The retail sales report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. It is the most timely indicator of broad consumer spending patterns and is adjusted for normal seasonal variation, holidays, and trading-day differences. Retail sales include durable and nondurable merchandise sold, and services and excise taxes incidental to the sale of merchandise. Excluded are sales taxes collected directly from the customer. It also excludes spending for services, a large component of consumer expenditures. Retail sales is a the first picture of consumer spending for a given month.

Nonfarm payrolls measure the number of people on the payrolls of all non-agricultural businesses and is released on the first Friday of every month.

The ADP National Employment Report is a measure of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents approximately 392,000 of ADP’s 500,000 U.S. business clients and roughly 24 million employees working in all 19 of the major North American Industrial Classification (NAICS) private industrial sectors.

FHA is also increasing the annual Insurance Premium.  Currently, FHA is charging 1.15% but starting April 9th this will go up by 10 basis points to 1.25%.   For a $100,000 purchase this will increase the borrower payment by $8 a month.   These increases do not apply to Streamlined Refinances or Reverse Mortgages. 

FHA had been very forgiving with customers who have collections on their credit report.  In most cases FHA would not require collections to be paid.  Starting April 1st , FHA will require any collection of $1000 or more that is  reported on the credit report to be either paid off, settled, or show there is a payment arrangement that has been in place for a minimum of 3 payments at or prior to closing.  This is a major shift and may cause a major problem with borrowers who are not keeping up on their credit.   It is now even more important that borrowers contact their lender to have their credit report reviewed it lease 4 months prior to closing.  This will allow for the proper plan of action to be put into place to make sure borrowers can qualify under these new FHA rules.

FHA will allow disputed accounts on credit reports that are less than $1000 and are two years old to remain open.  If the disputed account is less than two years old and/or over $1000, it will have to have the dispute verbiage on the credit report removed.  CAUTION!!  When an account is disputed on a credit report, that account is not counted into the credit score.  If the account is a collection or is negative reporting, then when the dispute verbiage is removed the credit score will be affected and most likely will be negative.

Why is FHA doing this?  It is clear that one of the reasons for the increases to the mortgage insurance is to offset the Temporary Payroll Tax Cut.  Another outcome of this will be a shift of mortgage loans to conventional mortgages, which will require private mortgage insurance companies to insure a large percentage of loans.  FHA stepped in and took on the mortgage insurance responsibility when private mortgage insurances companies were failing and going under during the mortgage melt down.  Now that private mortgage companies are making a comeback, FHA wants to reduce their exposure and become a small part of the mortgage industry.    These changes in the collections policy require borrowers to have better overall credit.

• Does not require a new appraisal.
• Mortgage must have been current for the previous 12 months.
• Borrowers must have a minimum of 640 credit score.
• The interest rate on the new loan must be a minimum of 1.00% lower than the existing USDA loan.
• Pilot states: AL, AZ, CA, FL, GA, IL, IN, KY, MI, MS, NV, NJ, NM, NC, OH, OR, RI, SC and TN.
• All Rural Refinance Pilot loans must be manually underwritten.
• The new term of the refinance loan must be 30 years.
• The upfront USDA guarantee fee will be 1.50%.
• The applicable Annual Fee will be .30%.
• The new loan may only include the principal balance of the existing loan plus the upfront guarantee fee (accrued interest, prepaid interest, closing costs, and funds required to establish an escrow account may not be financed into the new loan).
• No cash out is permitted.
• Reasonable and customary closing costs and other fees may be collected from the borrower by the originating lender. However, the origination fee charged to the borrower may not exceed one percent of the total loan amount. As a reminder, none of these charges may be financed into the new loan amount.
• Income verification for all adult household members is required for income eligibility determination. Household income is necessary for determining program eligibility only, not for determining repayment ability. Therefore, ratio waivers are not required.

Year-over-year prices were also down, dropping 4.0% from December 2010. Only Detroit had a year-over-year gain, with prices increasing 0.5% from December 2010. Atlanta had the largest annual drop with prices down 12.8% from December 2010.

The Case-Shiller Price Indices are constructed to accurately track the price path of typical single-family homes located in each metropolitan area provided.

Pending home sales is an index that measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes.

The year-over-year Core PPI number also increased, up 3% from January 2011. This was also an increase from the previous year-over-year reading of 2.7% from December 2010 to December 2011.

The Producer Price Index (PPI) is a measure of price changes in the manufacturing sector of the average price level for a fixed basket of capital and consumer goods paid by producers. It’s important to keep an eye on these numbers as inflation is the arch enemy of bonds, and therefore home loan rates.