 8:00 a.m. EST

 

Today, the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank (ECB), and the Swiss National Bank are announcing schedules for term auctions of U.S. dollar liquidity to be conducted during the first quarter of 2009.  These schedules cover operations providing 28-day and 84-day dollar liquidity.  Schedules for provision of dollar liquidity at other terms will be announced separately by individual central banks.  Central banks will continue to work together to address pressures in global money markets.

Federal Reserve Actions
During the first quarter of 2009, the Federal Reserve will conduct three auctions of 28-day credit and three auctions of 84-day credit through its Term Auction Facility (TAF), as indicated in the schedule below.

Schedule for 28-day and 84-day TAF Auctions
First Quarter 2009

Auction Date	Term	Settlement Date	Maturity Date
12 January 2009	28 days	15 January 2009	12 February 2009
26 January 2009	84 days	29 January 2009	23 April 2009
9 February 2009	28 days	12 February 2009	12 March 2009
23 February 2009	84 days	26 February 2009	21 May 2009
9 March 2009	28 days	12 March 2009	9 April 2009
23 March 2009	84 days	26 March 2009	18 June 2009

Related Announcements by Other Central Banks
Information on related announcements by other central banks is available at the following websites:

Bank of England

Bank of Japan (79 KB PDF) 

European Central Bank

Swiss National Bank (61 KB PDF) 

FAST TRACK WORKOUTS FOR DELINQUENT BORROWERS WITH FREDDIE MAC-OWNED MORTGAGES UNDERWAY

Washington, DC – Seriously delinquent borrowers with mortgages owned by Freddie Mac or Fannie Mae can now take advantage of a new Streamlined Modification Program designed to make mortgage payments more affordable so more families can avoid foreclosure and stay in their homes.   The Streamlined Mod Program officially went into effect on December 15, three days after Freddie Mac sent detailed implementation instructions to its servicers.

Announced on November 11, 2008 with the Federal Housing Finance Agency (FHFA), Fannie Mae and the HOPE Now Alliance, the Streamlined Modification Program replaces several time-consuming steps in a traditional loan modification with a faster uniform process that uses standard eligibility requirements and documents.

“This initiative builds on Freddie Mac's current loss mitigation efforts, which are on track to provide three out of five of our seriously delinquent borrowers with a workout this year,” said David M. Moffett, Freddie Mac's Chief Executive Officer.  “Our alliance with FHFA, Fannie Mae, and the HOPE Now Alliance will help our industry bring relief to thousands of distressed homeowners.”

Under the Streamlined Modification Program, mortgage and escrow payments can be cut to 38 percent or less of an eligible borrower's gross monthly income by one or more of the following steps as necessary: reducing mortgage rates, extending the mortgage term up to 40 years, or forbearing part of the principal. To be eligible, borrowers must own and occupy the property as a primary residence, have missed at least three mortgage payments and not filed for bankruptcy.

Borrowers should contact their servicers if they think they may qualify.  At the same time, servicers will be identifying eligible borrowers and reaching out to them through the mail.

If an affordable payment cannot be achieved through the Streamlined Modification Program, servicers will evaluate borrowers through the traditional modification process. Servicers will also continue reaching out to distressed borrowers as early as possible to determine their eligibility for a workout or other foreclosure alternative.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

NAR Applauds Fed for Timely Action on Rates

The NATIONAL ASSOCIATION OF REALTORS® applauds the actions of the Federal Reserve Board in lowering interest rates for home buyers and homeowners who need to refinance. This will significantly impact housing sales, home valuations, and the nation’s overall economy.

The Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets.

“NAR has been aggressively calling for mortgage rate reductions, and the Fed’s action to slash interest rates, coupled with the actions by the Federal Housing Finance Agency and the Department of the Treasury, has driven down interest rates to make the dream of homeownership once again attainable for thousands of Americans,” said NAR President Charles McMillan.

Mortgage rates, which had averaged 6.3 percent in the third quarter, have recently fallen into the 4 percent range in some parts of the country. “That is the lowest rate in nearly 50 years and will bring buyers back to the market,” McMillan said. “We are pleased that the government heard our message and responded to our call for action.”

NAR has estimated that a one percentage point decrease in mortgage rates will increase home sales by more than 500,000 homes. “To boost the economy, it is critical to stem the rising tide of foreclosures and boost home buyer confidence in the housing market.” McMillan said. “Lower interest rates coupled with increased foreclosure mitigation are the key ingredients to stabilizing the housing market and preserving communities and homeownership.”

NAR continues to call on the federal government to maintain the higher loan limits passed in the economic stimulus bill earlier this year and to expand the $7,500 tax credit for first-time home buyers to all buyers and to eliminate the credit repayment requirement. “Together, all of these actions will stimulate and stabilize the housing market and begin an overall economic recovery,” McMillan said.

Source: NAR

Research: Good Loans Make Good Borrowers

Properly structured programs to help low-income people buy homes can be sound public policy, according to a study that compares 4,000 low-income and minority homeowners with a similar group of renters.

The study by the University of North Carolina School of Social Work determined that loans with low monthly payments result in borrowers who stay current. They also participate in their communities and vote.

The problem is subprime loans, says Roberto G. Ouercia, director of the Center for Community Self-Help, a nonproft that partners with Fannie Mae and the Ford Foundation to lend mortgage money to low-income borrowers. The study found that borrowers with subprime loans are four times more likely to fall behind.

"If done right, lending to low-income and minority families is good business," says Quercia,

Source: News-Observer, David Ranii (12/18/2008)

Buyers Increasingly Suspicious of Foreclosures

Fewer buyers are willing to consider purchasing foreclosed property than they were seven months ago, according to a study commissioned by Trulia.com and RealtyTrac.

Seven months ago, 54 percent of adults surveyed said they would consider purchasing a foreclosed home. In November, only 47 percent of adults say they’d buy a foreclosure.

The chief turnoff is perceived risk, with 80 percent of those surveyed citing hidden repair costs, a tricky buying process, and the possibility that the neighborhood will lose more value and drag the property down with it.

To compensate for these risks, 75 percent say they expect at least a 25 percent discount and 30 percent say they would only buy if there is a 50 percent discount compared with a comparable home that isn’t in foreclosure.

Other findings:

* 56 percent of single/never married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 60 percent in April.
* 43 percent of married adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50 percent in April.
* 42 percent of divorced/separated/widowed adults were at least somewhat likely to consider purchasing a foreclosed home, down from 50 percent from April.

Source: Trulia.com (12/16/2008

Press Release

Release Date: December 18, 2008

For immediate release

The Federal Reserve Board on Thursday published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).

The asset-size exemption for depository institutions will increase from $37 million to $39 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2008.  As a result, depository institutions with assets of $39 million or less as of December 31, 2008, are exempt from collecting data in 2009.  An institution's exemption from collecting data in 2009 does not affect its responsibility to report the data it was required to collect in 2008.

The adjustment is effective January 1, 2009.

HMDA and the Board's Regulation C require most mortgage lenders located in metropolitan areas to collect, report, and disclose data about applications for, and originations and purchases of, home purchase loans, home improvement loans, and refinancings.  Data reported include the type, purpose, and amount of the loan; the race, ethnicity, sex, and income of the loan applicant; the location of the property; and loan price information for some loans.  The purposes of HMDA include helping to determine whether financial institutions are serving the housing needs of their communities and assisting in fair lending enforcement.

The Board's notice is attached.

Attachment (18 KB PDF)

2008 Banking and Consumer Regulatory Policy

Press Release

Release Date: December 18, 2008

For immediate release

The Federal Reserve Board on Thursday approved final rules that would better protect credit card users by prohibiting certain unfair acts or practices and improving the disclosures consumers receive in connection with credit card accounts and other revolving credit plans. 

The final rules prohibiting certain credit card practices were adopted under the Federal Trade Commission Act, and are being issued concurrently with substantially similar final rules by the Office of Thrift Supervision and the National Credit Union Administration.  Among other things, the rules will:

• Protect consumers from unexpected interest charges, including increases in the rate during the first year after account opening and increases in the rate charged on pre-existing credit card balances.
• Forbid banks from imposing interest charges using the "two-cycle" billing method.
• Require that consumers receive a reasonable amount of time to make their credit card payments.
• Prohibit the use of payment allocation methods that unfairly maximize interest charges.
• Address subprime credit cards by limiting the fees that reduce the amount of available credit.

In finalizing the rules on unfair credit card practices, the Board carefully considered information obtained through consumer testing and more than 60,000 comment letters received during the comment period.

"The revised rules represent the most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts," said Federal Reserve Chairman Ben S. Bernanke.  "These protections will allow consumers to access credit on terms that are fair and more easily understood." 

The Board is also adopting final rules to revise the disclosures consumers receive in connection with credit card accounts and other revolving credit plans to ensure that information is provided in a timely manner and in a form that is readily understandable.  These rules amend Regulation Z (Truth in Lending) and conclude a comprehensive review of the open-end credit rules.  The final rules under Regulation Z require changes to the format, timing, and content requirements for credit card applications and solicitations and for the disclosures that consumers receive throughout the life of an open-end account.  Many of the changes reflect the result of consumer testing conducted on behalf of the Board during its review.

"Our intent is to increase transparency and fairness in how credit card and deposit accounts operate, thereby enhancing competition and empowering consumers to better manage their accounts and avoid unnecessary costs," said Federal Reserve Governor Randall S. Kroszner.  "The rules represent a significant step forward in consumer protection.  By ensuring fairness and making credit terms easier to understand, these safeguards should allow more consumers to benefit from using credit."

Both of the final rules addressing credit card accounts take effect on July 1, 2010.

The Board is separately proposing rules to protect consumers that use overdraft services offered by their bank.  The rule solicits public comment on proposed amendments to Regulation E (Electronic Fund Transfers) intended to provide consumers a choice regarding their institution's payment of overdrafts for automated teller machine withdrawals and one-time debit card transactions.  The Board is proposing two alternative approaches to providing consumer choice, including a proposed requirement that would require institutions to obtain consumers' affirmative consent (or opt-in) before any overdraft fees or charges may be imposed on consumers' accounts.  The comment period for the Regulation E proposal ends 60 days after publication in the Federal Register.

In a related move, the Board is adopting final amendments to Regulation DD (Truth in Savings) to address depository institutions' disclosure practices related to overdraft services.  The effective date for the final rules adopted under Regulation DD is January 1, 2010.

All four Federal Register notices are attached.  Publication of each of the rules is expected shortly.

Highlights of Final Rules Regarding Credit Card Accounts (27 KB PDF)

Statement by Chairman Ben S. Bernanke

Statement by Governor Randall S. Kroszner

Federal Register notice, Regulation AA (848 KB PDF)

Federal Register notice, Regulation DD (110 KB PDF)
B-10 (70 KB PDF) Aggregate fee model

Federal Register notice, Regulation E (367 KB PDF)
Model forms and samples:

1. A-9 (23 KB PDF) Model consent form for overdraft services
2. A-9 (A) (24 KB PDF) Model opt-out form for account opening
3. A-9 (B) (9 KB PDF) Model opt-out form for periodic statements

Review and Testing of Overdraft Notices (1.94 MB PDF)

Federal Register notice, Regulation Z (2.18 MB PDF)
Model forms and samples:

1. G-10 (A) (81 KB PDF) Applications and solicitations model form (credit cards)
2. G-10 (B) (77 KB PDF) Applications and solicitations sample (credit cards)
3. G-10 (C) (79 KB PDF) Applications and solicitations sample (credit cards)
4. G-10 (D) (32 KB PDF) Applications and solicitations model form (charge cards)
5. G-10 (E) (111 KB PDF) Applications and solicitations sample (charge cards)
6. G-17 (A) (83 KB PDF) Account-opening model form
7. G-17 (B) (77 KB PDF) Account-opening sample
8. G-17 (C) (79 KB PDF) Account-opening sample
9. G-17 (D) (79 KB PDF) Account-opening sample (line of credit)
10. G-18 (A) (158 KB PDF) Periodic statement transactions: interest charges; fees sample
11. G-18 (D-E) (29 KB PDF) Periodic statement new balance, due date, late payment, and minimum payment sample (credit cards) and periodic statement new balance, due date, and late payment sample (open-end plans (non-credit-card accounts))
12. G-18 (F) (170 KB PDF) Periodic statement form
13. G-18 (G) (197 KB PDF) Periodic statement form
14. G-19 (18 KB PDF) Checks accessing a credit card sample
15. G-20 (100 KB PDF) Change-in-terms sample
16. G-21 (149 KB PDF) Penalty rate increase sample

Design and Testing of Effective Truth in Lending Disclosures: Findings from Qualitiative Consumer Research (3.78 MB PDF)

Design and Testing of Effective Truth in Lending Disclosures: Findings from Experimental Study (3 MB PDF)

2008 Banking and Consumer Regulatory Policy

Press Release

Release Date: December 17, 2008

For immediate release

 

The Federal Reserve Board on Wednesday extended the end of the comment period on its proposal to revise the disclosure requirements for mortgage loans under Regulation Z (Truth in Lending) from January 23, 2009, to February 9, 2009.  The revisions would implement the Mortgage Disclosure Improvement Act (MDIA), which was enacted in July 2008 as an amendment to the Truth in Lending Act (TILA).  The extension is granted to give the public additional time to comment on the proposal.   

The Board's notice is attached.

 

Attachment (24 KB PDF)

2008 Banking and Consumer Regulatory Policy

Joint Press Release

Joint Press Release

Housing Inventory Falls in Key Metropolitan Areas .

The inventory of homes for sale is down 3.6 percent from October in the 29 major metropolitan areas for which ZipRealty compiles data.

Housing inventory has traditionally declined in November. The average decrease has been 1.9 percent, according to research firm Zelman & Associates.

The ZipRealty data doesn’t cover New York City, where appraisal firm Miller Samuel Inc. says the number of homes on the market rose 4.7 percent compared with October.

Source: The Wall Street Journal, James R. Hagerty (12/11/08)

Foreclosures Decline, but Lull Likely Temporary

Foreclosures of U.S. homes declined 7 percent in November, compared to the previous month, according to RealtyTrac, foreclosure marketing company.

"Foreclosure activity in November hit the lowest level we've seen since June thanks in part to recently enacted laws that have extended the foreclosure process in some states, along with more aggressive loan modification programs and self-imposed holiday foreclosure moratoriums introduced by some lenders," said James J. Saccacio, RealtyTrac CEO.

Foreclosures remained 28 percent higher than they were in November 2007, and there are indications that this is just a temporary lull.

Delinquencies on loans not yet in the foreclosure process jumped to nearly 7 percent in the third quarter, a record high, according to the Mortgage Bankers Association. And more than half of the homeowners whose loans have already been modified are already delinquent again, according to the U.S. Office of Thrift Supervision.

States with the highest number of foreclosures are: California, Florida, Michigan, Nevada, Arizona, Ohio, Georgia, Illinois, Texas and Virginia.

Source: RealtyTrac (12/11/2008)

Should You Reveal a Pending Foreclosure?

Whether a real estate practitioner can, should or must tell potential buyers when a property is facing or already in the foreclosure process depends on where it is located, experts say.

For instance, Virginia laws require that practitioners protect their clients’ personal and financial information. They can’t discuss pending foreclosure or short sales without permission from their clients.

In Maryland and Washington, D.C., practitioners are required to disclose all material defects that are “known” or “should be known.” Whether that includes pre-foreclosure or pending auction status isn’t clear.

"Generally, it's preferred that material defects be disclosed, and by 'material defects,' this means anything that might affect how a buyer approaches negotiations," says Chris Darby, a lawyer with Counselors Title in Washington.

In Virginia, a lack of candor about short sales can be particularly problematic because Metropolitan Regional Information Systems, which operates the multiple listing service, requires that short sales be revealed. A seller who won’t give permission can’t be included, which, of course, makes the home harder to sell.

Plus, "buyers usually are wanting a response in a couple of days," said Tony Arko, an agent with Market Advantage in Sterling. "If you don't tell them upfront that it could take weeks or months, they are going to get ticked off.”

Source: The Washington Post, Patricia Kime (12/06/08)

CHICAGO - Little in Gov. Rod R. Blagojevich’s background prepared the people of Illinois for the man who was revealed in the criminal complaint that dropped like a bombshell.  Delusional, narcissistic, vengeful and profane, Mr. Blagojevich as portrayed by federal prosecutors shocked even his most ardent detractors.

(Click on the web address below for the VIDEO - NOTE:  Give it 30 seconds to load and play)

http://www.msnbc.msn.com/id/21134540/vp/28155244#28155244

Study Shows Housing Values Have Climbed

News reports have been packed with stories about declining home values, but a recent government report shows that the situation is not nearly so dire as some reports make it sound.

Despite big loses in some areas of the country, the majority of markets continue to show growth in home value over the last five years.

According to the third-quarter survey released by the Federal Housing Finance Agency, out of 292 metropolitan markets, 273 showed positive net home values in the last five years. Only 19 percent were negative.

While home values declined 4 percent on average in the last year, values were up nearly 29 percent over the past five years.

According to the Federal Housing Finance Agency, markets that gained the most over the last five years were:

• Honolulu: up 78.7 percent
• Virginia Beach: 72.6 percent
• Flagstaff, Ariz.: 66.5 percent
• Bellingham, Wash.: 65.6 percent
• Wilmington, N.C.: 62.1 percent
• Baltimore: 60.6 percent

Deadline Nears for Dropping Jumbo Loan Limits

The deadline for getting what is known as a conforming jumbo loan is closing. As of Jan. 1, the maximum for loans that Fannie Mae and Freddie Mac are willing to buy will decline from $729,750 to $625,500 in the nation’s priciest areas.

Also, beginning Jan. 1, underwriting standards for these loans will rise, requiring that most buyers put down 20 percent and have a debt-to-income ratio as low as 30 percent, according to the trade publication Inside Mortgage Finance.

Observers say this makes it more likely that home prices in these upper ranges will fall, pushing down prices for less-costly properties in the process.

Source: Washington Times, David M. Dickson (12/09/08)

Illinois governor's arrest stuns politicos

By SHARON COHEN, AP National Writer Sharon Cohen, Ap National Writer

Ill. governor charged in Obama successor probe

By MIKE ROBINSON, Associated Press Writer Mike Robinson, Associated Press Writer

Blagojevich scandal creates distraction for Obama transition

By Marisa Taylor and Steven Thomma, McClatchy Newspapers Marisa Taylor And Steven Thomma, Mcclatchy Newspapers

Spotless Homes Sell

Ideally, real estate agents want the properties we market to look spotless, but even the most impeccable housekeepers find it difficult to keep the house in prime showing condition all the time.

Keeping the beds perpetually made, dishes washed, bathrooms spotless and the closets neat is a lot of work. Is it worth it? Yes, it is -- if you want to get your house sold in a reasonable amount of time for the best price.

Often when buyers see normal household clutter, what registers is "this place hasn't been maintained." They see bathtub rings and think "plumber's bills." They see lint under the refrigerator and grease on the electric range and imagine having to replace all of the appliances. It isn't particularly logical, but people often respond with their feelings when buying a house. When making their final selection, buyers may be going on emotion and adrenaline rather than reason and logic. You can help your real estate agent by minimizing the amount of imagination they will need to fall in love with your home.

Improving To Sell

Many homeowners wait until they are ready to put their home on the market before painting, planting flowers, and making other improvements to their homes. After completing these improvements, they may be so delighted with the results that they wish they had done the work on their home sooner in order to enjoy the changes.

Whether you have recently purchased a home or have been settled in your home for several years, you should consider evaluating the condition of your house as if you planned to sell it soon. Maximize your home's "curb appeal" now, so that you will reap the benefits every time you pull into your driveway. Plant those flowers and bulbs and you will have your fresh flowers on your own dining room table. Add new window treatments to freshen the appearance of the main rooms. If your house needs an upgraded kitchen, go ahead with the renovation. You will enhance your whole neighborhood and experience the pleasure of living in a more beautiful and fully functional home.

Keeping Your House Safe

Home safety precautions are always important, but it is especially important to make your home "accident-proof" while it is on the market. Many strangers will be coming through your home who won't be aware of the minor hazards that you and your family instinctively avoid.

Go through your home with an eye for potential hazards. Remove the obstacles that you can and post "watch your head" or "watch your step" signs where they are needed. Look for loose banisters, uneven steps, precariously placed plants, art objects or anything else that could fall on someone, wet spots on bath or kitchen floors, toys that someone might fall over and anything that you have to step over or duck under. Make sure that rugs will not slip, especially those at the bottom of stairs. There aren't many things that will more quickly dampen a buyer's enthusiasm for a house than a bump on the head or an unexpected trip down a flight of stairs.

Lighting Up the Sale

Lighting is an important factor to take into account when you are selling your home. Natural and artificial lighting can create a mood that buyers notice when they walk into your home, so don't overlook this significant factor which can favorably influence a potential buyer.

Before your house is shown, walk through each room with an eye to creating a pleasant ambiance through lighting. Accentuate the natural light by keeping curtains open and windows sparkling clean. Arrange your furniture to take advantage of the best view. You may want to install indirect lighting to highlight a vaulted ceiling or to draw attention to indoor plants. Dimmer switches can create simple and inexpensive lighting appeal. Place a lamp and table arrangement in a dark alcove or corner to brighten up the area.

Speech

Investors Not Happy With 4-Loan Limit

Some real estate investors are up in arms over a new Fannie Mae-Freddie Mac policy that limits to four the number of real estate loans that can be held by a single person.

The rule, which took effect Dec. 1, prohibits an investor from obtaining even a fifth mortgage no matter how much money he puts down or how much income documentation he provides. It offers no exceptions for assets or history of success as a real estate investor.

“The four-house rule is going to keep us in a recession longer,” said Tom Hutchens, an Atlanta-area investor. “It’s going to keep qualified buyers out of the market.”

Some investors are trying to work around the rule by partnering with other investors to either buy in cash or use their eligibility to borrow.

Source: The Atlanta Journal-Constitution, D.L. Bennett (12/05/08)

Fed Chair: Reducing Foreclosures is Critical

Federal Reserve Chair Ben Bernanke asked the federal government Thursday to increase efforts to put an end to foreclosures because they are driving other economic problems.

"Weakness in the housing market has proved a serious drag on overall economic activity," he said. "Steps that stabilize the housing market will help stabilize the economy as well."

In a question-and-answer session after his speech at a Fed housing conference, Bernanke rejected the notion of federal support for declining housing prices.

"I don't think we would be either willing or able to target house prices," he said. "I think that would probably be an impossible thing to do given the size of the national housing market."

Instead, he suggested more support for the mortgage market so more people are able to borrow.

Source: The Associated Press, Jeannine Aversa (12/04/08)

President Bush, First Lady Buy Retirement Home

President George W. Bush and first lady Laura Bush have bought a house in the affluent Dallas neighborhood of Preston Hollow.

Accountant and family friend, Robert McCleskey, apparently purchased the house on their behalf. It has 8,500 square feet on a cul-de-sac with a half-dozen homes. Its market value is $2.1 million, and total estimated taxes on the property are listed at $43,984.

The neighbors include Tom Hicks, owner of the Texas Rangers, and Mark Cuban, owner of the Dallas Mavericks. T. Boone Pickens and retired Exxon Mobil CEO Lee R. Raymond also own houses nearby.

"If he moves next door, we'd love it," Hicks wrote in an e-mail to The Associated Press. "The Secret Service would make the neighborhood safer!"

Source: The Associated Press, Jeff Carlton (12/04/08)

Why Are Property Taxes Still Rising?

Property taxes continue to rise across the country, despite steep declines in home values.

Property tax collections across the United States rose 3.1 percent this year, according to the U.S. Bureau of Economic Analysis (BEA). That means state and local governments will collect more than $400 billion in property taxes this year—a record amount.

Most states have caps that prevent taxes from rising rapidly in boom times. The same laws keep taxes from plummeting when home values decline.

"Property taxes aren't always popular, but they are a very stable tax, even in tough times," says Thomas Gentzel, executive director of the Pennsylvania School Board Association.

Source: USA Today, Dennis Cauchon (12/04/08)

Treasury Alerts REALTORS to Fraud Scheme

If a buyer tries to use a "personal promissory note" or "private offset bond" to buy a home, the matter might be an attempt at fraud and you should let the U.S. Treasury Department know, a notice from the Treasury's Office of Inspector General says.

Here's the notice in full, with contact information:

SUBJECT: Fraud Alert

The U.S. Department of Treasury, Office of Inspector General (OIG), is investigating incidences whereby individuals are using fraudulent promissory notes and bonds to attempt to purchase vehicles and real estate. The OIG has been notified of numerous occurrences throughout the United States where fraudulent documents were used to attempt to purchase vehicles. Treasury OIG has also been made aware of incidents in Arizona and Colorado where similar fraudulent documents were used to attempt to purchase homes and an office building.

The fraudulent documents are not referenced as “U.S. Treasury” bonds or promissory notes. They are referenced as “personal promissory note” and “private offset bond;” however, they have the name of Henry Paulson, Secretary, U.S. Treasury, on the face of the documents.

Treasury OIG has learned that the only type of hard-copy bond issued by the U.S. Treasury that a citizen can purchase today is a savings bond. All other bonds are electronic and the buyer would not receive a hard-copy document. Finally, Paulson’s name should not appear on any document listed as a private bond or promissory note since these items are not backed or guaranteed by the U.S. Treasury.

If you have any information regarding this type of fraudulent activity, we request that you contact the U.S. Department of Treasury, Office of Inspector General (OIG), Office of Investigations Hotline, at 800/359-3898 or e-mail Hotline@oig.treas.gov. REALTORS® approached by a person giving these or similar circumstances should consider the potential for fraud. Should you suspect fraudulent activity, it is recommended that you contact the OIG Hotline and your local law enforcement agency immediately. Additional information regarding this and other similar fraud schemes can be found at the following Department of Treasury Web site:

http://www.treasurydirect.gov/instit/statreg/fraud/fraud_bogussightdraft.htm

Source: REALTOR® Magazine Online

NAR-Backed Rate Buydown Gains Traction

An effort by the NATIONAL ASSOCIATION OF REALTORS® to spur home sales through a mortgage-interest rate buydown appears to be gaining traction. Reports in major news media like the Washington Post and Wall Street Journal today quote sources familiar with a meeting between U.S. Treasury officials and NAR in November in which the buydown proposal was discussed.

"Treasury officials told the REALTORS® that the [buydown] plan could be a more effective way to help homeowners than focusing solely on borrowers who are struggling to meet their monthly payments," the Washington Post story says.

Under the Treasury plan, lenders would sell newly issued mortgage-backed securities to the government provided the interest-rate on the loans collateralizing the securities was no higher than 4.5 percent. Although NAR supports a buydown, it does not take a position on how low interest rates should go.

To pay for the plan, Treasury would issue bonds at 3 percent, creating a 1.5-percent spread that it could use for buying the securities. Those securities would then be purchased by secondary mortgage market companies Fannie Mae and Freddie Mac, which are under federal conservatorship.

NAR has been calling for a buydown and other measures to help stimulate housing sales as part of a four-point plan it showcased at its annual meeting in Orlando last month. To date, tens of thousands of REALTORS® have sent letters to their members of Congress asking for quick action to help housing, which is widely considered a crucial first step to a broader economic recovery. Other parts of the four-point plan include making 2008 high-cost conforming loan limits, which are now $729,750, permanent, and improving the home buyer tax credit by expanding it to all buyers, not just first-timers, and eliminating the repayment requirement.

Some analysts have calculated that an interest-rate buydown could help as many as 2.5 million households.

Source: REALTOR® Magazine Online

Fed: CRA Didn't Encourage Subprime Loans

The Community Reinvestment Act isn’t the culprit behind the current housing meltdown, said Federal Reserve Governor Randall Kroszner in a speech to a Washington DC public policy forum.

Kroszner said that contrary to charges that that encouraging banks to lend to lower-income borrowers pushed banking firms into high-risk lending, most of the subprime loans took place in middle and higher-income neighborhoods.

The loans that are the focus of the CRA represent "a very small portion of the subprime lending market," Kroszner said.

Source: Dow Jones Newswires (21/03/2008)

Housing Prices Fall Below Replacement Costs

Housing consultancy Global Insight reports that nationwide, housing prices are now 3.8 percent undervalued, based on total market value. It says values fell at a faster pace in the third quarter after stabilizing earlier in the year.

According to Global Insight’s calculations, prices are now 6.5 percent below their 2007 peak. They fell at a 6.9 percent annual pace affecting 241 of the 330 metropolitan areas analyzed by Global Insight. That’s up from 150 metro areas affected in the second quarter.

Contraction is most severe in the Southeast and Southwest with only the Pacific Northwest remaining overvalued, Global Insight says.

Home prices fell more than 10 percent in the third quarter in nine central California communities. The Central Valley communities of Merced, Stockton, and Modesto have seen property values fall to less than half their 2005 value. Twenty-nine metro areas in California, Florida, and Nevada ­– at one time among the most overvalued – have seen price declines in excess of 30 percent. Similar steep price drops are occurring in Michigan, northeast Ohio, the southern metro areas from Charlotte to Atlanta, as well as in New England.

"Weak economic conditions and wary consumers continue to hold the housing market back. Although many areas are seeing home sales increase, it is largely due to foreclosure homes being snapped up at significantly discounted prices. As the inventory of these homes is removed from the market, prices will remain on a downward path," predicts Jeannine Cataldi, senior economist and manager of Global Insight’s Regional Real Estate Service.

Source: Global Insight (12/03/2008)

Speech

Economists Ponder Future of Home Prices

When will home prices go back up again?

Economists surveyed by The Wall Street Journal say that home prices won’t hit bottom until the second half of 2009 at the earliest and some say the downward trend will continue until 2011 or 2012. After that they may rise again, but not nearly as fast as they have in the last decade. Instead they will rise just a little faster than inflation and stay in line with increases in household income.

William Wheaton, a professor of economics and real estate at the Massachusetts Institute of Technology, says he expects house prices to increase at a rate roughly 1-percentage point higher than inflation over the long term.

Celia Chen, director of housing economics at Moody’s Economy.com is more optimistic, expecting home values to rise an average of 4 percent per year over the next couple of decades.

Demographer William Frey predicts that growth will continue in coastal and Southern cities while populations in rustbelt areas like Michigan, Ohio, Western Pennsylvania and Upstate New York will continue to decline.

The great unknown is the impact aging baby boomers will have. While retirees in the past have often headed for warmer and suburban areas, boomers have tended to confound expectations. They could well show a propensity for staying put or moving to urban areas for the cultural life or to be near friends and family, shunning sun-dappled retirements communities.

Source: The Wall Street Journal, James R. Hagerty (12/02/2008)

Mortgage Applications Surge After Fed Action

Mortgage applications skyrocketed last week in response to the Federal Reserve’s announcement that it would buy debt from Fannie Mae and Freddie Mac.

Even with the shortened Thanksgiving week, the mortgage applications index increased 112.1 percent to 857.7 compared to 404.4 the previous week on a seasonally adjusted basis. On an unadjusted basis, the index increased 51.4 percent compared with the previous week, but was still down 21.9 percent compared with the same week a year ago.

Rates fell quickly, but they didn’t stay so low. “Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when [Fannie Mae and Freddie Mac] were placed under conservatorship,” said Orawin Velz, associate vice president of economic forecasting for MBA. Last week's announcement persuaded many of those on the sidelines to quickly jump in and take advantage of lower rates before they began to rebound, added Velz.

Nearly 70 percent of the applications were for refinances with the refinance index rising 203.3 percent compared to the previous week.

Mortgage rates declined dramatically, then rose toward the end of the week:

• 30-year fixed-rate mortgages decreased to 5.47 percent from 5.99 percent;
• 15-year fixed-rate mortgages decreased to 5.13 percent from 5.78 percent;
• 1-year ARMs decreased to 6.61 percent from 6.87 percent.

Dress For Success

Looking good is important when you want to make a great impression, whether for a job interview or a social function. The same is true of a home that is on the market. When the "For Sale" sign goes up in front of your home, it should be "dressed" for the occasion.

Since the first impression will be of the front of the house, a well-groomed exterior is crucial, from the landscaping to the paint. The interior of your home should be clean and tastefully decorated. Take care of any minor cosmetic repairs that are needed, such as cracked plaster or peeling paint. A sparkling kitchen and shiny bathrooms, clean windows, and the absence of clutter will help your home "show well". Keeping your home looking good at all times is hard work, especially if you have children and are packing for a move. However, the dividends are impressive, because a home that looks well cared for has an excellent chance of selling quickly and for the best price.

Full Disclosure

If you are about to list a home that you have lived there for many years, you know that it is not perfect. For example, there might be a leak in the basement that is noticeable only after a heavy rain. Your garage door might stick, and the dishwasher may be prone to work stoppages.

Every home has a few quirks. When it is time to sell your home, you have a choice of either making the necessary repairs or letting the buyers know about the problems. Material defects must be fully disclosed. Some buyers will order a structural inspection in order to learn exactly what they will be getting. Even if the buyers don't ask for an expert to look at the house, it is the seller's responsibility to disclose any known defects in the property. The seller's agent will provide the disclosure form, wherein the seller may itemize any problems. Sellers may avoid any real estate lawsuits over undisclosed defects by making repairs before the sale or agreeing to a price adjustment during the transaction if defects are discovered.

Open House

If your home has been on the market for a few weeks, your real estate agent may suggest an "open house." Your agent puts up signs, gives you some pointers about how to prepare your home for showing and shows up early on Sunday morning. You may be tempted to stay around, but the best advice is to leave while your home is being shown!

When sellers are present at an open house, they can hamper the sales professional's ability to cultivate interested buyers, and can even squelch a sale. What would your response be, for instance, if someone strolls into your kitchen and says, "What awful wallpaper!" If prospective buyers know that you as the owner are present, they might feel reluctant to express their objections and concerns openly and directly to your agent. If your objective is to get your home SOLD, the best thing to do is to get out of the way and let the sales professional do the job.

Your Selling Strategy

Have your housing needs expanded along with your income? Are you are thinking about selling your property and looking for a new home? The transition can be accomplished smoothly by using a systematic approach.

As part of your selling strategy, it is advantageous to have your present house under contract before you begin a serious search for a new home. This will make you attractive to sellers in two ways. You won't have to include a contingency in your offer to cover the sale of your present home. You will strengthen your negotiating position by improving your financial circumstance with an accepted offer. In a situation where there are multiple offers on the new home, the chances of your offer being accepted are better if it isn't dependent on selling another house before you can make a move.

The Best Real Estate Agents

The best real estate agents in today's marketplace are becoming even better about marketing the homes they list to the public, as well as to other agents who have potential buyers.

When you are interviewing prospective real estate agents to help you sell your home, ask how they find buyers. In the past, a "For Sale" sign would go into the ground, the basic information went into the Multiple Listing Service, and then there was an occasional Sunday classified ad and an "open house". If the house did not sell right away, the agent might recommend a price reduction.

Agents today are much more sophisticated and pro-active about getting people into their homes. They rely on computers, direct mail, telemarketing, and just plain clever ideas that no one else has tried. Ask prospective listing agents for two things--a written analysis of what is happening with housing prices in your area and a marketing plan which outlines how they would get your home from "For Sale" to "Sold".

FREDDIE MAC ADVISES NYSE OF INTENT TO MEET CONTINUED LISTING STANDARD

McLean, VA – Freddie Mac (NYSE: FRE) today reported in a filing with the U.S. Securities and Exchange Commission (SEC) that the company has notified the New York Stock Exchange (NYSE) that it intends to bring the share price of its common stock and the average share price of its common stock for 30 consecutive trading days above $1.00 by no later than May 18, 2009.

Freddie Mac is currently working with its conservator, the Federal Housing Finance Agency (FHFA), to determine the specific action or actions that Freddie Mac will take to cure the deficiency. If necessary to bring its share price and its average share price for 30 consecutive trading days above $1.00, and subject to the approval of the U.S. Department of the Treasury, Freddie Mac has advised the NYSE that it may undertake a reverse stock split in order to cure the deficiency by the May 18, 2009 date. Freddie Mac expects to determine the actual number of shares that will produce one share of common stock as a result of any reverse stock split based on both the market price of Freddie Mac's common stock prior to announcement of the split and additional input from FHFA and Treasury.

Under applicable NYSE rules, Freddie Mac now has until May 18, 2009, subject to supervision by the NYSE, to bring its share price and its average share price for 30 consecutive trading days above $1.00. If it fails to do so, the NYSE will initiate suspension and delisting procedures.

Freddie Mac's common stock and each of the company's listed series of preferred stock continue to trade on the exchange's main platform under the symbol or prefix "FRE," but with the addition of a ".BC" to indicate to investors that the company is not currently in compliance with the exchange's continued listing standards.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

###

FREDDIE MAC PRICES $1 BILLION REOPENING OF 4.125% FIVE-YEAR REFERENCE NOTES® SECURITY

McLean, VA – Freddie Mac (NYSE: FRE) announced today that it auctioned a $1 billion reopening of its 4.125% five-year USD Reference Notes® security that matures on September 27, 2013. The stop yield for the issue, CUSIP number 3137EABS7, was 2.861%, priced at 105.645626 or approximately 104.5 basis points more than five-year U.S. Treasury Notes. The bid-to-cover ratio was 2.69 to 1.

After the reopening, which was conducted via an Internet-based auction, the total outstanding size of the 4.125% five-year Reference Notes security will be $6 billion. The issue will settle on Tuesday,  December 2, 2008. The issue is listed on the Euro MTF market of the Luxembourg Stock Exchange.

Including today's offerings, Freddie Mac has issued $49 billion of Reference Notes securities during 2008 and has approximately $255 billion in Reference Notes and Reference Bonds® securities outstanding.

This announcement is not an offer to sell any Freddie Mac securities. Offers for any given security are made only through applicable offering circulars and related supplements, which incorporate Freddie Mac's proxy statement, its Registration Statement on Form 10 dated July 18, 2008 and all documents that Freddie Mac files with the Securities and Exchange Commission (“SEC”) pursuant to Section 13(a), 13(c) or 14 of the Securities Exchange Act of 1934.

Freddie Mac's press releases sometimes contain forward-looking statements. A description of factors that could cause actual results to differ materially from the expectations expressed in these and other forward-looking statements can be found in the company's Registration Statement on Form 10 dated July 18, 2008 and its reports on Form 10-Q and Form 8-K, filed with the SEC and available on the Investor Relations page of the company's Web site at www.FreddieMac.com/investors and the SEC's Web site at www.sec.gov.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

NATIONAL HOME-VALUE DROP ACCELERATES IN THIRD QUARTER

Home Values In Every Region, Led By Losses In Pacific State

McLean, VA – Freddie Mac (NYSE: FRE) announced today that its Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series registered a 7.3 percent annualized decline in U.S. house prices during the third quarter of 2008, following a downward revised 0.9 percent annualized drop in the second quarter. Over the four quarters ending with the third quarter of 2008, home sales prices fell an average of 7.2 percent in the CMHPI Purchase-Only Series – the largest annual fall in values over the 39-year history of the series.

“The disruptions in the credit markets during the latter part of the third quarter have likely weakened housing demand and contributed to further declines in house prices,” said Frank Nothaft, Freddie Mac vice president and chief economist. “With the unemployment rate having risen to 6.5 percent in October, there will likely be further weakening in housing demand, which could push the market bottom in home sales and housing starts out at least until middle to late next year and result in further declines in house prices. Our November forecast has the CMHPI purchase-only index declining 4.3 percent over the course of 2009.

“For the first time in the CMHPI series we saw every region of the nation experience declining home values over the quarter. There is significant variation in the degree of the declines, ranging from a very small 0.1 percent annualized drop in values in the West South Central region to a 20 percent annualized loss in home values in Pacific states. Some areas have been fortunate not to feel the full sting of the credit crunch or the foreclosure storm, but unfortunately they are no longer immune from the effects of falling home values.”

The CMHPI Purchase-Only Series excludes all refinancings in its calculation. Freddie Mac also produces a CMHPI Classic Series that includes data from both home purchase transactions and mortgage refinancings, with the latter values based on appraisals. Generally, because appraisals are backwards looking through the use of recent comparable property transactions, the Classic Series will lag changes in the Purchase-Only series when the market reaches a peak or trough turning point. The CMHPI Classic Series indicated that home values fell 11.9 percent nationally during the third quarter on an annualized basis, the steepest quarterly decline since the index began in 1970. Over the year ending with the third quarter, home values depreciated 5.6 percent on average in the Classic Series, the sharpest annual drop in this index over the 39 years spanned by the series.

Seventeen states registered modest price gains over the past year, and five states had increases in the third quarter, according to the CMHPI Classic Series. Annual price gains of 2 to 4 percent occurred in Alabama, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, and Texas, which have benefited from stronger local economies led in part by the petroleum, natural gas and ethanol industries. Annual drops of more than 14 percent occurred in Arizona, California, Florida and Nevada, which have borne the brunt of the housing market woes.

The Conventional Mortgage Home Price Index (Purchase-Only) Series shows the following regional performances:

West South Central Division (AR, LA, OK, TX): dipped 0.03 percent (–0.1 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values increased 0.5 percent, and during the last five years, home values increased 25.9 percent.
Middle Atlantic Division (NJ, NY, PA): decreased 0.1 percent (–0.3 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 2.2 percent, and during the last five years, home values increased 33.4 percent.
West North Central Division (IA, KS, MN, MO, ND, NE, SD): decreased 0.5 percent (–1.8 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 2.6 percent; over the last five years, home values increased 12.7 percent.
East South Central Division (AL, KY, MS, TN): fell 1.1 percent (–4.2 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 1.3 percent, and during the last five years, home values increased 23.6 percent.
New England Division (CT, MA, ME, NH, RI, VT): dropped 1.1 percent (–4.2 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 5.1 percent, and during the last five years, home values increased 13.9 percent.
East North Central Division (IL, IN, MI, OH, WI): decreased 1.2 percent (–4.6 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 3.9 percent, and during the last five years, home values increased 5.7 percent.
South Atlantic Division (DC, DE, FL, GA, MD, NC, SC, VA, WV): fell 2.1 percent (–8.1 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 6.8 percent, and during the last five years, home values increased 27.6 percent.
Mountain Division (AZ, CO, ID, MT, NM, NV, UT, WY): declined 2.3 percent (–8.9 percent, annualized) in the third quarter of 2008. In the last 12 months, home values decreased 7.6 percent; during the last five years, home values increased 33.1 percent.
Pacific Division (AK, CA, HI, OR, WA): decreased 5.4 percent (–19.9 percent, annualized) in the third quarter of 2008. Over the last 12 months, home values decreased 20.2 percent, and during the last five years, home values have increased 18.0 percent.

Unlike other home price indexes based on mean or median values of homes sold during a given period, the Conventional Mortgage Home Price Index is constructed, using regression techniques, from observations of actual sales prices or appraised values of the same homes over time. The street addresses of properties that serve as collateral for mortgages funded by the two secondary mortgage market firms are second processed using software certified by the United States Postal Service to create a uniform address format and are then matched to identify consecutive transactions on the same property. There are currently more than 36.6 million records in the repeat-transactions database used to construct the classic Conventional Mortgage Home Price Index – this database includes transactions on one-unit detached and single-family townhome properties serving as collateral on loans originated through the third quarter of 2008 and purchased by Freddie Mac and Fannie Mae by October 31, 2008.

Freddie Mac publishes the Conventional Mortgage Home Price Index each quarter. Index values and growth rates for the nation as a whole as well as for the nine Census divisions, the 50 states and the District of Columbia, and 392 metropolitan statistical areas (MSAs) and metropolitan divisions under the classic series of the CMHPI are available and the purchase-transaction only series is available for the nation and nine Census divisions. All of the CMHPI series can be found on Freddie Mac’s web site, www.freddiemac.com/finance/cmhpi/.

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation's residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Over the years, Freddie Mac has made home possible for one in six homebuyers and more than five million renters.

Notes: *These indices rely on data from only home-purchase transactions.

Send comments and questions to chief_economist@freddiemac.com. These data are available at www.freddiemac.com/news/finance/

Although Freddie Mac attempts to provide reliable, useful information in this document, Freddie Mac does not guarantee that the information is accurate, current or suitable for any particular purpose. Estimates contained in this document are those of Freddie Mac currently and are subject to change without notice.

Information from this document may be used with proper attribution. Alteration of this document is strictly prohibited. © 2008 by Freddie Mac.

Thomas Jefferson Quotes

When we get piled upon one  another in large cities, as in Europe, we shall  become as corrupt as  Europe . Thomas Jefferson

The democracy will cease to exist when you take away from those who are  willing to work and give to  those who would not. Thomas Jefferson

It is incumbent on every generation to pay its own debts as it goes. A  principle which if acted on  would save one-half the wars of the  world.  Thomas Jefferson

I predict future happiness for Americans if they can prevent the government  from wasting the labors of