Good Afternoon!
Standard and Poors released today “The Shadow Inventory Of Troubled Mortgages Could Undo U.S. Housing Price Gains” ( I have been saying for a long time this shadow inventory is an issue) and now the data is being published for all to see. This is a must read for all in the housing industry as it touches on an issue that has long been swept under the carpet and now the carpet is being cleaned. Add to this that the new Home Affordable Foreclosure Assistance Program (HAFA) goes into effect on April 1, 2010 – this gives servicers and borrowers incentives to move homes thru the foreclosure process much more quickly and efficiently. This will force the foreclosure process along and the 7.7 million homes (yes that number is correct) that are in some part of the foreclosure process will be done sooner so they can be worked back into the housing market to sell. Guess what this can mean for the most part? Lower home prices since Servicers will be trying to get these homes off of the “non-performing asset” part of the balance sheet and they will be coming to market instead. It looks like this process will take about 29-33 months to work though, not a good sign since the housing market is still pretty fragile right now.

I have been letting you know also that FHA is making some very serious changes to the program – including the following:
• Mortgage Insurance Premiums increased from 1.75 to 2.25% –
Effective April 1st
• Seller Contribution decreased from 6% to 3% – TBA early Spring
• Increased Monthly MI – Effective date TBA
• Increased down payment for borrowers with lower credit scores TBA

This is very important as buyers will feel the impact via more cash to close AND with the updates to RESPA (Real Estate Settlement Procedures Act), if the Earnest Money Agreement is not written properly, the buyer gets to pay for the owners title policy and it does count toward the 3% or 6% in seller closing cost concessions.

On a totally different note – China as of December is now the second largest holder of US Debt, Japan has now jumped to the top, interesting! The other thing I found very interesting today is that (as you may know) copper is really being run up in price. It costs about $1 a pound to produce and it is going for about $3+ as of this morning. 2/3 of the world has dropped copper consumption by 20% and those that are buying are stock piling as demand is still high but consumption is not and is actually down. Another bubble perhaps? We shall see!

If you have questions on the FHA info or would like to contact me – I am at Thanks and have a great night!

Theresa Springer
Senior Mortgage Banker
NMLS #70667