FEDS CUT INTEREST RATE

This afternoon the Federal Reserve cut the Fed Funds rate a quarter of one percent from 2.25% to 2.0%. The prime rate should follow with a drop of one-quarter percent from 5.25% to 5.0%. The rate cut will not affect fixed rate mortgages, however, those borrowers with home equity loans, a home equity line of credit, or adjustable rate mortgage (ARM) should see some relief in their monthly payments when the rate adjustment date occurs. This should be good news for those homeowners or investors facing financial difficulties with their payments.

In an interview with Bankrate.com Orawin Velz, senior director at the Mortgage Bankers Association, predicts "mortgage rates will not go too much higher this year. It’s going to be a slow-growth year, so we’re not looking for a big pickup in rates at all," she says. This is also good news for those thinking about making a real estate purchase in the near future.

FLOOD INSURANCE

It is recommended you should obtain flood insurance if you are a new homebuyer or existing homeowner without flood insurance, and do it tomorrow. Your lender may not require flood insurance, but the premiums are relatively inexpensive and rates are set by the federal government. It takes 30 days for a new policy to become effective, and signing up on May 1 would make your coverage effective on June 1 for the start of the rainy season. Naples, Bonita Springs, and Estero are located in an area of Florida which is sub-tropical in nature. As a sub-tropical we are subject to extended periods of heavy rains during thunderstorms or tropical depressions. Your homeowners insurance does not cover ground water. June 1 is also the start of the hurricane season.

HURRICANE INSPECTIONS

Speaking of hurricane season, in a recent survey of My Safe Florida Home participants found that 97 percent of homeowners in the program said the application process is easy, 80 percent had a good experience and 82 percent said they would recommend it to neighbors. By using the program you will discover improvements that your home might need to make it safer and as an added benefit, you might be able to save some money on your annual homeowners insurance.

FIRST TIME HOME BUYERS

Some programs for first-time buyers still offer slightly more lenient underwriting standards that make it easier to get into a home, or discounted interest rates that make homeownership more affordable. But it’s harder to find first-timer mortgages today.

MORTGAGE FRAUD

In light of Florida’s current real estate market and rapid rise in foreclosures, the state Senate Tuesday passed a second bill in as many years increasing the penalties for those convicted of mortgage fraud.

FLORIDA CONSUMER CONFIDENCE

Falling housing prices, tighter credit and rising gas and food costs caused Florida’s consumer confidence to drop four points to 66 in April. However, perceptions as to whether it is a good time to buy big-ticket consumer items rose three points, and housing prices have all but bottomed out, according to the survey director.

CREATOR OF MODERN MORTGAGES SAYS ‘FIX IT’

The current mortgage crisis is unique, and for the first time, investors from around the world had a financial structure that allowed them to easily invest in U.S. mortgages. But the man credited with developing this financial system that bundled mortgages and sold them as securities on Wall Street now says he supports U.S. Rep Barney Frank’s bill that would make lenders accept losses in exchange for government guarantees. "At this point in the crisis, those of us who are practitioners would take what we can get," says Lewis Ranieri, CEO of Ranieri & Co. "I wouldn’t turn down less because we need a re-performing program, which is what in effect the Frank bill is." Ranieri, who developed the securitization market while he worked at Salomon Brothers, also says he favors more regulation in the loan market. "The whole system could sell a person the biggest investment he ever had, his house, in an inappropriate structure," he says. "It makes no sense. It is on its surface patently nuts." Source: Reuters News

It seems as though Lewis Renieri missed the issue or safeguards when he developed the securitization market for mortgage securities. Maybe he should be endorsing programs or legislation which will recast interest rates for financial strapped homeowners or working with banks to efficiently and promptly address borrowers concerns when they realize they are facing financial difficulties – after all isn’t part of the pie (interest) better than no pie (foreclosures).

FORECLOSURES

The number of homes in some stage of the foreclosure process rose again in the first quarter, according to RealtyTrac. And while Florida had a number of cities near the top of the list, California and Nevada landed the top spots. Stockton, Calif., ranked Number 1, with one out of every 30 homeowners in some stage of foreclosure in the first quarter.

COUNTRYWIDE

Bank of America Corp. will expand efforts over the next two years to help Countrywide Financial Corp. borrowers avoid foreclosure, a top bank executive said Monday, adding it would help at least 265,000 borrowers with $40 billion in problem loans.

CONSUMER CONFIDENCE

Consumer confidence fell 3.6 points in April, though most of the drop resulted from a decline in attitudes about current economic conditions. Expectations about conditions six months in the future remained relatively unchanged.

HOUSING MARKET

According to the United States Census Bureau, 2.9 percent of all U.S. homes – excluding rental properties – were vacant and for sale in the first quarter, compared with 2.8 percent in the fourth quarter of 2007, setting a new record. The United States homeownership rate remained at 67.8 percent in the first quarter.  

COUNTRYWIDE

Consumer advocates claim Countrywide has not been responsive enough to homeowners struggling to make mortgage payments, and that Bank of America needs to do more when it takes over the troubled lender. The Fed is currently investigating the allegation, as it must do under the law, to make sure consumers wouldn’t be harmed by the takeover. This should help with getting prompt responses for possible short sale situations as well.

FHA

New government data shows that claims on Federal Housing Administration mortgage insurance, which is backed by the government to prevent foreclosures, rose by 61 percent last year compared to five years ago. These payoffs allowed more than six in 10 homeowners who defaulted on FHA-insured loans to stay in their homes.

BUYERS AND SELLERS

It’s a good time to buy a home while inventory is high, mortgage rates continue to stay low and sellers are willing to negotiate. However, squeezed by high prices for gasoline, food and other products, worried about their jobs and rattled by talk of a recession, buyers are wary of large purchases right now.

REAL ESTATE TAX AMENDMENT

Florida’s Taxation and Budget Reform Commission voted yesterday in favor of a constitutional amendment to decrease property taxes in exchange for higher sales taxes, providing it’s approved by 60 percent of voters in November.

FORECLOSURES

The Bush administration "strongly opposes" Democrats’ housing rescue package, an official announced yesterday, calling it a bailout that would expose taxpayers to excessive risk. Among other things, the plan would relax Federal Housing Administration standards for at-risk homeowners seeking an Federal Housing Administration loan.

MORTGAGE RATES

Rates on 30-year mortgages topped 6 percent for the first time in six weeks as financial markets grew more worried about rising inflation pressures.

HOUSING MARKET

And now for the heartwarming side of the housing bust: It’s helping some people buy homes that they couldn’t afford a couple of years ago.

SHORT SALES

What exactly is a "short sale"? The National Association of REALTORS may decide the answer at its meetings in May. Technically, it’s not a short sale until a bank agrees to accept less money than it’s owed for a mortgage loan, and that raises questions on how some listings should be presented in the Multiple Listing Services.