Falling FHA Multifamily Mortgage Rates?

Will Economic Indicators Affect FHA Multifamily Mortgage Rates? Today the Jobs report stated that 148,000 non-farms jobs were added in September when the consensus expectation was 185,000 jobs were to be added.  This gap has led the 10 year Treasury yields to drop from 2.60% to 2.52%, the lowest they have been since mid-July. So what does that mean for FHA Multifamily rates? As I said in an earlier blog post, two things are keeping rates high. First, there are a lot of REMICs that are still underwater, needing the high interest rates of new securities to leaven the entire REMIC so as to increase the weighted average coupon from earlier purchases.  This hangover continues. The security buyers are trying to hold investor coupons above 4% so as to be able to curtail losses on those underwater loans bought before the Bernanke pronouncements in May. Secondly, the investors in the securities have been expecting higher yields next year, based on tapering the purchases by the Fed. This made it likely that next summer’s rates would be much higher than today’s rates, causing investors to want the higher rates expected next year. Securities have been priced accordingly. With today’s Jobs report, and the weak data probably coming out over the next few weeks, it is likely that the Qualitative Easing will continue.  If rates stay low, the large spreads, especially in new construction under the 221 (d) 4, will have to narrow, bringing rates down. As an interested party, what should you be looking for as a sign of lowering rates?  If the 10 year Treasury bond continues/stabilizes in the 2.50%...
FHA: The Loan of Last Resort?

FHA: The Loan of Last Resort?

  FHA was once thought of as the lender of last resort, but now is often is the first and best option for many borrowers. So what changed? How did FHA get the reputation for being the lender of last resort? In the pre-1930s, single family homes were financed by banks.  These were 3-5 year loans typically, that caused a family to begin to worry about refinancing them the day the loan closed.  Maturity defaults were always looming.  Banks would extend the loans, add costs in the form of a second and maybe extended for 2-3 years.  This cycle continued, until people were having 4 or 5 loans that were renewing every 6 months. Things were fine, if cumbersome, during the Roaring ‘20s, but when the stock market crashed and credit dried up, homes began to be foreclosed as there was no liquidity in the mortgage markets. This is when the Federal Government stepped in with the precursor to the modern single family programs under FHA.  This is when 30 year loans came into existence, with easier qualifying terms.  FHA became the lender of last resort for single family loans. But what about apartments?  How did FHA get the reputation in the apartment industry? I can only discuss back to 1974 on this one.  I was a Senior at the University of Oklahoma, taking classes in the morning and working construction in the afternoon. We always had the radio on at work and eventually the music broke for the news. Among the other stories of the day-the pressure on Nixon to resign, the horrible economy and the ending of...