A new FHA rule that took effect on June 3 will cushion the agency against a budget shortfall, but at the same time will saddle its mortgage borrowers with higher costs.

Going forward, new homebuyers now must pay the insurance premium on their FHA loan – which previously expired once 22 percent of the principal was paid – for a minimum of 11 years and possibly for as long as the life of the loan.

That could mean hundreds of extra dollars each month in payments for FHA borrowers, who typically have flawed credit and/or cannot contribute a large downpayment.

The time it takes to foreclosure on a mortgage in Florida may soon get a bit shorter now that Gov. Rick Scott signed a bill to speed the process into law on Friday.

“Florida’s housing market is important to our economy’s continuous recovery and this bill will aid in that effort by placing abandoned homes, caught up in the foreclosure process, back onto the market,” wrote Scott in the bill-signing letter for HB 87, sponsored by Rep. Kathleen Passidomo (R-Naples). “This process will put these homes back onto the housing market and allow Florida families who have experienced a foreclosure to begin working to repair their credit and finances.”

The new law brings more certainty to the state’s housing market, the governor added. It took effect immediately after Scott signed it.

Florida’s foreclosure process now takes about 853 days, which is more than twice the national average. In sponsoring HB 87 earlier this year, Passidomo noted that it maintains the due-process rights for struggling homeowners while boosting the state’s real estate recovery by getting foreclosed property “back into the stream of commerce.”

The new law gives lenders the right to ask the court to justify why a final foreclosure order hasn’t been entered; and it also allows condominium and homeowners associations to ask the court to speed the process along where appropriate.

Consumer interests are addressed in several provisions including:

• Requiring lenders to prove in detail that they own the loan for a property before foreclosing on it;

• Reducing the time lenders can seek deficiency judgments from five years to one year;

• And providing protections for innocent parties who purchase a property without knowledge that a previous owner may have a claim to the property.

A deficiency judgment refers to the difference between what the original owner still owes on a mortgage and the money received from selling a foreclosed property.

Consumer Confidence, which measures how optimistic or pessimistic consumers are with respect to the economy in the near future, hit a five-year high in May, coming in at 76.2. The Consumer Sentiment Index, a similar measure, also came in above expectations for May.

There was also good news on the housing front, as the Case Shiller 20-city Home Price Index rose 10.9 percent year-over-year. This was above expectations and the best annual gain in seven years.  In addition, the second estimate for first quarter Gross Domestic Product (GDP) rose by 2.4 percent. By comparison, the final reading of GDP for the fourth quarter of 2012 was 0.4 percent. GDP is an important measure of productivity growth and a key indicator of economic strength.

In inflation news, the Personal Consumption Expenditures (PCE), the Fed’s favorite measure of inflation, shows that inflation remains tame. In fact, the year-over-year core PCE (which excludes volatile food and energy measurements) is running at 1.1 percent, well below the Fed’s upper end target of 2 percent and just above the all-time low.

What does all of this mean for home loan rates? Remember: Weak economic news normally causes money to flow out of stocks and into bonds, helping bonds and home loan rates (which are tied to mortgage bonds) improve. Strong economic news often has the opposite result. With several strong economic reports released last week, bonds and home loan rates felt the impact.

However, helping bonds and home loan rates is the fact that inflation remains non-existent, as inflation reduces the value of fixed investments like bonds. An important question moving forward is: Will the Fed continue its bond purchase program known as Quantitative Easing? While low inflation gives the Fed reasons to do so, there are growing opinions that the program should come to an end.

30 year rates still around 4% is VERY low cost of money.

Chris Ryder

U.S. home prices rise 10.9% – most since 2006

Florida city home sales

U.S. home prices jumped 10.9 percent in March compared with a year ago, the most since April 2006. A growing number of buyers are bidding on a tight supply of homes, driving prices higher and helping the housing market recover.

The Standard & Poor’s/Case-Shiller home price index released Tuesday also showed that all 20 cities measured by the report posted year-over-year gains for the third straight month.

And prices rose in 15 cities in March from February. That’s up from only 11 in the previous month. The monthly figures aren’t seasonally adjusted and may reflect the beginning of the spring buying season.

Prices rose in Phoenix by 22.5 percent over the past 12 months, the biggest gain among cities. It was followed by San Francisco (22.2 percent) and Las Vegas (20.6 percent).

New York City had the smallest year-over-year increase at 2.6 percent, followed by Cleveland at 4.8 percent.

“Rising home prices may begin to alleviate a lack of housing inventory … by encouraging more homeowners to put their properties on the market,” said Maninder Sibia, an economist with Economic Advisory Service, in a note to clients. “The housing market is clearly improving.”

The index covers roughly half of U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The March figures are the latest available.

The U.S. housing market is steadily recovering, buoyed by solid job gains and near-record low mortgage rates. Sales of new homes rose in April to nearly a five-year high. And sales of previously occupied homes ticked up in April to the highest level in three and a half years.

Despite the gains, a limited number of homeowners are putting their houses on the market. That’s helped lift home prices. And it’s made builders more willing to ramp up construction. Applications for building permits rose in April to the highest level in nearly five years.

The supply of available homes jumped in April, but was still 14 percent below its level a year earlier.

Stan Humphries, chief economist at Zillow, a real estate data provider, said that the increase in the Case-Shiller index has been skewed higher by cities such as Phoenix and San Francisco. Fewer homes are available in those areas because many homeowners still owe more on their mortgages than their homes are worth. That makes it difficult to sell.

Fed bond buying has big impact on mortgage rates

The Federal Reserve is torn over when to slow its aggressive efforts to stimulate the economy.

Its uncertainty burst into view Wednesday, when Chairman Ben Bernanke testified to Congress in the morning and the Fed in the afternoon released the minutes of its last policy meeting.

Stock prices gyrated through the day as investors struggled to determine whether the Fed might soon pull back – even gradually – on its extraordinary efforts.

At one point, the Dow Jones industrial average had jumped more than 150 points after Bernanke’s testimony signaled his belief that it was too soon for the Fed to pull back on its support for the economy, including its $85 billion a month in Treasury and mortgage bond purchases.

But the Dow plunged and closed down 80 points after minutes from the Fed’s April 30-May 1 meeting showed that several members favored cutting the level of purchases, perhaps as early as June. Even that was hard to decipher because the minutes said members would have to agree that the economy had shown strong and sustained growth before the Fed would slow its bond purchases.

The Fed is buying the bonds to try to ease long-term borrowing costs, encourage borrowing and accelerate growth. And it’s said it will maintain its pace of bond purchases until the job market improves substantially.

Economists don’t expect the Fed to curtail the bond purchases next month. But Paul Ashworth, chief U.S. economist for Capital Economics, said the September meeting is a real possibility.

For one thing, Bernanke told lawmakers Wednesday that the Fed might reduce the purchases within the next few meetings if the job market showed “real and sustainable progress.” Bernanke is scheduled to hold a news conference after the September meeting, so Ashworth said it would allow him to directly explain the change then.

Still, whatever the Fed does is likely to be done gradually, Ashworth said.

“It could begin with a relatively trivial reduction to gauge market reaction,” he said.

Most of Bernanke’s testimony Wednesday to the Joint Economic Committee focused on the many risks the U.S. economy still faces and the help the Fed’s support programs have provided. His remarks suggested that the Fed isn’t ready to taper the bond purchases.

In recent weeks, the job market and the broader economy have shown renewed vigor. The unemployment rate has reached a four-year low of 7.5 percent. A resurgent housing market has helped lift consumer confidence. And a powerful stock market rally has made many consumers feel wealthier.

Palm Beach County Annual Financial Report to Taxpayers Now Available https://createsend.com/t/y-548C938D298924DB