Another mortgage hurdle? Sheesh!

On October 1, 2011, the cost of a mortgage could rise significantly. Current FHA and GSEs mortgage loan limits are scheduled to decrease, lessening the availability of mortgage credit. Lowering the loan limits will force buyers to come up with larger down payments.

The new limits, published by HUD and the Federal Housing Finance Agency (FHFA), show that more than 669 counties in 42 states and the territories will be negatively impacted. The average decline in loan limits will be more than $68,000. Monroe County will be the hardest hit within Florida. The current FHA loan limit in Monroe is $729,750, but as of October 1st the mortgage limit is scheduled to drop to $529,000 a difference of ($200,750)

The timing couldn't have come at a worse time, just when the housing market has shown just a bit of light. Now this move could again hold back the housing recovery.

An (Intense) Analysis of the Obama Jobs Plan

President Obama's jobs proposal would help stabilize confidence and keep the U.S. from sliding back into recession.

The plan would add 2 percentage points to GDP growth next year, add 1.9 million jobs, and cut the unemployment rate by a percentage point.

The plan would cost about $450 billion, about $250 billion in tax cuts and $200 billion in spending increases.

Many of the president's proposals are unlikely to pass Congress, but the most important have a chance of winning bipartisan support.

Click here to read the full article

By Mark Zandi Moody's Analyst
September, 2011

Bipolar housing market

In America, it’s starting to feel as if there are two housing markets. One for the rich and one for everyone else.

Consider Detroit. In the historic Green Acres district, a haven for hipsters, a pristine, three-bedroom brick Tudor recently sold for $6,000 – about what a buyer would have paid during the Great Depression. Yet just 15 miles away, in the posh suburban enclave of Birmingham, bidding wars are back. Multi-million-dollar mansions are selling quickly. Sales this August were up 21 percent from the previous year.

Think of this as two housing markets. In the luxury sector, occupied by 1.5 percent of the U.S. population, the recession is a memory and sales and prices are rising. “Luxury is the best performing segment of the housing market right now,” says Zillow.com chief economist Stan Humphries. But everywhere else, the market is moving sideways or getting worse.

In the housing market inhabited by most Americans, prices have fallen 30 percent or more since the peak in 2007. That’s a steeper decline than during the Depression. Almost a quarter of American homeowners owe more on their house than it’s worth. About half of homeowners couldn’t get a mortgage if they applied today.

The divide is also making credit a perk of the rich. Mortgage rates are the lowest in decades. But what good are absurdly cheap rates if you can’t get a mortgage?

Pickup in Foreclosure Activity

Lenders foreclosed on 64,813 properties last month, and are now on track to repossess 800,000 this year.   228,098 U.S. homes received a foreclosure-related notice last month. That translates to one in every 570 U.S. households.

The increase in foreclosure processing by the banks could also mean a potentially faster turnaround for the U.S. housing market. Experts say a revival isn't likely to occur as long as there remains a glut of potential foreclosures hovering over the market.

Zillow: Key West Home Prices

Key West Zillow Home Value Index

Key West Home Values - Interactive chart

New Foreclosure Wave

Banks have stepped up their actions against homeowners who have fallen behind on their mortgage payments, setting the stage for a fresh wave of foreclosures.

The number of U.S. homes that received an initial default notice jumped 33 percent to 78,880 in August from July, the biggest monthly gain in four years.

California saw a 55 percent increase in homes receiving a default notice last month, while in Indiana they climbed 46 percent. In New Jersey, default notice increased 42 percent. Nevada still leads the nation, with one in every 118 households receiving a foreclosure-related notice last month.

Rounding out the top 10 states with the highest foreclosure rate in August are California, Arizona, Georgia, Idaho, Michigan, Florida, Illinois, Colorado and Utah.

Better Strategy For the Economy

A better strategy -- one that would truly be in the best interests of lenders and mortgage investors -- would be to avert foreclosures by writing down the principal on loans.

read more from Bloomberg article

FHFA filed lawsuits today against Bank of America & 16 more

The Federal Housing Finance Agency alleged the banks mislead Fannie Mae and Freddie Mac about residential mortgage-backed securities.

The agency named Bank of America, Citigroup and JPMorgan Chase as well as Barclays PLC, Nomura Holdings Ltd., HSBC Holdings PLC, Societe General SA, Morgan Stanley, Ally Financial, Royal Bank of Scotland, Credit Suisse Group AG, Deutsche Bank AG and First Horizon National Corp.

The complaints say the banks misled Fannie Mae and Freddie Mac about the soundness of the underlying mortgages. The housing finance agency is seeking to have some defendants refund the investments with interest and pay other damages, including punitive damages for alleged misconduct.

What's the down payment on $30 Billion?

White House officials are looking for private partners to remove as much as $30 billion in single-family properties currently on the books of Fannie, Freddie, and the Federal Housing Administration.

Among possible investors, officials said they were looking for private-equity funds, financial institutions, and perhaps local governments and nonprofits to buy foreclosed properties and offer them as rentals in stressed housing markets.

Another approach would allow investors to partner with Fannie and Freddie in a joint venture to buy a pool of converted rental homes, with an equitable split between the government entities and investors to reduce losses at the mortgage giants.

Such partnerships with private-sector investors "may reduce taxpayer losses" said Edward DeMarco, acting director of the Federal Housing Finance Agency.