USDA Rural Housing Loan: October 2009

USDA Rural Housing History shows this government insured home loan program has had great success over the last 60 years and is gaining in popularity. 

In 1949, USDA's telecommunications loan program was established to provide telephone service to rural America. At the time, only one in three farms had access to telephone service. As it did with the rural electrification program, the Telephone Loan Program revolutionized the lives of millions of rural families and businesses by providing connectivity, access to emergency services and business activities that fueled economic growth. Today, Rural Utilities Service (formerly REA), provides loans and grants for telecommunication, electricity and water and environmental services. It is also administering a program, funded through the American Recovery and Reinvestment Act, to provide broadband service to under-served communities.

Also in 1949, passage of the Housing Act marked a turning point the nation's history by establishing the Farmer's Home Administration. To date, three million rural Americans have benefited by receiving housing loans, grants and guarantees totaling $124.6 billion.

USDA Rural Development's mission is to increase economic opportunity and improve the quality of life for rural residents. Rural Development fosters growth in home ownership, finances business development and supports the creation of critical community and technology infrastructure. Further information on rural programs is available at a local USDA Rural Development office or by visiting www.USDALoanExpert.com!

This week in the Economy: October 26th - 30th

Massive Treasury auctions and a big day of economic reports on Friday could combine for market-moving news throughout the week.  Currently, we are in a floating status for rate locks while mortgage bonds are trading sideways with potential to move higher.  If we can break through resistance, then mortgage rates should improve from their current levels.

Reports to Watch

The information below is a highlight of the reports due out this week. For more detailed information and insight, view the Economic Calendar, the Daily Market Update, and our exclusive Market News. And don’t forget, you can easily download the Economic Calendar to your Outlook Calendar to make sure you don’t miss important economic releases. Just click here to read instructions for downloading to Outlook.

• Consumer Confidence for October kicks off the week on Tuesday. Last month, confidence was reported at 53.1. This month’s report is expected to climb up slightly to 54.0.


• Coming after last week’s better-than-expected Existing Home Sales, New Home Sales for September will be reported on Wednesday. New Home Sales for August were reported at 429,000, slightly lower than expectations of 441,000. The inventory of unsold homes dropped to a 7.3-month supply--down from the previous reading of 7.5% and the lowest since January 2007. The report due out this week is expected to show an increase in New Home Sales to 440,000 for September.


• Durable Goods Orders will also be reported on Wednesday. Durable Goods Orders are considered a leading indicator of manufacturing activity, and the market often moves on this report despite the fact that its headline number is a less-than-perfect indicator of activity. Last month, Durable Goods Orders for August unexpectedly fell 2.4% for the largest decline since January. The report for September is expected to be reported at 0.7%.


• On Thursday, the Gross Domestic Product (GDP) and GDP Chain Deflator for the third quarter will be reported. The Chain Deflator is a key inflation measure included in the GDP Report. And since inflation is the archenemy of Bonds and home loan rates, this report could be a market mover. Unlike the Consumer Price Index--which is a more closely watched inflation indicator--the Chain Deflator has the advantage of not being a fixed basket of goods and services, so changes in consumption patterns or the introduction of new goods and services will be reflected in the Chain Deflator. GDP is expected to be reported at 3.1% compared to last quarter’s -0.7%, while the Chain Deflator is expected to come in at 1.3% from 0.0% last quarter.


• The all-important Core Personal Consumption Expenditure (PCE) and Year-Over-Year PCE will also be released this Friday. This is the Fed's favorite gauge of inflation so the markets will be playing close attention to this report.


• Friday also brings another look at Personal Income and Personal Spending. Personal Spending is expected to be reported at -0.4%, which would be down from last month’s reading of 1.3%. Personal Income is also expected to be down to 0.0% from last month’s reading of 0.2%.


• The Chicago PMI will be released on Friday as well. This is a big report for the markets because many industry experts use it to help predict the upcoming ISM report. Last month’s reading was reported at 46.1, and this month’s is expected to come in at 48.5 when it’s released.


• The Employment Cost Index (ECI) caps off the week of heavy hitters. This index is a comprehensive measure of labor costs and represents the price of labor as compensation per employee-hour worked, during the previous quarter. As such, the ECI is one way to evaluate wage trends and the risk of wage inflation, as well as possible price pressures. If wage inflation threatens, it is possible interest rates will rise through Bond prices dropping or Fed intervention.

The X Factor

This week, the Treasury Department auctions off a massive $123 Billion worth of Securities. That’s even more than anyone expected last week when the Treasury announced the amounts of this week auctions. Here’s how the auctions break down this week:

• $7 Billion in TIPS on Monday
• $44 Billion in 2-yr Notes on Tuesday
• $41 Billion in 5-yr Notes on Wednesday
• $31 Billion in 7-yr Notes on Thursday

This massive amount is enough to shake up the market all by itself if it isn’t received well. Then, when you combine that with the fact that the Fed’s purchase program of MBS is slowing and coming to an end, you can see how the X Factor has the potential to move the market this week as much as the heavy-hitting reports on tap.

The Bottom Line

Mortgage Bonds were able to stabilize last week but still closed below a key floor of support at the 200-Day Moving Average. The battle begins again this week.

Courtesy of Mortgage Market Guide

No Property Tax increase in Peachtree City, GA for 2010!

USDA Rural Housing Loans are running out of money!  Now what?

  The President has signed the Agriculture Appropriations Act for fiscal year (FY) 2010.  Since October 1, 2009 we have operated under a Continuing Resolution (CR) with carryover funds from FY 2009 and funds allocated under the CR.  Once the bill is signed into law a lapse of three to four weeks occurs before program levels receive funds under the bill from the Office of Management and Budget (OMB).
 
Due to a high demand for purchase funds, it is anticipated CR and FY 2009 carryover funds for PURCHASE transactions will be exhausted by October 27, 2009, if not sooner.  Refinance funds under the CR and carryover from FY 2009 remain available.  During the lapse of funding for purchase transactions, Rural Development will continue to process and issue Conditional Commitments “Subject to receipt of Congressionally appropriated funds.”   Business will be conducted as usual.

As you can see from the following, USDA Rural Housing is currently using carryover funds from 2009 and expect to have all of those exhausted by next Wednesday, October 27.  There will be lenders who will not be able to close and fund USDA Rural Housing mortgages for a few weeks.

NORTHSTAR MORTGAGE GROUP IS NOT ONE OF THOSE LENDERS!  I want to make sure that you understand that we will still be able to close and fund mortgages for purchases under the USDA Rural Housing Program even when they are issuing conditional commitments and waiting for the funds to be released.  This is huge due to the timing with the expiration of the First Time Home Buyer’s Credit!

If you have a client that is doing a USDA Rural Housing mortgage and closing in November, make SURE you ask the lender TODAY if they can fund with a conditional commitment while USDA is securing the 2010 funds; if not, you need to have your client move their mortgage so that they do not lose the opportunity to receive the first time home buyer’s credit, as it expires on November 30 and with the Thanksgiving holiday right there at the end, they should be closed on or before November 23 to make sure that they get it!

I hope that you remember us if your clients’ current lender is unable to do their mortgage!
Visit the USDA Loan Expert website to get started!

This week in the economy, we’ll get a look at the health of the housing industry. But the real market mover could be the Stock market again.

Reports to Watch

The information below is a highlight of the reports due out this week. For more detailed information and insight, view the Economic Calendar, the Daily Market Update, and our exclusive Market News. And don’t forget, you can easily download the Economic Calendar to your Outlook Calendar to make sure you don’t miss important economic releases. Just click here to read instructions for downloading to Outlook.

• On Tuesday, the Producer Price Index (PPI) will be released. This report provides information about inflation at the wholesale level. Last month, the Labor Department reported that the Producer Price Index rose 1.7%, which was more than double expectations. This week, the index is expected to be reported at 0.1% for September.


• Also on Tuesday, we’ll get a read on the housing market with a report on Housing Starts and Building Permits. In last month’s report, Housing Starts rose to 598,000, which was the highest level since last November. Building Permits, on the other hand, came in a bit shy of expectations at 579,000. All in all, it was a decent report and suggested that the worst in the housing market may have passed. We’ll see if that line of thinking continues this week when Housing Starts are expected to be reported at 607,000 and Building Permits are anticipated to hit 590,000.


• The Fed’s Beige Book--officially known as the Survey on Current Economic Conditions--will be reported on Wednesday. This report is published eight times per year and contains anecdotal information on the current economic and business conditions. It reflects data from bank reports, as well as interviews with key business contacts, economists, market experts, and other sources. Although some people consider the Beige Book to be a lagging report, it can serve as a helpful indicator of the Fed’s policy decisions.


• Thursday will bring another Initial Jobless Claims report at 8:30 a.m. (ET). This weekly report continues to be important to watch as the job market plays a key role in our economic recovery. In last week’s report, Initial Claims fell 10,000 to come in lower than expected at 514,000. But that number still represents an enormously high amount of new people filing for jobless benefits in what continues to be a weak labor market. 


• The week ends with a look at Existing Home Sales on Friday. Last month, Existing Home Sales were reported at 5.10 Million, which was less than expectations of 5.35 million and the first decline in five months. However, there was some good news in the report, as inventories of unsold homes fell to an 8.5-month level…the lowest inventory level seen since April 2007. This week’s report is expected to climb back up to 5.38 Million.

The X Factor

There are no Treasury auctions this week, except for the regularly scheduled T-bill auctions. However, on Thursday, the Treasury Department will announce next week’s auctions. Depending on the size of the auctions and how the announcement is received, this could add volatility to the market later this week.

In addition, corporate earnings could play a big role in the markets this week. The earnings report season ramps up even more this week with perhaps the biggest week of reports due out. These reports will determine the fate of Stock prices, which could in turn move Bonds. So keep an eye on the earnings reports and market reactions as we go through the week.

The Bottom Line

Last week, the Core Consumer Price Index was reported higher than expected, indicating that inflationary forces may be underway. In addition, Capacity Utilization was reported well below the 80-85% range, which would present inflationary pressures from the manufacturing sector.

We’ll see more news this week on inflation. But the bottom line is that even if it appears to be low now, inflation will likely grow in the weeks and months ahead--which means, we’re probably looking at the lowest rates for the foreseeable future.

Courtesy of Mortgage Market Guide.

President Obama Wins Nobel Peace Prize. 

How did this happen?

   Hello again Peachtree City & AR!  You probably didn't know this but I have been     a proponent for gaining the support from our elected officials related to getting an extension of the 1st Time Home-Buyers program.  My efforts went so far as to send personal letters to both Senators Saxby Chamblis and Johnny Isakson asking for their positions on pending issues and continued support on others. 

   Folks, I would be remiss if I first didn't state that I received responses from both Senators.  I thought I'd share the response I receive from Sen. Johnny Isakson which acknowledged his efforts as co-sponsor of the Bill to extend the tax credit to 2010.  What you may not have known is that he also fully supports a Bill that would also create a $15,000 tax credit for all home buyers. 

I've contacted both Senators on other issues that I strongly supported such as the down-payment assistance program and getting federal assistance to help the thousands of recent flood victims.  Folks, can I be blunt for just a minute?  Regardless of whether you voted for the person that is currently in office or not, this is the person duly elected to represent you!  Can we put partisan politics aside for a minute and just talk about the facts? 

The housing and financing industries are still in crisis!  Bank of America just reported recent losses of $2.24 billion for the 3rd quarter of 2009 as loan losses keep sky-rocketing!  Recently Senator Vincent Fort was able to get Wells Fargo/Wachovia not to foreclose on about a thousand homes that were set to be sold on the court house steps in Atlanta.  In fact he and other protesters were arrested on August 31st at the Camp Creek marketplace offices of Wells Fargo for participating in a protest related to exposing predatory lending practices by Wells Fargo and Wachovia and their role in Georgia home foreclosures.  By the way, Wells Fargo/Wachovia received $25 billion in tax-payer bailout assistance! 

We need more than ever for our elected officials to step up and help find solution to these pressing issues that are affecting us all! 

However, don't relinquish your responsibilities by merely relying on our elected officials to come up with all the answers.  Take the opportunity to express your concerns to our elected officials and do what you can to make things happen.  The bottom line is that in the end we all will be impacted by the decisions made my our electorate and the solutions that will be passed down as laws.  You have a voice, a choice and a vote!        

Dear Mr. Saunders:  Thank you for contacting me regarding the extension of the current $8,000 first-time homebuyer tax credit. I appreciate your thoughts and the opportunity to respond.  We are quickly approaching the November 30, 2009, sunset of the of the $8,000 first-time homebuyer tax credit. The current credit that was enacted as part of the American Recovery and Reinvestment Act has enable to roughly 2 million individuals to tax credit. According to the National Association of Realtor's 350,000 additional home sales have taken place because of the current credit. In response to the November 30sunset, I have signed on as a co-sponsor of S.1678 a bill to extend the first-time homebuyer tax credit until June 1, 2010.   While home sale numbers on entry level homes have begun to increase, there continues to be gridlock in the "trade-in" and "move up" market. A family who has been transferred to Georgiafrom another state is still having a hard time selling their previous home. With so many pending purchases contingent on the sale of the previous home, markets in this category continue to be locked. That is why I continue to support a $15,000 tax credit available to all homebuyers toward the purchase of a primary residence within one year after the date of enactment. We should at least continue the existing tax credit until June 30, 2010. I know there are concerns regarding the costs of an expanded tax credit but, there are ways to pay for this tax credit without increasing the national debt. Some estimates say an expanded tax credit could spur 700,000 additional home sales and generate 600,000 jobs for our economy. The U.S. economy is strongest when we have a vibrant housing market. Rest assured I will continue to support commonsense legislation that spurs growth in our economy.  Thank you again for contacting me.  Please visit my webpage at http://isakson.senate.gov/ for more information on the issues important to you and to sign up for my e-newsletter. Sincerely, Johnny Isakson United States Senator

First Time Home Buyer Tax Credit:

www.USDALoanExpert.com

First Time Home Buyer Tax Credit is set to expire November 30.  Currently, there are many bills that have been introduced and submitted in attempt to extend the credit.  Thus far, the credit has been extended to military personnel only. 

Is the first time buyer tax credit helping the economy.  Right now, it is way to early to tell.  However, pending home sales is continuing to increase and we are certainly getting a high volume of calls from potential first time home buyers. 

Before you buy, it is important to know and understand the requirements and limits of the tax incentive.