Tuesday, December 10, 2013

FHA Drops the Ceiling on Home Mortgages

The U.S. Federal Housing Administration will scale back the size of loans it backs to a maximum $625,500 at the beginning of 2014 to reduce its share of the U.S. mortgage market, the agency said on Friday. Currently, the FHA's limits that vary by region, from $271,050 up to $729,750 in the country's most expensive housing markets. The FHA's move brings it partly in line with taxpayer-owned mortgage financiers Fannie Mae and Freddie Mac, which use a $417,000 cap in most areas and have an upper limit of $625,500.

"As the housing market[4] continues its recovery, it is important for FHA to evaluate the role we need to play," Carol Galante, FHA Commissioner, said in a statement. "Implementing lower loan limits is an important and appropriate step as private capital[5] returns to portions of the market." Those in favor of lower limits say the government should not be helping borrowers at the high end of the real-estate market. The FHA became a major backer of new mortgage financing during the housing crisis when banks[6] became reluctant to lend.

The reductions will impact buyers in about 650 counties across the country with relatively high home prices. Loan limits are based on median home prices in each county, and they do not go any lower than $271,050. That floor will remain unchanged, the FHA said.

The FHA, which is mainly funded through insurance pr emiums it brings in, backed about a third of loans used to purchase homes last year. In September, the FHA said it needed to draw $1.7 billion in cash from the U.S. Treasury to help cover losses from troubled loans, marking the first time in its 79-year history that it has needed aid. With an FHA loan, buyers can put down as little as 3.5 percent. The FHA, which does not make loans, provides mortgage insurance to borrowers without enough of a down payment to qualify for prime loans.

Source : http://realestate.aol.com/blog/2013/12/09/fha-limits-size-home-mortgages/

Pearland City Council approves 48-hour shifts for firefighters, EMS workers

New shift structures were recently approved for firefighters, EMS workers and other department staff as part of the merger of the Pearland Fire and EMS Departments. The current shift schedule is 24 hours-on-duty with 48 hours off. When the consolidation of the departments are complete nest year, the structure will change to 48 hours-on-duty and 96 hours (four days) off.

The new policy also specifies every fire truck sent to a fire will be required to have a minimum of four people. However, the question of whether the fourth person should be a volunteer, part-time or full-time paid firefighter proved to be the more-difficult decision for city officials.

Members of the Pearland City Council discussed the various options with City Manager Bill Eisen and Fire Chief Vance Riley at a council meeting held Monday (Nov. 11).

"I think the fourth position should be a combination of full-time, part-time and volunteer firefighters." Councilmember Scott Sherman said. "You can always go back and adjust the program and the plan so I'm not sure why you'd start out with four full-time employees."

Other council members questioned if volunteers were trained and certified and wanted to know if they were dependable. Fire Chief Vance Riley said there had been few problems with volunteers not being reliable.

"They have to complete a certain number of shifts each month to be a member of the department," Riley said.

If volunteers don't pull the minimum number of shifts, they are put on probation and eventually let go if it continues to be an issue.

As for training, a new in-house fire academy would be put in place next year as part of the department consolidation, which could potentially offer volunteers the additional benefit of becoming certified by the Pearland Fire and EMS Department.

"Our volunteers are trained and certified. So far, we haven't had any volunteers ask about attending the fire academy next year," Chief Riley said. "But I guess we could arrange that if there were volunteers interested in additional training."

The department currently has 16 volunteers with another 13 members going through the new member training program, Riley said. However, an increase is expected as a part-time staff position to recruit additional volunteers had recently been created using grant funding.

"Are we having any issues with getting that fourth man?" Councilmember Tony Carbone asked. "My understanding is we are staffing them with volunteers and/or part-time firefighters."

"The fourth position is currently staffed with half part-time and half volunteer. It varies month-to-month as to whether there are enough volunteers to pull the shifts," Riley said. "But, even with part-timers we have a hard time making sure that spot is always filled. "

Carbone said he wasn't comfortable sending the trucks out with only three firefighters.

"That's why I am in favor of four full-time employees so we know that spot is filled. I am not looking to squeeze out the volunteers but when they roll up on scene I'd to have all four guys there," he said.

City Manager Bill Eisen said there would still be a place for volunteers even if four full-time firefighters were required on each truck.

"What would happen is the volunteer firefighters would be riding as a fifth person," Eisen said. "But, in my view, it would diminish the role of the volunteers if you go with the approach there has to be four full-time firefighters per apparatus."

Chief Riley was asked about the option of having volunteers riding as the fifth person in the truck.

"It makes it a little bit tight in the truck. However, they would still have an air pack and the radios just like normal," he said. "But, in the short term we would be limiting volunteers to some extent."

There were pros and cons on both sides of the issue, Riley said.

"One of the cons is right now two of the stations don't have enough sleeping quarters," he said. "When we get more stations there would be other options."

Pearland has six fire stations, three of which have sleeping quarters and are staffed 24 hours-a-day.

City officials have discussed future plans to renovate station three to include sleeping quarters. Located at 1801 E. Broadway on the city's east side, the station is currently used mainly as a storage facility.

"I don't want to squeeze out the volunteers but I do want to make sure we not having to hold people over which I think has happened in the past," Councilmember Keith Ordeneaux said. "I want to make sure we have four people on the truck for the safety of our fire fighters and our residents and still leave a place for the volunteers. But as we grow I think it is important to have those positions fully staffed."

During a council workshop last October, city officials also considered a four-shift schedule with 24 hours on-duty and 72 hours (three days) off. According to agenda documents, an employee survey showed EMS workers favored the four-shift structure.

Councilmember Susan Sherrouse said she thought asking EMS workers to answer emergency calls for 48 hours at a stretch was too stressful and advocated for the four-shift structure, using volunteers and part-time staff to take the fourth position in the truck.

"My perspective is with three shifts, you do have burnout. When you're running that ambulance it's non-stop at times; you don't have time to rest," she said. "I think it is important for retention and the safety of our citizens and our first responders that we need to have four shifts, especially since we have the opportunity to have volunteers to help us augment. We don't have that in other cities. We have a very strong volunteer tradition here. I think by augmenting that and by going to four shifts is the logical thing to do."

Councilmember Sherman countered by saying fire department officials at the workshop had said 48-hour shifts did not pose any safety risk.

"I asked this question early on in the process, that is if there are any safety concerns or statistical evidence related to whether we went with one option over the other. I specifically asked if we were putting our homeowners or fire fighters at risk and the answer I got was no; there was not a safety concern," Sherman said. "So, any implication that we are going with a lesser option that may relate to safety issues with firefighters or homeowners is not related to any information we have received here. I want to make sure that is still correct."

"Yes," Chief Riley answered.

To deal with the issue of stress and burnout among EMS workers, additional personnel would be hired next year to allow workers to rotate throughout the shifts, officials said.

Councilmember Carbone asked how often trucks were sent to fires with only three people.

"I couldn't say off the top of my head, but I would throw out an estimate of 40 percent of the time," Chief Riley said.

Carbone then made a motion to amend the ordinance to go to a three-shift schedule with four full-time firefighters.

The motion failed by a vote of three-to-two. Voting in favor: Carbone and Sherrouse. Voting against were Sherman, Ordeneaux and Councilmember Greg Hill.

"At this point, it sounds like we are shifting to the minimum and I don't agree with that; I don't think that is the right move when you're dealing with fire and EMS," Carbone said.

According to agenda documents, hiring additional firefighters to fill the fourth spot would add $1 million or more to next year's budget.

"I don't have the feeling that the budget can stand the four-shift option without a tax increase looking at future needs," Councilmember Ordeneaux said. "Unfortunately, it comes down to a matter of budget and trying to do the best job with the least amount of money."

The city manager said a compromise arrangement was also an option.

"It doesn't have to be an either-or position. For example one station could have four full-time firefighters and one station could have a combination of three full-time firefighters with the fourth spot to be filled by part-time and volunteers depending on the number of volunteers we have," Eisen said. "It doesn't have to be all-or-nothing in terms of having four full-time fire fighters at every station. It can be some mixture of the two."

After the end of the discussion, Councilmember Sherman made a motion to go with the three-shift structure with the option of a volunteer, part-time or full-time firefighter as the fourth person on calls. The motion passed three-to-two. Voting in favor: Sherman, Hill and Ordeneaux. Voting against: Carbone and Sherrouse.

Source : http://www.yourhoustonnews.com/pearland/news/pearland-city-council-approves--hour-shifts-for-firefighters-ems/article_ab40c600-fec6-556a-b1a1-1770f17f4936.html

Thursday, December 5, 2013

Jobs growth drives mortgage rates

NEW YORK (CNNMoney)

Mortgage rates jumped this week on stronger-than-expected economic reports, according to Freddie Mac's weekly survey.

mortgage rates 12413The 30-year, fixed-rate loan, the most popular product for homebuyers, rose to 4.46% from 4.29% last week. The average rate on a 15-year, fixed-rate mortgage, typically used for refinancing higher interest mortgages, also jumped 0.17 percentage point to 3.47%.
This week's rate approached a high for the year. Rates on the 30-year have ranged from a low of 3.34% in the first week of January to a high
Source : http://rss.cnn.com/~r/rss/money_realestate/~3/enqLEtDl-_c/index.html

Wednesday, December 4, 2013

Soaring new home sales: Not what they seem

It was the sharpest jump in more than three decades, but housing watchers are already poking holes in the new home sales numbers. After delays due to the government shutdown, data for both September and October were released together, in addition to a large downward revision for August. Follow the numbers, and the gains are not quite what the headline seems.

Contracts signed to buy newly built homes jumped 25.4 percent in October month to month, after falling 6.6 percent in September from August. The seasonally adjusted annual rate went from an originally reported 421,000 units in August, which was revised down to 379,000 units, and to 354,000 units in September. The number for September was a 10 percent drop from September of 2012. It then rose to 444,000 units in October. There is a nearly 20 percent margin of error on all these numbers.

"The October 'preliminary' report released this morning, along with the terrible August and September data, is the outlier and will be revised lower next month in line with the new trend lower that began in July," noted housing analyst Mark Hanson.

August sales estimates were revised down by 15 percent on an unadjusted basis and September sales dropped from there.

"Both the September and October new home sales data were released together and averaged 399,000 annualized versus the estimate of 424,000 and compares with the average year-to-date of 422,000," said Peter Boockvar, chief market analyst of economic advisory firm  The Lindsey Group. "The weakness seen in July through September was clearly in response to the rise in rates and the almost 25-basis-point decrease in mortgage rates in October seemed to have brought out buyers that were previously on the fence."
[3]

Builders say it wasn't just the falling rates, but the end of the government shutdown.

Source : http://www.cnbc.com/id/101246658

New Home Sales Surge in October as Supply Dwindles



Lucia Mutikani
WASHINGTON -- Sales of new U.S. single-family homes recorded their biggest increase in nearly 33½ years in October, suggesting the housing market recovery remains intact despite higher mortgage rates.
New Home SalesThe Commerce Department said Wednesday[1] sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 units. It also said new home sales fell 6.6 percent in September.
The release of both the September and October reports was delayed because of a 16-day partial shutdown of the government[2] last month.
Economists polled by Reuters had expected new home sales to set a 428,000-unit pace last month.
Compared with October last year, new home sales were up 21.6 percent.
The strong rise in new home sales, which are measured when contracts are signed, suggested higher mortgage rate had not derailed the housing market recovery.
Higher mortgage rates[3] have slowed the pace of home sales, but demand for accommodation as household formation continues to recover from multidecade lows is keeping demand supported.
Home resales fell in October for a second straight month and confidence among single-family home builders has ebbed somewhat since nearing an eight-year high in August.
Strong new home sales in October saw the stock of houses on the market falling 3.7 percent after touching their highest level in nearly three years in September. Despite the tight supply of properties, the median price of a new home slipped 0.6 percent from a year-ago.
At October's sales pace it would take 4.9 months to clear the houses on the market, down from 6.4 months in September. A supply of 6.0 months is normally considered as a healthy balance between supply and demand.
Source : http://realestate.aol.com/blog/2013/12/04/new-home-sales-surge-october-higher-mortgage-rates/


New mortgage rules may mean less choice

(CNNMoney)

New rules launching early next year designed to make mortgages safer may result in less choice for borrowers.

The problem: small banks may drop out of the business because of the cost of tougher regulations.

Beginning Jan. 10, banks have to ensure that monthly mortgage payments are affordable, a result of the Dodd Frank law passed in 2010. The failure to do so carries strict penalties.

"My concern is that we're going to be in an environment where some lenders are too small to comply," said David Stevens, CEO of the Mortgage Bankers Association.

During the housing bubble, some banks issued loans without even checking applicants' income or assets.

Under the new rules, lenders must carefully determine that borrowers have the ability to repay their loans. That means, for example, that the banks can't lend to anyone whose total debt payments would exceed 43% of their income. Lenders must carefully examine and double check pay statements, bank records, tax returns and other paperwork provided by borrowers.

Banks will have to make three main changes, according to Anthony Hsieh, CEO of loanDepot, an online mortgage bank.

They will have to update their underwriting policies and procedures, change their technology and retrain staff.

Is there a housing bubble in California?

Already, lending had become more complicated.

Five years ago, Total Mortgage, a mid-sized lender in Connecticut, had a single attorney on retainer to handle compliance issues, according to its president John Walsh.

Today, Total Mortgage has three full-time workers who work exclusively on compliance in addition to the outside counsel, even though his business has not grown.

"I expended a lot of effort to stay ahead of the new regulations," Walsh said. "You just can't make mistakes these days."

Related: 10 Best Places to Retire[4]

Banks large and small are hiring outside companies to handle a share of their mortgage underwriting to ensure the quality, according to Jeff Taylor, co-founder of Digital Risk, a provider of risk, compliance and transaction management services.

Big banks can handle the cost, but small lenders may not be able to afford all the extra manpower.

The changes are coming at an already challenging time. Fewer homeowners have been refinancing their old, high interest mortgages. "Now that the refi boom is over, we'll see a lot of small banks fading away," said Taylor.

It's possible that bankers, never receptive to regulation, may be overstating the impact of the new rules, according to Ellen Schloemer, spokeswoman for the Center for Responsible Lending, a consumer advocacy group.

She points to an October report from CoreLogic that asserted that lenders should be able to meet the requirements. The report was written by Margarita Brose, a consultant on lender risks, and Faith Schwartz, who ran Hope Now, a coalition of lenders, consumer groups and government organizations that fights foreclosure.

Lenders will "figure out a way to deliver . . . mortgages in a way that meets all the regulatory requirements, incorporates sound lending and consumer protections -- and makes a profit," according to the report's authors.

Source : http://rss.cnn.com/~r/rss/money_realestate/~3/Zg2Uv1bAM6U/index.html

Mortgage Applications Slide for Fifth Straight Week

Luciana Lopez

NEW YORK -- Applications for U.S. home loans tumbled in the latest week, led by a sharp slide in refinancing applications, data from an industry group showed Wednesday.

The Mortgage Bankers Association said[1] its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, sank 12.8 percent in the week ended Nov. 29.

The week's results included an adjustment for the Thanksgiving holiday last Thursday, the group said.

The data marked the fifth straight weekly drop for the index, taking it to its lowest level since early September.

The fall in mortgage applications comes as investors try to gauge when the U.S. Federal Reserve[2] might exit its bond-buying program.

The Fed has said it would begin to scale back its $85 billion a month in purchases of Treasuries and mortgage-backed securities when policy makers are convinced of a steady, self-sustaining recovery.

But data on the world's biggest economy[3] have been mixed, leaving investors uncertain about the future path of U.S. monetary policy.

MBA data showed 30-year mortgage rates rose 3 basis points in the latest week to 4.51 percent.

The refinancing index sank 17.5 percent while the purchase index, a leading indicator of home sales, fell 4.1 percent.

The mortgage survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Source : http://realestate.aol.com/blog/2013/12/04/mortgage-applications-slide-fifth-straight-week-mba/