“Market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August placed downward pressure on Treasury bond yields and allowed fixed mortgage rates to hit new lows this week. On net, the economy added no new jobs last month and was the weakest reading since September 2010. Meanwhile, the unemployment rate remained at 9.1 percent, marking its 31st consecutive month of being above 8 percent, the longest such stretch in 70 years.

• “The Federal Reserve (Fed) painted a bleaker picture as well in its September 7^th regional economic review. Seven of its 12 Districts reported more subdued views of business conditions. Many of the Fed’s manufacturing contacts downgraded or became more cautious about their near-term outlooks due to increased economic uncertainty.”

Get the latest information from Freddie Mac’s Office of the Chief Economist on Twitter: @FreddieMac

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Foreign National Loan Program includes Non-Resident and Non-U.S. Citizens borrowing for second homes, extended to all countries, not just Canada. The following are required guidelines:

• Maximum loan amount $417,000
• 30-year fixed rate mortgage
• 30% down payment required from borrower’s own funds and must have 6 months reserves in a US bank before closing
• MAX LTV 70%  - NO GIFTS
• Must have 24 months of credit history
• Income amounts must be converted into US dollars
• Credit report must contain four (4) trade lines
• 700 credit score minimum required
• 36/45 DTI
• Single family homes and condos allowed
• Property must be in an area where second homes are common and customary
• Can not own additional US property
• Borrowers with diplomatic immunity are ineligible

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• 30-year fixed-rate mortgage (FRM) averaged 4.22 percent with an average 0.7 point for the week ending September 1, 2011, matching last week when it also averaged 4.22 percent. Last year at this time, the 30-year FRM averaged 4.32 percent.
• 15-year FRM this week averaged 3.39 percent with an average 0.6 point, down from last week when it averaged 3.44 percent. A year ago at this time, the 15-year FRM averaged 3.83 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it averaged 3.07 percent. A year ago, the 5-year ARM averaged 3.54 percent.
• 1-year Treasury-indexed ARM averaged 2.89 percent this week with an average 0.6 point, down from last week when it averaged 2.93 percent. At this time last year, the 1-year ARM averaged 3.50 percent.

“Weaker economic data reports eased upward pressure on mortgage rates this week and kept them at or near all-time record lows. The economy grew at a slower rate of 1 percent in the second quarter than was originally reported due to a smaller increase in inventories and fewer exports.

 In addition, consumer confidence in August fell to the lowest reading since April 2009, according to The Conference Board. “Recently released data on the housing market also showed less strength as well. The S&P/Case-Shiller® National Index fell 5.9 percent between the second quarters of 2010 and 2011, representing the largest yearly decrease since the third quarter of 2009. Moreover, July’s pending sales of existing homes fell at a monthly rate of 1.3 percent, the first decline since April 2011.”

For more:  http://freddiemac.mediaroom.com/index.php?s=12329&item=56124

Data through June 2011, released today by S&P Indices for its S&P/Case-Shiller Home Price Indices...show that the U.S. National Home Price Index increased by 3.6% in the second quarter of 2011, after having fallen 4.1% in the first quarter of 2011. With the second quarter's data, the National Index recovered from its first quarter low, but still posted an annual decline of 5.9% versus the second quarter of 2010. Nationally, home prices are back to their early 2003 levels...As of June 2011, 19 of the 20 MSAs covered by S&P/Case-Shiller Home Price Indices and both monthly composites were up versus May -- Portland was flat. However, they were all down compared to June 2010.

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“…Pending home sales declined in July but remain well above year-ago levels, according to the National Association of Realtors…all regions show monthly declines except for the West, which continues to show the highest level of sales contract activity…”

The Pending Home Sales Index,* a forward-looking indicator based on contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is 14.4 percent above the 78.4 index in July 2010. The data reflects contracts but not closings.

Lawrence Yun, NAR chief economist, said sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy,” he said. “We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process.” The PHSI in the Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July 2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8 percent above a year ago. Pending home sales in the South fell 4.8 percent to an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6 percent to 110.8 in July and is 20.6 percent above a year ago.

For more:  http://www.realtor.org/research/research/phsdata

Nicolas Retsinas, director emeritus of the Joint Center for Housing Studies at Harvard University, discusses the U.S. housing market. Retsinas speaks with Erik Schatzker and Michael McKee on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

The short sale system has been simplified by the Obama Administration. The Treasury Department unveiled rules requiring banks to respond to homeowner short sale requests within 45 days. Short sale sellers are also eligible for up to $3,000 in aid to move. By some estimates up to 275,000 foreclosures could be prevented by these efforts.

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• Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss.  To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale.  Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
• Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price.  According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
• Home buyers wanting to purchase a short sale must have patience.  In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours.  With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases.  It may take 30 days or longer for a buyer to receive a response from the bank.
• In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home.  In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
• Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or forego an inspection altogether.
• Even with the challenges associated with short sales, buyers should not avoid these transactions. 

For more:  http://realestate.aol.com/blog/2011/08/11/short-sales-are-they-worth-the-trouble/

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“…The employed remain worried about their own job security, which they see tied to overall U.S. economic health…”

• 41% of respondents in the Housing Market Index indicated that they had lost sales contracts due to buyers’ inability to sell their current homes
• This is an example of the unemployed impact on the broader marketplace, where it impedes the fluid economic progression of the employed, or the healthy market participants
• The traditional argument holds that although the old home must be sold cheaper than preferable, a new home is also acquired at better value
• These buyers worry about the future of the real estate market, specifically the risk of losing value post closing

For more:  http://seekingalpha.com/article/288177-housing-insight-from-home-builders