Aaron Layman's Katy Texas Real Estate Forum

Big Fed Rate Cut Doesn't Translate Into Lower Mortgage Rates In Katy, Houston Texas

Home buyers looking to lock in a low mortgage rate my have bee surprised that the 3/4 point rate cut by the Fed had little impact on mortgage rates.  There are several reasons for this.  First and foremost is the fact that the market normally prices in any Fed actions well before the Fed actually pulls the trigger.  Financial markets adjust far more rapidly than any governmental agency.

A second factor is that mortgages are sensitive to inflation and/or perceived inflation risk.  The fact that the Fed is cutting rates increases the likelihood that the market will experience inflation later on.  When you make borrowing less expensive you increase the possibility of applying too much stimulus and thereby causing prices to spike.

A third factor in the current economic environment is the sub-prime fallout.  Banks are still adjusting to the new (old) reality of real market risk.  Many banks have been burned by risky loans which are now spilling out of their balance sheets.  The mess has now spilled over into the prime market for mortgages, meaning that borrowers with even stellar credit are having to pay a little extra for the bank's bad judgment.  Mortgage rates should be a full half point lower or more were it not for the added sub-prime risk premium being tacked on to all mortgages.

If you want to get a better handle on where mortgage rates are headed, take a look at the 10 year bond.  When bond prices rise, mortgage rates usually fall along with bond yields.  This normally coincides with a poor day for stocks.

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

President Signs Economic Stimulus Package and Higher Conforming Loan Limits In High Cost Areas

President Bush today signed the economic stimulus package, H.R 5140, with the provision for higher conforming loan limits intact.  The legislation provides for a temporary increase in the conforming loan limit up to $729,750.  Fannie Mae and Freddie Mac will be allowed to buy loans up to $729,750 that were originated between July 31st, 2007 and December 31st, 2008.  This is an increase from the previous limit of $417,000.  The move will also allow FHA to insure loans as high as $729,750 in more expensive markets.  The temporary Houston area FHA loan limit will be 271,050.

The bad news for Texas residents is that the new conforming limits won't be available based on MSA (Metropolitan Statistical Area) averages.  Texas still has some of the most affordable housing in the nation.  Houston area residents will be able to take advantage of the FHA increase of $271,050 through January 2009.

Click here to view recent MSA home price data in the U.S.  Download msa_home_prices.pdf

For the official press release in print or video you can visit www.whitehouse.gov

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Mortgage Debt Relief Act of 2007 Making It Easier For Strapped Borrowers To Walk Away

More and more home owners in bubble states like Nevada, California and Florida are choosing to walk away from their mortgages.  Faced with the reality of falling home prices and ballooning mortgage payments, owners are choosing to pay credit cards and car payments and wait for the foreclosure notice.

The Mortgage debt relief act of 2007 has created a 3 year window in which home owners can walk away from the mortgage without any fear of being taxed on the deficiency that might otherwise be owed to the bank if the property sells for less than the original mortgage amount.  With all the no-down and interest only mortgages that were originated in the last few years it's not surprising that we are seeing a surge in defaults, particularly with investor-owned properties.

While the mortgage default will likely be a black mark on the credit score for two years or more, it's not as bad as a bankruptcy.  Missing payments on multiple accounts is a bigger blow to a borrower's credit score than a single foreclosure.  If you had little or no money invested in the first place, it doesn't make sense to keep pouring money into a depreciating asset.

For more information about the Mortgage Forgiveness Debt Relief Act of 2007 you can visit this link:

http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Economic Stimulus Plan Contains Increase In Conforming Loan Limit

Part of the economic stimulus plan proposed by Congress and the Bush administration yesterday provides an increase in the conforming loan limit from the current $417,000 to a new higher limit of $730,000.  Fannie Mae and Freddie Mac would be able to purchase and guarantee the larger "Jumbo" loans up to the new amount.  The new cap would be for twelve months, but it will be interesting to see if there is pressure to make it permanent.

The higher loan limit would have an immediate positive impact in the real estate market, making it easier and cheaper to get loans for more expensive properties.  The new loan limit could help move inventory in stagnant markets and even provide a boost here locally for what is already a healthy market.

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Recession Fears Produce Lower Katy Texas Mortgage Rates

This week's market sell-off and the talk of recession has resulted in lower mortgage rates in the Katy West Houston area.  Wholesale (par) rates for a fixed rate mortgage approached 5.00% and 5.500% for the 15 year and 30 year respectively.  Retail rates are closer to 5.25% and 5.75%.  This is a significant improvement over the pre-holiday rates we were seeing.  If you were waiting to lock in a rate for a mortgage loan this is welcome news!

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Treasury Secretary Paulson Plans Temporary Rate Freeze For Loans

According to a Wall Street Journal report, Treasury Secretary Hank Paulson is close to an agreement that would temporarily freeze interest rates on almost 2 million mortgages that are due to reset in the next two years.  This band-aid for the housing sector might provide some relief, but it is hard to see how there would be any significant benefit, considering many of the troubled loans will go into foreclosure even before the interest rate resets.  Paulson's plan simply extends the bad loans with more poorly documented, rubber-stamp rate freezes.

The reality is there were too many loans issued on poor underwriting standards and too much speculation in the real estate market.  Paulson's rate-freeze plan is being met with the same type of scrutiny that accompanied his proposal for an SIV super-fund.  I would say that the scrutiny is well deserved.

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Foreclosure Relief Gets Mixed Reception

With all of the foreclosure stories making headlines this year, it's hard to ignore the drain on the economy and the turmoil experienced by many people who have lost their homes.  As the foreclosure filings mount, banks are more hard-pressed to consider any and all alternatives that might avert disaster and control the damage to their balance sheets.  This explains the growing trend among banks to seek the help of counselors and other non-profits to try to help people hold on to their homes.

The flip side of this disaster is that there are many foreclosure victims who had little or none of their own money invested in the properties they are losing.  100% financing and flexible investor financing created a growing tidal wave of defaults that was doomed from the start.  Responsible homeowners have been insulted by the restructured loans and generous offers made by banks to keep some people in their homes.  It's hard to feel sorry for a foreclosure victim when they made no down payment, drive a brand new car, and have a boat in the garage.  Such lifestyle issues and irresponsible behavior are a common thread among foreclosure filings.

Banks deserve a lot of the blame for the pain we are experiencing.  It would be foolish to ignore the greed of consumers who also looked to capitalize on the cheap money that was floating around.  The current situation reminds me of an interview I once watched with Donal Trump.  He said that if the bank owns most of your loans, you are at the mercy of the bank.  If, however, you own most of the debt on the bank's balance sheet, then you own the bank.  A lot of banks have a new owner, FORECLOSURE!

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Countrywide Partners With NACA To Fight Foreclosures

Countrywide announced that it will partner with the Neighborhood Assistance Corporation of America to help combat the rising number of foreclosures in it's portfolio of loans.  The announcement came as a bit of a surprise considering the NACA has historically criticized the lenders practices and even accused them of predatory lending.

Borrowers facing foreclosure can apply with the NACA and complete designated education seminars.  In return, Countrywide will restructure loan programs to help eliminate the exploding ARM resets that are causing most of the problems.

More information about the program can be found on the NACA's website:  www.naca.com

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Texas Attorney General Accuses Mortgage Companies of Scam

The Texas Attorney General charged two mortgage companies, Foreclosure Assistance Solutions LLC and J.W.W. Services Inc with defrauding struggling homeowners out of thousands of dollars.  The companies apparently made promises that they could stop foreclosure proceedings in return for sizable cash payments.  The office of the AG has also frozen $13 million in deposits that Foreclosure Assistance Solutions placed in Bank of America accounts.  The AG is seeking $20,000 per violation under the Texas Deceptive Trade Practices Act as well as $5,000 per violation for failing to register for telephone solicitations.

Attorney General Greg Abbott noted, "Homeowners facing difficulty making their monthly mortgage payments should be wary of mortgage rescue scams.  Schemes offering too-good-to-be-true solutions are usually just that.  Texans who fall behind on their payments should contact their lender directly to work out a resolution."

To view the entire press release, visit www.oag.state.tx.us/.  You can also call the AG's toll-free complaint line at 1-800-252-8011.

For more information about real estate and mortgage issues in Katy or West Houston contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can contact him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com.

Katy Texas Mortgage Rates Dip Below 6 Percent

The meltdown in the financial markets this summer has resulted in lower mortgage rates for Katy and Houston area home buyers.  The rate on the 30 year fixed finally dropped back below the 6 percent mark, with wholesale (par) rates coming in at roughly 5.875 percent.  Retail rates stand at roughly 6.125 percent this week.

This is welcome news for qualified buyers shopping for a loan.  Jumbo rates are still in limbo for the most part as many lenders raised rates on their larger loan products above 7 percent.  There are still lenders taking quality jumbo loans, so it pays to shop around for a competitive rate.

When you are shopping for your loan remember that your lender should charge you the retail rate without any origination fees.  If you are going to pay an origination fee, you should receive the wholesale (par) rate unless you have a very small loan or unusual circumstances are involved.  Don't get "double-dipped" by your lender!

For more information about real estate and mortgages in Katy or West Houston, contact Aaron Layman.  He is a licensed real estate broker and mortgage broker.  You can call him directly at 281-994-5190.  You can also visit him on the web at www.AaronLayman.com