I wonder what the hottest real estate markets are in 2010.

Arizona?

Uh, no.

Nevada?

Try again.

Florida?

Sand = no.

Really?

Just a few short years ago, these states were on all of the “hottest real estate markets of 2006″ lists…

And now they aren’t.

Think A-L-A-B-A-M-A.

And my only question is… I wonder if Alabama will be in the dumps in a few short years.

Ah, the joys of real estate. No wonder I can’t leave it alone.

2010 Hottest Real Estate Markets

FHA Rates Continue to DROP!

First it was the news that the Federal Government was bailing out Fannie Mae and Freddie Mac.

Now, in an effort to steady the financial markets that are reeling from the news of collapse of Lehman Brothers and the sale of Merrill Lynch, there is a valid possibility that the Federal Reserve will cut interest rates.

The past two days have seen the biggest drop of the DJI average since the September 2001 terrorist attacks it plummeted 504 points.

The Fed announced recently that it was expanding its efforts to supply more cash to the financial system in order to help financial institutions that are facing problems as a result of the recent market turmoil.  But, most experts believe that the current market commotion combined with the recent jump in unemployment will result in this not be enough to steady the market without a Fed rate cut.

The Federal Reserve met today, September 16th, and decided not to cut rates at this time although they acknowledged the increasing instability of the economy.

“Strains in financial markets have increased significantly and labor markets have weakened further,” they said. “Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters.”

The Fed’s next regularly scheduled meeting is on October 29th.  However, it is possible that they may hold an emergency meeting before then to cut rates if needed.

In the last few weeks, we at Best FHA Lender have seen a dramatic drop in our FHA rates.  Typically, we have the lowest FHA mortgage rate available. It has dropped by around 1.5% since the beginning of August.  This is great news to those that are currently in the market to buy a new home as it greatly enhances the recent benefits put into play by the Housing and Economic Recovery Act.

In addition, this is fantastic news for existing homeowners with FHA financing as they can take advantage of the FHA streamline refinance program.

Contact us today using by filling in the form on the side of the page, call us at 480-344-3662 or email slines@bestfhalender.com.

Since the Federal Government announced its decision to take over mortgage giants Fannie Mae and Freddi Mac on Sunday, there has been widespread reactions.  The best of which for current homeowners and potential home buyers is a significant drop in interest rates.

FHA rates are LOW LOW LOW, much lower than they have been in the recent few months.  Contact me today for a quote at 480-344-3662!

Here is a copy of an article that gives a pretty good overview of the current situation.

NEW YORK (Fortune) — Wall Street likes Henry Paulson’s plan to break the logjam in the mortgage markets. But the Treasury secretary and other policymakers still have much work to do to get the economy on a more steady footing.

Financial markets rallied Monday in the wake of Treasury Secretary Henry Paulson’s plan to take the two biggest U.S. mortgage-finance companies, Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), into government custody. But Tuesday’s pullback – fed in part by reports that struggling brokerage Lehman Brothers (LEH, Fortune 500) has failed in its bid to sell a stake to investors in Korea – offers a reminder that merely easing the housing bust won’t get the economy humming again.

That said, the early success of the Paulson plan is noteworthy. The stock market got a significant bounce Monday, even as Fannie and Freddie themselves became penny stocks, trading for the first time in history below a dollar each. Far more important, though, was the action in the markets for the mortgage-backed securities Fannie and Freddie traffic in.

As Paulson had hoped, the spread between the yield on mortgage-backed securities and risk-free Treasury bonds narrowed sharply Monday and mostly held those gains Tuesday. The tightening of those spreads has the effect of bringing down rates on the mortgages the companies are eligible to buy or guarantee – so-called conforming loans, typically those of $417,000 or less though up to $729,000 in some pricier areas. The rate for a conforming 30-year fixed mortgage fell to 5.88% Monday from 6.26% a week ago, according to BankRate.com.

The steep decline in mortgage rates will be good news for the housing market if it holds, by allowing some troubled homeowners to refinance and by generally making financing more available.

“Mortgages tightened a ton,” says Merrill Lynch mortgage-backed securities strategist Akiva Dickstein. “The question now is whether there’s more tightening to come.”

If so, people looking to buy houses could find purchasing a house more affordable. That could bring more buyers into a market struggling to digest near record levels of houses for sale, and slow the decline of prices. Prices in 20 big metro areas have fallen 16% over the past year, according to data from the S&P/Case-Shiller national survey.

In an additional bit of good news, Treasury bond prices rose in the wake of the rally in mortgage-backed bonds, and the dollar continued its two-month-long ascent against other major currencies. There has been some concern that a bailout of the GSEs could prompt a selloff in the dollar and Treasurys, because the sheer scope of Fannie and Freddie’s gross obligations – together they own or guarantee more than $5 trillion of mortgages – stands to add significantly to the government’s liabilities.

But Rebecca Patterson, global head of foreign exchange at J.P. Morgan’s Private Bank, says currency traders are less concerned with the oft-invoked $5 trillion figure than with the putative actual cost of the bailout. The tab associated with Treasury’s plan could run into the hundreds of billions of dollars, given possible outlays tied to a decision to extend Fannie and Freddie an unlimited credit line, to purchase preferred shares in the companies, and to buy mortgage-backed securities. And it could end up costing a good deal less if the companies’ credit losses don’t spiral out of control.

“The net amount is not that large” in the context of the $5 trillion in existing on-balance sheet government obligations, Patterson says. She adds that investors generally are reacting favorably because the move “removes one more tail risk” – the improbable but highly costly prospect of a default by the companies.

While the early reaction to the Fannie-Freddie takeover has been roundly positive, history shows that could change. Dickstein points out that mortgage spreads initially narrowed in response to Paulson’s decision in July to ask Congress for the authority to use taxpayer dollars to backstop the companies. Paulson famously insisted at the time that he didn’t believe he would have to use the authority, likening his legislative blank check to a bazooka he would never have to fire.

But after the initial success of that shock-and-awe effort, mortgage rates surged again. Dickstein says the problem was that the capital-constrained GSEs were unable to purchase mortgage-backed securities at a time when other investors were fleeing risk as well. That sent the prices for those issues higher at a time when Treasury prices were falling, widening the spreads. “It was more of a supply-demand trade,” he says.

Dickstein adds that he believes Treasury’s decision to purchase mortgage-backed securities – a move he calls “unprecedented” – will lend substantial backing to the market for MBS paper.

But if the mortgage market is getting a boost, there’s little hope it will help the economy avert the recession it has been heading toward for more than a year. For one thing, economists expect to see further house-price declines, as weak demand and a glut of supply inexorably bring the cost of buying a house back into line with rental rates and incomes.

Meanwhile, there is no end in sight to other dour trends. Banks stuffed with bad loans remain unwilling to extend credit, and joblessness is on the rise. The U.S. has lost private-sector jobs in each of the past eight months. But Ashraf Laidi, currency strategist at CMC Markets in New York, notes that the job-loss cycles in the 1990-91 and 2001-2002 recessions lasted 11 and 15 months, respectively.

Meanwhile, big financial sector employers such as Lehman and AIG confront a souring credit market as they consider how to raise new money to fill holes in their balance sheets left by the multibillion-dollar mortgage-related losses of the past year.

The flood of bad news has some observers saying someone in the nation’s leadership is going to have to come up with a more sweeping answer before the markets, and the economy, are able to make a sustained recovery.

“Government actions continue to attempt to maintain the status quo among financial institutions,” Merrill Lynch equities strategist Rich Bernstein writes in a note Monday. “There has yet to be a remedy that approaches the credit crisis as a systemic problem. As with the Bear Stearns situation, the GSEs are being treated as a one-off problem.”

The Federal Government announced today that they are taking control of Fannie Mae and Freddie Mac in its continuing attempt to shore up the ailing housing market and overall economy.  It has been widely speculated that this action would be taken, especially considering the recent created Federal Housing Finance Agency and the passing of the Housing and Economic Recovery Act of 2008.

This action should be closely followed in the next number of months as it could greatly influence mortgage lending policies, including those established by FHA.

Here is a link to an article that discusses the announcement of this action.  The content of the article is also posted below.

By Alan Zibel and Martin Crutsinger, AP Business Writers

Government assumes control over mortgage giants Fannie Mae and Freddie Mac

WASHINGTON (AP) — The Bush administration, acting to avert the potential for major financial turmoil, announced Sunday that the federal government was taking control of mortgage giants Fannie Mae and Freddie Mac.

Officials announced that the executives and board of directors of both institutions had been replaced. Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.

Treasury Secretary Henry Paulson says the historic actions were being taken because “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe.”

The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

“A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance,” Paulson said.

Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie.

The Federal Reserve and other federal banking regulators said in a joint statement Sunday that “a limited number of smaller institutions” have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were “prepared to work with these institutions to develop capital-restoration plans.”

The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission.

Paulson said that it would be up to Congress and the next president to figure out the two companies’ ultimate structure.

“There is a consensus today … that they cannot continue in their current form,” he said.

Paulson and James Lockhart, director of the Federal Housing Finance Agency, stressed that their actions were designed to strengthen the role of the two mortgage giants in supporting the nation’s housing market. Both companies do that by buying mortgage loans from banks and packaging those loans into securities that they either hold or sell to U.S. and foreign investors.

The companies own or guarantee about $5 trillion in home loans, about half the nation’s total.

Lockhart said that both Fannie and Freddie would be allowed to increase the size of their holdings of mortgage-backed securities to bolster the housing industry as it undergoes its worst downturn in decades.

Lockhart said in order to conserve about $2 billion in capital the dividend payments on both common and preferred stock would be eliminated. He said that all lobbying activities of both companies would stop immediately. Both companies over the years made extensive efforts to lobby members of Congress in an effort to keep the benefits they enjoyed as government-sponsored enterprises.

Both Paulson and Lockhart were careful not to blame Daniel Mudd, the CEO of Fannie Mae, or Freddie Mac CEO Richard Syron for the companies’ current problems. While both men are being removed as the top executives, they have been asked to remain for an unspecified period to help with the transition.