Government’s various efforts to keep homeowners homeowners

 The original Making Home Affordable program was enacted by the US Government by means of the Financial Stability act of 2009, with the intention of blunting the blow foreclosures were causing to the housing market. It contained two components that have had mixed success and was the subject of a recent announcement of additional support.

Here is a brief review of the two original components and the recent news.

 Home Affordable Modification Program

This program was released with the intent of assisting homeowners delinquent on their mortgages and those in imminent danger of default by modifying the terms of the original loan to achieve sustainable monthly payments. The program has been widely criticized for the difficulty of successfully completing the documentation process, and for the perception that many homeowners re-default. As of September, of 3.9 million estimated homeowners who could be helped, 850,000 had received a permanent modification.

Home Affordable Refinance Program

 This program was designed to help homeowners on time with their payments to refinance in spite of reduced home equity caused by the crisis. Provided the original lien was 80% or less of the original appraised value of the home, the program offers to refinance existing balances even if a new appraisal reveals borrowing as high as 125% of the current value without mortgage insurance. It was also intended to provide assistance to homeowners with mortgage insurance, however, that has been very difficult to access, as it is available only to the current servicer of the loan, and many are not participating in the program. Province Mortgage has closed a substantial number of these transactions.

 2011 Changes to HARP

 An announcement on October 24^th, 2011 previewed several meaningful changes to HARP, which may improve eligibility options. While an announcement of actual specifications isn’t due until November 15^th, some enhancements that have been suggested include:

• Reduced appraisal requirements
• Higher maximum loan-to-value ratio (over 125%)
• Reduced pricing surcharges for various associated risks
• Extended program duration to December, 2013

While many details remain uncertain, the hope is that this will expand eligibility to more borrowers helping more homeowners remain in their homes and, hopefully, providing a bit of economic stimulus with the extra cash those homeowners will have to spend.

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

Economic data has gradually worsened as the months of 2011 have passed, and at no time was that more apparent than last Friday, when total Gross Domestic Product growth since January 2012 was announced at less than 0.5%. This figure was far lower than expected, especially considering the downward revision of 1st quarter growth from 1.9% annual to 0.4% annual growth. While the 2nd quarter slowdown earlier believed to have been principally driven by supply interruptions precipitated by natural disasters, it now appears that the problems were farther reaching.

Another recent concern in the economy has been energy prices, which attracted significant attention in earlier months as the price of oil surged over $100 per barrel. This afternoon, oil sold off sharply, ending below $90 for the first time since February, as the US dollar was strengthened by the announcement that Japan will take action to weaken its currency versus the dollar. The Euro remains under significant pressure due to the continued concerns about its member nations’ sovereign debt. Worries have proliferated since July, as previously stable countries Spain and Italy have seven yields on their sovereign debt rise by hundreds of basis points in the last few weeks.

ADP released the results of its July survey of employers, saying that it believed private companies had added 114,000 positions to their payrolls in the most recent month. This is somewhat consistent with that company’s announced results last month, when it announced 157,000 jobs had been added. Last month, though, the Bureau of Labor Statistics announced only 18,000 jobs had been added, though, significantly off the figure announced by ADP. It is unlikely that 114,000 jobs is enough to meaningfully impact the current 9.2% unemployment rate.

Based on this data, my models have developed statistically significant predictions ranging from 82,000 to 93,000 jobs added by private employers. The correlation between ADP and BLS data again failed to achieve significance over the short term, and last month’s miss worsened the situation. As a result, the data derived from that method have been given reduced consideration. Last month, I believed that the ADP results might be anomalous, and I was later proven correct, although I underestimated the size of the error. That ADP shows 100,000 jobs added 2 months in a row suggests that there may be a trend starting. I have developed a prediction that tomorrow’s report will show 90,000 jobs added to private payrolls in July.

Governments are continuing to reduce employment. The most recent visible episode is the recent shutdown of the Federal Aviation Administration, which resulted in the layoff of tens of thousands of employees. Because of the reductions in government employment, the total number of jobs added in tomorrow’s report will be reduced by 25,000 positions, bringing the total to 65,000 jobs added.

The official unemployment rate climbed to 9.2% in July, and the situation hasn’t changed significantly since then. If anything, the barrage of negative news may have caused more of the long-term unemployed to give up their search for unemployment. I don’t believe this phenomenon has accelerated to the point where it will affect the unemployment rate in July. I expect the unemployment rate to hold at 9.2%.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

The recipients of this award are chosen based on responses to a management questionnaire as well as a confidential employee survey. You can click below to read the original article on the Providence Business News website and see the entire list of companies honored.

Original Article: http://www.pbn.com/PBN-names-Best-Places-To-Work-for-2011,57996

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Original Article: http://www2.turnto10.com/lifestyles/2011/may/17/coffee-cup-salute-province-ar-492239/

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

2011 has been characterized by a gradual worsening in the character of released economic data. While growth in 2010 was at its strongest in several years, GDP growth in the 1st quarter of 2011 declined to 1.9%. Economic growth was further questioned as that quarter drew to a close with the natural disasters in Japan and New Zealand, and the resultant interruption in supply of intermediate goods and raw materials. A spike in petroleum prices further threatened growth. It was thus unsurprising that manufacturing data, especially, retreated as May arrived. No where was this more noticed than in the Philadelphia and Empire State Manufacturing Indexes.

Oil prices have declined since then, principally driven by recent strength in the dollar relative to other currencies, especially the Euro. Still, at over $98 per barrel, oil prices have risen faster than nominal inflation, and the dollar is under pressure from the Euro again. While the immediate situation in Greece has been resolved, and while. if not so large,Portugal’s situation is at least as dire, threats on the stability of the currency remain, which have made the dollar more attractive. Threats against the dollar have not been completely eliminated, though, due to the ongoing debate regarding the US Treasury’s borrowing limit, which could severely damage the dollar’s strength.

ADP today released the results of its survey of employers, saying that it believed 157,000 positions had been added to private employer payrolls in June of 2011. This represents a quick reversal in employment, and is nearly high enough to be sufficient to lower the unemployment rate from its current 9.1% level. June’s growth, though is still well below the level of improvement seen in the first few months of this year.

Based on this ADP data, my models have produced reliable predictions ranging from 134,000 to 165,000, with most indicating highest confidence at approximately 140,000. The correlation between ADP and BLS data still failed to hold over the short term, although it has shows signs of improvement. As a result, data obtained using this method have been given reduced consideration. In spite of these figures, I believe that the ADP results may be anomalous, and have thus tempered my own predictions. I have developed a prediction that tomorrow’s report will show 130,000 total jobs added to private payrolls in June.

Governments are continuing to reduce employment, with no greater evidence of this the shutdown of the state of Minnesota that is currently in its 6th day.  Because of the impact of government employment reductions, government employment will reduce total employment gains by 20,000 positions to 110,000 jobs added total.

The official unemployment rate rose to 9.1% in May, as, in spite of meaningful increases in employed residents, even more previously discouraged workers returned to the labor force. I believe that the opposite effect will be seen in June, as the volume of negative news likely caused more workers to give up their searches. Due to this decrease in the labor force, the unemployment rate is expected to decrease to 8.9%.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

While economic data in January and February suggested continued strong economic growth, the direction of that data began to turn in March, as war and natural disasters pressured commodity prices and interrupted material supplies. This trend continued in April, as elevated oil prices raised questions the cost of oil would itself impact economic growth. Those concerns began to play out in May, as several significant economic activity surveys, including the important Philadelphia and New York Fed surveys, showed a sharp decline in underlying economic growth. In addition, weekly claims for unemployment benefits have climbed significantly, a disturbing trend as it could eventually impact hiring.

While oil prices have moderated slightly, the price of oil, currently $100 per barrel, remains at a high enough level that it could continue to impair economic growth. A significant contributing factor in high oil prices is the weakness experienced by the US dollar in currency markets, which directly impacts oil prices because most oil is paid for and purchased in dollars. The dollar is not expected to strengthen in the immediate future given questions about the level of US Treasury debt and the significant supply of currency that has come about due to recent Federal Reserve stimulative measures.

ADP released the results of its survey of employers, saying that it believed 38,000 private payroll jobs were added in May, 2011. This represented a sharp decline in employment growth, and is a low enough gain that it could likely result in a meaningful increase in the unemployment rate, especially if discouraged workers resume their employment search. It also interrupts a period of over 5 months of greater than 170,000 jobs added.

My models produced reliable predictions ranging from 35,000 to 161,000 private payroll jobs added in May, with a higher confidence range between 100,000 and 130,000. The correlation between ADP and BLS private payroll data still failed to hold true in the short term, but it did continue to move closer to signficance. As a result, data derived from that method were given reduced consideration.  I have developed a prediction that tomorrows report will show 130,000 private payroll jobs added in May.

Governments are continuing to cut employment, which is dragging on overall jobs creation. These cuts will lower total job additions to 115,000 for May.

The official unemployment rate rose to 9.0% in April, as some discouraged workers did return to the labor force. I had previously predicted the unemployment rate would be moving higher because of returning workers. That will not be a meaningful contributor to tomorrow’s unemployment rate; rather the decline in jobs growth will be a more important factor, and that will cause the official unemployment rate to increase to 9.1% for May.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

Economic data in December, January and February suggested that the economic recovery was consolidating its momentum. Data turned slightly more mixed in March, as major natural disasters in New Zealand and Japan, and war in Libya have sapped consumer confidence and caused a sharp spike in energy prices. In the meantime, US manufacturing data showed continued growth and a healthy manufacturing environment, suggesting that employers may be hiring for those positions again.

Data in April have been substantially more mixed. While manufacturing continues to remain strong, unemployment claims have spiked to the highest level in 2011, and the outlook for services has worsened. Productivity remains strong, another indicator that businesses are getting more work from the same number of employees. Throughout April, commodity prices remained elevated, although this reversed sharply on May 5th with a 10% decrease in prices for oil, and similarly large changes in prices for gold, silver, and other precious metals. Federal Reserve Chairman Ben Bernanke suggested in comments he gave April 27th that he believed the spike in prices was transitory; while this is only a single day’s trading, a continued downward trend in prices would confirm his assertion.

Yesterday, ADP released its survey of employers, stating it believed 179,000 payroll jobs were added in April, 2011. This represented a significant decline in job creation from that firm’s revised estimate of 207,000 jobs added in March, 2011. This is the first time in 2011 that estimate has been below 180,000. While 179,000 new positions still represents meaningful growth in jobs, it is not enough to meaningfully reduce the unemployment rate.

My models produced reliable predictions ranging from 159,000 to 194,000 jobs added in April, based on this data. Recent data suggests that the result of tomorrows employment situation report will fall to the lower end of that range, especially the sharp increase in unemployment filings, which often lag the termination or layoff by 1-2 weeks. My data have retained strong statistical significance over the long term. That significance is returning over the short term, and data for one of the data sets used achieved sufficient significance for inclusion in this estimate. After review of available data, I have developed a prediction that tomorrow’s report will show 170,000 jobs were added to private payrolls in March.

Governments continue to cut positions, however, given the magnitude of government job cuts in 2010 and the first few months of 2011, it appears unlikely that trend will continue. I believe government layoffs will still result in the reduction of the total non-farms payrolls to 168,000.

The official unemployment rate declined to 8.8% in March as over 300,000 Americans reported they had started work. Still, labor force participation remains exceptionally low, and will likely result in challenges in reducing the unemployment rate, as discouraged workers come back into the labor force. Given other conditions, especially high gas prices, the return will not be strong in April. For tomorrow, the I expect the reported unemployment rate to increase to 8.9%

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

A meaningful correlation exists between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

Economic data in December, January and February suggested that the economic recovery was consolidating its momentum. Data have turned slightly more mixed in March, as major natural disasters in New Zealand and Japan, and war in Libya have sapped consumer confidence and caused a sharp spike in energy prices. In the meantime, US manufacturing data have showed continued growth and a healthy manufacturing environment, suggesting that employers may be hiring for those positions again.

Last month, the rising price of oil was a meaningful concern for continued growth. At that time oil traded at $105 per barrel. Since then, tensions in Libya erupted, sending that country into civil war, and effectively disabling over 1% of the worlds oil supplies. Significant concerns remain in Yemen, Syria, and other oil producing countries, and the price of oil has remained over $105 per barrel. Oil prices at this level will eventually affect hiring and employment.

Yesterday, ADP released the results of its survey of employers, stating it believed 201,000 private payroll jobs were added in March, 2011. This represented a decline in jobs growth over February’s estimate, but held the 4-month average of 200,000 jobs added that has existed since December. At that time, job markets made a significant break from their trend in 2010, where job gains averaged closer to 80,000 per month.

My models produced reliable predictions ranging from 152,000 to 161,000 jobs added in March. I felt recent data suggest these figures are too low, especially recent unemployment claims filings. Filings have been on a steady decrease since early 2010. For the third month in a row, the correlation between ADP and BLS data did not hold over the short term, although there was a marked improvement. As a result, data from that method was discarded when preparing this estimate. I have developed a prediction that tomorrow’s report will show 170,000 jobs were added to non-farms payrolls in March.

Governments are continuing to cut employment, but recent data suggests that trend is slowing gradually. Reductions in government employment will lower total job additions to 165,000 in March.

The official unemployment rate held in February, declining slightly to 8.9% from 9.0% in January. This is solely the result of the more than 1 million workers who left the labor force in 2010. I predict we will see the unemployment rate tick higher again as those discouraged workers return to the labor force, but it will not happen in March. For tomorrow, the official unemployment rate will hold at 8.9%.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

A meaningful correlation between the ADP Private Payrolls report and the Bureau of Labor Statistics monthly Employment Situation Report. I have used data from the past 5 years reports to develop a prediction for tomorrow’s Employment Situation Report.

Recent economic information has shown a decided trend towards continued improvement in the US economy. Recent reports on services, manufacturing, and retail sales, all point to continued strengthening. Consumer confidence reports have also shown stronger expectations. There have been a few reports of improvement in the housing sector, however, those reports have been very weak, principally reflecting a slight bounce from the abysmal lows of late 2010. Employment data has been suspect at best, reflecting continued inability of employers to increase hiring.

Significant concerns have arisen recently with regard to possible dampening of economic growth due to a sharp rise in prices for oil. These increases began in the 2nd week of February, so are unlikely to affect employment data yet, however, a continued elevated level of gasoline prices could affect hiring and the willingness of applicants to accept employment farther from their homes.

Yesterday, ADP reported the results of its survey of employers, stating that its data suggested 217,000 private payroll jobs had been added in February, 2011. This is a greater than 10% increase in net jobs added over the 189,000 ADP believed were gained in January. It is believed that job gains in January were tempered by severe weather in that month.

My models produced reliable predictions ranging from 195,000 to 200,000 jobs added based on the historical ADP and BLS data. For the second month, the ADP and BLS data failed to correlate in the short-term 10-period analysis; in fact the correlation became even weaker. As a result, data from that method was discarded in preparation of this estimate. Over the longer 5-year period, though, there continues to exist a strong correlation between the two data sets. I have developed a prediction that tomorrow’s report will show 210,000 private payroll jobs added in February.

As was seen in Providence today, governments continue to cut employment. Reductions in government employment will cause net job gains to be reduced to 200,000 positions. In addition to these gains, there will also be a revision to prior results which should add a substantial number of jobs, likely 80,000 added to January and December results.

The official unemployment rate fell sharply in January, declining from 9.4% to 9.0%. This was primarily precipitated by an exodus of workers, but also by a substantial increase in households reporting working status. I believe that this may have been caused by temporary fluctuations in survey results. It is likely that this may have reverted in February, which should result in a rise in the unemployment rate, likely to 9.2%.

Dan Hartman is a Senior Mortgage Advisor with Province Mortgage Associates of Providence, RI, and has more than 10 years experience in the mortgage industry. He also serves as an Adjunct Professor of Finance and Economics with Roger Williams University and the University of New Haven. Extensive data was researched and compiled by Thomas Khoudary of Providence College.

You’ve probably heard the stories. Stories from people trying to buy homes who have submitted dozens of pages of documentation, only to be met with endless requests for more documentation, excuses, and, ultimately, a loan denial. It’s frustrating, upsetting, and downright insulting what is happening to many families. The worst part of all is, in many cases, it’s avoidable.

It’s true that the market has made things a lot tougher for home buyers. Many difficulties have arisen due to an epidemic of  “buy-backs”, that is, lenders that wrote mortgage loans have been forced to buy them back from investors who purchased them, often for seemingly meaningless reasons, like the wrong date on a pay stub, or a punctuation error on an insurance binder. The result of this is that bank underwriters are much more careful in their review of documents.

Rather than diving too deep into the problem these buy-backs represent, let’s examine some of the problems that have been found, and ways to prevent them affecting your application. One of the most prevalent problems found is matching errors between information shown on various home buyer documents. One client I worked for recently wanted to refinance her home to take advantage of current low mortgage rates. She had owned the home for a few years, but she had never updated some of her important documentation to match the new address. As a result, it appeared from her pay stubs, bank statements, and insurance documents that she still lived at the old address.

It’s very important to promptly update your address with employers, creditors, lenders and banks as soon as possible on moving. While it might not seem to be such a big deal, especially with everything else going on around the time of moving in, this is extremely important to underwriters, and can cause significant delays to your closing. Think about it as a basic part of moving. You unpack all your stuff; update your address, too.

Another area that creates significant additional questions is inquiries in your credit report. You get a credit inquiry every time a company requests your credit for the purpose of granting you credit. Think of it as the banks’ way of tracking where you’re applying for new loans. Most home buyers have very few credit inquiries, often only 1 or 2 related to searching for the right mortgage. This is often not an issue for a mortgage approval.

It can be a different issue altogether when a credit report contains numerous inquiries for various different purposes. A common scenario I’ve seen is when a buyer had applied in the last few months for a card at Old Navy to get the extra 10% one-time discount offered there, then, after getting mortgage pre-approval and a contract to buy, they head to the furniture store.

Many mortgage pre-approvals today are based on very tight margins, where even a small increase in monthly budget can turn an approved loan into a denial. Now, it’s natural to think that you’ll need furniture for your new home, and you probably will! During the mortgage process, though is not the time to get it. You see, underwriters are requiring home buyers to explain any and all credit inquiries that appear in their credit report. If the credit requests turned into new credit accounts, then, those accounts will have to be considered in the underwrite. Even though the the furniture store may be offering no payments for 6 months, future payments will have to be incorporated into budget review.

Another problem that can be caused by credit inquiries is damage to the credit score. Each credit inquiry has  a small effect on credit score, which varies depending on the type of inquiry, and the number of recent inquiries. Mortgage inquiries cause relatively little change (and none if they are subsequent mortgage inquiries within a 21-day period), while credit card, and especially store charge inquiries can do substantial damage. Once you’ve settled on where you’ll be getting your mortgage, it is important to avoid any further requests until after closing.

Tax returns are becoming more and more important in 2011. Prior to 2009, most home buyers didn’t have to supply tax returns with their mortgage applications, but, due to a number of cases of fraud involving falsified tax returns, banks are verifying tax filings of all home buyers today. This means that they will review that information even if it’s not submitted to them. There are a number of ways in which this can delay a mortgage process:

• Change in filing status (single –> married, for example)
• Undeclared rental or business income (or, especially, loss!)
• Unreimbursed employee business expense
• Certain deductions (mortgage interest when no home is owned, student loan interest when no loans on credit, etc.)
• Taxes unfiled for one or more years

These, and many other surprises can come from the review of tax returns. If you have any questions about whether your tax return could cause concerns, it would be best to review your returns with your mortgage advisor before finalizing an offer on a home. While most entries on a tax return are relatively innocuous, the degree to which this documentation is currently scrutinized demands an overabundance of caution.

I’ve only scratched the surface of the surprises that can come up during the mortgage process in 2011. Credit inquiries, tax return verifications, and address discrepancies are among the most common challenges seen lately, and most issues there can be mitigated by providing enough documentation and explanations upfront.  Thank you very much for reading our review of this situation. Please feel free to contact us with any questions not answered here.