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02 Jul 09 Trend Upward for Mortgage Rates

The average rate on a 15-year fixed mortgage dropped to 4.81 % from 4.93 % the prior week. The rate on a one-year adjustable mortgage loans decreased to 6.52 % last week from 6.54 %, according to the mortgage bankers.  Home loan rates tracked by McLean, Virginia-based mortgage buyer Freddie Mac climbed along with Treasury yields through late May and early June on investor concern that a greater supply of government debt being sold to fund federal spending would fuel inflation.

This year the Federal Reserve purchases of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae brought down the yields on those securities, allowing lenders to reduce rates on new home loans and still sell them at a profit.  Still, rising foreclosures that sell at discounted prices are flooding the market and depressing home values, according to Lawrence Yun, chief economist of the Chicago-based Realtors’ group. This year the number of foreclosures may rise to 2.5 million, the highest on record, Yun said.

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09 Feb 09 Fannie Mae Brings Back Required Counseling

With mortgage interest rates this low, organizations like Fannie Mae want to extend the opportunity to potential homeowners who are considering purchasing a new home.  In the last 2 years, FHA home loans have been the only mortgage available for first time homebuyers with a competitive interest rate.

Fannie Mae has reinstated a mandatory homeownership counseling and education requirement for first-time homebuyers interested in qualifying for its MyCommunity Mortgage loan or nontraditional credit profile customers applying for any other mortgage loan type. The goal, Fannie said, is to help borrowers “better assess their options and responsibilities both before and after they purchase a home.” For borrowers purchasing a two- to four-unit property under the MyCommunity Mortgage product, Fannie will require pre-purchase education and counseling and landlord counseling through its “Becoming a Landlord” curriculum, or other programs with a similar content.

Service for borrowers must be provided in compliance with the national industry standards for homeownership education and counseling developed by a national advisory council of industry stakeholders including Fannie Mae, launched by the NeighborWorks Center for Homeownership Education and Counseling. “In this extraordinary market, we think it is critical to reinstate this requirement and to work with counseling agencies and our lender partners to help homeowners succeed,” said Fannie Mae president and chief executive officer Herb Allison, in a company release.  “High-quality counseling provides the first-time homebuyer in particular with reliable information and the resources necessary to make the kind of informed decisions that ultimately lead to sustainable homeownership.”

The effort is part of Fannie’s longstanding strategy that promotes the development of mortgage industry standards to ensure persistent quality before and after homebuying education in partnership with some of the country’s main agencies such as the National Foundation for Credit Counseling, Consumer Credit Counseling Service of Greater Atlanta and Mission of Peace, a Flint, Mich., faith-based nonprofit, along with lender counseling services offered by large banks, including CitiMortgage and Wells Fargo Home Mortgage.

Sanjiv Das, CEO of CitiMortgage, another partner to the program, has also committed a lot of resources to counseling through its decade-long $200 million global commitment to financial education. “Any person who receives pre-purchase housing counseling understands the financial obligations involved in homeownership and learns how to budget their income to pay for all these obligations,” said CCCS vice president of counseling, Michelle Jones. Read the complete article >

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05 Dec 08 2009 Mortgage Loan Limits

The Federal Housing Finance Agency announced the conforming loan limit will remain $417,000 for 2009 for most areas in the U.S. but specified higher limits in specific high cost cities and counties. The conforming home loan limit is the maximum size of loans that Fannie Mae and Freddie Mac can purchase in 2009.  Mortgage lenders across the country have been praying for positive news regarding the home loan limits.

According to provisions of the Housing and Economic Recovery Act of 2008, the national mortgage loan limit is set based on changes in average home prices over the previous year, but cannot decline from year to year.  FHA home loan limits for two-, three- and four-unit properties in 2009 will remain at 2008 levels as well: $533,850, $645,300 and $801,950 respectively, for houses in the continental U.S.  Read complete article > 2009 FHA Mortgage Loan Limits.

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11 Nov 08 Fannie Mae Takes Advantage of Government Funds

Fannie Mae said its access to long-term debt markets has deteriorated, as has demand from foreign investors who have questioned the depth of the government’s backing for home financing.  The company’s funding costs rose significantly with the financial market turmoil, such that it skipped a note issuance window in October for the first month this year. Freddie Mac in November passed on long-term monthly note issuance since December 2006.  Loan modifications have become more common than refinance transactions.

Treasury infusions into the companies “would be proof of the government stepping in as they need to,” said Mario DeRose, fixed income strategist at Edward Jones in St. Louis, Missouri. “If we saw the government taking specific action to back Fannie and Freddie it would have a positive impact on debt spreads” and the companies’ ability to sell the debt needed to finance mortgage loan purchases.

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