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 .

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/ .

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Americans are Buying Second Homes As Market Recovers

According to Fannie Mae’s report released Monday, titled “Second Homes: Recovery Post Financial Crisis,” the second home mortgage market is recovering after the housing market crash, and is expected to continue to grow. CF Funding is happy to share this sign of economic recovery. The Housing Insights report shared that second home mortgage origination has averaged about 4.6 percent of the total purchase market since 1998, and it has grown in the past few years. Fannie Mae and Freddie Mac have acquired about 64 percent of these second home purchase mortgages.

The National Association of Realtors’ survey of second home buyers, which was released last week, is used in the report to share general characteristics of second home buyers vs. those of primary residence buyers (those who have only one home). The typical second home buyer was profiled as about 47 years old, as opposed to a primary home buyer’s average age of 38. A second home buyer usually comes from a two-earner household and has a median household income of $90,660, whereas the primary homebuyer has a median household income of $74,580. The average second home buyer finances the purchase of their home about 61 percent of the time and usually puts down a larger down payment on their home than a primary homebuyer.

The increase in second home buying correlates with CF Funding’s April 2 article titled “Vacation Sales Rise Strongly in NAR Survey,” as the lender observed that more high-net-worth households gained enough confidence in the housing market to buy a recreational property last year. Fannie Mae also mentioned that “34 percent of all second home mortgages have been originated on properties located in Florida, California, and Arizona,” which makes sense as these states are located in warmer climates where many purchase vacation homes. Read the full CF Funding article here.

Fannie Mae also shared a history of the second home mortgage market, as the second home share of PMM has more than tripled from the late 90’s through about 2006, then declined through 2009. This is relatively consistent with the cycle of the real estate market. Since 2009, the second home mortgages share of all purchases has increased, as “private lenders are increasingly more willing to lend to second home borrowers.” During the housing peak (around March 2006), the share of second home mortgages peaked at more than 15 times its share compared to 1998 volumes, while other purchase mortgages were at less than 4 times their 1998 mortgages.

Although the population aged 45-64, who are most likely to buy a second home, is expected to grow more slowly than the rest of the adult population through 2060, it is still predicted that second homes will occupy a large part of real estate and mortgage business in the years to come. CF Funding looks forward to assisting second home buyers in financing their new home purchase. 

For more updates on daily mortgage news, follow CF Funding on Twitter at www.twitter.com/CF_Funding or visit our daily news feed at www.cffunding.com/index.php/news/ .

Consumer Attitudes are Positive in March 2014 Housing Survey

Last month, CF Funding reported positive results from the February Fannie Mae National Housing Survey, sharing that home price expectations rose 7 points and 68 percent of respondents said it is a good time to buy a home. This month the lender is happy to share more good news, as 69 percent of respondents now believe it is a good time to buy a home, and 68 percent said they would buy if they were going to move (up 2 points from February). The percent of respondents who believe it would be easy to get a home mortgage has increased by 7 points to a score of 52, an all-time survey high that has only been matched in January of this year.

CF Funding is happy to share that the average 12-month home price change expectation decreased from 3.2 percent to 2.7 percent. Those who expected home prices to stay the same increased by 4 points to 42 percent. The lender agrees with Mortgage News Daily’s prediction of a “pickup in home buying and selling activity this spring” due to positive consumer attitudes in the survey. As Jann Swanson reported in today’s article “Fannie Survey Hints at Warmer Spring for Housing,” over 50 percent of respondents expect mortgage rates to increase over the next year, yet most believe it will be easy to get a mortgage.

The survey also revealed an improvement in personal finances, as 40 percent of respondents said their financial situation improved during the past year, and those who expect their finances to worsen in the next 12 months decreased from 15 to 12 percent. Unfortunately, the number of respondents who believe the economy is on the right track decreased slightly from 35 percent in February to 33 percent in March.  The share of respondents who said their household expenses are significantly higher than 12 months ago decreased from 36 to 33 percent, and most respondents (58 percent) said their household expenses are about the same.

CF Funding would like to remind readers that although home prices are expected to rise, rental prices are also expected to rise. In regards to home rental attitudes, the expected 12 month rental price change was 4.2 percent, a slight decrease from last month’s 4.3 percent. The percent of respondents who believe home rental prices will increase over the next year was 52, up slightly from 51 in February. 41 percent believe rental prices will stay the same, and 4 percent believe they will go down.

According to Fannie Mae, the Monthly National Housing Survey polled a nationally representative sample of 1005 respondents between March 1 and March 23 for the results of this survey.

To keep up with mortgage news updates be sure to follow CF Funding on Facebook at www.facebook.com/cffundingcorp.