Rate on 30-year mortgage falls to 4.29%

Mortgage Rate Trend Index Almost two-thirds (62%) of mortgage experts polled by Bankrate.com this week expect little change in rates of the short term. Only 13% predict an increase, while the remaining 25% foresee a further decline.
WASHINGTON – July 5, 2013 – Average U.S. rates on fixed mortgages fell this week after last week’s surge. The declines could prompt homebuyers to act quickly before rates rise further.
Freddie Mac said Wednesday that the average on the 30-year loan dropped to 4.29 percent. That’s down from 4.46 percent last week, the highest in two years and a full point more than a month ago.
The average on the 15-year mortgage fell to 3.39 percent, down from 3.50 percent last week – the highest since August 2011.
Mortgage rates jumped last week after the Federal Reserve signaled it could slow its monthly bond purchases later this year if the economy keeps improving. The bond purchases have kept long-term interest rates down, making mortgages and other consumer loans cheaper. A pullback by the Fed would likely send rates higher.
Despite the gains, mortgages are still low by historical standards. Low mortgage rates have helped fuel a housing recovery that has kept the economy growing modestly.
In May, completed sales of previously occupied homes surpassed the 5 million mark for the first time in 3 1/2 years. And those sales could rise further in June because the number of people who signed contracts to buy homes rose last month to the highest level since December 2006. There’s generally a one- to two-month lag between a signed contract and a completed sale.
Greater demand, along with a tight supply of homes for sale, has driven up home prices. It’s also led to more home construction, which has created more jobs and contributed to economic growth.
To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of the week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for a 30-year mortgage was 0.7 point this week, down from 0.8 last week. The fee for a 15-year loan was also 0.7 point, also down from 0.8 last week.
The average rate on a one-year adjustable-rate mortgage remained unchanged at 2.66 percent, the same as last week. The fee was 0.4 point, down from 0.5 point last week.
The average rate on a five-year adjustable mortgage was 3.10 percent, up slightly from 3.08 percent last week. The fee was 0.7 point, up from 0.5 point last week.
Copyright 2013 The Associated Press, Martin Crutsinger (AP Economics Writer). All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

U.S. Senate to take up flood insurance rate increase

WASHINGTON – July 5, 2013 – Five Louisiana members of the U.S. House have joined more than 20 other Republican and Democratic representatives in sending a letter to Federal Emergency Management Agency (FEMA) Administrator Craig Fugate. The letter urges administrative fixes to prevent skyrocketing rates under the National Flood Insurance Program (NFIP).
“A small percentage of homeowners are learning that they may be subjected to flood insurance rates that are ten, a hundred, and in some cases, more than a thousand times higher than their current subsidized rates,” the letter states. “These rates, which are upwards of $28,000 per year, are unaffordable and could have devastating impacts on these homeowners and their communities if they are implemented.”
FEMA, on the other hand, is in the midst of finalizing its flood maps, though more parts of Louisiana’s coast could be considered high-risk velocity zones where insurance rates would increase more.
An amendment to delay the phase-out of grandfathered rates for NFIP policyholders by one year moves to the U.S. Senate in July. Senate Appropriations Homeland Security Subcommittee Chair Mary Landrieu (D-La.) inserted the amendment into an appropriations bill slated for markup this month.
Landrieu warns, however, that a legislative fix is needed to make NFIP financially sustainable.
Several other bills have been filed to address NFIP rate hikes, including Landrieu’s Strengthen, Modernize and Reform The National Flood Insurance Program Act (SMART NFIP Act) that would indefinitely delay the hikes until six months after Congress receives an affordability study by FEMA and protects currently grandfathered properties.
The Responsible Implementation of Flood Insurance Reform Act, filed by Sens. David Vitter (R-La.) and Thad Cochran (R-Miss.), would delay the period of phasing in rates, give flexibility for state and local governments to assist with subsidizing flood insurance, and reform FEMA’s flood-mapping procedures.
In the U.S. House, members have sponsored the Flood Insurance Implementation Reform Act to delay rate hikes from going into effect for five years after properties are sold, and stall for three years rate hikes for properties that have their grandfathered statuses phased out.
Source: Advocate (07/03/13) Blum, Jordan

Fla. Insurance Commissioner: Buy flood insurance now

TALLAHASSEE, Fla. – April 16, 2013 – Florida Insurance Commissioner Kevin McCarty encourages Floridians to prepare for the upcoming 2013 hurricane season by purchasing flood insurance now. Most flood insurance policies – with a few exceptions – don’t take effect for 30 days.
The National Flood Insurance Program (NFIP) administers the coverage rather than local insurers, and private policies – if available – generally cost significantly more. Homeowners’ policies generally cover water damage from wind and storms, but they don’t cover rising water in a flood, even though it’s the nation’s most common natural disaster.
McCarty cites another reason to buy flood insurance sooner rather than later: NFIP policy rates are set to rise on Oct. 1, 2013. McCarty calls the increase “significant.”
“Florida’s risk for severe weather is well-known and, even though a hurricane has not impacted our state in recent years, several tropical storms have caused significant flood damage to many Floridians,” says McCarty. “Regardless of the storm type, I strongly urge Floridians to prepare now and purchase flood insurance by May 1, as a typical flood insurance policy takes 30 days to become effective. This will ensure you are covered on June 1, the first day of hurricane season.” Florida consumers can purchase flood insurance from NFIP for up to $250,000 for property damage and $100,000 for personal contents.
Excess flood insurance can be purchased for homes valued at more than $250,000. NFIP coverage is also available for commercial structures at $500,000 for building coverage and $500,000 for contents coverage.
Check with an insurance agent for more information about access to the NFIP.
In July 2012, the U.S. Congress passed the Flood Insurance Reform Act of 2012 extending the NFIP through Sept. 30, 2017. Key provisions of this legislation will be implemented over time and include raising premium rates to reflect the actual flood risk of the program, phasing out subsidies on properties with repetitive losses, allowing coverage availability for multifamily properties and minimum deductibles for flood claims, etc.
To learn more, visit the new Hurricane Resource website page hosted by the Florida Insurance Commission.
For more info on the National Flood Insurance Program, visit the federal website FloodSmart.gov.
© 2013 Florida Realtors®

Fla. releases info on state insurance companies

TALLAHASSEE, Fla. – Jan. 9, 2013 – The Florida Office of Insurance Regulation (OIR) has released its 2012 Fast Facts report, created to give interested parties statistical data about Florida’s insurance market. The report compiles financial and regulatory information, insurance premium volume, number of domestic insurance companies and related entities, enforcement actions/consumer recoveries, public hearings and more.
The Fast Facts report also includes four “Top 20” lists with information about insurance companies in Florida for personal residential, personal automobile, life and annuity, and accident and health lines of business.
For residential homeowner policies, Florida-owned Citizens Property Insurance tops the state list with 1.4 million policies, or more than the number covered by the four largest private insurers combined.
The latest report includes the following breakdown for residential insurance writers by size, followed by number of Florida policies in December 2012:

1. Citizens Property – 1,423,160
2. Universal Property & Casualty – 578,825
3. State Farm Florida – 453,997
4. St. Johns Insurance – 174,021
5. Security First – 147,080
6. USAA – 142,733
7. Castle Key Indemnity (Allstate) – 131,759
8. Castle Key Insurance (Allstate) – 127,540
9. Homeowners Choice – 122,737
10. ASI Assurance – 113,603
11. Florida Peninsula – 112,372
12. American Integrity – 106,052
13. Tower Hill Prime – 104,594
14. American Bankers – 96,381
15. United Property & Casualty – 95,036
16. Florida Family – 87,059
17. ASI Preferred – 78,977
18. Tower Hill Signature – 78,816
19. Universal Insurance – 76,559
20. Southern Fidelity – 74,556
The Fast Facts report can be downloaded through the Florida Office of Insurance Regulation website.

© 2013 Florida Realtors®

Flood insurance changes run into resistance

WASHINGTON – July 3, 2013 – Just a year after Congress imposed significant changes in the government’s oft-criticized flood insurance program, howls of protest from homeowners facing higher premiums have coastal lawmakers pressing for delays that would preserve below-cost rates for hundreds of thousands of people in flood-risk areas.
The government can’t say how many people could confront higher premiums, but homeowners in places like Staten Island, N.Y., along the battered New Jersey coast and in low-lying areas of Louisiana, Florida and Texas face the prospect that new government surveys could produce flood insurance premium increases so big that they could be forced from their homes or see their market value plummet.
“That’s insane,” said Robert Taylor, a homeowner in Des Allemands, La. Taylor said the new law and flood survey would bump his premiums from $400 to more than $28,000 a year. “This community has been here since 1923 and has never, ever flooded. Ever.”
At issue is a premium spike driven by a new flood map from the Federal Emergency Management Agency that says Taylor’s home is 6 or 7 feet below flood stage. The map, however, doesn’t take into account a levee built 80 years ago by the local government that protected the community through hurricanes Katrina, Rita and Isaac.
The federal flood insurance debate is the intersection where efforts to root out waste and abuse run into real-world impacts on people. The aim is to end taxpayer bailouts of the flood insurance program, even if the overhaul forces people from their homes, reduces real estate values and alters the fabric of communities.
FEMA estimates that about 20 percent of its 5.5 million policyholders – about 1.1 million – receive subsidies. About 250,000 of them will see immediate increases: business owners, those owning second homes and people with frequently flooded properties. An additional 578,000 policyholders living in hazardous areas will retain their subsidies until they sell their homes or suffer severe, repeated flood losses. The same is true for people in condominiums.
The program, which has required $24 billion in bailouts since being established in 1968, had drawn withering criticism for its below-market insurance rates and the billions of dollars in losses from repeat claims on homes and businesses flooded every few years.
Last year’s revision of the program was one of the few things that virtually everyone from tea party Republicans to liberals like Rep. Maxine Waters, D-Calif., could agree on: It was time to bring soundness to the program by charging people insurance rates that reflect their risk of being flooded.
Now comes the implementation. Starting late next year, FEMA will no longer grandfather in below-market rates for people whose older homes were built to the flood code in previous years or decades ago but have been judged to be at greater risk under new flood maps.
Already, people are paying higher rates for second homes. In October, rates on businesses in flood zones and homes that have been severely or repeatedly flooded will go up 25 percent a year until the rates represent the “true risk” of flooding. And subsidized rates will lapse when a home is sold or flooded repeatedly.
The changes have sparked enormous controversy in places like Louisiana, New Jersey and Florida, where subsidized flood insurance has been a staple of the economy for decades. In some areas, home values have plummeted because of uncertainty over insurance rates. Home sales are falling through because subsidized rates can’t be passed on to the buyer. And some homeowners have learned that new flood maps will send their premiums skyrocketing.
In response to the firestorm, an unusual House coalition of Democrats and GOP conservatives teamed up on a 281-146 vote last month to delay some of the premium increases for a year. The measure, sponsored by Rep. Bill Cassidy, R-La., would block FEMA from implementing a provision of the law that phases out below-market, grandfathered premiums for homeowners whose flood risks are deemed higher under new maps, but it leaves in effect FEMA efforts to phase out direct subsidies of people living in flood zones.
Cassidy’s amendment was added to the spending bill that funds FEMA’s budget. Despite opposition from conservative groups like Heritage Action, many prominent conservatives voted for the amendment, including Reps. Paul Ryan, R-Wis., and Steve Scalise, R-La., chairman of the Republican Study Committee.
Cassidy is running to unseat Democratic Sen. Mary Landrieu, who, for her part, is aiming for broader legislation in the Senate from her perch atop the Appropriations subcommittee that writes FEMA’s budget. She hasn’t revealed her plans.
“What I’m talking about are the fishermen, the dock workers, the middle-class families that have lived on this coast and river for 300 years. And we’re literally pricing them out from a piece of geography that President Jefferson leveraged the entire federal Treasury to buy,” Landrieu, D-La., said. “On the heels of this recession, it’s just terribly cruel and harsh. And on the heels of the BP oil spill. And on the heels of Katrina and Rita, how much more can we take?”
Supporters of the changes roll their eyes. They say the law is, for the most part, being implemented as designed and that it’s just that people are upset by the higher insurance rates they are having to pay.
“This program was designed to bring some sanity to this flood program,” Rep. Mick Mulvaney, R-S.C., said during debate on delaying the new premiums. “These are the exact intended consequences … that we would simply charge folks who are in risky areas more.” But FEMA’s critics say the agency is botching implementation of the law, for instance, failing to take into account nonfederal levees and flood mitigation factors like coastal restoration and pumping equipment when looking at flood risks.
David Miller, the FEMA official in charge of the program, acknowledges the agency has ignored nonfederal levees in determining flood risk but is rethinking the policy. “We’ve put all mapping of levees on hold until the new policy goes into effect” in a few weeks.
A bigger impact could be felt by people whose homes met previous building standards or were deemed at lower risk under previous flood maps but will face higher premiums soon. Under the old system, they could retain their old rates, since they followed the rules at the time they bought or built their home. The new law will phase out such grandfathered rates, starting late next year.
Lawmakers say this grandfathering change is the source of nightmare stories of homeowners who presently pay a few hundred dollars annually for their policy but face many-fold increases now. FEMA can’t tell policymakers how many people even benefit from grandfathered rates, much less predict how remapping will affect them.
For Louisiana homeowner Taylor, the possible effects are daunting – unless FEMA issues a reprieve by redrawing its new flood map.
“The worst part is my home was worth $230,000 this Jan. 1,” Taylor said. “As of right now, my tax assessor tells me because of this flood insurance issue my home is worth $35,000, basically the lot.” Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

First-time buyers lose out as home sales rise

WASHINGTON – July 5, 2013 – U.S. home prices have risen for 14 straight months, but first-time buyers have been increasingly on the sidelines.
In May, first-time buyers accounted for 28 percent of existing-home purchases, down from 34 percent a year before and 36 percent two years ago, according to the National Association of Realtors.
The declining share of first timers means that many have missed out on low interest rates – which recently moved up from near-record lows – and home prices that have risen sharply from their bottom.
“The people buying homes today … are participating in home price growth. Younger people, they are being left out,” says Lawrence Yun, chief economist of the NAR. “It remains to be seen when the first-time buyer can return.”
First-time buyers are critical to a housing recovery because they help existing-home owners sell and move up to larger or more expensive homes. But their presence is being reduced by:
• Competition. Cash buyers accounted for 33 percent of existing home sales in May. Investors, who are often all-cash buyers, accounted for 18 percent of purchases, NAR says.
Cash buyers are tough competitors, especially in markets with limited inventory and for first-time buyers who often use low down-payment loans to finance purchases.
The first-time buyer “is being squeezed out of the market a lot,” says Zillow economist Svenja Gudell.
There are also more repeat buyers in the market, given that higher home prices have enabled more people to sell homes and buy others, says Glenn Kelman, CEO of brokerage Redfin.
• Tight credit. Home loans are harder to get than before the housing bust, and that’s true for first-time buyers, too.
Almost half of first-timers get low down-payment loans through the Federal Housing Administration, NAR data show.
New FHA home loans in the last three months of 2012 went to borrowers with an average credit score of 696, vs. under 660 in 2007 and 2008, FHA data show. Credit scores, which run up to 850, for conventional loans have also risen.
• Recession. It hit the 25- to 34-year-old group with higher unemployment than for adults overall, says Jed Kolko, Trulia economist.
Young people have made a strong recovery, but it takes years of steady employment to save a down payment and build strong credit, he says. High levels of student debt will also delay homeownership, Kolko says.
Increases in home prices and mortgage rates since last year have made a big difference in costs.
In May, the median value of the bottom third of homes in San Francisco was $287,500, Zillow says.
With today’s 4.4 percent interest rate and 20 percent down, the mortgage payment runs $1,154 – $313 more than at last year’s prices and rates, its data show.
“You’re getting a double whammy with higher prices and rates,” says Ashley Krause, 31, of Boston, who’s been trying to buy her first home for six months with a down payment of 5 percent or less.
The hospital pharmacist has lost two bids to others.

Copyright USA TODAY 2013