01 Sep 10 Home Loan Applications Rise
Home loan applications increased 2.7% last week as more American consumers took advantage of the lowest rates in decades to lower their mortgage payments. The Mortgage Bankers Association said Wednesday the increase was led by a 2.8% increase in refinance applications. The number of home mortgages taken out to purchase a home rose 1.8 %.
Mortgage refinance activity is at its highest level since May 2009 and makes up almost 83% of all new home mortgages, its highest share since January 2009. However, home sales continue to struggle. Buyers are sitting out because they are worried about jobs or are deterred by strict mortgage requirements. New purchase loan activity is 40% below the levels seen at the end of April, when two federal tax credits for homebuyers expired.
Home loan rates have fallen since spring as investors, worried about the health of the global economy, seek the safety of Treasury bonds. That lowered their yield, and mortgage rates tend to track those yields. The average interest rate for a 30-year mortgage with a fixed rate fell to 4.43% from 4.55% a week earlier. Rates on the 15-year fixed-rate mortgage, a common refinancing option, decreased to 3.88% from 3.91%.
23 Aug 10 Home Mortgage Rates Fall to Record Lows Again
According to Freddie Mac, mortgage rates dropped this week to more record lows amid concerns about the state of the U.S. economy. Home mortgage rates on 30-year fixed-rate home loans, the most widely used loan, averaged 4.42 % this week, down from last week’s 4.44% and its year-ago level of 5.12 %, according to the survey. Home mortgage refinance loan volumes have risen for three consecutive weeks as the 30-year mortgage rates have fallen to record lows for nine straight weeks. Freddie Mac started the survey in April 1971. Meanwhile, 15-year fixed-rate home loans averaged 3.9%, down from 3.92% last week, the lowest level since Freddie Mac began surveying this loan type in 1991. 15-year mortgage rates have hit record lows for six straight weeks.
Freddie Mac said rates on 5/1 adjustable-rate mortgages, set at a fixed rate for five years and adjustable in each following year, was 3.56%, unchanged from last week, remaining at its lowest level since Freddie Mac began tracking this loan type in 2005.
Last year at this time, 15-year mortgages averaged 4.56 %; the one-year ARM was 4.69%, and the 5/1 ARM was 4.57%. Rock-bottom rates should continue to spur demand for home loan refinancing, putting extra cash into consumers’ hands that they can save, use to pay off existing debt or funnel into the economy through extra spending.
Home loan applications rose 13% in the week ended August 13th, fueled more by homeowners seeking a house refinance than by new buyers looking for loans, according to an index from the Mortgage Bankers Association. Record low interest rates have yet to spur home sales, which are being weighed down by unemployment and the end of a federally sponsored home-buyer tax credit.
17 Aug 10 Fed Bans Lenders from Paying YSP to Mortgage brokers
The Federal Reserve announced that they were banning mortgage lenders from paying bonuses to brokers for higher interest rate sold to the lender. The change is among several announced by the Federal Reserve, which has been criticized for failing to rein in high-risk lending during the housing boom. The Federal Reserve on Monday approved a rule banning mortgage lenders from paying bonuses to mortgage brokers and loan officers who get borrowers to agree to a higher mortgage rate than they need to pay. The Fed also proposed requiring clearer disclosures about how payments on adjustable-rate loans can change over time.
One of the proposed rules is designed to give consumers more time to review lenders’ disclosures for their home loan costs. Lenders would be required to refund any loan fees collected if the prospective borrower withdraws the mortgage application within three days of receiving the disclosures. That proposal is open for public comment. The change in required disclosures for adjustable-rate loans is set to take effect at the end of January as an interim rule. Mortgage lenders must show the maximum interest rate and monthly payment that can occur during the first five years, a “worst case” example showing the maximum rate and payment possible over the life of the loan. The disclosures must also include a statement that consumers might not be able to avoid rate and payment increases by mortgage refinancing.
The ban on mortgage lenders’ paying bonuses to brokers and loan officers for higher-interest loans takes effect in April. The Federal Reserve said that its consumer tests found that borrowers generally were unaware of the payments and how they could affect the total cost of a loan. Critics have called the bonuses little more than kickbacks that encouraged mortgage brokers and lender salespeople to steer borrowers into costlier loans.
Mortgage brokers have argued that they can use the payments, also known as rebates or yield spread premiums, to cover borrowers’ closing costs, so a homeowner wanting to refinance a mortgage with no upfront costs might accept a higher interest rate to accomplish that. In making the rule final, the Fed said a loan originator “may not receive compensation that is based on the interest rate or other loan terms. This will prevent loan originators from increasing their own compensation by raising the consumers’ mortgage costs.” Mortgage loan originators would still be able to receive compensation calculated as a percentage of the loan amount.
Another rule finalized Monday would require borrowers to be notified when their home mortgage has been sold or transferred. The Fed also proposed a rule to make it easier for consumers to learn who owns their loans. Under the provision, once a mortgage servicer is asked by a borrower for that information, the loan servicer would have to provide it within a reasonable time, which generally would be 10 business days
17 Aug 10 Mortgage Costs Rising Nationally
BankRate reported that mortgage closing costs such as origination fees and third-party fees increased 36.6% from last year’s average of $2,739. The financial survey company also indicated that that New York mortgage loans had the highest closing costs at $5,623 and Arkansas had the lowest, at $3,007. According to a Bankrate spokeman, the financial reform law penalizes loan companies if they underestimate mortgage closing costs, so this year’s survey reporting could be a high estimate.
11 Aug 10 Fed to Keep Mortgage Rates Low
The Fed Reserve’s announcement yesterday moved the mortgage markets. Industry insiders continue to brace for the feared double dip recession. Many analysts that aren’t in Obama’s pocket believe the economy will take another dip. The housing sector is pretty flat and there are many regions that are in desperate need of some good news. Consumer bankruptcies in the U.S. continue to rise (in 2006 there were less than 600,000 filed; last year there were 1.4 million, and this year is on pace to top 1.6 million). The private sector does notappear to be ready to hire. These factors should contribute to the Fed keeping mortgage rates low for the near future.
11 Aug 10 Emergency Homeowner Loan Program
Word on the finance street is that the Federal government will soon announce the Emergency Homeowner Loan Program. The latest round mortgage bail-outs from the Obama Administration is said to be focused on aiding homeowners who have under-water mortgages.
According to CNNMoney, the Obama administration pledged another $3 billion in additional funds available to assist distressed homeowners in a foreclosure prevention effort. One part of the mortgage bail-out plan, includes a new $1 billion program that will offer self-employed home loans to unemployed borrowers at risk of losing their homes. The mortgage loan relief, which will be dispersed through non-profit and housing agencies, will carry 0% interest and be good for a maximum of $50,000 for up to two years. In the coming weeks, HUD said it will announce details about the new loan relief program, called the Emergency Homeowner Loan Program.
It was not clear whether or not the Emergency Homeowner Loan Program would be part of the recently discussed bail-out for Freddie Mac and Fannie Mae. HUD announced just last week more government loan relief with the FHA short refinance program that was created to help homeowners refinance their under-water mortgages. It also wasn’t clear whether or not the FHA short refinance program would be part of the Emergency Homeowner Loan Program. HUD was unavailable for comment.
Recent Government Mortgage Relief Programs
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The administration also added $2 billion in home loan aid for its mortgage program that helps struggling homeowners in the states with highest unemployment rates. Today, the Obama administration announced an additional $2 billion that will expand the mortgage relief program to a total of 17 states and the nation’s capital. The regions chosen have suffered significant home value depreciation, high unemployment and high foreclosure rates well above than the national average for a year.
Tags: Emergency Homeowner Loan Program, FHA short refinance program, self-employed home loans, under-water mortgages
09 Aug 10 1 in 5 Homes Are Plagued with Underwater Mortgages
Zillow published a mortgage report that revealed that more 1 in 5 U.S. homes have a mortgage that is presently underwater. This is the primary reason that so many lenders are offering loan modification agreements in regions that have seen significant declines in home values. Fewer Americans are strategically defaulting on their mortgage loans, foreclosure rates continue to increase with RealtyTrac reporting a first-quarter foreclosure rate of 1.65 million. Analysts project that the number of mortgage defaults, repossessions and scheduled auctions are likely to reach 3 million by the end of the year. Read the original article online > 20% of US Mortgage Loans Under-Water
09 Aug 10 Is It Time for Home Refinancing?
QUESTION: Our mortgage lender said it was difficult for us to qualify because our mortgage was greater than our home value. He said our mortgage was under-water. Do we still qualify for fixed rate mortgage refinancing?
ANSWER: You might, bvecause there are few government loan programs that are available for homeowners struggling to refinance because their mortgage is under-wtarer. If you have a Fannie Mae-owned loan, you may qualify for refinancing up to 125% of your home’s value. To see if you have a Fannie Mae loan, go to fanniemae.com/loanlookup. There’s a similar program for Freddie Mac loans, too. Go to https://ww3.freddiemac.com/corporate/, to see if you have a Freddie Mac loan.
Read more online > When Is the Best Time for Home Mortgage Refinancing?
09 Aug 10 FHA Premiums Rising
HUD announced last Friday that FHA loan premiums would be rising in a few weeks. As more and more borrowers struggle to qualify for FHA refinancing, it’s hard to not question the timing of this HUD decision. Yes raising FHA insurance premiums paid by borrowers will increase the depleted FHA loan reserves, but won’t this reduce new FHA home loan applications even more?
There is clearly a big difference in what consumers will pay annually for FHA loan premiums. However, one must also consider several additional matters when comparing the old premium schedule with the new one. Under the current plan the big money is due up front and that is usually when first-time buyers, are least likely to have extra money. That is when new home buyers are less likely to be able to afford a FHA loan made larger by the addition of the up-front mortgage insurance premiums. By reducing the up-front insurance cost HUD has made the FHA mortgage a lot more practical for many marginal borrowers.
Second, the insurance requirement might not last for seven years. The FHA allows borrowers to end their insurance payments after five years if the value of their loan is less than 78% of the property’s value. “For FHA home loans with terms more than 15 years,” says HUD, “the mortgage insurance premium will be terminated when the Loan to Value ratio reaches 78%, provided the borrower has paid the MIP for at least five years. If the Loan to Value hits 78% and the borrower has not paid MIP for at least five years then the borrower must continue to pay MIP until the five year requirement is met. ” FHA mortgage rates are so low it is hard to believe that first time homebuyers will not reconsider purchasing a home in 2010 or 2011.
03 Aug 10 Good Credit Home Refinancing
Home refinancing activity increased as home mortgage rates began dropping to record lows. The mortgage refinance guidelines callled for borrowers with good credit who took out mortgages in recent years at relatively low costs, bond prepayment reports show. The continuous pre-payment rate for Fannie Mae’s 30- year fixed-rate home mortgages with 4.5% coupons issued in 2008 jumped an estimated 24% from the previous month to 16.3 in June, after stripping out the effects of the Washington- based company’s purchases of bad credit home loans from the bonds, JPMorgan Chase & Co. said, based on data released yesterday. At the same time, the adjusted CPR, or the share of debt that would be retired in a year at the current pace, for 2007 bonds carrying 6.5% coupons, reflecting higher rates for their underlying loans, dropped almost 12% to 12.5. The disparity underscores how borrowers most in need are among the least able to lower their financing costs after slumping property prices cut home equity and tightened mortgage lending standards. According to data compiled by Bloomberg. Freddie Mac’s 30-year securities, prepayment speeds on 4.5% bonds jumped 71% to 8.4 CPR, while those for 6.5 percent securities rose 2.6% to 24.1.
Average Mortgage Refinance Rates
The average rate on a typical 30-year mortgage tumbled to a record low 4.57% in the week ended today, down from this year’s high of 5.21% in April, according to Freddie Mac. Rates averaged about 4.87% in May; loans usually close a month or two after applications Credit Suisse Group analysts said in a report that prepayment speeds among lower-coupon, more-recent securities were “slightly faster than our estimates,” while bonds with higher coupons prepaid slower than expected.
The data “underscores our arguments that any refi activity will be very narrowly focused,” supporting prices for higher- coupon bonds and slices of collateralized mortgage obligations created out of them such as interest-only securities, the New York-based analysts led by Mahesh Swaminathan wrote. Aggregate prepayment speeds for Fannie Mae’s 30-year securities fell 37% to 17.5 CPR as the company’s buyouts of delinquent loans to reduce its expenses slowed, the JPMorgan data show. Speeds for similar bonds guaranteed by Freddie Mac, which eliminated earlier its backlog of repurchases of loans more than 120 days delinquent, rose 20% to 17.2 CPR.
Newer Issues Home loans from more recent years are expected to refinance more quickly because the homeowners qualified under tougher standards and haven’t seen their equity erased by the about 30% decline in home prices since their 2007 peak, according to an S&P/Case Shiller index. For example, the CPR for Freddie Mac’s 5 percent 30-year securities from 2009 almost doubled last month to 14.6 CPR, while speeds for similar 2007 securities climbed 23% to 20.5, according to BNP.
Borrowers with loans with higher rates may be “starting to show significant burnout after a year and half of elevated refi incentive,” as well as getting less attention from mortgage companies “given capacity constraints in the system” as those “mortgage lenders scrambled to close loans for prime borrowers (presumably prime borrowers withgood credit scores carry larger loans and may be less constrained to a single lender),” JPMorgan said. Freddie Mac’s 6% and 6.5% securities “managed to eke out a small gain in speeds,” the JPMorgan analysts said. “This suggests that super premium speeds can still increase, however minuscule.” Article was written by Jody Shenn for Bloomberg.
Tags: mortgage refinance guidelines
03 Aug 10 Fannie Mae Offers Home Loan Advice
Many homeowners are confused by mortgage relief opportunities today, as home refinancing and loan modification offers are being promoted on the TV and airwaves. Homeowners who are struggling to make mortgage loan payments now have a new place to turn for information on home loan programs that could help. Mortgage giant Fannie Mae has just launched a new web site, KnowYourOptions.com, that aims to help homeowners figure out the best solution to a difficult problem. But is a company that has so far racked up $75 billion in bailout funds from the U.S. Treasury in any position to dole out advice? Guy Cecala, the publisher of Inside Mortgage Finance, a trade publication, says yes. While Fannie Mae and its sister company, Freddie Mac, continue to receive attention as the mortgage crisis unfolds, they’re not linked to the borrowers in the deepest trouble, says Cecala. They maintained stricter underwriting standards than the true bad credit mortgage loan programs that were pushed by subprime lenders a few years ago. “The size of Fannie Mae’s problems has more to do with the size of the firm and their footprint in the industry, rather than their underwriting,” Cecala says.
Consumer advocates argue that any effort to educate homeowners about their options is worthwhile. The foreclosures rates continue to rise, with more than 1.6 million properties facing foreclosure filings in the first half of the year. Although the new web site stresses foreclosure prevention as a key goal for any consumer, the options presented don’t always help homeowners remain homeowners. “People are coming to the conclusion that it doesn’t necessarily help people to stay in a home that they can’t afford,” Cecala says. Read more: Mortgage Advice From Fannie Mae? – Personal Finance – Real Estate – SmartMoney.com
28 Jul 10 Is the Financial Reform Bill Flawed?
Much to the surprise of many pundits, the recently signed Financial Reform Bill did not outline guidelines for regulators to begin crafting the future of Fannie Mae, Freddie Mac, and Ginnie Mae. Although this was viewed as an oversight by most, it was the right move because it will allow our political and financial leadership to focus on repairing the mortgage finance system. Remember that the government loan programs Fannie, Freddie, VA and FHA loans maintain nearly 96% of the mortgage market-share yet they are exempt from most of the financial reform repercussions.
Watch Glen Beck Discuss the Pitfalls of Finance Reform Bill on Fox News
Read the original mortgage news article > Financial Reform Bill Flawed?
Tags: financial reform bill
