Good morning! I'm Gary Edelbrock, and I've asked Kathleen Gillis to give us a quick rundown on what the "Big Banks" settlement means to homeowners.

Here are the highlights of the government assistance to homeowner's as a result of the Settlement reached with the "Big Banks"

What the settlement means to you

Principal reduction: At least $17 billion will go to reducing the principal owed by homeowners who are both underwater and behind on their mortgages.

The agreement calls for principal reduction for as many as 1 million people. But it's unlikely the money will go that far, because many people need more than the $17,000 average reduction that would result if the money is split among 1 million homeowners.

At the same time, total principal reduction could go higher -- to as much as $34 billion -- since the agreement requires deeper principal reductions for the most troubled loans.

Refinancing

Officials say up to 750,000 other underwater homeowners who are current on their mortgages will be able to refinance their current loans at lower rates. They will not receive a reduction in principal, but with mortgage rates now near record lows, they could receive substantial savings on their monthly payments.

The settlement sets aside $3 billion to account for the reduced interest payments the banks will receive after the refinancing.

Robosigning payments

About $1.5 billion of the settlement will go to homeowners who had their homes foreclosed upon between Jan. 1, 2008 and Dec. 31, 2011, and who meet other criteria. They will receive up to $2,000 each.

Accepting that payment does not preclude homeowners who lost their home in an improper foreclosure from suing the bank to recover damages, Donovan said.

Participating banks

The five mortgage servicers that are parties to the settlement -- Bank of America (BAC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial -- will pay a total of $5 billion to the states. Some of that money will go to foreclosed homeowners and the rest to the states.

Federal officials say negotiations are underway to expand the settlement to nine other major servicers, which would raise the overall value of the settlement to $30 billion.

At Nova Home Loans, we are beginning to see some minor releases of the proposed Home Affordable Refinance Programs, HARP 11 Refinance Program (see refinances above), for homeowners who owe more on their homes than they are worth. Homes that are commonly referred to as "underwater" homes or homes with negative equity. Banks that currently refinances up to 105% of appraised value have implemented some lower interest rates and capped fees for lower rates. Look for the refinance programs for underwater homes to be rolled out from Fannie Mae and Freddie Mac in early Spring, 2012. These programs have the potential to return many homeowners to positive equity more quickly than reliance on an uncertain economic recovery in housing. I look forward to the opportunity to offer these programs as soon as possible. The potential, if banks adopt the proposed refinance programs proposed by the government, is for millions of homes to be saved from foreclosure. This could become the largest refinance boom in US history, or fall far short of expectations if banks see no incentives in their interest to adopt these voluntary programs.

Only time will tell if the banking industry is far-sighted enough to give up short term profits for long term gains. Stay tuned to find out soon, spring is right around the corner

Update on Mortgage Market News from Nova Home Loans

Mortgage bond prices were slightly this last week, which pushed mortgage interest rates higher. Rates were positive the beginning of the week following weaker than expected retail sales data but rose sharply following unfriendly data Thursday. Lower than expected weekly jobless claims started the negative trend. The figure was the lowest since 2008. A surge in the core producer price index also added pressure to rates. The core rose 0.4% in comparison to the expected 0.2% increase. Fortunately the core consumer price index was in line with expectations, which kept the rate increases in check, no inflation indication to rattle the bond market. Debt trouble in Europe continued to dominate headline news, which also helped. The US continues to be seen as a safe-haven for bond investors.

Existing Home Sales release Feb 24th

The National Association of Realtors releases existing home sales data near the end of each month. The data is derived from a sampling of MLS data across the nation. The release shows the current sales rate for existing single-family, coops, and condos. A national figure and 4 regional figures are provided. The NAR Chief Economist indicated in February the current methodology used to calculate the benchmarks will be revised in the near future. There is no timetable for the revision, but a great deal of interest in how this may affect numbers in the future.

The housing market is a critical component of the US economy. A house is usually one of the largest assets a consumer owns. Housing usually leads market recoveries. Unfortunately the housing industry remains in transition as the effects of massive foreclosures still weigh heavily. Most analysts agree that the housing market will remain wobbly for some time. The important thing to remember is that housing is a "local" issue. The maxim about housing being strongly tied to "location, location, location" still holds true. The overall housing market shows signs of trouble while there are areas that don't follow the overall trend.

While the data usually isn't a big market mover it still has the potential to result in some market volatility. The release usually includes remarks from the Chief Economist regarding prices, inventory, and interest rates. These statistics are of great interest in the real estate and lending industries and as a benchmark to measure the status of economic recovery.

Week in Review: Investors tense ahead of Greek debt agreement from Nova Financial Services

For the week ended February 17, 2012

• Greek bailout hopes rise
• Moody's cuts ratings for six European countries, puts banks on review
• Bank of Japan moves to stimulate economy
• Eurozone economy shrinks slightly in fourth quarter
• GM posts record earnings

Global equities markets were flat this week after investors endured days of uncertainty, resulting from European policymakers' inability to cement an agreement on a Greek bailout and restructuring package.

Adding to the tension, Moody's cut its debt ratings for six European countries, including Spain and Italy. The credit rating agency also placed numerous large banks in Europe and North America on review.

In the United States upbeat data assuaged some fears. After dipping sharply on Wednesday, the Dow Jones Industrial Average traded near a four-year high Thursday. U.S. weekly unemployment claims fell to a four-year low, housing activity rose, and inflation gauges showed modest rises.

The U.S. Congress extended the U.S. payroll tax deal through the end of 2012, taking it off the table as an election campaign issue, and continuing a mild but steady form of economic stimulus for 160 million American workers.

U.S. and global economic news

Greek bailout hopes rise

Drama rose surrounding the highly anticipated €130 billion bailout of Greece, which would allow it to make its March 20 bond redemption obligation of €14.5 billion among other payments. As the clock ticked, the Greek government approved austerity measures necessary for fellow eurozone member countries to sign off on a bailout package. The eurozone finance ministers initially hesitated to agree to the package as they felt the austerity measures didn't go far enough. However, recent reports indicate they will likely approve the package on Monday. The bailout will require contributions from the International Monetary Fund, European Central Bank and European Union.

Moody's cuts ratings for Italy, Spain and other countries

Moody's Investors Service cut the credit ratings for six European countries: Italy, Spain, Portugal, Slovakia, Slovenia, and Malta. Spain was downgraded to A3 from A1, Italy to A3 from A2, and Portugal to Ba3 from Ba2, all with a negative outlook. The ratings agency also revised its outlook for the United Kingdom, France, and Austria to negative. However, all three countries kept their Aaa ratings.

Bank of Japan moves to stimulate economy

The Bank of Japan made a surprising move to stimulate the Japanese economy and battle deflation by expanding its asset purchase program. The BOJ added ¥10 trillion ($128 billion) to an asset-purchase program and set an inflation target to counter its stagnant, deflationary economy, which shrank 2.3% last quarter. The yen is expected to weaken as a result of this action, helping Japanese exporters.

U.S. weekly jobless claims fall; four-week average at four-year low

Initial jobless claims by U.S. workers decreased by 13,000 to 348,000 for the week ended February 11, the fewest since March 2008, according to the U.S. Department of Labor. The four-week low fell to 365,250. The number of continuing unemployment benefit claims drawn by workers for more than a week fell by 100,000 to 3,426,000 in the week ended February 4, the lowest since August 2008.

Eurozone economy contracts 0.3%

The eurozone economy shrank in the fourth quarter, but gross domestic product decreased by a slim 0.3%, less than had been expected. Germany's economy, which makes up one-fifth of the eurozone's economic output, fell 0.2% during the quarter, while France's economy unexpectedly grew. German business sentiment improved in January and German investor confidence rose to a 10-month high in February.

U.S. inflation tame according to two key measures

U.S. inflation remains quite tame based on both the wholesale producer price index and the Consumer Price Index. The CPI rose just 0.2% in January from December and 2.9% over the past year. The core CPI, excluding energy and food items, climbed 0.2% for the month and 2.3% on the year. The producer price index rose a seasonally adjusted 0.1% in January from December, and was 4.1% higher than a year ago. Excluding volatile energy and food costs, the wholesale gauge was up 0.4% on the month and 3.0% year over year.

U.S. housing starts rise; warm weather a possible factor

Home construction increased 1.5% in January, a possible sign of recovery in the fragile U.S. housing market, the U.S. Department of Commerce reported. The seasonally adjusted annual rate of 699,000 housing starts compared well to the previous three years' numbers––609,000 in 2011, 587,000 in 2010, and 554,000 in 2009. However, the fourth-warmest January on record might have helped.

Mortgage delinquencies at three-year low

In another positive sign for the U.S. housing market, 7.6% of residential mortgages were at least 30 days past due on their payments at the end of 2011, down from 8.3% a year earlier, and a drop from a peak of 10% early in 2010.

U.S. economic indicators up for fourth straight month

The Conference Board's index of U.S. leading indicators rose 0.4% in January, just shy of the 0.5% anticipated by economists surveyed by Bloomberg News. It was the fourth consecutive month of gains. Seven of the 10 indicators in the leading index rose.

Kathleen Gillis, MBA
Loan Officer, NMLS #199674
Nova Home Loans
222 W Gurley Street #205
Prescott, AZ 86301
Off: 928-778-6682
Cell: 928-273-0440
Fax: 602-464-7334
www.novahomeloans.com/kathleen.gillis
www.prescottmortgages.com
www.NorthernAZGreenLoan.com