Friday, March 27, 2009
Do-it-yourselfers on a budget!
Check out this great site for great home decorating and gift ideas that won't break the bank. http://www.designspongeonline.com/
Want to go green?
Check out the following website for great eco-friendly tips and information.
http://www.inhabitat.com/
http://www.inhabitat.com/
Wednesday, March 25, 2009
Treasury Unveils Details of New Public-Private Investment Program
Treasury Unveils Details of New Public-Private Investment Program The Treasury Department today issued details on its Public-Private Investment Programs in conjunction with the FDIC and the Federal Reserve Board to buy troubled mortgage loans and mortgage-backed securities from banks. The programs will use $75 billion to $100 billion in Troubled Asset Relief Program funds and capital from private investors to generate $500 billion to purchase troubled assets, with the potential to expand to $1 trillion over time. The PPIP has two components: a “Legacy Loan Program” and a “Legacy Securities Program.” The Legacy Loan Program would encourage private investors to buy loans from banks in the following way:
A bank would assemble a pool of residential mortgage loans it is seeking to divest. For example, assume the mortgages have a face value of $100.
The FDIC would determine the amount of funding it would guarantee, not to exceed a 6-to-1 debt-to-equity ratio.
The pool would be auctioned by the FDIC to private sector bidders. The highest bidder -- in this example, $84 -- would form a Public-Private Investment Fund to purchase the pool.
Of the $84 purchase price, the buyer would receive financing by issuing debt guaranteed by the FDIC of $72, leaving $12 of equity.
Treasury would then provide 50 percent of the equity funding required on a side-by-side basis with the investor. In this example, Treasury and the investor would each invest $6.
The private investor would manage the servicing of the asset pool and the timing of the sale of the pool, with oversight by the FDIC.
The Legacy Securities Program consists of two related parts to draw private capital into the mortgage-backed securities market by providing debt financing from the Federal Reserve under the Term Asset-Backed Securities Loan Facility and through matching private capital.
Eligible assets are expected to include certain non-agency residential mortgage-backed securities that were originally AAA-rated and outstanding commercial mortgage-backed securities and asset-backed securities that are AAA-rated.
Treasury will launch the application process for managers interested in the program.
A fund manager would submit a proposal and is pre-qualified to raise private capital to participate in joint investment programs with Treasury.
The government agrees to provide a one-to-one match for every dollar of private capital that the fund manager raises.
For example, the fund manger raises $100 of private capital. Treasury provides $100 equity co-investment and provides a $100 loan to the Public-Private Investment Fund. Treasury will also consider an additional loan up to $100 to the fund.
The fund manager has $300 (or possibly $400) in total capital with which to purchase the securities.
The fund manager has full discretion in investment decisions, but will predominantly follow a long-term buy-and-hold strategy. The investment fund would be eligible to take advantage of the expanded TALF program for legacy securities when it is launched.
Materials released by Treasury today stated that executive compensation restrictions will not apply to either the Legacy Loan Program or the Legacy Securities Program. Additional details of the programs will need to be fleshed out through rulemakings, which Treasury expects will be commenced soon.
Treasury said that by coupling government financing with private investments, the Public-Private Investment Program maximizes purchasing power; ensures that risks and rewards are shared among taxpayers and private sector participants; and reduces the likelihood that the government will overpay for assets by letting the private sector competition price out the assets. “This approach is superior to the alternatives of either hoping for banks to gradually work these assets off their books or of the government purchasing the assets directly,” Treasury said in its announcement.Read Treasury’s fact sheet.
Other Treasury links of note:Legacy Securities Summary of TermsLegacy Securities FAQsApplication for Private Assets ManagersLegacy Loans Summary of TermsLegacy Loans FAQs
ABA “Breaking News” e-mails are a service of ABA Daily Newsbytes, a daily e-mail bulletin published for the benefit of ABA members. If you are not subscribed to ABA Daily Newsbytes but would like to be, please register on aba.com. For other inquiries, please email ABA Newsbytes Editor, or call 1-800-BANKERS. American Bankers Association, 1120 Conn. Ave NW, Wash. DC 20036
A bank would assemble a pool of residential mortgage loans it is seeking to divest. For example, assume the mortgages have a face value of $100.
The FDIC would determine the amount of funding it would guarantee, not to exceed a 6-to-1 debt-to-equity ratio.
The pool would be auctioned by the FDIC to private sector bidders. The highest bidder -- in this example, $84 -- would form a Public-Private Investment Fund to purchase the pool.
Of the $84 purchase price, the buyer would receive financing by issuing debt guaranteed by the FDIC of $72, leaving $12 of equity.
Treasury would then provide 50 percent of the equity funding required on a side-by-side basis with the investor. In this example, Treasury and the investor would each invest $6.
The private investor would manage the servicing of the asset pool and the timing of the sale of the pool, with oversight by the FDIC.
The Legacy Securities Program consists of two related parts to draw private capital into the mortgage-backed securities market by providing debt financing from the Federal Reserve under the Term Asset-Backed Securities Loan Facility and through matching private capital.
Eligible assets are expected to include certain non-agency residential mortgage-backed securities that were originally AAA-rated and outstanding commercial mortgage-backed securities and asset-backed securities that are AAA-rated.
Treasury will launch the application process for managers interested in the program.
A fund manager would submit a proposal and is pre-qualified to raise private capital to participate in joint investment programs with Treasury.
The government agrees to provide a one-to-one match for every dollar of private capital that the fund manager raises.
For example, the fund manger raises $100 of private capital. Treasury provides $100 equity co-investment and provides a $100 loan to the Public-Private Investment Fund. Treasury will also consider an additional loan up to $100 to the fund.
The fund manager has $300 (or possibly $400) in total capital with which to purchase the securities.
The fund manager has full discretion in investment decisions, but will predominantly follow a long-term buy-and-hold strategy. The investment fund would be eligible to take advantage of the expanded TALF program for legacy securities when it is launched.
Materials released by Treasury today stated that executive compensation restrictions will not apply to either the Legacy Loan Program or the Legacy Securities Program. Additional details of the programs will need to be fleshed out through rulemakings, which Treasury expects will be commenced soon.
Treasury said that by coupling government financing with private investments, the Public-Private Investment Program maximizes purchasing power; ensures that risks and rewards are shared among taxpayers and private sector participants; and reduces the likelihood that the government will overpay for assets by letting the private sector competition price out the assets. “This approach is superior to the alternatives of either hoping for banks to gradually work these assets off their books or of the government purchasing the assets directly,” Treasury said in its announcement.Read Treasury’s fact sheet.
Other Treasury links of note:Legacy Securities Summary of TermsLegacy Securities FAQsApplication for Private Assets ManagersLegacy Loans Summary of TermsLegacy Loans FAQs
ABA “Breaking News” e-mails are a service of ABA Daily Newsbytes, a daily e-mail bulletin published for the benefit of ABA members. If you are not subscribed to ABA Daily Newsbytes but would like to be, please register on aba.com. For other inquiries, please email ABA Newsbytes Editor, or call 1-800-BANKERS. American Bankers Association, 1120 Conn. Ave NW, Wash. DC 20036
Federal Reserve Surprises Financial Markets
Here we go again, with the talking heads on financial news misinterpreting the impact of the Fed's actions on home loan rates.
Here's the scoop. What the Fed just announced is huge – they have committed to buy another $750B in Mortgage Backed Securities, and $300B in Treasuries.
But what does this mean and why do you care?
Their actions provide a demand for Mortgage Backed Securities, which should help keep a ceiling on home loan rates moving much higher in the foreseeable future. That's good news, for homebuyers who are seeing the bargains out there and understanding that now is the time to act. Good news for those who are ready to refinance too.
But an important distinction – this does not mean rates may move significantly lower. Depending on exactly which coupons the Fed purchases when they go shopping for Mortgage Backed Securities, their actions may keep a lid on rates, but not push them very much lower. And based on what they've been buying since the beginning of this year when they started their purchasing program – that is exactly how it has played out.
Present home loan rates are within inches of historic lows. What is keeping you on the sidelines from acting now to refinance and get some dollars back into your own pocket, where they belong – or moving forward to buy the home of your dreams, while it is still on sale?
Here's the scoop. What the Fed just announced is huge – they have committed to buy another $750B in Mortgage Backed Securities, and $300B in Treasuries.
But what does this mean and why do you care?
Their actions provide a demand for Mortgage Backed Securities, which should help keep a ceiling on home loan rates moving much higher in the foreseeable future. That's good news, for homebuyers who are seeing the bargains out there and understanding that now is the time to act. Good news for those who are ready to refinance too.
But an important distinction – this does not mean rates may move significantly lower. Depending on exactly which coupons the Fed purchases when they go shopping for Mortgage Backed Securities, their actions may keep a lid on rates, but not push them very much lower. And based on what they've been buying since the beginning of this year when they started their purchasing program – that is exactly how it has played out.
Present home loan rates are within inches of historic lows. What is keeping you on the sidelines from acting now to refinance and get some dollars back into your own pocket, where they belong – or moving forward to buy the home of your dreams, while it is still on sale?
Sunday, March 1, 2009
Notable Quotable
Notable Quotable
Posted: 26 Feb 2009 07:33 PM PST
Contacting Congress Couldn’t Be Easier
The National Association of Realtors’ Broker Involvement Program makes it as easy as clicking a couple of buttons for Realtors to contact Congress regarding issues such as the housing stimulus package recently announced by President Obama.Any U.S. Broker/Owner or Manager can sign up for the program at realtoractioncenter.com/realtors/brokers. Then, when an important issue is before Congress, NAR will call and e-mail the Broker/Owner with an alert that a call for action is coming. NAR Calls for Action generally occur five to six times annually.
If the Broker/Owner agrees, NAR will send all the agents in the company an e-mail under the Broker/Owner’s name and with the company logo. It includes an imbedded e-mail message that, if the agent hits submit, will be forwarded to that agent’s senators and congressional representatives.
500,000 e-Mails to CongressA call to action last December in relation to the stimulus package generated more than 500,000 e-mails from Realtors to members of Congress. Messages have also gone out dealing with FHA loan limits and the tax credit for homebuyers.
More than 600 brokers have signed up for the program, says Ed Lawler, a former RE/MAX Broker/Manager from Ft. Collins, Colo., who directs the program for NAR.
“Since this is one of the most important times in our industry, and real estate is at the focus of much of the legislation, the ability to rally the troops is very important,” Lawler says. He hopes to have 2,500 brokers on the list by the end of 2009, who in turn will influence more than 250,000 agents.
Posted: 26 Feb 2009 07:33 PM PST
Contacting Congress Couldn’t Be Easier
The National Association of Realtors’ Broker Involvement Program makes it as easy as clicking a couple of buttons for Realtors to contact Congress regarding issues such as the housing stimulus package recently announced by President Obama.Any U.S. Broker/Owner or Manager can sign up for the program at realtoractioncenter.com/realtors/brokers. Then, when an important issue is before Congress, NAR will call and e-mail the Broker/Owner with an alert that a call for action is coming. NAR Calls for Action generally occur five to six times annually.
If the Broker/Owner agrees, NAR will send all the agents in the company an e-mail under the Broker/Owner’s name and with the company logo. It includes an imbedded e-mail message that, if the agent hits submit, will be forwarded to that agent’s senators and congressional representatives.
500,000 e-Mails to CongressA call to action last December in relation to the stimulus package generated more than 500,000 e-mails from Realtors to members of Congress. Messages have also gone out dealing with FHA loan limits and the tax credit for homebuyers.
More than 600 brokers have signed up for the program, says Ed Lawler, a former RE/MAX Broker/Manager from Ft. Collins, Colo., who directs the program for NAR.
“Since this is one of the most important times in our industry, and real estate is at the focus of much of the legislation, the ability to rally the troops is very important,” Lawler says. He hopes to have 2,500 brokers on the list by the end of 2009, who in turn will influence more than 250,000 agents.
Karen Davis,CDPE "Saving families from foreclosure" RE/MAX Allegiance "Want TOP Results...Call a TOP Agent"! Search the entire mls @ http://www.agentkarendavis.com/ Direct Mobile: 757-535-4884 Direct Office: 757-227-3615 I LOVE REFERRALS!!
New U.VA Study Sheds Light on Foreclosures in States and Metropolitan Areas
New U.Va. Study Sheds Light on Foreclosures in States and Metropolitan Areas
Posted: 27 Feb 2009 04:02 PM PST
Very interesting press release below reference a recent UVA study. The media wants us all to belive that prices have collapsed across the country. The reality is 87 percent of the national declines have been in, you guessed it, Arizona, Nevada, Florida and California. Kudos to Andrew Kantor over at varbuzz.com for posting earlier.
————–
February 25, 2009 — National housing price declines and foreclosures have not been as severe as some analyses have indicated, and they are not as important as financial manipulations in bringing on the global recession, according to a new analysis of foreclosures in 50 states, 35 metropolitan areas and 236 counties by University of Virginia professor William Lucy and graduate student Jeff Herlitz.
Their analysis shows that most foreclosures have been concentrated in California, Florida, Nevada, Arizona and a modest number of metropolitan counties in other states. In fact, they claim that “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines.”
“California had only 10 percent of the nation’s housing units, but it had 34 percent of foreclosures in 2008,” Lucy and Herlitz reported.
California was vulnerable to foreclosures because the median value of owner-occupied housing in 2007 was 8.3 times the median family income, while the 2007 national average was only 3.2 times higher than median family income (and in 2000, it was lower still at 2.4).
Another vulnerability to foreclosures was seen in the Los Angeles metropolitan area, where more than 20 percent of mortgage-holders in each county were paying at least 50 percent of their income in housing-related costs.
“But even in California, enormous variations existed among jurisdictions, such as in the San Francisco area, where Solano County had 3.69 percent of housing units in foreclosure in November 2008, while only 0.24 percent of housing units were in foreclosure in the City of San Francisco — a 15 to 1 difference,” according to Lucy and Herlitz.
Across the country, the run-up in housing prices from 2000 to the national peak in 2006 has contributed to a 10-months’ supply of houses for sale, nearly six months more than the norm from 1998 through 2005, they concluded. But most of the excess supply is either foreclosed properties for sale in declining areas — which constituted 45 percent of total sales in some months of 2008 — or “opportunity” sale offerings by owners seeking to take profits on the price escalation of previous years, which often happens when the price of existing homes rise appreciably. Only a small portion of the excess supply is from current construction of new houses, they said.
Potential losses in housing values from 2008 foreclosures in all 50 states — if values decline to 2000 levels — were less than one-third of the $350 billion provided to banks and insurance companies to cope with losses in mortgage-backed securities, Lucy and Herlitz estimated.
“Damage to the balance sheets of large banks and AIG occurred not mainly from losses on foreclosed residential mortgages, but because of borrowing short-range to buy long-range derivatives and from selling credit default swaps insuring derivatives backed by mortgage payments,” Lucy and Herlitz said.
“These financial manipulations had high-speed forward gears, but when the housing bubble burst, the banks and AIG discovered they had neglected to create a reverse gear with which they could separate foreclosed properties from some forms of mortgage-backed securities.”
Although there are pockets of substantial declines, claims that overall housing values have tanked nationwide are exaggerated, they said. “In the Washington, D.C. metropolitan area, for example, prices have barely changed in the District of Columbia, Alexandria and Arlington County, and parts of Fairfax County in Virginia. The largest price declines (more than 30 percent in 2008) have been in Prince William County, Va., but even there, the range of price declines in its six zip codes ranged from 49 percent to only 6 percent.”
The number of foreclosures usually were lower in central cities than in some suburban counties, probably due to less demand in those suburbs, according to Lucy and Herlitz.
Part of this loss of demand can be accounted for by shifts in the age distribution in the population. The population segment from age 30 to 44, when the biggest increase in home ownership occurs, has been declining in recent years. Those are prime child-rearing years for families, so demand for houses with four or more bedrooms has declined and led to an excess of large houses in some counties.
The Obama administration’s proposed foreclosure prevention program sets a target of households spending between 31 percent and 38 percent of their income on housing-related expenses. The program will try to prevent foreclosures in residences where Fannie Mae and Freddie Mac have purchased the mortgages by permitting downward adjustments to mortgage rates, to where the value of mortgages is not more than 105 percent of the houses’ value, they said.
“This policy will help homeowners where price declines have been modest, as they have been in most states, most metropolitan areas and most counties,” Lucy and Herlitz said.
This study includes foreclosure, house value and income data for 2007 or 2008 for 50 states, the 35 largest metropolitan areas and 236 counties in the 35 metropolitan areas.
Lucy is Lawrence Lewis Jr. Professor of Urban and Environmental Planning in U.Va.’s School of Architecture. Herlitz is a graduate student in the Department of Urban and Environmental Planning.For information, contact William Lucy at 434-295-4453 or whl@virginia.edu.
Karen Davis,CDPE "Saving families from foreclosure" RE/MAX Allegiance "Want TOP Results...Call a TOP Agent"! Search the entire mls @ http://www.agentkarendavis.com/ Direct Mobile: 757-535-4884 Direct Office: 757-227-3615 I LOVE REFERRALS!!
Posted: 27 Feb 2009 04:02 PM PST
Very interesting press release below reference a recent UVA study. The media wants us all to belive that prices have collapsed across the country. The reality is 87 percent of the national declines have been in, you guessed it, Arizona, Nevada, Florida and California. Kudos to Andrew Kantor over at varbuzz.com for posting earlier.
————–
February 25, 2009 — National housing price declines and foreclosures have not been as severe as some analyses have indicated, and they are not as important as financial manipulations in bringing on the global recession, according to a new analysis of foreclosures in 50 states, 35 metropolitan areas and 236 counties by University of Virginia professor William Lucy and graduate student Jeff Herlitz.
Their analysis shows that most foreclosures have been concentrated in California, Florida, Nevada, Arizona and a modest number of metropolitan counties in other states. In fact, they claim that “66 percent of potential housing value losses in 2008 and subsequent years may be in California, with another 21 percent in Florida, Nevada and Arizona, for a total of 87 percent of national declines.”
“California had only 10 percent of the nation’s housing units, but it had 34 percent of foreclosures in 2008,” Lucy and Herlitz reported.
California was vulnerable to foreclosures because the median value of owner-occupied housing in 2007 was 8.3 times the median family income, while the 2007 national average was only 3.2 times higher than median family income (and in 2000, it was lower still at 2.4).
Another vulnerability to foreclosures was seen in the Los Angeles metropolitan area, where more than 20 percent of mortgage-holders in each county were paying at least 50 percent of their income in housing-related costs.
“But even in California, enormous variations existed among jurisdictions, such as in the San Francisco area, where Solano County had 3.69 percent of housing units in foreclosure in November 2008, while only 0.24 percent of housing units were in foreclosure in the City of San Francisco — a 15 to 1 difference,” according to Lucy and Herlitz.
Across the country, the run-up in housing prices from 2000 to the national peak in 2006 has contributed to a 10-months’ supply of houses for sale, nearly six months more than the norm from 1998 through 2005, they concluded. But most of the excess supply is either foreclosed properties for sale in declining areas — which constituted 45 percent of total sales in some months of 2008 — or “opportunity” sale offerings by owners seeking to take profits on the price escalation of previous years, which often happens when the price of existing homes rise appreciably. Only a small portion of the excess supply is from current construction of new houses, they said.
Potential losses in housing values from 2008 foreclosures in all 50 states — if values decline to 2000 levels — were less than one-third of the $350 billion provided to banks and insurance companies to cope with losses in mortgage-backed securities, Lucy and Herlitz estimated.
“Damage to the balance sheets of large banks and AIG occurred not mainly from losses on foreclosed residential mortgages, but because of borrowing short-range to buy long-range derivatives and from selling credit default swaps insuring derivatives backed by mortgage payments,” Lucy and Herlitz said.
“These financial manipulations had high-speed forward gears, but when the housing bubble burst, the banks and AIG discovered they had neglected to create a reverse gear with which they could separate foreclosed properties from some forms of mortgage-backed securities.”
Although there are pockets of substantial declines, claims that overall housing values have tanked nationwide are exaggerated, they said. “In the Washington, D.C. metropolitan area, for example, prices have barely changed in the District of Columbia, Alexandria and Arlington County, and parts of Fairfax County in Virginia. The largest price declines (more than 30 percent in 2008) have been in Prince William County, Va., but even there, the range of price declines in its six zip codes ranged from 49 percent to only 6 percent.”
The number of foreclosures usually were lower in central cities than in some suburban counties, probably due to less demand in those suburbs, according to Lucy and Herlitz.
Part of this loss of demand can be accounted for by shifts in the age distribution in the population. The population segment from age 30 to 44, when the biggest increase in home ownership occurs, has been declining in recent years. Those are prime child-rearing years for families, so demand for houses with four or more bedrooms has declined and led to an excess of large houses in some counties.
The Obama administration’s proposed foreclosure prevention program sets a target of households spending between 31 percent and 38 percent of their income on housing-related expenses. The program will try to prevent foreclosures in residences where Fannie Mae and Freddie Mac have purchased the mortgages by permitting downward adjustments to mortgage rates, to where the value of mortgages is not more than 105 percent of the houses’ value, they said.
“This policy will help homeowners where price declines have been modest, as they have been in most states, most metropolitan areas and most counties,” Lucy and Herlitz said.
This study includes foreclosure, house value and income data for 2007 or 2008 for 50 states, the 35 largest metropolitan areas and 236 counties in the 35 metropolitan areas.
Lucy is Lawrence Lewis Jr. Professor of Urban and Environmental Planning in U.Va.’s School of Architecture. Herlitz is a graduate student in the Department of Urban and Environmental Planning.For information, contact William Lucy at 434-295-4453 or whl@virginia.edu.
Karen Davis,CDPE "Saving families from foreclosure" RE/MAX Allegiance "Want TOP Results...Call a TOP Agent"! Search the entire mls @ http://www.agentkarendavis.com/ Direct Mobile: 757-535-4884 Direct Office: 757-227-3615 I LOVE REFERRALS!!
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