Affordable Housing Programs Extended through December 2016

CF Funding is pleased to share that the Obama administration has announced the expansion of its affordable housing program. The program helps to support the construction of rental housing, and provides assistance to underwater homeowners in order to avoid foreclosures. The administration will be tapping into Treasury funds in order to support these programs. The Home Affordable Modification Program was set to expire at the end of 2015, but is now extended for another year. According to the Washington Post, the program has “reduced the payments of about 1.3 million homeowners, far short of its initial 4 million projection.”

The announcement was scheduled to coincide with the Making Home Affordable program’s 5^th anniversary, as the program was introduced in 2009 (after the housing crash) as a means of stimulating the economy and improving the housing industry. As CF Funding has shared previously, the housing industry has come a long way since then. In CF Funding’s April press release “Underwater Homes at Lowest Level in Two Years,” the lender shared news that foreclosures and shadow inventory are continuously decreasing, and that an increase in home values has allowed homeowners to regain equity. Increased equity has allowed many homeowners to refinance or invest in remodeling projects. However, more improvement is needed to reach peak levels of housing activity.

The program is now extended through December 2016, according to US Treasury Secretary Jack Lew. “We need to continue to be there for homeowners who are facing foreclosure, those who are struggling with increasing interest rates on their modified mortgages, and those whose homes are caught underwater,” Lew said. The program not only helps to construct affordable rental housing, but allows state housing finance agencies to underwrite multifamily FHA loans. In doing so, the finance agencies take on a risk, as they share any losses from those loans.

The new program will receive anywhere from 500 million dollars to 1 billion dollars in annual funds from the Treasury and the FHA, in comparison to 363 million dollars which the FHA provided to the program last year.

The administration also hopes to bring back the private sector in order to reduce the government’s role in the mortgage market. The market is currently dominated by Freddie Mac and Fannie Mae, which are government-owned mortgage firms. Lew said he has directed his team “to bring investors and securitizers together in the months ahead so we can uncover new paths to increase private investment.”

CF Funding will keep readers updated on mortgage and housing news on the lender’s blog at http://cffundingcorporation.blogspot.com .

Mortgage Credit More Available, Rates Remain Low

CF Funding is pleased to share that mortgage credit is becoming more available, according to the Mortgage Credit Availability Index (MCAI). In the month of May, mortgage credit availability increased by about 1.4 percent, from 113.8 in April to 115.1. Some investors have lowered credit score requirements for FHA loans, which had an effect on the score. JUMBO loans also become slightly more available in May. 

As seen in the graph, the index benchmarked to 100 in March 2012. The Mortgage Credit Availability Index did not exist during the housing boom, but an expanded historical chart has been released which reveals credit availability scores as high as 850 in 2006. Scores quickly dropped from October 2006 to October 2008 to levels near 100, and have remained close to 100 for the past six years. CF Funding is happy to see credit availability increase, although the pace is slow.

The MCAI uses several factors to calculate credit availability, including credit scores, loan types, LTV ratios, and other factors. Underwriting data from over 85 lenders and investors are used to create the index.

In other mortgage news today, interest rates were relatively unchanged in response to the Employment Situation Report. Total nonfarm payroll employment increased by 217,000 in May, but the unemployment rate remained at 6.3 percent. Most major worker groups (adult men, adult women, whites, blacks, and Hispanics) showed little to no change in unemployment in May.  The number of long-term unemployed was nearly unchanged as well. As a response, the most prevalently quoted conforming 30-year fixed rate remained at about 4.125 to 4.25 percent, according to Mortgage News Daily. Best-execution rates for FHA/VA today are near 3.75 percent, and 15 year fixed rates are near 3.375 percent. Interest rates for a 5-year adjustable rate mortgage are about 3 to 3.5 percent, depending on the lender. These rates are calculated based on an ideal scenario and may vary based on credit scores and other factors.

Although interest rates have risen since last year, rates are still considerably low in comparison to previous years. Over the past 20 years, the rate for a 30-year fixed rate mortgage reached as high as 8.5 percent (in 2000) and 8.8 percent in 1995.

CF Funding regularly reports mortgage interest rates on the lender’s website at www.cffunding.com/index.php/mortgage-rates. Those looking to refinance and take advantage of historically low rates may contact the lender by calling 888-344-4080.

Consumer Confidence Rises in May

CF Funding is pleased to share that consumer confidence has risen in May to a score of 83.0. The Consumer Confidence Index, provided by the Conference Board, had decreased in April to 81.7. The index is now at its second-highest reading since 2008, with March of this year slightly higher at a score of 83.9.

The lowest score seen in the Consumer Confidence Index was 25.3 in February of 2009. Consumer confidence has risen significantly since then, but is not yet at its peak  pre-recession levels. In 1985, the index was at a score of 100. Consumer confidence in regards to present-day conditions improved in May, with those stating business conditions as “bad” declining from 24.8 to 24.1 percent. Those who believe jobs are “plentiful” rose about 1 percent from 13.0 to 14.1, and those who believe jobs are “hard to get” decreased from 32.8 to 32.3 percent.

Consumer expectations increased in May, with those expecting business conditions to improve (over the next 6 months) increasing from 17.2 to 17.5 percent. Those expecting business conditions to worsen decreased from 10.5 to 10.2 percent. Confidence in the labor market improved slightly, with those expecting more jobs increasing from 14.7 to 15.4 percent, and those expecting their incomes to grow increasing from 16.8 to 18.3 percent. According to Lynn Franco, Director of Economic Indicators at The Conference Board, “Consumers assessed current conditions, in particular the labor market, more favorably. Expectations regarding the short-term outlook for the economy, jobs, and personal finances were also more upbeat. In fact, the percentage of consumers expecting their incomes to grow over the next six months is the highest since December 2007 (20.2 percent).”

Home prices rose slowly in March, according to the S&P/Case-Shiller Index released this week. The index for March revealed a 12.4 percent increase in home prices in comparison to February’s 12.9 percent. Home price gains were high in Chicago, with a year-over-year gain of 11.5 percent. Price gains were also high in Cleveland, Detroit, Miami, Minneapolis, and New York. Las Vegas had one of the highest annual returns at about 21 percent. Only two cities in the index have set record highs since the housing crisis: Dallas, TX and Denver, CO. CF Funding is happy to be a part of the growing housing industry in these cities as the lender is licensed in both Texas and Colorado.

For more updates on home prices, mortgage rates, and housing industry news, follow CF Funding on Facebook at www.facebook.com/cffundingcorp or visit the lender’s news feed at www.cffunding.com/index.php/news.

Consumers Believe It Is a Good Time to Buy and Sell Homes

CF Funding is happy to share that consumer optimism has continued to rise in Fannie Mae’s April 2014 National Housing Survey, as 42 percent of respondents now believe it is a good time to sell a home. This is the third consecutive month of increases, reaching an all-time survey high. Experts predict an increase in housing activity due to these results, as well as the positive jobs data released this week and decrease in mortgage rates.

The monthly housing survey evaluates consumer attitudes in regards to homeownership, renting a home, the economy, and household finances. According to the survey, the average 12 month home price expectation rose to 2.9 percent, up from 2.9 percent last month. The percentage of respondents who believe home prices will rise in the next 12 months was at 50 percent, and the percentage who believe home prices will decrease was at an all-time survey low of 5 percent. The percentage of respondents who believe mortgage rates will rise decreased to 52 percent. Those who believe rates will go down has increased from 3 percent to 7 percent. The percent of respondents who believe it is a good time to buy a home stayed the same this month at 69 percent.

CF Funding is not surprised that the number of respondents who believe it is a good time to sell has risen by 4 percent to 42 percent, as the Spring season always brings out more buyers and sellers andmortgage rates are looking great. The fact that consumers believe rental prices will increase in the next 12 months may also affect the “good time to sell” factor. The percentage of respondents who believe the economy is on the right track has increased from 33 to 35 percent over the past month, and 14 percent expect their personal finances to improve over the next 12 months, in comparison to last month’s 12 percent. CF Funding is pleased to share that 25 percent of respondents say their household income is significantly higher than 12 months ago, up 4 points from last month.

According to Doug Duncan, senior vice president and chief economist at Fannie Mae, “Our April survey results suggest that consumer confidence is moving in a positive direction… consumer attitudes about the current home selling environment have improved and now are at the most favorable level we’ve seen in the survey’s four-year history. Consistent with Friday’s upbeat jobs report, concern about job loss among employed consumers also has hit a record survey low. These results are in line with our expectations for increased housing activity and gradual strengthening of the housing market going into the spring and summer selling season."

CF Funding will keep readers updated on the state of the housing industry as future housing surveys are released. To follow the lender on Facebook, visit www.facebook.com/cffundingcorp.  To view last months’ survey results, visit http://cffunding.com/index.php/news/consumer-attitudes-are-positive-in-march-2014-housing-survey/ .

Homeownership Vacancy Decreases in First Quarter 2014

The U.S. Census Bureau released its Residential Vacancies and Homeownership report today, revealing that homeowner vacancy rates have decreased since last year. The vacancy rate is now at 2 percent, about 0.1 percent lower than the first quarter of 2013. CF Funding is happy to see the economy recover as more homebuyers are able to fulfill their dreams of homeownership.

Although rental vacancy increased slightly (about 10 basis points to reach 8.3 percent), the vacancy rates are still relatively low in comparison to the past few years, and are now at levels last seen in 2001. The rental vacancy rate in the third quarter of 2009 reached as high as 11.1 percent. The homeowner vacancy rate in 2008 reached 2.9 percent. As CF Funding has mentioned on the Daily News Feed before, the housing industry is experiencing large improvements that show signs of economic recovery, which has led to rising house prices and interest rates.

In regards to prices, the first quarter of 2014’s median asking price for rent in vacant units was $766, and the median asking sales price for vacant for sale units was $139,200. Rental prices have been steadily rising since 1999 as seen in the chart. Home prices were rising steadily until the recession (2007-2009) where a visible decrease shows home values sinking. As the economy improves, home prices are now rising again, which has put equity back into the homes of many, allowing homeowners to refinance in recent years. Read more about refinance options on the CF Funding website here.

The U.S. Census Bureau also divided vacancy rates by region: Northeast, Midwest, South, and West, as well as Metropolitan Areas, suburbs, and others. The vacancy rate for rentals in cities was at 8.5 percent, versus the suburbs’ 7.7 percent, and other areas (outside Metropolitan Statistical Areas – or MSA’s) at 9.7 percent. The homeowner vacancy rate in cities was 2.3 percent, versus the suburbs’ 1.8 percent, and the rate outside MSA’s of 2.3 percent. Rental vacancy was highest in the South at 10.3 percent. Midwest rental vacancy was 8.5 percent, in comparison to the first quarter of 2014 where the Midwest vacancy was 9.5 percent. Northeast rental vacancy was 7.0 percent, not statistically different from the West at 6.4 percent.

Homeowner vacancy rates in the south were also the highest at 2.2 percent in the first quarter, followed by the Midwest (2.0 percent), Northeast (1.8 percent), and the West (1.7 percent). The age group with highest homeownership vacancy was age 35 or younger at 36.2 percent. The age group with the lowest home vacancies was age 65 plus at 79.9 percent. For more detailed information, visit www.census.gov.

Today, most home payments are similar to the cost of renting. CF Funding has been helping renters achieve their dreams of homeownership for over 10 years. The lender has programs available with as low as 3 percent down (or no money down for veterans!). Renters who are looking to buy and gain valuable equity should contact CF Funding today by calling 888-344-4080 or visiting www.cffunding.com .

Single-Family Home Starts Grow 6 Percent in February

The warm March weather caused an increase in housing starts last month, as single-family home starts grew 6 percent in comparison to February’s estimate. New home starts for privately-owned buildings were up about 2.8 percent from the revised February estimate, reaching 946,000 in March (seasonally adjusted annual rate). Although these increases also come with losses, as fewer permits were issued and fewer homes were finished in comparison to February, CF Funding is optimistic that housing starts will bounce back as the weather continues to improve.

Other stats in the U.S. Department of Housing and Urban Development’s Building Permits Survey include a 0.5 percent increase in single-family building permit authorizations as compared to February, and a 3.8 percent decrease in single-family housing completions as compared to the revised February rate. In March, there were 79,100 housing starts (on an unadjusted basis) as compared to 63,100 in February. 54,000 of those were single family units, as compared to 41,000 in February. On a non-seasonally adjusted basis, approximately 83,000 permits were issued in March, as compared to 70,500 in February.

CF Funding is happy to share that the Midwest saw large increases in permits, with a 26.0 percent increase month-over-month and an 18.7 percent increase year-over-year. According towww.mortgagenewsdaily.com, “Housing starts [in the Midwest] rose 65.5 percent from February and were 2.9 percent above the same period in 2013. There were 14.1 percent fewer completions than in the previous month but 15.5 percent more than a year earlier.” The West saw an unchanged rate of permits issued, and the Northeast saw a 33.3 percent increase. The South unfortunately saw a decrease in permits issued, with 17.1 percent less than February and 1.1 percent less than one year previous.

The Building Permits Survey is based on a voluntary mail survey by building permit officials. For more information visit www.census.gov.

Those who are looking to build a new home or remodel in 2014 should contact CF Funding Corporation for the best construction mortgage options, including our new Express Home Loanand One-Time Close Construction Mortgage. Those who are looking to buy a home should start shopping sooner than later to avoid rising prices. Lock in a low interest rate by contacting a CF Funding loan specialist at (888)344-3080 or http://www.cffunding.com.