Rates Continue Their Slow Rise

Mortgage rates today are still very low, but borrowers have a very short memory. They tend to forget that the rate on the 30-year fixed, which sits around 3.6% today, was a full percentage point higher a year ago, and above 5% in January of 2010. The purchasing power gained through today"s low rates have arguably helped fuel the recovery in home sales.

Low rates have also sparked a boom in mortgage refinancing, which in turn has put more spending money in consumers pockets. Still, the slightest move higher has dramatic effects. Witness the 10% drop in refinance applications from a week ago, on the Mortgage Bankers Association"s weekly report. The rate on the 30-year fixed moved from 3.62% to 3.67%.  But rates are now up .375%, and it may hold given MBS/Treasury market technicals and moderately improving economic fundamentals.

The complacency has a lot to do with rates having be en low enough to make no-cost refis easy. But when rates rise this much, the no-cost options go away and people tend to wake up.

When Squatters Don't Flee, Their Home Can Be Free

Andre Barbosa is expecting a casserole or a batch of cookies from his new neighbors, he's going to be waiting a long while. The 23-year-old Brazilian man has been squatting in a fab $2.5 million mansion in Boca Raton, Fla., since July.

Angry neighbors called the cops on Dec. 26, but police could do nothing. No one saw Barbosa break in, and he had paperwork claiming ownership under a quirky state law called "adverse possession," which allows a person to move into a home and claim the title if they stay there for seven years.

Bank of America says it's following the legal process regarding Barbosa, but one neighbor has already offered to buy the house to get rid of him. But the situation is driving his wealthy neighbors crazy. "This is a very upsetting thing," said next door neighbor Lyn Houston. "Last week, I went to the Bank of America and asked to see the person in charge of mortgages. I told them, 'I am prepared to buy this house.' They haven't even called me back."

Barbosa, according to records, is a Brazilian national who refers to himself as "Loki Boy," presumably after the Norse god of mischief. He did not return calls. Someone with his name has been boasting about his new home on Facebook, even calling it Templo de Kamisamar. Barbosa also posted a notice in the front window naming him as a "living beneficiary to the Divine Estate being superior of commerce and usury." S

Superior Ice Fest

This looks like a moonscape, but its origins are purely terrestrial. (click on photo to enlarge) It’s actually a shot from NASA’s Moderate Resolution Imaging Spectroradiometer, showing the frozen-solid region around Lake Superior and northern Lake Michigan.

Home Sales See Slight Slip But Prices Keep Rising

Existing-home sales eased in December but are well above a year ago, while limited inventory maintained the upward momentum in home prices, according to the National Association of Realtors®. Total sales in 2012 were the highest in five years, while the annual price rose the most since 2005. Total existing-home sales1, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.0 percent to a seasonally adjusted annual rate of 4.94 million in December from a downwardly revised 4.99 million in November, but are 12.8 percent above the 4.38 million-unit level in December 2011. The preliminary annual total for existing-home sales in 2012 was 4.65 million, up 9.2 percent from 4.26 million in 2011. It was the highest volume since 2007 when it reached 5.03 million and the strongest increase since 2004.

Home Affordability Reaches New High in 2012

2012 is shaping up to be a record year for favorable housing conditions and a strong year for buyers, according to the National Associations of Realtors.

As of November, the Housing Affordability Index released by NAR stood at 198.2. This index takes into account the relationship between median home price, median family income and average mortgage interest rate.

A higher index indicates a stronger household purchasing power. When an index hits 100, it is at the point where a median-income family is making enough money to qualify to buy a median-priced single-family home, assuming 20% is put down and a quarter of gross income is devoted to mortgage principal and interest payments.

NAR predicts that once the December numbers are reported, 2012 will hit a record high 194 on the index, up from 186 in 2011, which was the previous record.

New Rules for New Mortgages Raise New Questions

Although not scheduled to take effect until next January, the new changes in lenders's mortgage regulations are likely to begin affecting the housing market much sooner.

Some consumer groups are complaining that they will provide cover for lenders to refuse more loan applications, http://money.cnn.com/2013/01/10/real_estate/mortgage-rules/ l

Most are seen as common sense ways to avoid a repeat of the Sub Prime Loan mess that triggered the housing crisis 7 years ago.

1. Lenders must consider now at least eight criteria in applications, including a borrower’s credit history, debt obligations, employment status, income and assets.

2. Lenders can no longer base borrowers’ repayment ability on teaser rates.

3. “Qualified mortgages,” offer lenders certain legal protections as long as they adhere to the criteria laid out by regulators.

 4.. Most qualified mortgages will have a 3 percent cap on the amount of fees and origination expenses that lenders can charge.

5. A borrower’s total debt burden can not exceed 43 percent of his or her income. Debt in this instance includes student loans, auto loans, revolving debt, alimony, child support and existing mortgages.


What's still needed is clarity on government incentives for homeownership, such as the mortgage interest deduction, zoning, and backing of mortgage underwriters Fannie Mae and Freddie Mac. These have the potential to renew the perception that prices will always trend upward, once again turning home buying into a speculative market.
 http://www.cnbc.com/id/100370451

http://www.washingtonpost.com/business/economy/new-mortgage-rules-a-checklist-for-consumers/2013/01/10/0a588942-5b47-11e2-beee-6e38f5215402_story.html

Big and Small Towns are Taking Control of Energy Resources

City of Ellensburg, Washington, is one of the few municipalities in the US that still owns all of its own utilities (water, gas, sewer, electricity). It's also no coincidence that it was also the first city to build a community/utility owned solar array in 2006, feeding the community grid. It began generating power in November of 2006, and has since produced more than 170,000 kilowatt-hours, averaging 58,000 kilowatt-hours, annually. They're constantly expanding the array, and as of this fall, started adding wind turbines.

The Department of Energy is also using the community's local power generation to measure the impact on a local grid of expanding renewable power integration. They're easily 5+ years ahead of any other municipality when it comes to locally produced renewable power.

Grist is reporting that Boulder, Colorado, is investigating the formation of its own,publicly owned municipal utility. They initiated the study with a climate action plan passed by the city in 2002, committing it to reducing its emissions in line with Kyoto targets.

In 2006, the city imposed a carbon tax and just last year extended the tax by five years. Nonetheless, the city is falling short of its targets, in large part because it gets its electricity from the big private utility Xcel, which gets 60 percent of its power from coal (as of 2011). The idea behind forming a municipal utility would be to buy more renewable energy and have more direct control over pricing, distribution, and demand-side programs.

Banks Pay Massive Fines to Government

In two of the biggest civil settlements since the financial crisis, the nation's biggest banks agreed Monday to cough up nearly $19 billion to resolve federal allegations of mortgage misdeeds.

Bankers saw the settlements as a major step in providing more certainty for their balance sheets and possibly foreshadowing an end to the era of billion-dollar mea culpas and open-ended regulatory probes. In one case, 10 banks settled with regulators for $8.5 billion. In the second, Bank of America Corp. agreed to pay almost $10.4 billion to Fannie Mae, the giant loan buyer that the U.S. seized and propped up with tens of billions of taxpayer dollars.

The deals come three years after prosecutors dropped criminal investigations against such subprime-mortgage kingpins as Countrywide Financial Corp.'s Angelo Mozilo in favor of pursuing civil fines.

Debt Relief Act Extended

The Mortgage Forgiveness Debt Relief Act was introduced in Congress on September 25, 2007, and became law on December 20, 2007. This act offers relief to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure.

The act extends such relief for three years, applying to debts discharged in calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008, this tax relief was extended another three years, covering debts discharged through calendar year 2012.) In the eyes of the Internal Revenue Service, housing debt that is forgiven or written off is the same as income.

If the law had expired last week, forgiven mortgage debt would be taxable. The same applies to foreclosures and to loan modifications in which principal is reduced. Once the lender writes off the debt, it will report the amount to the IRS. Homeowners should expect to receive Form 1099-C showing the canceled debt amount. Part of the new year's Fiscal Cliff deal extended the Mortgage Forgoveness Debt Relief Act.

How Small Cutbacks Can Make a Huge Savings in Your Annual Budget

Budgeting doesn't have to be hard.You don't even need to be tied down to the idea of "making a budget." Saving money can be as simple as making a few small changes at home. This infographic from Intuit shows you easy, convenient ways to save up to $8,800 a year, without ever feeling the pinch of a restrictive budget

Personal Finances from Quicken

2013 Predictions (1)

The Real Estate Market is expected to see a major upswing this year to a greater degree than it has in the last 6 to 8 years.  Leading the boom is the return of home price appreciation.

Most experts agree that home values hit bottom sometime in early 2012. Zillow Home Value Forecast shows that 67 of the 156 markets it covers will experience an increase in home values over the next 12 months. Nationally, Zillow forecasts home values will rise 1.1 percent.

Home price increases will exceed inflation in most housing markets for the first time in nearly 7 years. Investors, first time buyers and move up buyers will return to the housing market in earnest. In many markets demand will outstrip supply for homes in FHA price ranges.