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White House May Cut FHA Premiums 50 bps by Executive Action
by HousingWire



President Obama may announce an executive action to lower Federal Housing Administration premiums by as much as 50 basis points during his January 7th in Phoenix, in the run up to his State of the Union address.


Whether GSE reform features in his speech is still up in the air - the White House press office tells HousingWire there's no preview of the speech available yet - but housing will be the primary focus of Obama's remarks, and several sources say that the President will likely announced the 0.5% cut to FHA premiums.


Private mortgage insurers such as Radian (RDN), MGIC (MTG), Essent Group (ESNT) and NMI Holdings have over the last couple of years enjoyed an increase in market share following boosts in FHA premiums. Share prices in those firms are sinking today on this news.


Real estate agents, however, are expected to receive the development warmly.


"Realtors are hopeful that during tomorrow's speech in Phoenix, the President will announce his intention to lower FHA's costly mortgage insurance premiums that have priced too many potential home owners out of the market. NAR estimates that in 2014, nearly 234,000 creditworthy borrowers were priced out of the housing market because of high FHA insurance premiums," said National Association of Realtors President Chris Polychron, who will attend tomorrows speech. "By lowering its fees, FHA will provide greater access to homeownership for historically underserved groups. I look forward to attending the speech tomorrow and sharing our views with President Obama."


The federal government's home mortgage insurance program is operating in the black, but its insurance premiums remain at record-high levels.


An analysis by the Urban Institute indicates that that FHA can significantly lower premiums - charging current borrowers more appropriately for their risks - while continuing to build the necessary reserves against future losses.


The President's unilateral executive action could be met with fierce opposition in the newly sworn-in, Republican-controlled Congress.


On Nov. 17, the FHA released its actuarial report on the Mutual Mortgage Insurance Fund for single-family programs, and while the health of the regulating agency improved, it still has a way to go with its finances.


The FHA boasted a $21 billion improvement since late 2012, after implementing a series of financing changes. The MMI Fund, which handles single-family programs, gained almost $6 billion in value in the past 12 months, printing now at $4.8 billion. Last year it fell short by more than $1.3 billion.


The report served as a Rorschach test, with those on the left and right, and those in the industry and those advocating for fair housing using it to bolster their disparate agendas.

"Given that the FHA's flagship fund - the Mutual Mortgage Insurance Fund  - is expected to remain below the Congressionally-mandated 2.0% threshold until October 2016, a decision to lower FHA premiums in 2015 would undoubtedly be met by considerable opposition from Congressional Republicans," said Lauren Burk, analyst with Compass Point Research & Trading.


"Specifically, we believe that House Financial Services Chair (Jeb) Hensarling, R-Texas, and likely Senate Banking Committee Chair (Richard) Shelby, R-Ala., would publicly and aggressively attack a move to lower FHA premiums in advance of the MMIF clearing the 2.0% threshold," Burk said in November.




Survey 42% of Americans didn't take a vacation in 2014
by The Dallas Morning News


Many Americans said they can't afford to use their vacation days

About 4 in 10 Americans didn't use any of their vacation days in 2014, a new survey says.


Just under 42% of Americans didn't take a single day of vacation in 2014, while about 15% of Americans took at least 20 days of vacation, according a survey by Skift, a travel intelligence site. The survey was administered via Google Consumer Surveys to 1,500 adult Americans on the Internet earlier this month.


The findings revealed that many full-time employed Americans have at least 10 days of allotted vacation, though only about 13% said they could afford to take that many.


The survey also said that, on average, women took fewer vacation days than men.

According to the U.S. Chamber of Commerce, Americans are reluctant to use their vacation time for fear of being replaced or worries of their work piling up. Employers are not required to give their workers paid time off under federal law.


How Cheaper Oil Affects Mortgage Rates  

by The New York Times



Falling oil prices typically lead to lower heating bills and cheaper fill-ups at the gasoline pump. Less obvious to the average consumer is the role cheaper oil is playing in driving down mortgage rates.


It is a complicated and indirect link that will likely keep rates low well into 2015, economists say.

Average fixed mortgage rates dropped this month to their lowest levels of the year, according to Freddie Mac. As of Dec. 18, the agency's weekly mortgage survey showed the 30-year fixed-rate national average was 3.80 percent with an average of 0.6 point. (A point is a fee equal to 1 percent of the loan amount.) The national average for the 15-year fixed-rate loan was 3.09 percent, also with an average of 0.6 point.

    Mortgage rates are largely driven by the bond markets and most closely follow the yields (or rates of return) on United States Treasuries. The Freddie Mac survey noted that the bottoming out of average fixed rates earlier this month followed the lowest yields on 10-year Treasuries since May 2013.


So why the decline in yields? The answer, at least in part, has to do with the prolonged slump in oil prices. The price of Brent crude, a benchmark for international prices, which peaked at $115 a barrel in mid-June, has been trading in the $60 range.


In general, interest rates tend to be very sensitive to inflation. Because cheaper oil lowers costs throughout the American economy, inflation is pulled downward as well, said Keith Gumbinger, the vice president of HSH.com, a financial publisher. In turn, lower inflation can allow for interest rates in general to decline.


That effect has been exacerbated of late by global investors' concerns about the ailing economies in oil-producing countries, especially Russia. If low oil prices are a boon for consuming nations, they can be detrimental to the economies of producing nations, Mr. Gumbinger said.


"Markets that would normally be pumping oil and getting dollars will get far fewer dollars - and the prospects for those countries are lower," he said.

The United States, in contrast, with its strong dollar and strengthening economy, looks like a far safer bet for global investors, said Nela Richardson, the chief economist for Redfin, a national real estate brokerage. And many of them are seeking shelter in United States Treasuries.

"Investor demand is chasing that strong dollar into U.S. bonds, and those investors are requiring less yield," Ms. Richardson said. "And as investors require less yield to invest in those bonds, it also decreases mortgage rates."


How long low oil prices will help support low mortgage rates is anybody's guess. For one thing, nobody really knows when oil prices will turn around and go the other way, Mr. Gumbinger said. But sustained low-level energy prices also could eventually have a counter effect on interest rates, he said, "by adding hundreds of billions of dollars" to consumer spending.

Rates could begin to creep up if the economy continues to strengthen, Ms. Richardson said. "If firms start hiring again, and wages increase - that's when the level of all interest rates in the U.S. would increase," she said.

And then there's the role of the Federal Reserve. Janet L. Yellen, the Fed's chairwoman, recently said that the central bank expects to raise interest rates in 2015, sometime after late April. But Ms. Richardson predicts that global concerns will exert far more influence over interest rates than the Fed, which could mean mortgage rates will stay well below 5 percent for yet another year.


The takeaway for home buyers, Ms. Richardson added, is "there's not a lot of urgency."

D-FW Home Values Rise by Almost by 25 Billion in 2014 

by CNN Money


D-FW home values rose by more than 7 percent in 2014, Zillow estimates.

Dallas-Fort Worth homes gained almost $25 billion in value in 2014, according to a new report from Zillow Inc.