Economic Focus

MIXED NEWS, BUT VERY PROMISING

The housing market continues to fight a prolonged slump. Total home sales declined for two consecutive months ending in May, bringing the three-month average below the 5.3-million-unit 18month average that is smoothing out the impact of the two homebuyer tax credits. House measures are a mixed bag: Homebuilding did pick up a bit in May; S&P/Case-Shiller seasonal adjusted 20-city index flat month to month; the Federal Housing Finance Agency purchaseonly index is up 0.8%; the median existing price down 1% for April. The market does not yet show signs of a turnaround. LOWER MORTGAGE LIMITS HIGHER RATES Conforming loan limits will soon fall from $729,750 in the highestcost areas of the country to $625,000 and FHA loan limits are likely to fall even more. Private lenders will likely step in to the mortgage market as the GSEs and the FHA start scaling down the whopping 90% share of mortgage originations they currently hold. Private securitization, without government guaranties, will demand higher returns, thus higher interest rates. It is estimated that added costs of capital and reserve requirements, mortgage rates will rise between 25 and 50 basis points. JOBS, JOBS, JOBS Employment numbers, job creation and household creations are weak and pose a downside risk on demand for housing. FORECLOSURES The foreclosure pipeline is still large, with about 3.8 million homes 90 days or more delinquent or in the foreclosure process, according to data from Equifax.
RELEASE DATE Mon 07/18 1:00 pm et Mon 07/18 1:00 pm et Tue 07/19 8:30 am et Wed 07/20 7:00 am et Wed 07/20 10:00 am et Thu 07/21 8:30 am et Thu 07/21 10:00 am et Thu 07/21 10:00 am et
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for the week of July18, 2011 Volume 15, Issue 28

Key Economic Reports Released This Week
ECONOMIC INDICATORS RELEASED BY Dept. of the Treasury National Association of Home Builders Bureau of the Census Dept. of Commerce Mortgage Bankers Association of America National Association of Realtors Bur. of Labor Statistics Department of Labor Bur. of Econ. Analysis Dept. of Commerce Federal Reserve Bank of Philadelphia CONSENSUS 1 SURVEY N/A N/A 575k N/A 4.95M 405k 0.2% 1.0% Wt. INFLUENCE ON INTEREST RATES

Weekly Bill Auction NAHB Housing Mkt Index for July 11 Housing Starts / Bldg Permits for June 11 MBA Mtg Apps Survey for week ending 07/15 Existing Home Sales for June 11 Jobless Claims for week ending 07/16 Leading Economic Indicators for June 11 Philadelphia Fed Survey for July 11

** ** *** * ** * ** **

If strong demand If weak demand If strong demand If weak demand If above consensus If below consensus
Undetermined

If above consensus If below consensus If above consensus If below consensus If above consensus If below consensus
Undetermined

Survey courtesy of Insight Economics, LLC

* Low Importance ** Moderate Importance *** Important **** Ver y Important

The foreclosure pipeline is still large and legal issues surrounding the foreclosure process are taking longer to resolve than anticipated. The courts are congested with filings and it may take longer than expected to work through the foreclosure backlogs. Limited credit accessing will dampen new construction once the outlook clears. GOOD NEWS Washington is requiring 12 month relief for defaulted homeowners who are unemployed. According to Equifax the second quarter 30- and 60-day mortgage delinquency rate is below 3%, and down 154 basis points from the 2009 first quarter peak and about 100 basis points above the 2005 reading, when delinquency rates were at a cyclical low. Servicers cleaning up from the foreclosure crisis and several have separately settled with mortgage-backed securities

investors who claimed they were sold pieces of defective mortgages. Servicers distressed homes pipelines are being empted more quickly than they are filled.

Jessica Lombardo Loan Officer Hi-Tech Mortgage 2184 McCulloch Boulevard, # A Lake Havasu City, AZ 86403 jessica@hi-techmortgage.com Office: 866.768.5626 Cell: 916.548.8533 Fax: 916.372.2518