Obama Tells FHA to Cut Premiums
President Obama has directed the FHA to cut the annual FHA premium from 1.35% to .85%. That is a huge cut. Over 5 years, the borrower will save approximately 2.5%. On a $200,000 mortgage, that is $10,000. It is expected that over 800,000 borrowers could benefit from a refinance that could start a refinance frenzy. Expectations are for 250,000 new FHA purchase loans. Also in the directive, the president promises to cut red tape and clarify lending standards. That could be bigger news than the premium cut. We can hope everyone in Washington is listening.
Since price is based on scarcity, interest rates for FHA loans increased the fastest since June, based on the belief many more loans will be available through refinances and even purchases. This could mute the insurance premium reduction.
Fannie And Freddie Post 20% Profit Gain
Those ole GSEs that everyone wants to get rid of (supposedly) just keep churning out the profits. Thanks to some large settlements, Fannie and Freddie turned a tidy $6 billion dollar profit in the 3rd quarter. Volume is way down though compared to 2013. The 2 GSEs only issued $488 billion in securities compared to $1,027 billion in the first 3 quarters of 2013. Still, that was 69% of all residential securities issued. Last year, the GSEs issued 77% of the MBS.
Zillow Says Who Needs Realtor.com?
Zillow is terminating its contract with ListHub, a division of NewsCorp, which indirectly operates Realtor.com for NAR. Zillow is going directly to local MLS providers for the data. NewsCorp is a media powerhouse that is taking the challenge seriously. I’d say this means war.
Then there is the Zillow-Trulia merger. Some of you may remember when potato chip maker Utz and pretzel maker Snyders wanted to merge a few years ago. The FTC basically killed the deal. That was in spite of the fact that they wouldn’t even be the top chipmaker. But Zillow and Trulia, who are number one and number two, seem confident the FTC will let them merge and essentially dominate online real estate and loan sourcing. The downside for real estate agents and loan originators would be the combined giants’ ability to jack up ad rates with impunity. The merger date is now set for February 15, 2015. I suppose you could write to the FTC but they haven’t opened this for formal public comment.
* Source: NAMB