Foreclosed Home Stats & Buying Tips. Final 2Q GDP 1.7%. Is Zillow Credible?

Is Zillow Credible?
If and when I go to find another home loan, is Zillow going to set the rate? Is Zillow going to underwrite it? (Sorry – venting a little here.) In a report that some would say is “Big Brotherish”, according to research by Zillow Mortgage Marketplace, done with myFICO.com, any potential borrower with a credit score less than 620 is unlikely to receive a 30-year fixed-mortgage, even if they offer a relatively high down payment. Yet, according to myFICO.com, 29.3% of Americans have a credit score below that number. Zillow tracked over 25,000 loan quotes and purchase requests in the first half of September, and potential borrowers’ credit scores 720 or higher received the lowest interest rates on Zillow.com. Those with credit scores below 620 received too few loan quotes to calculate the average APR, Zillow said. The question is, “Should anyone with a low credit score be able to receive a home loan from a mainstream lender?” And if they can’t, is that news?

Foreclosures 24% Of 2Q Home Sales (and other stats)
In a related issue, RealtyTrac estimates that banks will take over a record 1.2 million homes this year, up from around 1 million last year and about 100,000 in 2005 before the housing bust. The company also noted that foreclosed homes accounted for 24% of all second-quarter sales, at an average price discount of more than 26 percent compared with homes not in the foreclosure process. In a “normal” market, foreclosure sales account for less than 5% of total sales – but for the next few years look for something in the 25-30% range.

Fannie Mae Program For Foreclosed Home Buyers
How does one sell 191,000 properties? And why would the market ever believe that Fannie and Freddie selling them would have no impact on the real estate market? Fannie Mae has once again upped the ante to encourage home buyers to purchase, and real estate agents to market its REO (aka foreclosed) properties. It is estimated that Fannie Mae and Freddie Mac own a combined 191,000 properties taken through foreclosure. Fannie Mae markets its REO through a program called HomePath Properties. Under the new incentive program, owner-occupants and public entities that buy a HomePath Property between now and the end of the year can receive up to 3.5 percent of the purchase price in closing cost assistance. The funds can also be used to purchase a home warranty. Properties bought from pools, at auction, or by investors are not eligible. The sale must close within 60 days. Here’s the HomePath buyer guide.

Final 2Q GDP 1.7% & Market Roundup
Wednesday $2.4 billion in MBS’s crossed the wires, and unfortunately selling interest outweighed buying interest and by the end of the day the 10-yr closed at 2.51% and 30-yr current coupon mortgages were worse between .250-.375. A few investors had price changes. On the plus side 7-yr notes were sold at a record low yield of 1.89%, which was below the previous low of 1.989 pct set in August. Markets can be like springs, and the fact that the 10-yr note’s yield has fallen more than 25 basis points was enough reason for some profit taking.

We’ve already had Jobless Claims, which were better than expected at 453k, and the 4-week moving average was down about 6,250. Sure, the fact that it is less than 475 or 500k is good, but it is generally thought that weekly jobless claims like this are not strong enough to really help the economy. We also had the third of three GDP readings for the 2nd quarter which came in +1.7%, slightly better than the +1.6% that was originally reported. Later on we have the Chicago PMI (Sep: 55.9 vs. 56.7), and testimony from Chairman Bernanke before the Senate Banking Committee on implementing the Dodd-Frank Act. So far stocks are pointing higher, the 10-yr is sitting around 2.52%, and mortgages are roughly unchanged.