Market Conditions

Local communities that enjoyed stability from nearby military installations after the 2008 recession are facing the reality that those bases are not immune from Congressional austerity measures designed to shrink federal government.

With the U.S. Army’s announcement of plans to reduce the ranks by 40,000 soldiers, or about 8% of the active force, local leaders last week began to assess the impact on individual posts. About 17,000 civilian jobs will also be eliminated over the next three years.

For the bond industry, the most immediate concern is likely to focus on taxable bonds used to finance privatized military housing since 1997. Today there are 205,000 privatized military housing units, mostly apartments and townhouses but also single-family homes.

Ratings analysts said they are studying the issue, with reports on the credit impact possible later in the week. Generally, however, ratings have held up through the […]

The Federal Housing Administration endorsed 102,800 loans in May, the second month in a row that endorsements passed 100,000.

The elevated FHA activity suggests continued interest in the government-backed market since the federal mortgage insurer reduced its annual mortgage insurance premium by 50 basis points in late January.

By contrast, the FHA endorsed just 66,300 single-family loans in January and 67,700 loans in December.

The latest FHA Production Report released earlier this month also shows that the agency received a total of 686,800 loan applications in February through May compared to 346,600 in the same period last year. (It generally takes 60 days from application to process and endorse an FHA loan.)

However, application activity dropped off toward the end of that four-month period, indicating the rush to refinance loans has waned. Applications in May decreased 10.5% from the previous […]