WASHINGTON (Reuters) - Pending sales of previously owned U.S. homes rose unexpectedly in July, an industry group said on Thursday, suggesting a tax credit-related housing market decline was close to bottoming.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in July, increased 5.2 percent to 79.4 from June. June contracts were revised to show a slightly bigger 2.8 percent decline instead of the previously reported 2.6 percent fall.

Compared to the July last year, pending home sales fell 19.1 percent. Economists polled by Reuters forecast the index, which leads existing home sales by a month or two, falling 1.0 percent in July.

Home sales and building activity have dropped sharply following the end in April of a popular tax credit for home buyers.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said Lawrence Yun, NAR chief economist.

(Reporting by Lucia Mutikani; Editing by Padraic Cassidy)

Will the government revive tax credits to encourage home sales? Housing experts are dubious.

Even suggesting that the tax credit might be revived could have a negative effect on the market, says housing economist Tom Lawler, because it could “lead many a prospective home buyer to hold off on buying a home.”

Earlier this month Richard Dugas, CEO of PulteGroup Inc., said earlier in August on an earnings call: “Almost regardless of how future demand plays out, we still believe that the tax credit had to end. We need to know the true level of demand without government stimulus distorting the market so that we can continue to properly position our business for ongoing improvement.”

Source: The Wall Street Journal, Nick Timiraos (08/30/2010)

http://www.wsj.com

WASHINGTON (AP) — Major banks are agreeing to give local governments and nonprofit groups the ability to buy foreclosed homes before they are sold to private investors.

The Obama administration says local officials could benefit from acquiring these properties and using the land for redevelopment projects. Congress has provided $7 billion in money to buy the homes.

These groups have been outbid by speculators who are snapping up foreclosures.

The administration says the largest mortgage lenders in the country, including Bank of America Corp. and Wells Fargo & Co. have agreed to let the groups purchase the properties ahead of private speculators.

Fannie Mae is banning a common practice known as “appraisal cutting,” starting next week.

When lenders selling loans to the firm challenge a valuation, the underwriter will have to contact the appraiser directly; if the lender is unable to settle the dispute, its only option will be to order a second appraisal.

Lenders will be unable to simply cut the value of the appraisal or shop around for the best appraisal.

Source: American Banker, Kate Berry and Marc Hochstein (08/26/10).

Government and banking experts meet next week to decide the future of Fannie Mae and Freddie Mac.

The likeliest solution is a complex one. The Mortgage Bankers Association is proposing a system where risk-based fees on a class of mortgage-backed securities would be charged in exchange for a government guarantee against losses.

Whatever the outcome, it is unlikely that Fannie and Freddie will be able to pay back the nearly $150 billion in taxpayer bailout money that they have received since 2007.

Source: Reuters News (08/12/2010)

REUTERS — 51 MINUTES AGO

By Julie Haviv

NEW YORK (Reuters) - Mortgage rates fell in the past week to the latest in a series of record lows amid concerns about the state of the economy, according to a survey released on Thursday by Freddie Mac.

Rock-bottom rates offer a glimmer of hope for a housing market struggling to gain traction since the recent expiration of popular home-buyer tax credits.

Interest rates on 30-year fixed-rate mortgages, the most widely used loan, averaged 4.49 percent for the week to August 5, down from 4.54 percent a week earlier and 5.22 percent a year ago, according to the survey.

Thirty-year rates have fallen to fresh lows in six out of the last seven weeks. Freddie Mac, the second-largest U.S. mortgage finance company, started the survey in April 1971.

Fifteen-year fixed-rate mortgages averaged 3.95 percent, down from 4.00 percent last week, the lowest since Freddie Mac began surveying this loan type in 1991. Fifteen-year rates have hit fresh lows in five of the last seven weeks.

With rates near their lowest since Freddie Mac started the survey, demand for loans to refinance or purchase homes has picked up, boding well for the market and the economy.

“Yet again, interest rates for fixed-rate mortgages and now the hybrid 5-year ARM (adjustable-rate mortgage) fell to … record lows this week following the second-quarter GDP release,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

Annual revisions cut cumulative growth in U.S. gross domestic product over the past three years to 0.6 percent from 1.4 percent, reducing inflationary pressures and allowing longer-term rates room to ease, he said.

Mortgage rates are linked to yields on both U.S. Treasuries and mortgage-backed securities.

Home sales have fallen since the expiration of government tax credits. To take advantage of them, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30 but that was extended by three months.

Cameron Findlay, chief economist at LendingTree.com in Charlotte, North Carolina, said the housing market is vulnerable, with a flood of foreclosures in the pipeline and high unemployment weighing heavily.

“The world essentially collapsed after the tax credits expired,” he said. “This baby cannot walk on its own without government intervention.”

Findlay said his biggest concern is that the economy is going to stall and believes there is a 30 percent chance of a double-dip recession.

“Low mortgage rates are certainly a positive, but jobs growth is more important and without that, a housing rebound will not emerge,” he said.

The U.S. Labor Department said on Thursday new claims for unemployment benefits rose last week to the highest since early April. On Friday it will release July U.S. payrolls data.

The Mortgage Bankers Association said on Wednesday U.S. mortgage applications to purchase homes rose last week for a third straight week as rates tumbled.

Freddie Mac said the rate on the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 3.63 percent, down from 3.76 percent last week, its lowest level since Freddie Mac began tracking this loan type in 2005.

One-year ARMs were 3.55 percent, down from 3.64 last week.

A year ago, 15-year mortgages averaged 4.63 percent, the one-year ARM was 4.78 percent and the 5/1 ARM 4.73 percent.

http://www.reuters.com

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It’s Election Day!

Polls are open from  7 to 7 today, so please make an effort to vote if you didn’t do so during the early voting period. Today’s state primary could very well select Tennessee’s next governor. There are other races of interest, too, like the County Commission race in the 5th District. Remember, if you don’t vote, you can’t complain about the outcome. And every vote DOES count. See you at the polls!

In other new headlines today….

• Imagine having to wear combat boots to your bathroom every morning just to, you know, or to shower. That’s what our troops in Afghanistan have to do. But people like Brentwood Police Chief Ricky Watson are working to change that. Find out how, and how you can help, in our story today.
• The Susan G. Komen for the Cure annual Survivor Celebration – a day to lift-up newly diagnosed women, a day to celebrate survivorship and a day to remember those we have lost in the fight – will take place in Brentwood on Saturday. We’ve got details.
• Brentwood audiences will have a unique opportunity Sunday night when Libera, the South London-based boys vocal band, performs a free concert. 
• Dr. Jeff Wilson made an unplanned move on Wednesday. And during it, he found himself asking some very deep questions. Perhaps you have the answers.
• And that’s not all. We have new stories in Sports, new listings in our Community Calendar and tons of other opportunities to learn what’s going on in your city. 

Big things are ahead for Brentwood Home Page! On Monday, we launch our 2010 Football Focus, featuring all you need to know about the upcoming BHS, RHS and RA football seasons. If you would be interested in advertising in this special section, contact Kelly ASAP at kelly@brentwoodhomepage.com. We’re also making big plans in conjunction with Greater Nashville Race for the Cure that returns to Brentwood Oct. 9. And on Sept. 1, we’ll celebrate our first anniversary. Thanks for coming along for the ride.

Susan & Kelly

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By Julie Haviv

NEW YORK (Reuters) - The demand for mortgage applications to purchase homes rose last week for a third straight week as interest rates tumbled, the Mortgage Bankers Association said on Wednesday.

The low rates also buoyed demand for home refinancing loans, with activity rising in five out of the past eight weeks, the industry group said.

The trends provide a glimmer of hope for a housing market that has been struggling since the April 30 expiration of popular home buyer tax credits.

The MBA said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 1.3 percent in the week ended July 30. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 0.3 percent.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.60 percent, down 0.09 percentage point from the previous week, the MBA said. The rate was up just 0.01 percentage point from a record low set two weeks earlier. The survey has been conducted weekly since 1990.

Interest rates were also below their year-ago level of 5.17 percent.

The seasonally adjusted purchase index, a tentative early indicator of home sales, increased 1.5 percent. Demand, however, is down about 40 percent since the tax credit expiration.

To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30, but that was extended another three months.

Kurt Gleeson, national vice president of sales at RealEstate.com, a division of LendingTree, which is headquartered in Charlotte, North Carolina, said he expects poor home sales over the next two to three months.

“The housing market is sputtering,” he said. “There is a smaller pool of buyers who can afford to purchase a home. The economy, and more specifically, the sluggish employment market, has excluded many potential buyers from the housing market.

“Jobs growth ranks No. 1 in importance for the housing market and without it there will be no rebound,” Gleeson said.

Key insight into the state of the jobs market will emerge on Friday when the U.S. Labor Department releases July data.

The MBA’s seasonally adjusted index of refinancing applications increased 1.3 percent.

The MBA said fixed 15-year mortgage rates averaged 4.03 percent, down from 4.12 percent the previous week, a record low. Rates on one-year adjustable-rate mortgage, or ARMs, decreased to 7.10 percent from 7.15 percent.