25 May 10 No 2nd Mortgage Modifications for Obama Loan Relief Efforts
According to the Huffington Post, 11 million homeowners owe more on their home loan than their house is worth, putting them “underwater.” Obama’s 2nd mortgage modification program has failed miserably because after one year and millions of 2nd loan candidates they have not modified even one second mortgage loan. This mortgage relief plan was supposed to reward mortgage servicers to coordinate principal reductions on second mortgage loans when the first mortgage is modified under the administration’s Home Affordable Modification Program.
In today’s upside-down market, homeowners who are stuck with under-water mortgages are seeking principal reductions. Many second mortgage lenders are actually lowering the principal for these borrowers because in many cases it is a better option than taking over the property from a foreclosure or surrender. Loan modification sthat simply lower the interest rate are often not enough for homeowners residing in these heavily depreciated regions like Southern California, Las Vegas and Phoenix, Arizona. According to Citi’s regulatory filings, about 28% of its first mortgages are now worth more than the underlying assets, along with about 42% of their second mortgages. Read the original article > Obama Second Mortgage Loan Modification Plan Failing
Tags: Home Affordable Modification Program, principal reductions, second mortgage loans
03 Feb 10 FHA Credit Improving
The FHA home loans originated last year went towards borrowers with better credit scores than in previous years. These borrowers migrated to FHA when the subprime market disappeared. The average credit score of an FHA borrower is now 690, up from 630 only two years ago, agency officials said.
The agency banned 268 FHA lenders from making FHA mortgage loans last year, more than double the total terminated in the previous eight years. The FHA suspended six other firms. Among them were some of the largest FHA mortgage lenders –Taylor, Bean & Whitaker and Lend America, both of which shut their doors soon thereafter. Consumers taking out FHA mortgage loans will have to pay higher upfront fees, perhaps as early as this spring. Those with especially weak credit scores will also have to put down at least 10% instead of the usual 3.5% down-payment. Read the original article from the FHALoanBlog, > Better Credit FHA Loans Performing Well
08 Jan 10 Jumbo Loan Market Remains Sluggish
In other mortgage news, jumbo mortgage loan market continues to get hit hard. Jumbo lenders offering jumbo loan products want significant down-payments even if the home loan applicants are earning large salaries. It would stand to reason that if any private label market returns it would be the jumbo sector where presumably the applicants would be in strong shape financially. However, they see nothing on the horizon whatsoever in regard to jumbo loan securitizations returning any time soon…Read more from National Mortgage News
10 Sep 09 Bonds for Mortgage Loans Yields Decline
Bloomberg reported that yields on Fannie Mae and Freddie Mac mortgage securities declined to the lowest in more than three months, signaling that mortgage rates on home loans will drop more and bolster the U.S. housing market. Yields on Washington-based Fannie Mae’s current-coupon 30- year fixed-rate mortgage bonds fell 0.1of a percentage point to 4.29% as of 3 p.m. in New York, the lowest since May 26, according to data compiled by Bloomberg. The drop followed benchmark Treasury yields lower after stronger-than-forecast demand at the last of three government debt auctions this week. “If Treasury auctions are oversubscribed day after day, it is only natural that mortgages shouldn’t be far behind,” Tae Park, a portfolio manager in New York who oversees mortgage-bond investments at Societe Generale, said.
Lower mortgage rates may help the housing market offset a forecasted further flood of foreclosure sales to build on recent signs of strength, including the first month-over-month increases in property prices since 2006 registered in an S&P/Case-Shiller index in May and June. The drop in mortgage-bond yields also suggests home-loan rates may reach the levels below 5% that analysts including Credit Suisse Group AG’s Mahesh Swaminathan say are needed to send refinancing to elevated levels, bolstering consumer finances and spending. The average rate on a typical thirty-year fixed-rate mortgage dropped to 5.07 % in the latest week, McLean, Virginia based Freddie Mac said today in a statement. That’s down from as high as 5.59% in June, and up from the record low of 4.78% in April. While mortgage refinance applications rose to the highest since late May in the latest week, they remained 64% below the high this year set in January, according to a Mortgage Bankers Association index.
Yields on so-called agency mortgage bonds, the type of debt being bought by the Federal Reserve under a $1.25 trillion program as well as by the Treasury Department, are now guiding rates on almost all new U.S. home lending, following the collapse of the non-agency market in 2007 and retreats by banks. The almost $5 trillion market includes securities guaranteed by government- controlled Fannie Mae and Freddie Mac and bonds of U.S.-insured, low-down-payment loans backed by federal agency Ginnie Mae. While “after four years of decline, the housing market is showing signs of turning,” sizable challenges remain, including more than 2 million foreclosures over the year ahead, Deutsche Bank AG analysts Peter Hooper and Torsten Slok in New York wrote in a report yesterday. “The question is how strong the bounce,” they said. “Recent movements in sales, prices and builder expectations looked quite promising, but there are good reasons to expect that home building and prices will remain relatively depressed well into next year despite the recent bounce.” Article was written by Jody Shenn.
01 Sep 09 Freddie Mac Compliant for NYSE Listing
Mortgage rates are low and the home financing industry looks like it’s getting back on track. Is Freddie Mac poised to gain their NYSE listing back on the stock market? Mortgage giant, Freddie Mac soon may be receiving a notice from the New York Stock Exchange, saying it is back in compliance with the NYSE’s listing requirements. As of yesterday, Freddie Mac’s common stock was trading at $2.22, which means that its average share price will have been north of $1 for the past 30 days – that is, as long as its stock price doesn’t collapse by close of business Monday. Under NYSE rules, the exchange can initiate delisting proceedings for companies whose 30-day average price falls below $1. “We’re waiting for official notification from the NYSE,” a company spokeswoman said Monday. In a week it will mark the one-year anniversary since Freddie Mac and its sister company, Fannie Mae, were taken over the government and placed into conservatorship. The share price of both GSEs has been rising over the past month. Some stock analysts attribute the price increase to bottom fishing and speculation by short sellers. Freddie’s 52-week low is 25 cents, its high $5.52. In the second quarter Freddie actually posted a profit while Fannie lost money.
