First Mortgage Buyer

The recent report from the U.S. Department of Commerce stated that overall construction spending  in the US is down 0.6% month-over-month in July.

Residential construction fell by 2.1%, up slightly from June’s 1.3% decrease, while non-residential construction gained 0.2%, down slightly after rising 1.1% in the previous month. Overall, this is not surprising news. As home purchases continue to decrease in the tightening credit market making it unwise for contractors to take on large residential projects. More worrying is the notable decline in private construction.

There was a 1.4% decline in private construction and a 1.4% increase in public building, which came in at 0.2% and 0.4% in the month of June.

This week Senator Barack Obama outlined his plan to save the US housing market while speaking to a group of Union members in New York. His plan centers on the modernization of the financial regulatory system as well as a second stimulus package. According to Senator Obama, the regulatory agencies in Washington have let the special interest set the agenda for reform.

The Obama plan is a three prong approach.

1. Modernize the Financial Regulatory System

This includes giving the Fed supervisory authority over any institution where the Fed is a lender of last resort; i.e. Bear Sterns. Obama also wishes to increase disclosure requirements for investment institutions and streamline the entire process of regulation. Currently, many institutions are regulated by multiple agencies with overlapping areas of authority. This makes it difficult to identify who is responsible for enforcing compliance.

2. Help Homeowners Facing Foreclosure

Obama proposes the start of a new Housing Security Program to give lenders an incentive to refinance existing mortgages into fixed 30 year mortgages backed by the federal government. He also proposes closing the Chapter 13 bankruptcy loophole for mortgage companies and defining mortgage fraud and predatory lending at the federal level.

3. $30 billion Economic Stimulus Package Specific to the Mortgage Crisis

The stimulus package would set aside $10 billion in foreclosure prevention for home owners in danger of losing their home. Another $10 billion would go to state and local governments that are facing revenue shortfalls due to the housing market. The rest of the package would be used to extend the length of unemployment benefits for full time workers and offer compensation to many part time workers not currently included in the system.

Yet another program to help homeowners who are delinquent on their
mortgages was announced last week by Fannie Mae.

HomeSaver provides funds to pay past due balances of
principal, interest, taxes, insurance (PITI), and up to six months (in
some cases 12 months) of home owner association (HOA) fees.

There is a $600 workout fee paid to the
servicer…

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The Federal Reserve on Thursday announced that, in 2007, American
ownership in their homes as measured by equity fell below 50 percent for
the first time since records were first kept in 1945.

During the 2nd quarter of 2007 the central bank reported that
homeowners’ equity slipped to a…

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The National Association of Realtors (NAR) announced today that existing home sales decreased 0.4% in January, when compared to the previous month’s sales.

Tourists have long used home swaps as a way to save
money and escape the blandness of hotel rooms; trading use of a house on
the beach in Florida for a New York City apartment or lakeside cabin for
a week or two.

The idea has now spread to permanent swaps. With far
more home sellers than buyers in the market today some entrepreneurs have
come up with…

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