Oregon Housing Council SF Presentation: Uninsured and Private Mortgage Insurance Losses Per Loan to OHCS Were 10X Higher than for FHA Loans.

At Housing Council meeting today, there was one of best and most detailed single family presentations I have ever seen at a Council meeting. Kudos to Bob Larson for a very informative presentation.

I will encourage OHCS to share or post the presentation on their website, but in interim I fixated on the data in one table. It showed by insurer, the number of OHCS SF [foreclosure] acquisitions, the net loss, and the average loss per property for CY 2011 through September 30th. 

I expanded upon that to show in table format how much different the losses would have been in the average loss per loan to OHCS for all insurers had matched the average loss to OHCS from FHA loans ($6,274 per loan). The table is pasted below and my observations are below the table.  

Observations:

1. IF all loans had been FHA insured total losses to OHCS would have been reduced by 69%, or $1.7 million.
2. Uninsured loans were a relatively small number, but the average OHCS loss per loan was $65,255, more than 10 times the average loss to OHCS from an FHA loan. (Note that uninsured loans started with a LTV of 80% or less; a loss of $65,255 per loan suggests that the value of the uninsured home must have dropped by 20% PLUS the portion of the average loss per loan that did not include closing costs (about $53,000) . Big Wow!
3. Average OHCS losses per loan for acquisitions with private mortgage insurance was even larger at $70,840 per loan. Even Bigger Wow!
4. Keep in mind that the loss to OHCS is NOT the loss per loan; the lower rate of loss per loan to OHCS for FHA and RD loans is because those programs cover a greater share of the loss than did private mortgage insurance or when the loan was uninsured. Losses in those cases transfer to FHA and RD.
5. While OHCS losses from single family acquisitions were $2.4 million through September, SF bond revenue was more than enough to pay those costs, and the indication was that the actual losses may have been less than conservative estimates used by OHCS in their  financial assumptions.

Originally created and posted on the Oregon Housing Blog.

$10 Million Lottery Bonds Bill for Housing Has Oregon Ways and Means Commitee Hearing Today 10 AM.

Hearing is before Ways and Means Subcommittee On Capital Construction. 

Link to HB 5036 PDF text is HERE. You might be able to catch live audio of hearing via links on the page HERE. 

Originally created and posted on the Oregon Housing Blog.

The Case for Build America Bonds.

Treasury PR is HERE, says they saved state and local govs $20 billion in borrowing costs. 

Originally created and posted on the Oregon Housing Blog.

Two Additional Quick Hits on FY 2012 Budget Non HUD Housing Items.

A couple of NON HUD related housing proposals caught my eye within the FY 2012 Budget Federal Receipts document HERE (PDF page references included): 

p38
Simplify single-family housing mortgage bond targeting requirements.—Current law allows use of tax-exempt private activity bonds to finance qualified mortgages for single-family housing residences, subject to a number of targeting requirements, including, among others: (1) a mortgagor income limitation (generally not more than 115 percent of applicable median family income, increased to 140 percent of such income for certain targeted areas, and also increased for certain high-cost areas); (2) a purchase price limitation (generally not more than 90 percent of average area purchase prices, increased to 110 percent in targeted areas); (3) a refinancing limitation (generally only new mortgages for first-time home buyers are permitted); and (4) a targeted area availability requirement. The Administration proposes to simplify the targeting requirements for tax-exempt qualified mortgage bonds by repealing the purchase price limitation and the refinancing limitation.

P 107
Limit itemized deductions. The Administration is proposing to limit the tax rate at which high-income taxpayers can take itemized deductions to a maximum of 28 percent, affecting married taxpayers with incomes over $250,000 and singles over $200,000. This will reduce the value of tax expenditures for such deductions, which include mortgage interest, state and local taxes, and charitable contributions.

Originally created and posted on the Oregon Housing Blog. 

Glitch in Language of OHCS SF Bond Official Statement ?

At State Housing Council meeting on Friday OHCS staff indicated that the size of the upcoming SF bond sale was being reduced from $50 million to $33 million in response to slower than expected interest from lenders. Staff noted that unused bond proceeds would end up costing OHCS money, and the prudent thing to do was to start with a lesser amount and increase it later if demand picked up.

After I returned I found the preliminary official statement HERE and may have caught a problem that will need to be corrected before the final statement is published. 

The problem is a statement on PDF page 19 that says that  "OAHAC has contracted with the Department to administer all such programs funded in Oregon under the HHF fund."

The problem is that earlier last week I confirmed again with OHCS staff that there was NOT yet an executed contract  between OHCS and OAHAC for the Hardest Hit programs.  

It therefore appears to me that (1) this language will need to be changed in the final official statement, OR (2) the contract between OAHAC and OHCS will need to be executed in advance of the bond sale. 

Originally created and posted on the Oregon Housing Blog.

Oregon Vets, Including Vietnam Era Vets, Now Have Loan Program for Home Purchases at 3.75%, 30 Year Rate.

Measure 70 passed in the recent election, and the Oregon DVA website has been updated with new interest rates and a process to establish eligibility for the new home loan program:

ORVET Home Loan Rate Drops to 3.25% Fixed

Qualified veterans may now get a 15-year fixed rate mortgage for as low as 3.25% with a 1.375% loan origination fee. 30-year terms are available for as low as 3.75% fixed, with the same loan origination fee as the 15-year term. The current maximum loan amount using the ORVETS home loan program is $417,000 for a single family, owner occupied residence.

Starting in January 2011, veteran eligibility has expanded with the help of the passage of Measure 70. The ORVET Home Loan is now a lifetime benefit. 

Details about the new program, including how to establish eligibility, are available HERE.

Originally created and posted on the Oregon Housing Blog.

OHCS SF Revenue Bonds: Delinquency and REO are Up From Year Ago.

The table below shows the change in Oregon SF bond delinquency and REO stats from April 2009 to April 2010. (The most recent OHCS quarterly revenue bond statement HERE will open to page 6 where current data can be found). 

Some observations:

1. 100 OHCS loans were foreclosed during this 1 year period.
2. REO inventory increased by 247% to 52, increasing by more than $6 million in a year.
3. Seriously delinquent +In foreclosure rates combined to 3.2% in 2009, and are 6.2% a year later. 
4. (Not in table): OHCS total loans were 8,335 in 2010, a reduction of 407 from prior year.

OHCS SF Revenue Bond Delinquency and REO Stats, April 2009 and April 2010
Metric	2009	2010	% 2010-2009 Change	# 2010-2009 Change
30 Days Delinquent	1.21%	1.43%	18%
60 Days Delinquent	0.74%	0.92%	24%
90 Days Delinquent	1.43%	3.44%	141%
In Foreclosure	1.77%	2.82%	59%
# of Loans Foreclosed	381	481	26%	100
REO Number of Loans	15	52	247%	37
REO Current Balance	$1,710,442	$7,901,744	362%	$     6,191,302

Originally created and posted on the Oregon Housing Blog.

Corrected:Treasury Report on Build America Bonds: $90 Billion Nationwide, $2.3 Billion in Wa. State, But Only $22 Million in Oregon.

Correction: A couple of the links from Treasury did not work correctly, but they are now fixed. (Thanks for tip from reader for letting me know)
---
Treasury PR is HERE

The full report can be viewed HERE. Report says $90 billion in Build America bonds have been issued, with net present value savings of $12.3 billion compared to savings that regular tax exempt bonds would produce.

The complete list of bond issues organized by state is available in Excel HERE.

This report shows Oregon had only 2 bond issues for $22 Million vs 78 bond issues totalling $2.3 BILLION in Washington state.

In a prior post HERE, I projected that legislation enacted during the special session earlier this year MAY result in a substantial increase in the use of Build America bonds in Oregon.

Originally created and posted on the Oregon Housing Blog.

Tuesday Meet of the Oregon Facilities Authority Would Bring Approvals to $385 Million, Includes FHA Insured Hospital, and Reduced Future Disclosures?

The next OFA meeting is scheduled for next Tuesday, March 16, 1:15 p.m. - 3:15 p.m. Meeting details:

K&L Gates, LLP, 222 SW Columbia St.,KOIN Conference Room, To attend by teleconference, Dial-In #: 888-529-0350, Participant Passcode: 503 802 2102

I have updated the OFA CY 2010 Meeting Packets link in the right pane to include the March packet.

Three agenda items I have noted (Bookmarks panel in meeting packets has links to these items).

1.$33 Million FHA Insured Hospital in Stayton. Preliminary approval is recommended for a $33 Million FHA hospital loan in Stayton, Oregon. Packet indicates this would be for "construction of an approximately 50,000 ft medical facility in which the Applicant will provide surgical services, obstetrical services, and intensive care unit services."

2. $32 Million Willamette University Preliminary Approval.

3. Admin Rule Discussion to Reduce Transparency Seems Odd Given $385 Million in Deals to Date, and Push for Greater Governmental Transparency.
I count a total of $385 million in OFA approvals or pending approvals to date. As a result of concerns from some lenders, OFA will begin discussing upcoming Admin rule changes that would reduce disclosure on at least some OFA deals. This seems inconsistent with the trend toward greater governmental transparency, especially since OFA bond issuance is substantially higher than in recent years.

Originally created and posted on the Oregon Housing Blog.

Oregon Legislature Passes Bill Expanding OFA Housing Activities, AND Sets Stage for BIG Expansion in Use of Build America Bonds.

Following earlier House passage, the Oregon Senate passed HR 3646A on Saturday Feb 20th., moving the bill to the Governor for signature. (The Senate Staff Measure Summary is HERE; it projects a .5% to .8% reduction in interest rate for Build America bonds).

The bill authorizes the Oregon Treasurer to receive tax credits and rebates from the Federal Treasury and expands eligible housing related activities of the Oregon Facilities Authority.

One likely outcome of the bill that seems likely is a LARGE expansion of the use in Oregon of Build America bonds.

My recent post on state use of municipal bonds for 2009 included a Bond Buyer table that showed that Oregon had issued only $21.5 million in Build America bonds in 2009 vs $1.844 BILLION in Washington State.

My Projections of Oregon Debt Payment Savings from $1 Billion in Build America Bonds:$65-$104 Million Over 20 Years.
The Senate Staff Measure Summary projects a .5% to .8% reduction in interest rates by using Build America bonds; at a volume of $1 Billion, a 20 year term, and a NON BA bond rate of 5%, the BA bonds would save /reduce borrowing costs by $65-$104 million over a 20 year period or $3.3 million to $5.2 million annually.

Originally created and posted on the Oregon Housing Blog.

Western States: Oregon Had Biggest Decline in Housing Bonds from 2008-2009.

Bond Buyer has interesting story on 2009-2008 changes in use of municipal bonds in Western states HERE.

A comprehensive breakout by state is linked within the story and can be found HERE.(Oregon details are on page 5).

I took the state breakout and did a further breakout by state of just housing bonds.

In my summary HERE you will see that Oregon had the LARGEST decline in use of housing bonds of any Western state, a decline of 85.6%. (Washington state had a decline of only 11.3%, and California's decline was close to, but less than Oregon's, at 80.9%.

Originally created and posted on the Oregon Housing Blog.

Oregon Public Facility Authority Holding Jan 19th Hearing on Central City Concern Refinancing of 450 Units in 5 Projects.

Saw this in yesterday's Oregonian Public Notices

Notice of Public Hearing A public hearing will be held by the Executive Director of the Oregon Facilities Authority beginning at 1:00 p.m. on Tuesday, January 19, 2010 at the State Office Bldg., 800 NE Oregon St., Room 1E, Portland 97232 with respect to the issuance of not more than $4,550,000 aggregate face amount of tax exempt bonds to refinance five outstanding loans (the "Loans") used to acquire five facilities, to finance the remodeling of two of those facilities, and to pay costs of issuance the bonds.

Each of the facilities to be refinanced or remodeled is used by Central City Concern ("CCC"), a non-profit organization qualified under section 501(c)(3) of the Internal Revenue Code of 1986, as amended, in furtherance of its charitable mission to mitigate the effects of homelessness, poverty and addictions. Each of the facilities to be refinanced or remodeled is described below:

• Henry Building - an approximately 60,802 square foot facility located at 309 SW Fourth Ave., Portland, OR with 153 units of low income housing, space used by CCC in its Community Engagement Program, and approximately 6,637 square feet of commercial space.
• Letty Owings Center - an approximately 17,074 square foot facility located at 2545 NE Flanders St., Portland, OR used as a 37-unit residential drug treatment facility.
• Medford Building - an approximately 27, 840 square foot facility located at 506 NW 5th Ave., Portland, OR with 62-units of low income housing and approximately 12,300 square feet used as a homeless shelter.
• Sally McCracken Building - an approximately 35,989 square foot facility located at 532 NW Everett, Portland, OR with 95-units of low income housing and CCC administrative office space.
• Hatfield Building -an approximately 48,250 square foot facility located at 726 W. Burnside St., Portland, Oregon with 106 units of low income housing and approximately 4,082 square feet used by Central City Concern's Recovery Center.

Interested individuals may express their views, both orally and in writing. Oral comments at the public hearing will be limited to 10 minutes for each speaker. Written testimony may be submitted to the Oregon Facilities Authority, 1600 Pioneer Tower, 888 SW Fifth Avenue, Portland, Oregon, 97204, until the close of business on Monday, January 18, 2010, or at the hearing.

Originally created and posted on the Oregon Housing Blog.

Oregon Bond Carry Forward Meeting Next Tuesday, Jan 12.

Carry forward requests for CY 2009 are $328 Million:

• Housing Authority of Portland, $20,000,000
• Oregon Housing and Community Services, $308,510,425

Requests for 2010 Allocations Currently Total Only $50 Million

• Portland Development Commission, $50,000,000

Full Agenda and Meeting Time/ Location :

PUBLIC MEETING NOTICE AND AGENDA
Tuesday, January 12, 2010
9:30 am – 11:30 am

LOCATION: Office of the State Treasurer
Columbia Conference Room
350 Winter Street NE, Suite 100
Salem,

1. Call to Order
2. Approval of Minutes from Meeting of July 30, 2009
3. Status of PAB Carry Forwards 2006‐2009 and 2010 PAB Allocations
4. Consider 2009 Carry Forward Requests

• Housing Authority of Portland, $20,000,000
• Oregon Housing and Community Services, $308,510,425

5. Consider 2010 Current Year Allocation Requests

• Portland Development Commission, $50,000,000

6. Other Business

• 2010 quarterly PAB meeting schedule

7. Adjournment

Originally created and posted on the Oregon Housing Blog

Treasury Allocation for HFA Bond Programs Totals $29 Billion; Oregon Gets 78% of Request.

Washington Post news story is HERE.
Oregon received 78% ($234 Million) of it's requested amount of $300 Million.
An Excel spreadsheet with all of the requests and amounts allocated is HERE.

Originally created and posted on the Oregon Housing Blog.

Oregon Asks for $300 Million in Authority for New HFA Bond Program.

Thanks to Oregon Housing and Community Development staff for sending me a copy of the participation request form sent last week to the Treasury. Submission of this form was a prerequisite for OHCS to participate in new fast moving HFA bond program initiatives recently announced by the Obama Administration. (See prior post HERE).

The OCHS submitted form HERE asks for $300 Million in authority for the New Issue Bond Program. The request includes $250 million for SF bonds and $50 Million for MF bonds. The form indicates that the SF program will use FHA and RD programs and the MF program will use the FHA risk sharing program. (OHCS did not ask to participate in the second program, the Temporary Credit and Liquidity Program).

At $200,000 per loan (may be a bit high) the $250 million SF request would support 1,250 SF loans. (If amount per loan is less, number of loans increases, duh).

Some other information culled from the participation request form

CY OHCS Bond History, 5 Years 2004-2008: $2.5 Billion

CY	Total	SF	MF
CY 2004-2008	$ 2,518,702,471	$2,231	$ 288
Total CY 2008	$ 351,468,754	$ 334	$ 17
Total CY 2007	$ 390,108,296	$ 291	$ 99
Total CY 2006	$ 641,500,000	$ 620	$ 22
Total CY 2005	$ 242,973,921	$ 168	$ 75
Total CY 2004	$ 892,651,500	$ 818	$ 75

PAB Allocation Available --$821 MILLION:

TOTAL PAB Allocation Currently Available	$ 821,904,625
2006 PAB Carry Forward (expires 12/31/09)	$ 119,659,210
2007 PAB Carry Forward (expires 12/31/10)	$ 190,070,398
2008 PAB Carry Forward (expires 12/31/11)	$ 269,833,675
2008 PAB Carry Forward (expires 12/31/10)	$ 117,341,342
2009 PAB -Current Year (reverts 12/31/09)	$ 125,000,000

(With $300M request, this would apparently still leave $521 Million in unused bond authority allocated to OHCS).

I am sure there are lots of additional steps to be taken before any program becomes available in Oregon or elsewhere. As further information develops I expect OHCS will share it.

Originally created and posted on the Oregon Housing Blog.

OHCS Single Family Bond Program Likely Impacted by Moody's Drop of MGIC Credit Rating to Junk Level.

The latest bond report from OHCS HERE (pg 7) shows that about 20% ($219 Million) of the principal balance of their SF revenue bond loans had private mortgage insurance from Mortgage Guaranty Insurance Corp.

Yesterday Moody's cut the rating of that company from A 1 to Ba2. As the story HERE indicates, that is a cut to a junk bond rating level. (Ratings of several other private mortgage insurance companies were also cut; total private mortgage insurance is 25% of the principal balance of OHCS SF revenue bond loans).

Moody's published in December 2008 an explanation of how it evaluates the strength of private mortgage insurance on HFA bonds , titled Methodology Update: Incorporating Private Mortgage Insurance in Housing Finance Agency Single Family Housing Program Bond Ratings. (Available from Moodys.com, with a free subscription).

In that explanation the assumed support level (claims paying abiility) of a A 1 rated private mortgage insurance company ranged from 60% for a Aaa HFA rated SF bond to a 100% assumed support level for a Baa rated bond.

IF the private mortgage insurance rating dropped below Baa3 this would drop the assumed private mortgage insurance support level (claims paying ability) to ZERO, regardless of the bond rating.

I am not sure what options are available to OHCS in the near term, but unless I find some new information, my assumption is that this downgrade could have a very significant impact not only here in Oregon, but around the country.

At a minimum this will accelerate the flight to FHA insured loans and their greater protection against possible loss. ( I wish I were more confident in the institutional ability of FHA to propertly scale their operations and control loan underwriting in this challenging environment).

Bad News: OHCS Profitabilty Was Lowest of All HFA's, According to Data in Moodys.com HFA Study.

Last week I posted some good news about Oregon Housing and Community Services (OHCS), based on my review of a November 2008 Moody's com "State Housing Finance Agencies-Sector Outlook" Special Report. (The complete report is available for download to subscribers at moodys.com; a basic subscription is free, but you have to register).

In my earlier post I also indicated that the Moody's report had data that was bad news for OHCS. Here it is:

1.Overall State HFA Profitability-OHCS Ranked Last Among 48 HFA's.
The first piece of bad news is that OHCS had the worst profitability of 48 state housing finance agencies.(Moody's defines profitability as "net revenue divided by total revenue").

Specifically, the average HFA overall profitability rate in 2007 was 14.01%, while the OHCS profitability rate was the lowest of all HFA's at 1.39%.

Oregon's overall HFA profitability ranking was lower than it's 45th place ranking in 2006, but was identical to its last place ranking in 2005. Washington State's overall HFA profitability rate in 2007 was 6.56% (37th), while Idaho's was 13.99% (25th).

2.HFA Single Family Bond Program Profitability-Oregon Ranked 34 out of 35 Single Family Whole Loan Programs.
Moodys.com report data include not only overall HFA profitability data but also the profitability of 35 state HFA single family loan programs.

The average HFA single family bond (whole loan) program overall profitability rate in 2007 was 15.85%, while the OHCS profitability rate was much lower, at 5.4%. However, the OHCS SF bond program profitability ranking of 33th in 2007 was slightly better than its 34th. place ranking in 2006 (3.12%), and the last place/35th. ranking it had in 2004 when profitability was -3.05%.

Alaska had the lowest single family whole loan profitability rate and ranking in 2007 at 3.17% while Idaho's rate at 9.23% ranked 27th. (Washington state's SF program profitability was not rated).

The higher rate of profitability for the OHCS SF whole loan program compared to overall OHCS HFA profitability suggests to me that the SF program is covering its own costs PLUS the costs of non SF programs. I expect this is likely the case for not only OHCS, but for other states as well.

(Note: the count of SF HFA programs is different than the count of all HFA's as data was not available for some bond (whole loan) programs, and some states had more than one SF bond (whole loan) program for which data was available).

3.Are High Rates of HFA of SF Program Profitability Good or Bad?
Having the very lowest profitability rate of all HFA's can't be a positive for OHCS. On the other hand, excessively high rates of HFA profitability are not good either as they might. signal risky investment strategies or excessive charges to developers and home buyers.

The highest HFA profitability rate in 2007 was in Wyoming x at 31.94%; Wyoming also had the highest HFA SF profitability rate in 2007 at 41.95% . This rate of profitability for public agencies seems clearly excessive and could be as big a problem as having the lowest level of profitability.

I guess where I would come out is that being in the middle range of profitability is much better than being very high or very low. I also welcome YOUR thoughts on what OHCS and HFA profitability rates mean; I encourage you to add your comments in the block below this post.

Private Activity Bond Committee Notes: Oregon Awash with Unused Bond Cap, No Program Yet for Subprime Refinance Bonds.

I attended the Friday January 23rd. meeting of the Oregon Private Activity Bond Committee in Salem. A new Chair was introduced,Kate Cooper Richardson from the State Treasurer's Office. One of the three PAB members, Jack Kenny, was not in attendance.

The purpose of the meeting was to approve carryover allocations of unused 2008 bond cap, including the $117 million in special housing bond cap made in the summer '08 federal housing legislation.

A summary of some of the bond allocation numbers: OHCS didn't use any of the $120 million in 2008 PAB cap that had been allocated to them, nor any of the $117+ million in the special summer federal housing legislation cap. They requested that they receive $250 million, plus the $117 Million, and they also received $19 million that would have been lost, so their total carryforward allocation was $387 million. HAP's $25 million request, which was approved, was for a scaled down version of their downtown service center.

A table I prepared with a summary of these calculations is HERE.

Note also that Oregon has $341 million in private activity bond cap for 2009. Adding that to the $412 million in 2008 cap carried forward, my calculations are that in 2009 there will be at LEAST $753 million in private activity bond cap available for use.

During the OHCS discussion, several items from my notes:

OHCS 2008 single family loan volume was 1,598 loans, for $281 million.

In 2009 OHCS expects that volume to drop significantly to 800 loans, $132 million for the year. OHCS expects to have $100 million in PAB MF bonds.

The total of $232 million for 2009 is $155 million below the 2008 carryforward allocation already made to OHCS, without any additional allocation from the currently unallocated $340 million for 2009).

Following the OHCS staff discussion with the PAB, I made a short presentation to the PAB about the need for Oregon to adopt a sub prime refinancing program as permitted by the summer federal housing legislation. My presentation is HERE.

In particular, I attempted to provide information about the number of subprime ARM borrowers in Oregon (36,000); the potential savings to individual families, $5,870 using current bond rates; and the ability to use existing high volume refinance loan programs like FHA mortgage insurance in conjunction with an Oregon bond refinance program; [There were 738 loans/$159 million conventional loans that refinanced into FHA loans in November alone; this is close to the total ANNUAL 800 loan volume projected for the Oregon bond program for all of 2009].

As part of that presentation I recommended a set aside of $50 million for such a program.

(Angela Martin, from Our Oregon testified in support of Oregon adoption of a sub prime mortgage refinancing program and I very much appreciated her support).

Follow up testimony from OHCS was:

1. That they had a program ready to go,
2. That the existing allocation for Single Family from the PAB did not require any suballocation.
   
3. But since the current SF bonds were issued prior to the August adoption of the federal legislation, they could not use existing bonds for such a program,
4. OHCS would have to issue new bonds before such a program could be put into place.
5. A difficult marketplace made the timing of a new issue uncertain, and it seemed likely that rates in the new issue would be higher than the current bond rate of 4.5%.

My first response was that there had been noticeable recent improvements in the municipal bond market. (PAB staff said that this was true of the GO bond market, but not so in the mortgage revenue bond market). I also noted that a blog post I had just done that morning indicated that Chair Barney Frank's view was that TARP II funds could be used to purchase HFA mortgage revenue bonds.

Following the additional OHCS testimony, the PAB chose to not make such a suballocation for subprime refinance loans.

Although I have some misgivings about the potential for shenanigans in the FHA loan program, I am pleased that FHA is providing one way of reducing loan payments for subprime ARM borrowers, and an opportunity for families to stay in their homes at a lower monthly cost.

While I am happy to see FHA step up, it saddens me that the State of Oregon has not yet done likewise, by providing a loan product that would not cost the state anything, and could offer an even lower cost loan alternative for families with subprime ARM loans. February 1st will mark 6 months since the effective date of the legislation and there is yet no program in place.

One additional item from the meeting: Dates for the PAB meetings have been listed as April 15 (ironic,no?), July 15th, and October 15th.

Updated Oregon Mortgage Bond Subprime ARM Refinance Savings Estimator Posted: Annual Savings Now $5,870 Per Family.

I have updated a previously posted estimate of the savings that a family would realize if Oregon begins a program to allow families with subprime ARM loans to refinance into an Oregon bond loan, as authorized by the summer 2008 federal housing legislation.

The update uses the current Oregon bond rate (4.5%), the November 2008 average subprime ARM rate for Oregon from Federal Reserve data (8.25%), and the November 2008 Oregon conventional to FHA average refinance loan rate (6.2%).

Using those rates, an Oregon family refinancing a $200,000 loan with an Oregon bond loan would save $5,870 annually compared to the average subprime ARM annual principal and interest payment. The same subprime refinancing using an FHA loan instead of the Oregon bond loan would save the family $3,331 a year.

Extrapolated to 1,000 families over a 30 year period, the savings would be $176.1 Million comparing the average ARM rate with the Oregon bond rate and $99.9 Million comparing the average ARM rate with the average FHA refinancing rate.

[In November 2008 in Oregon, 738 conventional mortgage loans were refinanced into FHA loans, these new lower rate loans totalled $159 million].

The PDF HERE shows these calculations AND includes alternative savings with the Oregon bond and FHA rates increased by 1/2% and 1%. comparing the average FHA refinance rate with the Oregon bond rate. Savings are shown on a monthly, annual, and 30 year basis.

The Excel workbook I created HERE was used to produce these updated estimates.

Friday Meetings: Oregon Housing Council and Private Activity Bond Committee.

1. Housing Council meeting will be at 9 AM at

Oregon Food Bank
7900 NE 33rd Drive
Portland, Oregon 97211

Agenda link HERE

2. Private Activity Bond Committee meeting will be at 9 AM at:
Office of the State Treasurer
Columbia Conference Room
350 Winter Street NE
Salem

Meeting will allocate carryover 2008 bond authority; appears to be $392 Million to allocate according to agenda.

Agenda Link HERE: