Fair Isaac Corp., the company that devised the ubiquitous FICO credit scores, announced this week that it plans to roll out a suite of tools designed to predict future default risk.
Fair Isaac says the new products will predict how lenders can offer even more debt to consumers without taking on undue risk.
The update revamps the old credit-scoring formula so that it penalizes consumers with a high debt load more than the earlier version. FICO 08 should increase predictive strength by 5 to 15 percent, according to Fair Isaac's vice president of scoring, Tom Quinn.
FICO 08 is also expected to do a better job of determining which consumers with past defaults are "more on the road to recovery and should have more of a higher score," Quinn says.
The new index can look at three consumers with a 700 FICO score and determine which of the three could take on additional debt without defaulting, according to the company.
Source: Star-Tribune, Kara McGuire (01/22/08)
Wednesday, January 30, 2008
Thursday, January 24, 2008
2007 Existing-home Sales Fifth Highest
Existing-home sales declined in December following several months of stable activity, with total sales in 2007 at the fifth highest on record, according to the NATIONAL ASSOCIATION OF REALTORS®.
Existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 2.2 percent to a seasonally adjusted annual rate of 4.89 million units in December from a pace of 5.00 million in November, and are 22.0 percent below the 6.27 million-unit level in December 2006.
For all of 2007 there were 5,652,000 existing-home sales, the fifth highest year on record; however, the total was 12.8 percent below the 6,478,000 transactions recorded in 2006.
Lawrence Yun, NAR chief economist, said the market is experiencing uncharacteristic weakness.“Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate,” he said. “Home prices are lower, mortgage interest rates continue to decline and incomes are higher, but many potential buyers are delaying a purchase.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.10 percent in December from 6.21 percent in November; the rate was 6.14 percent in December 2006. Last week, Freddie Mac reported the 30-year fixed rate dropped to 5.69 percent. “Although interest rates on jumbo loans have fallen somewhat, they remain well above conventional mortgage rates,” Yun said. “It isn’t surprising that the share of single-family homes selling for more than $500,000 fell to 12.4 percent of transactions in December from 14.2 percent a year ago.”
Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply3 at the current sales pace, down from a 10.1-month supply in November. “The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets,” Yun said.The national median existing-home price2 for all housing types was $208,400 in December, down 6.0 percent from a year earlier when the median was $221,600. Because home sales have slowed the most in higher cost markets, there is a downward distortion to the national median as the mix of closed sales has changed over the past year. For all of 2007, the median price was $218,900, down 1.4 percent from a median of $221,900 in 2006.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said that raising the loan limit on conventional financing is urgently needed. “The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas,” he said. “It is grossly unfair that some Americans do not have access to low-interest rate loans. This would help people as they move away from risky subprime mortgages and high-interest rate jumbo loans.”
NAR projects the higher loan limit would increase annual home sales by nearly 350,000, reduce foreclosures by 140,000 to 210,000, and increase economic activity by $44 billion. “What’s more, this would come at no cost to taxpayers – it’s a policy change that could really boost the economy,” Gaylord said.
Other projections of NAR’s analysis show raising the loan limit would reduce the supply of homes on the market by 1.0 to 1.5 months, and strengthen home prices by 2.0 to 3.0 percentage points. In addition, as many as 500,000 jumbo loans would be refinanced to lower interest rates.
Gaylord said current housing conditions vary widely. “Many local areas continue to have healthy or improving local housing markets,” he said. “For example, we saw higher home sales last month in diverse areas such as San Antonio; Syracuse; Springfield, Ill.; and Sarasota, Fla. If you’re thinking about getting into the market as a buyer or a seller, consult a Realtor® to learn about conditions in your area – they may be considerably different from the composite national picture.”
Single-family home sales declined 2.0 percent to a seasonally adjusted annual rate of 4.31 million in December from 4.40 million in November, and are 21.6 percent below 5.50 million-unit level in December 2006. In all of 2007, single-family sales fell 13.0 percent to 4.94 million.
The median existing single-family home price was $206,500 in December, down 6.5 percent from a year earlier. For all of 2007, the single-family median was $217,800, down 1.8 percent from 2006.
Existing condominium and co-op sales fell 3.3 percent to a seasonally adjusted annual rate of 580,000 units in December from 600,000 in November, and are 24.5 percent below the 768,000-unit pace a year ago. Condo sales for all of 2007 fell 11.0 percent to 713,000 units.
The median existing condo price4 was $222,200 last month, which is 2.5 percent below December 2006. In all of 2007, the median condo price was $226,400, up 2.0 percent from 2006.
Source: NAR
Existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 2.2 percent to a seasonally adjusted annual rate of 4.89 million units in December from a pace of 5.00 million in November, and are 22.0 percent below the 6.27 million-unit level in December 2006.
For all of 2007 there were 5,652,000 existing-home sales, the fifth highest year on record; however, the total was 12.8 percent below the 6,478,000 transactions recorded in 2006.
Lawrence Yun, NAR chief economist, said the market is experiencing uncharacteristic weakness.“Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate,” he said. “Home prices are lower, mortgage interest rates continue to decline and incomes are higher, but many potential buyers are delaying a purchase.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.10 percent in December from 6.21 percent in November; the rate was 6.14 percent in December 2006. Last week, Freddie Mac reported the 30-year fixed rate dropped to 5.69 percent. “Although interest rates on jumbo loans have fallen somewhat, they remain well above conventional mortgage rates,” Yun said. “It isn’t surprising that the share of single-family homes selling for more than $500,000 fell to 12.4 percent of transactions in December from 14.2 percent a year ago.”
Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply3 at the current sales pace, down from a 10.1-month supply in November. “The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets,” Yun said.The national median existing-home price2 for all housing types was $208,400 in December, down 6.0 percent from a year earlier when the median was $221,600. Because home sales have slowed the most in higher cost markets, there is a downward distortion to the national median as the mix of closed sales has changed over the past year. For all of 2007, the median price was $218,900, down 1.4 percent from a median of $221,900 in 2006.
NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said that raising the loan limit on conventional financing is urgently needed. “The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas,” he said. “It is grossly unfair that some Americans do not have access to low-interest rate loans. This would help people as they move away from risky subprime mortgages and high-interest rate jumbo loans.”
NAR projects the higher loan limit would increase annual home sales by nearly 350,000, reduce foreclosures by 140,000 to 210,000, and increase economic activity by $44 billion. “What’s more, this would come at no cost to taxpayers – it’s a policy change that could really boost the economy,” Gaylord said.
Other projections of NAR’s analysis show raising the loan limit would reduce the supply of homes on the market by 1.0 to 1.5 months, and strengthen home prices by 2.0 to 3.0 percentage points. In addition, as many as 500,000 jumbo loans would be refinanced to lower interest rates.
Gaylord said current housing conditions vary widely. “Many local areas continue to have healthy or improving local housing markets,” he said. “For example, we saw higher home sales last month in diverse areas such as San Antonio; Syracuse; Springfield, Ill.; and Sarasota, Fla. If you’re thinking about getting into the market as a buyer or a seller, consult a Realtor® to learn about conditions in your area – they may be considerably different from the composite national picture.”
Single-family home sales declined 2.0 percent to a seasonally adjusted annual rate of 4.31 million in December from 4.40 million in November, and are 21.6 percent below 5.50 million-unit level in December 2006. In all of 2007, single-family sales fell 13.0 percent to 4.94 million.
The median existing single-family home price was $206,500 in December, down 6.5 percent from a year earlier. For all of 2007, the single-family median was $217,800, down 1.8 percent from 2006.
Existing condominium and co-op sales fell 3.3 percent to a seasonally adjusted annual rate of 580,000 units in December from 600,000 in November, and are 24.5 percent below the 768,000-unit pace a year ago. Condo sales for all of 2007 fell 11.0 percent to 713,000 units.
The median existing condo price4 was $222,200 last month, which is 2.5 percent below December 2006. In all of 2007, the median condo price was $226,400, up 2.0 percent from 2006.
Source: NAR
Wednesday, January 23, 2008
Landlords Are Among the Winners in Housing Slump
It’s good news for landlords that mortgage applications fell to their lowest level in a year last month because people have to live somewhere and if they can’t or won’t buy, they’ll have to rent.
Here are the nation’s 10-most-expensive cities for renters and the average rents. The data is provided by Marcus & Millichap.
New York, $2,922
San Francisco, $1,904
Boston, $1,658
San Jose, Calif., $1,612
Los Angeles, $1,452
San Diego, $1,304
Washington, $1,302
Miami, $1,080
Philadelphia, $1,014
Chicago, $1,010
Source: Forbes, Matt Woolsey (01/07/2008)
Here are the nation’s 10-most-expensive cities for renters and the average rents. The data is provided by Marcus & Millichap.
New York, $2,922
San Francisco, $1,904
Boston, $1,658
San Jose, Calif., $1,612
Los Angeles, $1,452
San Diego, $1,304
Washington, $1,302
Miami, $1,080
Philadelphia, $1,014
Chicago, $1,010
Source: Forbes, Matt Woolsey (01/07/2008)
Tuesday, January 22, 2008
Fed Issues Emergency Rate-Cut
The Federal Reserve, in an emergency meeting on Tuesday, slashed the key rate to 3.5 percent, citing a weakening economic outlook. The move marks the Fed's biggest rate cut — three quarters of a point — in more than 20 years.
As fears of a recession looms, the Fed said the rate-cut was to help restore confidence in the U.S. economy.
“While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households,” the Fed said in a public statement. “Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”
NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun says the 75-basis-point cut in the Fed funds was a good step in giving the economy the boost and sending a clear message to both the market and to consumers. “This strong rate cut will help lower mortgage interest rates and lessen the burden of adjustable-rate loans that are resetting in the current environment,” Yun says. “It also could help stimulate business investment in the wake of market uncertainties. We commend the Federal Reserve Board on its bold action, but at the same time we urge it to keep a close watch to see if additional action is needed.”
The Fed also approved a decrease in the discount rate — which, among other things, impacts how consumers pay home equity lines of credit — to 4 percent.
The Fed’s next scheduled meeting is on Jan. 30, where analysts say another rate-cut may be likely.
Source: Dow Jones Newswire (1/22/08)
As fears of a recession looms, the Fed said the rate-cut was to help restore confidence in the U.S. economy.
“While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households,” the Fed said in a public statement. “Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”
NATIONAL ASSOCIATION OF REALTORS® Chief Economist Lawrence Yun says the 75-basis-point cut in the Fed funds was a good step in giving the economy the boost and sending a clear message to both the market and to consumers. “This strong rate cut will help lower mortgage interest rates and lessen the burden of adjustable-rate loans that are resetting in the current environment,” Yun says. “It also could help stimulate business investment in the wake of market uncertainties. We commend the Federal Reserve Board on its bold action, but at the same time we urge it to keep a close watch to see if additional action is needed.”
The Fed also approved a decrease in the discount rate — which, among other things, impacts how consumers pay home equity lines of credit — to 4 percent.
The Fed’s next scheduled meeting is on Jan. 30, where analysts say another rate-cut may be likely.
Source: Dow Jones Newswire (1/22/08)
Sunday, January 20, 2008
NAR Urges Bush to Tackle Housing Woes
The National Association of REALTORS® today urged President George W. Bush and Congress to help home owners and the national economy by loosening constraints on Fannie Mae and Freddie Mac, as an integral part of a federal stimulus package currently being discussed.
“We believe that any stimulus package must address housing issues and increasing the conforming loan limits for these two government-sponsored enterprises,” says NAR President Dick Gaylord. “The increase in loan limits would not only improve liquidity in the mortgage marketplace, but also boost home buyers’ confidence levels, resulting in increased sales and economic activity.”
NAR has been calling on Congress and the administration to increase the loan limits for Fannie Mae and Freddie Mac from the current ceiling of $417,000 to $625,000.
In addition, NAR has been actively advocating for quick passage of the FHA reform bill. NAR leaders say a reformed, modernized FHA program would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and credit crunch.
“FHA reform would not only ensure we don’t find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure,” says Gaylord.
In a letter to congressional leaders, NAR estimated that lifting the GSE loan limit to $625,000 would lower interest payments for consumers who get new “GSE jumbo” loans, reduce the supply of homes on the market by one to one-and-one-half months, strengthen home prices by two to three percentage points, and increase economic activity by $42 billion.
An additional NAR report shows that increasing conforming loan limits could help reduce foreclosures by 140,000 to 210,000 and result in an additional 348,000 home sales.
“This is the quickest way to help the hurting housing market,” says Gaylord. “As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars."
—REALTOR® magazine online
“We believe that any stimulus package must address housing issues and increasing the conforming loan limits for these two government-sponsored enterprises,” says NAR President Dick Gaylord. “The increase in loan limits would not only improve liquidity in the mortgage marketplace, but also boost home buyers’ confidence levels, resulting in increased sales and economic activity.”
NAR has been calling on Congress and the administration to increase the loan limits for Fannie Mae and Freddie Mac from the current ceiling of $417,000 to $625,000.
In addition, NAR has been actively advocating for quick passage of the FHA reform bill. NAR leaders say a reformed, modernized FHA program would offer a safe and affordable alternative to subprime mortgages, which are widely blamed for the current high rate of foreclosures and credit crunch.
“FHA reform would not only ensure we don’t find ourselves in this very unfortunate situation again, but also it can help many families currently facing foreclosure,” says Gaylord.
In a letter to congressional leaders, NAR estimated that lifting the GSE loan limit to $625,000 would lower interest payments for consumers who get new “GSE jumbo” loans, reduce the supply of homes on the market by one to one-and-one-half months, strengthen home prices by two to three percentage points, and increase economic activity by $42 billion.
An additional NAR report shows that increasing conforming loan limits could help reduce foreclosures by 140,000 to 210,000 and result in an additional 348,000 home sales.
“This is the quickest way to help the hurting housing market,” says Gaylord. “As the potential for an economic recession increases and the fragile housing market continues to teeter, raising loan limits and reforming FHA would immediately impact the marketplace without the need for any new, complex federal programs or tax dollars."
—REALTOR® magazine online
Tuesday, January 15, 2008
Bank of America Counters Countrywide Rumors
Reports that the troubled mortgage lender Countrywide Financial Corp. was on the verge of bankruptcy is unfounded, says Bank of America CEO Ken Lewis, whose firm bought Countrywide last week.
Bank of America announced last week it planned to purchase Countrywide for $4 billion in stock, a move that makes Bank of America the nation's largest mortgage lender and loan servicer.
"I think the bankruptcy was a malicious rumor," Lewis told the Delaware State Chamber of Commerce.
Lewis also denied that his company had been pressured by the federal government to rescue Countrywide, and he expressed surprise that so much attention is being given to what he called “a relatively small transaction” for Bank of America.
Source: The Associated Press, Randall Chase (01/14/2008)
Bank of America announced last week it planned to purchase Countrywide for $4 billion in stock, a move that makes Bank of America the nation's largest mortgage lender and loan servicer.
"I think the bankruptcy was a malicious rumor," Lewis told the Delaware State Chamber of Commerce.
Lewis also denied that his company had been pressured by the federal government to rescue Countrywide, and he expressed surprise that so much attention is being given to what he called “a relatively small transaction” for Bank of America.
Source: The Associated Press, Randall Chase (01/14/2008)
Friday, January 11, 2008
The Priciest Real Estate Markets
More than 43 percent of sellers of luxury homes have had to reduce their prices, according to one study of high-end home sales.
The Institute for Luxury Home Marketing’s newly launched Luxury Housing Report says that homes in ZIP codes at the top end of the housing market are selling more slowly, up from 110 days on the market in May to 130 days in September.
Median prices have remained stable at a $1.154 million, or $336 a square foot, about the same as September.
Here’s the situation in the top 10 priciest markets and the average days on the market:
Atlanta: Median price, $788,062. Average days on market: 123
Boston: $1.45 million, 125
Chicago: $1.48 million, 153
Dallas: $844,036, 120
Honolulu: $1.15 million, 110
Las Vegas: $482,197. Inventory, 137
Miami: $1.96 million, 220
New York: $3.6 million, 186
San Diego: $2.1 million, 83
Seattle: $1.1 million, 113
Source: The Wall Street Journal, Robert Frank (11/11/08)
The Institute for Luxury Home Marketing’s newly launched Luxury Housing Report says that homes in ZIP codes at the top end of the housing market are selling more slowly, up from 110 days on the market in May to 130 days in September.
Median prices have remained stable at a $1.154 million, or $336 a square foot, about the same as September.
Here’s the situation in the top 10 priciest markets and the average days on the market:
Atlanta: Median price, $788,062. Average days on market: 123
Boston: $1.45 million, 125
Chicago: $1.48 million, 153
Dallas: $844,036, 120
Honolulu: $1.15 million, 110
Las Vegas: $482,197. Inventory, 137
Miami: $1.96 million, 220
New York: $3.6 million, 186
San Diego: $2.1 million, 83
Seattle: $1.1 million, 113
Source: The Wall Street Journal, Robert Frank (11/11/08)
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