Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!usa-post Newsgroups: usa-today.real From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: real Wed, Mar 11 1992 Date: Wed, 11 Mar 92 05:46:04 EST Message-ID: 03-11 0000 DECISIONLINE: Real Estate USA TODAY Update March 11, 1992 Source: USA TODAY:Gannett National Information Network THRIFTS MADE MONEY LAST YEAR: The USA's 2,096 S&Ls made money last year, the first time since 1986, the Office of Thrift Supervision said Tuesday. The industry earned $2 billion in 1991 vs. 1990's $2.9 billion loss. But most experts agree the industry will continue to shrink. Already there are half as many S&Ls as in 1980. Many survivors will shed their traditional roles of financing mortgages for other routes. (For more, see special Thrifts package below.) SERVICING PRICES COULD DROP: Prices paid for servicing could drop noticeably if a federal bill is enacted that would make servicers pay 5.25% interest on escrow accounts. The value of servicing from states with no or low interest required on escrow accounts could drop by up to 40 basis points, according to at least one industry expert at the recent National Mortgage Servicing Conference in California. CONTRACT INTEREST RATES DOWN: Contract interest rates on conventional mortgages for single-family homes averaged 8.05% in late January, according to the Federal Housing Finance Board. That's down 0.21% from late December and reflects the continuing drop of rates on mortgage loans closed. In January the average effective rate on fixed-rate mortgages closed decreased to 8.59% from 8.80% a month earlier. NEW PLAN TAKES PROPERTY TITLES: New Plan Realty Trust Tuesday announced that it has taken title to the last two of six properties it contracted to acquire earlier. The properties involved shopping centers in Greeneville and Athens, Tenn. During the previous three weeks, New Plan took title to a factory outlet center in St. Augustine, Fla.; a shopping center in Jasper, Ind.; and two apartment complexes in Birmingham, Ala. PROPERTY TAXES WOULD BE SLASHED: A new school finance plan has been unveiled for Kansas that would cut all property taxes in the state by 28%, state House Democratic leaders say. The plan reduces mill levies in 297 of the state's 304 school districts and raise the state sales tax to 5% from 4.25%. The state sales tax increase would generate $174.4 million. HOUSING PROGRAM PLANNED: A $2 million program designed to bring affordable housing to New Orleans will get underway in the city this year, according to the Local Initiatives Support Corp. The New York City-based non-profit firm has created 30,000 housing units nationwide. FIXED-RATE MORTGAGES STEADY: The rates for 30-year fixed-rate mortgages from the Federal Home Loan Mortgage Corp. were listed at 8.85% Tuesday, unchanged from Monday and up from 8.83% the week before. They were at 9.49% a year ago. For 30-year adjustable-rate mortgages, the rates were 5.99%, unchanged from Monday and up from 5.93% the week before. A year ago they were at 7.51%. ARM INDEXES INCREASE: The one-year Treasury ARM index rates were listed at 4.55% Tuesday, unchanged from Thursday and up from 4.41% the week before. A year ago they were at 6.48%. For the 11th District ARM index, rates were at 6.002, unchanged from Tuesday and unchanged also from the week before. A year ago they were at 7.858%. T-BONDS INCREASE: Treasury security rates for the 30-year bonds showed an increase Tuesday, listing at 7.90%. That's up 0.03 from rates of 7.87% Monday but down 0.02 from 7.92% the week before. A year ago T-bonds were at 8.26%. SPECIAL PACKAGE ON THRIFTS: `INDUSTRY IS DOOMED': While savings and loans made money last year for the first time since 1986, many analysts agree their future is shaky. "The whole industry is doomed," Robert Litan of the Brookings Institution wrote last year. Even if that's a bleak assessment, analysts agree thrifts are likely to lose their identity as the key financial provider of the American Dream of home ownership. RATE GAP CREATED PROFIT: Thrifts' problems aren't over. The 1991 profit of $2 billion was created largely by a huge gap between short- and long-term interest rates that probably won't last and may expose S&Ls to the risks that started the thrift crisis to begin with. As thrifts shift their key identities, they may become indistinguishable from their competition: Commercial banks, insurers and other big lenders. S&LS FILLED A NICHE: Some dispute the gloomy forecast. "We've been buried prematurely," insists Richard H. Deihl of H.F. Ahmanson & Co. S&Ls sprang up in the 1800s to fill a niche: Making long-term mortgages and holding them until they were paid off. But the long-term, fixed-rate loans they made were financed by deposits that could be withdrawn at any time if investors were unhappy with interest. TRADITIONAL ROLE VANISHES: S&Ls' traditional role is vanishing, replaced by a thriving secondary market in mortgages. Government-backed companies such as Federal National Mortgage Association (Fannie Mae) buy mortgages from S&Ls and other lenders, insure them against default, package them into securities and sell them to investors. The secondary market has made mortgages less risky. (End of package.) Real Estate Editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. 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