US Home Refinancing Demand at Highest in 15 Months

Published: Wednesday, 18 Aug 2010 | 7:02 AM ET

Home loan refinancing puts extra cash into consumers’ hands that can be used to pay off existing debt or funnel into the economy through purchases. By lowering a monthly mortgage payment it may also help some homeowners avoid default and foreclosure.

The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Aug. 13, increased 13.0 percent. The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 2.6 percent.

The MBA’s seasonally adjusted index of refinancing applications increased 17.1 percent, the highest since the week ended May 15, 2009.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.60 percent, up 0.03 percentage point from the previous week’s record low. The survey has been conducted weekly since 1990.

Interest rates were also below their year-ago level of 5.15 percent.

Thomas Meyer, CEO of J.I. Kislak Mortgage in Miami Lakes, Florida, said people in Florida, and other hard-hit housing markets, are finding it difficult to refinance because of appraisals coming in significantly below their current mortgage amount.

“High unemployment has certainly had a dampening effect, but that runs up against the psychological orientation that now is the time to get a deal, with housing prices low and interest rates low,” he said.

Meyer said he is seeing a pick up in activity, mostly in the home loan purchase business as opposed to the refinance business.

“There is a feeling that we are at, or very close to, the bottom in the fall of housing prices and that now is the time to buy,” he said.

The housing market has been struggling since the April 30 expiration of popular home buyer tax credits. The Commerce Department on Tuesday said U.S. housing starts rose but to a much weaker rate than expected in July, while permits for future home construction fell to their lowest level in more than a year.

Low rates failed to foster demand for loans to purchase a home last week, with demand sliding for the first time in five weeks, MBA data showed.

The MBA’s seasonally adjusted purchase index, a tentative early indicator of home sales, decreased 3.4 percent. Demand is down about 42 percent since the tax credit expiration.

To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30, but that was extended by three months.

The MBA said fixed 15-year mortgage rates averaged 3.99 percent, up from the previous week’s record low of 3.95 percent. Rates on one-year adjustable-rate mortgage, or ARMs, decreased to 6.90 percent from 7.00 percent.

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Dallas: Fastest Growing U.S. city

 By Les Christie, staff writerJune 22, 2010: 1:36 PM ET

According to the latest Census Bureau figures released Tuesday, the population of the sprawling Texas metro area grew by about 1.3 million people, or 25%, between April 1, 2000, and July 1, 2009.

The Palm Coast metro area in Florida had the highest percentage increase in growth. Its population exploded by 84% over the nine-years-plus covered by the Census Bureau report. But even after the jump there were only about 92,000 people living in the area.

Dallas’s attractions include a very favorable business climate, according to Mayor Tom Leppert. There’s no corporate income tax, building costs are relatively reasonable and regulations are minimal.

“It’s a great place to do business,” he said, “especially attractive for companies from high-tax states.”

Helping to drive growth is the area’s main airport, Dallas/Fort Worth International, the third busiest in the nation. Its location is far enough south to ensure good weather yet central enough to make it easy to fly to the Northeast, the Midwest and the Pacific Coast. It is also well positioned for air traffic with Latin American markets.

“Dallas has no port,” said Leppert. “The airport became a 21st century port.”

What it has lacked in the past — a vibrant downtown — is starting to develop. Recent additions include a huge new arts center, urban park, light rail system and new housing. These have bolstered the city’s density and made downtown more interesting and fun.

That said, the metro area’s suburbs are booming as well, according to Leppert. Indeed Williamson County, north of Dallas, is one of the 10 fastest growing counties in the nation.

A different dynamic has boosted Palm Coast numbers. Development in the area was originally promoted by ITT Corp., which presented it as a retirement community, according to Palm Coast City spokeswoman Marsha Lidskin.

It remains largely an area of retirees, but some of their kids and grandkids have decided to move there as well.

“I moved here myself, from Chicago,” said Lidskin. “This is the most beautiful, unknown part of Florida. Drive up [highway] A1A along the coast and all you see are beautiful beaches. There are no high-rises or strip malls.”

Palm Coast is a throwback to old Florida, before the post-war population boom made it the fourth largest state by population and permanently altered much of its pristine natural beauty.

The area is, however, no hotbed of employment opportunities. The biggest private employer, Palm Coast Data, a magazine and membership fulfillment company, has fewer than 1,000 workers.

The metro area unemployment rate in April was a stratospheric 15.4% and the housing market has plunged since the bubble burst. Average home prices in Palm Coast have fallen by about half to less than $120,000 since the peak in early 2006, according to the real estate website Zillow.

Of course, the census count is more than just an academic exercise created to please number freaks and provoke outbursts of civic pride in the winners and shame in the laggards.

“Census numbers govern the distribution of more than $400 billion in federal funds each year,” said Census Bureau director Robert Groves. “Local governments use census data to plan new roads, schools and emergency services. Businesses use the data to develop new economic opportunities.”

That means other big population gainers stand to cash in. Atlanta added more than 1.2 million people; Houston grew by 1.15 million; Phoenix recorded a 1.11 million-person jump; and Riverside-San Bernardino, Calif., saw 900,000 more residents.

Percentage-increase leaders were St. George, Utah, which leaped 52% to nearly 140,000; Provo, Utah, which grew by more than 47% to 555,000; Raleigh, N.C., which jumped 41% to nearly 1.13 million; and Greeley, Colo., where the population soared 41% to 255,000.

The decade’s biggest loser both by percentage and numerically, was New Orleans. The city was devastated by Hurricane Katrina and has been in recovery mode ever since.

Its metro area population is still down more than 126,000, off nearly 10% from its pre-storm status. 

Fannie and Freddie Announce Delisting From NYSE

Fannie Mae and Freddie Mac shares were halted as regulators announced that both companies are being asked to delist from the NYSE and any other national securities exchange.

The Federal Housing Finance Agency, the conservator for both Fannie and Freddie, has directed both to delist their common stock and their preferred stock, the agency announced Wednesday in a press release.

Both companies stock, however, will continue to trade, but will be quoted on the Over-the-Counter Bulletin Board, according to the press release.

“FHFA’s determination to direct each company to delist does not constitute any reflection on either Enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator,” Edward J. DeMarco, the FHFA Acting Director, stated in a press release.  “The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies.”

According to statements issued by both companies, Fannie has notified the NYSE and the Chicago Stock Exchange and Freddie has notified the NYSE of their intent to delist any common and preferred stock.

URL: http://www.cnbc.com/id/37726693/

Fed limits card fees to $25

WASHINGTON (CNNMoney.com) — Most credit card penalties will be limited to $25, and fees for customers who don’t use their cards will be eliminated under rules released Tuesday by the Federal Reserve.

The Fed also ordered a review of all credit card interest rate hikes imposed since January 2009, including most of the record increases that came in the wake of a nationwide cutback on credit.

The rules, which implement a final set of changes that Congress passed in May 2009, take effect Aug. 22.

“The Federal Reserve’s guidelines issued today are great news for consumers,” said Rep. Carolyn Maloney, D-N.Y., one of the authors of the credit card laws.

The Fed’s rules could result in lower interest rates for consumers. Banks will be required to reconsider the reasons for hikes that kicked in over the past 18 months. They would have to reduce rates if the reasons for the increases no longer exist, and regulators will review and enforce such cuts.

Consumers will most immediately notice the new penalty fee limit of $25. Reducing penalty fees was a central provision of the credit card law, but Congress left it to the Fed to determine how to do it.

The Fed leaves room for larger penalty fees to be charged if a consumer has shown a pattern of “repeated” violations or if a card issuer can show that a higher fee reasonably offsets its own costs in dealing with the violation that spurred the penalty.

Other parts of the new rules:

• Consumers won’t have to fear being charged a fee for failing to use their credit cards.
• Penalty fees can’t exceed the dollar amount incurred by the consumer’s violation that spurred the fee. For example, if a customer is late making a $20 minimum payment, the fee can’t exceed $20. A consumer who exceeds her credit limit by $5 cannot be charged an over-the-limit fee of more than $5.

• Consumers will no longer face multiple penalty fees, if the violation was based on a single late payment.

The provisions announced Tuesday by the Fed complement previous rules implementing the 2009 credit card law that are already in effect.Starting in February, issuers were prohibited from hiking interest rates on existing balances as long as customers paid their bills on time. They also have to notify customers at least 45 days in advance of interest rate increases and most fee changes.

The Fed was tasked with figuring out a way to set penalty fees in a way that’s “reasonable and proportional” to the violation that caused the fee.

Consumers scored a win, since these fee caps go beyond what the Fed had suggested earlier this year in a draft. The $25 limit will mean significant savings for consumers who face median penalty fees of $39, according to data collected by the Pew Safe Credit Cards Project.

However, if a cardholder is late or over his credit limit two times within six months, issuers could hike the second penalty fee to $35, or possibly more if the issuer can justify the fee to regulators, according to the Fed rules.

Although the Fed is cracking down on penalty fees, it hasn’t addressed the interest rate hikes that are also imposed on consumers who violate the terms of their credit card agreements.

So a consumer who spends more than his credit card limit by $15 may only face a $15 fee. But that consumer could still face a permanent penalty hike on his interest rate, which would apply to any future purchases.

Still, some banking groups have concerns. Financial Services Roundtable’s senior lobbyist Scott Talbott warned that the Fed’s cap on penalty fees will limit the industry’s ability to offset the risk that credit cardholders don’t pay their bills.

“The restrictions in the rules the Fed issued will decrease the ability of the credit card industry to price for risk and the net effect will be a decrease in [credit] availability,” Talbott said.

Tuesday, May 25th

Good News For Home Buyers: Mortgage Rates Near 50-Year Low ABC News

Rising home sales likely to cool despite low rates - AP

Tax credit and low mortgage rates boost home sales - AP

FHA Out-Guarantees Fannie and Freddie Combined - The Atlantic

U.S. regulator says mortgage lenders stabilizing - Reuters

Mortgage Loan Modification and Credit Scores - Fox Business

US mortgage bond rush on, ahead of regulations - Reuters

Default Rates Easing, Except on Credit Cards - NY Times