David Bruce

February 23rd, 2009

National Real Estate News Update

Fears about the economy led to a stock market decline and pushed mortgage rates a little lower during the week. Even with Tuesday’s passage of the new $787 billion stimulus plan, economic growth forecasts from Wall Street economists and from the Fed were revised lower.

Wednesday, President Obama announced the $275 billion Homeowner Stability Initiative, which contained broad outlines of three major elements intended to help prevent foreclosures and falling home values.

First, the government will make it easier for many borrowers who currently may not be able to refinance their loans to refinance. Only existing owner-occupied loans owned or guaranteed by Fannie Mae or Freddie Mac are eligible for consideration under the plan. The government estimates that 4 to 5 million borrowers will be eligible for this program. Details regarding qualification and procedures for this refinance program are expected to be released in coming weeks.

Second, the government will increase its commitment to Fannie Mae and Freddie Mac from $200 billion to $400 billion and will raise the portfolio size limits for the two firms by $50 billion each. In addition, the government pledged to continue to support purchases of mortgage-backed securities to help keep mortgage rates low.

The third program provides incentives for servicers to work with borrowers at imminent risk of default to modify the terms of the mortgage, bringing payments down to affordable levels. If successful, the government hopes to prevent an estimated 2 to 3 million foreclosures, which would keep these homes from adding to the inventories currently on the market.

This final week of February will reveal a number of important indicators of economic growth. Existing Home Sales and New Home Sales will be released on Wednesday and Thursday, respectively. Durable Orders will also come out on Thursday. Revisions to fourth quarter 2008 Gross Domestic Product (GDP) will be released on Friday, along with the Chicago PMI national manufacturing index. Consumer Sentiment and Consumer Confidence are on the schedule as well. Fed speakers, Treasury auctions, and new information about government programs also may have a significant impact on mortgage markets throughout the week. It will be interesting to see what the markets will do this week after the news!!!

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This entry was posted on Monday, February 23rd, 2009 at 9:15 am and is filed under Mortgage Info, Real Estate News and Statistics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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