by Associated Press

via the KING5.com website
Posted on April 1, 2011 at 6:50 AM

WASHINGTON, D.C. – The unemployment rate fell to a two-year low of 8.8 percent in March and companies added workers at the fastest two-month pace since before the recession began.

The Labor Department reported Friday that the economy added 216,000 new jobs last month, offsetting layoffs by local governments. Factories, retailers, education, health care and an array of professional and financial services expanded payrolls.

The second straight month of brisk hiring is the latest sign that the economy is strengthening nearly two years after the recession ended.

Private employers, the backbone of the economy, drove nearly all of the gains. They added 230,000 jobs last month, on top of 240,000 in February. It was the first time private-sector hiring topped 200,000 in back-to-back months since 2006 – more than a year before the recession started.

The unemployment rate dipped from 8.9 percent in February to 8.8 percent in March. The rate has fallen a full percentage point over the last four months, the sharpest drop since 1983.

Read the rest of the article HERE.

Seattle Real Estate Tyler Freed

The number of people applying for a mortgage rose last week as lower rates lured more borrowers to refinance.

The Associated Press
NEW YORK —
The number of people applying for a mortgage rose last week as lower rates lured more borrowers to refinance.

The Mortgage Bankers Association said Wednesday its overall mortgage application index increased 2.2 percent from the previous week. The refinance index rose 4.9 percent, while the purchase index slipped 3.7 percent last week.

The refinance share of activity rose to 72.1 percent of all applications from 71 percent the previous week.

Rates on fixed mortgages edged down last week, but are still more than a half-point higher than they were in late October. They have risen as Treasury yields increased on rosier economic data and expectations that tax cuts will spur growth and spark higher inflation. Mortgage rates tend to track those yields.

The rate on the 30-year fixed mortgage fell last week to 4.78 from 4.82 percent a week earlier. The rate on the 15-year fixed loan, a popular refinancing option, dropped to 4.15 percent from 4.23 percent.

The Mortgage Bankers Association’s survey covers more than 50 percent of all applications nationwide.

Seattle Real Estate Tyler Freed

Wash. state 2010 job growth shows big improvement

by Associated Press
KING5.com

Posted on January 19, 2011 at 3:32 PM

OLYMPIA, Wash. – Washington state added about 8,000 jobs in 2010, a vast improvement from the major job losses seen in recent years, state officials reported Wednesday.

Though modest compared with a labor force of more than 3.5 million, the state’s yearly nonagricultural job growth represents a huge swing upward from the nearly 134,000 jobs lost during 2009. Yearly job growth was led by the service sector, particularly in retail.

“This is the first month (since Sept. 2008) we’ve been able to see any kind of solid year-over-year growth,” said Dave Wallace, chief economist for the state Employment Security Department. “That in itself is a positive sign.”

For December, Washington state’s seasonally adjusted unemployment rate grew slightly to 9.3 percent — an uptick from the 9.2 percent reported in November and a year earlier. The state added about 2,100 jobs last month.

The national unemployment rate for December was 9.4 percent.

Washington added 11,800 private-sector jobs in 2010 and lost 3,800 government jobs, mostly in state government, the Employment Security Department said in Wednesday’s monthly employment report.

Yearly job growth in the state was led by the service sector, particularly retail. Goods-producing industries shrank, with the biggest losses in construction.

Retail led all employers in the service category with growth of 6,900 jobs in 2010. Other notable growth was seen in education and health services, which added 4,800; wholesale trade, which added 4,100; and leisure and hospitality, adding another 2,200.

The biggest losses in service-sector employment were in finance, which lost 3,900 jobs, and government, down 3,800 jobs for the year.

Job losses in the goods-producing industries were driven by construction, which has been devastated since the Great Recession. Construction led all Washington job sectors in job losses for 2010, shrinking by 10,400, the state said.

A positive sign was seen in manufacturing. That sector had been second to construction in annual job losses earlier this year, but it has since improved: December is the first month in more than a year that the aerospace industry gained jobs compared to a year earlier, posting an increase of 2,000.

Seattle Real Estate Tyler Freed

Fannie, Freddie to start buying back bad loans
By The Associated Press

WASHINGTON Government-controlled mortgage-finance companies Fannie Mae and Freddie Mac said Wednesday they will buy back troubled loans contained in securities they already have sold to investors.

The two companies are repurchasing mortgage loans for which borrowers have missed at least four months of payments. At the end of last year, Fannie had about $127 billion of such loans, while Freddie Mac had about $70 billion.

The two guarantee the mortgage securities they sell to investors. Buying back the delinquent loans would cost less than making those guarantee payments, both companies said.

Fannie and Freddie have been run under tight government oversight since their near-collapse in September 2008. They have required $111 billion in federal aid to stay afloat.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for both companies, lifting an earlier cap of $400 billion. That gave Fannie and Freddie more leeway to buy back delinquent loans.

“It is my expectation that any net additions to their retained mortgage portfolios would be related to this activity,” the companies’ chief regulator, Edward DeMarco, said in a letter sent to Congress this month.

Copyright © The Seattle Times Company

Seattle Real Estate Tyler Freed

Foreclosures weigh on home appraisals
It appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none.

By Alex Veiga

The Associated Press

LOS ANGELES — It wasn’t the first time that Katherine Scheri ruined a real-estate agent’s day with a low property appraisal.

Scheri, a real-estate appraiser, had sized up a three-bedroom, two-bath house in Santa Ana, Calif., for $30,000 less than what the buyers offered to pay. A typical deal-killer for a seller.

The agent urged the lender to force Scheri to consider several other properties that could back up the original $310,000 sale price. Then he tried good old-fashioned guilt, telling Scheri her appraisal was going to ruin the buyers’ shot at the American dream.

“That’s what he laid on me,” Scheri recalled. “And I said, ‘Don’t you care they could be potentially spending $30,000 too much for a house?’ ”

Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes.

And that gets to the heart of the problem.

Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they’ve hit more than 50 percent.

Appraisers determine the value of a property by looking at recent sales of comparable homes. They take an apples-to-apples approach, excluding or making adjustments for certain features, such as a swimming pool or a finished basement. And generally, a foreclosure isn’t used as a comparison for a standard sale.

But in some areas, appraisers like Scheri contend they are only sizing up homes according to the reality of the market, though they concede its becoming increasingly harder to pinpoint what a home is worth.

Home prices in many large metro areas, including Los Angeles and San Diego, hit bottom earlier this year and are recovering, data shows. Yet there are many neighborhoods across the country where foreclosures and other financially distressed sales are still rising.

“It used to be a very infrequent thing that you did an appraisal and the value wasn’t supported,” says Scheri, who is based in San Diego. “Now, it’s more common than not.”

So, if you’re trying to sell your home in a neighborhood where foreclosures and short sales are predominant, an appraiser could determine your home is actually worth less than what some buyers may be willing to pay.

Part of the problem, critics contend, is that many real-estate appraisers are now hired under new industry rules. Designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender.

Lenders may order appraisals through in-house staff or appraisers hired by outside firms known as appraisal-management companies. But neither may talk to the appraisers about the value of the property they’re evaluating.

The result, however, can mean that low-cost appraisers are hired from outside the area and don’t have the local knowledge to find homes that can be a better benchmark for regular homes.

Chris Heller, agent-owner of Keller Williams Realty in northern San Diego, recently had the sale of a home nearly thwarted for the second time because of a low appraisal.

The three-bedroom, two-bath house in the Poway suburb of San Diego was appraised for $55,000 less than what the buyer agreed to pay. The seller wasn’t willing to drop the price to $400,000, but knocked off $20,000 when the buyer agreed to come up with $35,000 in cash.

“The seller is taking less because of the appraisal,” Heller said, noting that almost all of the comparable homes used to gauge the property’s value were distressed sales.

Still, the buyer is paying a premium not to have to deal with the risks involved in buying a foreclosed home or a short sale, which can take several months to close.

So, should distressed homes sales be compared with other homes? Is one inherently worth more than the other?

A new analysis of foreclosure and nonforeclosure sales by Zillow.com found that even when most of the market is made up of bank-owned homes, nonforeclosures sell for as much as 30 percent more. Another study by Harvard’s Joint Center for Housing Studies came up with a similar conclusion.

In Las Vegas, which has one of the highest foreclosure rates in the nation, the median sale price for bank-owned homes sold in September was about 23 percent less than other types of properties, according to the Zillow study.

“There are two markets, two very distinct markets,” said Zillow economist Stan Humphries.

That doesn’t mean foreclosures don’t weigh down the value of nearby homes, although there’s loud disagreement on how much.

The Joint Center for Housing Studies examined home sales over 20 years in Massachusetts and found that a foreclosure within less than 100 yards of a home lowers the price of that home by 1 percent.

So it appears that in neighborhoods with high foreclosure rates, values for all homes are being pulled lower than in areas where there are few or none. That means you can live in one area of Las Vegas and values can be down twice as much as they are in another neighborhood just a few miles away.

When it comes to appraisals, that leaves a lot of room for interpretation.

Seattle Real Estate Tyler Freed

Fannie, Freddie prove too big for government to shirk
The government’s Christmas Eve pledge of unlimited financial aid to mortgage giants Fannie Mae and Freddie Mac is to make sure the housing market doesn’t deteriorate further, but it will cost taxpayers much more.

By ALAN ZIBEL

The Associated Press

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AP

These file photos show Freddie Mac’s headquarters in McLean, Va., and Fannie Mae’s headquarters in Washington, D.C. The Treasury Department has pledged unlimited aid to the mortgage giants to prevent the housing market from deteriorating further.

WASHINGTON — The government’s Christmas Eve pledge of unlimited financial aid to mortgage giants Fannie Mae and Freddie Mac is aimed at making sure the housing market doesn’t take another turn for the worse and cause the economic recovery to unravel.

This insurance policy taken out by the Treasury Department will help keep mortgage rates low, and may wind up being a gift of sorts to struggling homeowners and banks. But there’s a catch: the housing crisis is likely to cost taxpayers much more.

The Obama administration’s latest lifeline to Fannie and Freddie will cover unlimited losses through 2012, lifting an earlier cap of $400 billion. It also eases restrictions on the size of the companies’ investment portfolios.

That’s a reversal of the Bush administration’s September 2008 plan to shrink the size of the companies’ holdings of mortgage-backed securities.

The action, which needed no congressional approval, could position Fannie and Freddie to be more aggressive in dealing with the housing crisis, perhaps taking troubled mortgage investments off banks’ books.

“They’ve cleared the decks to use Fannie and Freddie as a vessel for whatever they want,” says Edward Pinto, a housing consultant who served as Fannie’s chief credit officer in the late 1980s.

Treasury could also lean harder on Fannie and Freddie to help troubled homeowners avoid foreclosures — and by extension the banks and other investors who own their mortgages. Many experts say an existing $75 billion government program to prevent foreclosures isn’t working fast enough, threatening the emerging signs of home-price stability in many cities.

Boosting the firepower of Fannie and Freddie, which finance three quarters of all new mortgages, also should help keep rates on home loans low as the Federal Reserve starts dialing back its separate $1.25 trillion program aimed at doing just that.

That’s good news for the banking industry, which has benefited this year from homeowners refinancing their mortgages, says Jason O’Donnell, senior research analyst at Boenning & Scattergood. “This is an initiative that spreads far beyond just Fannie Mae and Freddie Mac,” he says.

But the trade-off is the Treasury will have to cover much more than the $111 billion in losses at Fannie and Freddie it already has funded. Barclays Capital predicts the losses will range from $230 billion to $300 billion.

Vital money source

Both companies provide vital funding for home loans, buying mortgages from lenders, pooling them into bonds and selling them to investors with a guarantee against default.

While they historically backed loans to relatively safe buyers, they dramatically lowered their standards during the housing boom, and those loans are defaulting in higher numbers.

If the administration does lean on Fannie and Freddie to expand its foreclosure-prevention program, it would be pricey. If Fannie and Freddie were, hypothetically, to start forgiving a quarter of borrowers’ mortgage debt, that would cost $125 billion more to help about 2.5 million to 3 million borrowers, estimates Barclays analyst Ajay Rajadhyaksha.

The Treasury Department says its only motivation is to make sure investors remain confident Fannie and Freddie can keep doing their jobs of buying the bulk of mortgages made in the U.S. and turning them into investments.

“These measures bring broad benefits to American homeowners and our economy,” says Andrew Williams, a Treasury spokesman.

Fannie and Freddie must persuade everyone from the Chinese central bank to individual investors that it is still safe to buy their debt securities, which they sell partly through weekly auctions. The two companies have sold $2.7 trillion in debt this year, according to Credit Suisse calculations.

Still, by making the change before year-end, Treasury sidestepped the need for an OK from a bailout-weary Congress, infuriating Republicans on Capitol Hill.

The Treasury Department gave Fannie and Freddie a bigger lifeline “without any involvement, notice (or) dialogue with Congress,” says Rep. Scott Garrett, R-N.J., a member of the House Financial Services committee, who called Wednesday for an investigation into the actions.

Fannie Mae was born in 1938 in the aftermath of the Great Depression. It was privatized 30 years later to limit budget deficits during the Vietnam War. In 1970, the government created a rival, Freddie Mac.

After the housing market started to unravel in 2006, mortgage defaults soared, and the companies’ losses mounted. By summer 2008, the companies weren’t able to raise money, and their shares plunged.

The Bush administration’s hand was forced. It wound up taking over the pair a week before the collapse of investment bank Lehman Brothers.

The government now has a 79.9 percent stake in each company, the maximum amount possible to still keep the companies off the federal budget.

Up against the wall

Bush administration officials envisioned Fannie and Freddie would ultimately be able to scale back their mortgage holdings by 10 percent a year, starting next year.

But the housing market remains shaky, with 11 out of 20 major cities showing price declines in October. Private investors remain wary of U.S. mortgage investments.

So Obama officials decided last week to give Fannie and Freddie more leeway, effectively allowing them to build up their portfolios next year, then start cutting back in 2011.

Without this change, Fannie and Freddie would be forced to start selling mortgages from its portfolio early next year, just as the Federal Reserve begins to retreat from that market. That would push up mortgage rates and threaten the housing recovery.

Now they will be able to hold a combined $1.62 trillion in mortgage investments by the end of next year, compared with $1.36 trillion under the old rules. The result: Fannie and Freddie will have an additional $260 billion to invest next year, Credit Suisse calculates.

“They didn’t want Fannie and Freddie to be out there selling mortgages when the future of housing is uncertain,” says Credit Suisse mortgage strategist Mahesh Swaminathan.

Associated Press reporter Sara Lepro contributed.

Seattle Real Estate Tyler Freed

Condo construction rules could shut out buyers, hit builders
The Federal Housing Administration has started limiting the number of buyers in condo buildings that can get loans insured by the agency. The rules also put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals.

By ALAN ZIBEL and ADRIAN SAINZ

The Associated Press

New lending rules for condominium buyers are already forcing some developers to change or scrap plans for new projects for fear too many buyers will be shut out.

Last Monday, the Federal Housing Administration started limiting the number of buyers in condo buildings that can get loans insured by the agency. The rules also put restrictions on buildings with poor finances, too many delinquent owners and a high number of rentals.

The tighter lending standards are to protect the FHA’s financial health. Roughly 18 percent of loans insured by the agency are either delinquent or in foreclosure, and the agency’s financial cushion has dipped below the federal minimum.

But the move is a blow to condo buyers because the FHA has become a key source of mortgage financing. The agency insures roughly one in four new loans today because buyers need only have a 3.5 percent down payment.

“It is a huge debacle for us,” said Rene Oehlerking, marketing director for Salt Lake City developer Garbett Homes.

The company has canceled a 300-unit condo project, spending $300,000 to redesign it into free-standing homes. Most of its homes and condos this year went to buyers with FHA loans.

Garbett’s condo project didn’t pencil out with the new FHA rule that allows only half of a condo building’s units to have FHA-backed loans, with some exceptions. That number falls to 30 percent in 2011.

Another new rule requires at least 30 percent of units in new buildings be presold before the agency insures any loans. That number will rise to 50 percent in 2011.

Projects in Florida, where the condo market has been devastated, will require special approval before FHA-backed loans can be made.

“Many of our developers won’t be able to pursue condominium projects because the risk is too great that they won’t be able to sell the units,” said David Ledford, a senior at the National Association of Home Builders.

Government officials, however, say the rules are necessary to ensure consumers are purchasing units in viable buildings and to help ensure that defaults on condo projects don’t rise too high.

“We believe that we have a balanced policy that is flexible … yet will help us manage and mitigate the risk,” said Joanne Kuczma, director of the FHA’s home mortgage insurance division.

While the rules could be tough for builders, they will protect consumers because lenders will be forced to be more careful about which projects they fund, said Richard Vetstein, a real-estate lawyer in Framingham, Mass.

“On the whole, it’s a good thing,” he said. “Financially sound condominiums make better investments.”

During the housing boom, the FHA was not a big source of condo loans, and the agency had not updated its condominium rules since the mid-1990s. When the new rules were released this year, the lending industry lobbied aggressively to persuade the agency to loosen them.

“We worked very closely with them,” said Tamara King, director of loan origination at the Mortgage Bankers Association. Now that the rules have been relaxed, she said, “for the most part we are in support of the direction that they’re going.”

Critics, however, say the industry’s influence on the process shows the FHA is all too willing to bend to pressure from powerful interest groups, and they say condo loans will be highly prone to default and foreclosure.

“Rather than stopping the foreclosure mess, we’re actually adding more foreclosures to the mix,” said Edward Pinto, a financial consultant and an FHA critic.

For buyers, the new rules cinch already tight mortgage financing. Earlier this year both Fannie Mae and Freddie Mac slapped tighter restrictions on condo loans.

The new FHA rules are “going to create substantial confusion and turmoil,” for mortgage companies that make FHA loans, said Jack McCabe, a real-estate researcher in Fort Lauderdale, Fla.

“They have to be pulling their hair out right now.”

Seattle Real Estate Tyler Freed

Mortgage rates still below 5 percent
Mortgage rates rose this week but still remained below 5 percent, Freddie Mac said Thursday.

The Associated Press

McLEAN, Va. —
Mortgage rates rose this week but still remained below 5 percent, Freddie Mac said Thursday.

The average fixed rate on 30-year mortgages was 4.81 percent, up from a record-low 4.71 percent last week. Last year at this time, the average fixed rate for 30-year mortgages was 5.47 percent.

The Federal Reserve has kept rates around 5 percent this year by purchasing $1.25 trillion in mortgage-backed securities in an effort to make home buying more affordable and bolster the housing market.

Low rates are leading more homeowners to call their brokers. Mortgage applications to buy a home rose 4 percent last week, while refinance applications jumped 11 percent from the prior week, the Mortgage Bankers Association said.

Freddie Mac collects mortgage rates each week from lenders around the country. Rates often fluctuate, even within a given day.

The average rate on a 15-year fixed mortgage rose to 4.32 percent, from a record low of 4.27 percent last week.

Rates on five-year, adjustable-rate mortgages averaged 4.26 percent, up from last week’s 4.19 percent. Rates on one-year, adjustable-rate mortgages were 4.24 percent, down from 4.25 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year and one-year loans. The fee averaged 0.6 point for 15-year loans and 0.5 point for five-year mortgages.

Seattle Real Estate Tyler Freed

Boeing 787: 1st flight could come Dec. 15
Boeing Co. says the long-anticipated first flight of its new 787 jetliner could come as early as Tuesday.

The Associated Press

SEATTLE —
Boeing Co. says the long-anticipated first flight of its new 787 jetliner could come as early as Tuesday.

Boeing announced Thursday that its window for a first flight would open on Dec. 15 with the actual flight timing dependent on final internal reviews, taxi testing and Federal Aviation Administration documentation.

The company also said it has completed “final gauntlet” testing on the 787 and verified the success of fixes it made to a structural problem.

Scott Fancher, vice president and general manager of the 787 program, says two days of testing checked out all the airplane systems, such as avionics, hydraulics and electrical.

Boeing earlier reinforced weak points near the area where the wings attach to the fuselage, then conducted a so-called static test – essentially bending the wings – on the repairs.

Fancher says Boeing has completed its analysis of that static test and called it successful.

Seattle Real Estate Tyler Freed

Bank of America says 600,000 mortgages modified
Bank of America Corp. said Monday it has provided mortgage relief through loan modifications for more than 600,000 homeowners since January 2008.

The Associated Press

CALABASAS, Calif. —
Bank of America Corp. said Monday it has provided mortgage relief through loan modifications for more than 600,000 homeowners since January 2008.

The renegotiated loans were done through its own programs and the government’s Home Affordable Modification Program, the bank said.

Bank of America has concluded more than 450,000 loan modifications since January 2008 under its own programs. That includes about 225,000 modifications so far this year.

Through the government program and others, Bank of America said it has provided $215 billion to refinance existing mortgages.

Bank of America was one of the hardest hit by the economic downturn. It received an initial $25 billion at the peak of the credit crisis last fall shortly after Lehman Brothers collapsed. It received another $20 billion in early January to help absorb losses at Merrill Lynch, which Bank of America had acquired.

Controversy surrounding the purchase of Merrill Lynch, including bonus payments made to Merrill employees, led to sharp criticism of then-CEO Ken Lewis.

Lewis retired Dec. 31 and Bank of America has struggled to find a successor because of pay restrictions handed down by the government as part of the bailout program.

Bank of America announced last week plans to use available cash and raise $18.8 billion in capital to repay the $45 billion in government assistance.

Bank of America shares fell 12 cents in morning trading to $16.16.

Seattle Real Estate Tyler Freed