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12 Aug 09 Mortgage Loan Application Activity Slowing

According to the Mortgage Bankers Association home loan rates hopped last week and the response was less mortgage applications. The volume of mortgage loan applications declined 3.5% compared with the previous week.  Home loan applications filed were still up an unadjusted 16.1% for the week ended Aug. 7 from the same week in 2008, according to the MBA’s weekly survey. The survey covers about half of all U.S. retail residential mortgage applications.   FHA mortgage applications filed last week to purchase homes rose 1.1% from the week before. Volumes for conventional, VA and FHA loan applications were all lower than expected.

Mortgage refinancing applications to refinance existing mortgages decreased 7.2%, on a week-to-week basis, reversing the 7.2% increase during the week ended July 31, according to the Washington-based MBA. The four-week moving average for all mortgages was down 0.7%. Home refinancing applications made up 52.3% of all applications last week, down from 54.2% the previous week. ARM mortgage loans accounted for 5.8%, up from 5.4%.

According to the MBA survey, thirty-year fixed-rate mortgage loans carried an average interest rate last week of 5.38%, up from 5.17% the week before. As for 15-year fixed-rate mortgages, the average rose to 4.71% last week, up from 4.60% the week before. And 1-year ARMs averaged 6.71% last week, up from 6.67% the week before.

To obtain mortgage interest rates this low, borrowers are charged of an average 1.125 points when locking a thirty-year fixed-rate home loan.  Loan officers typically refer to these lending costs as “points.” A point is 1% of the entire mortgage amount and it is considered prepaid interest for disclosure purposes.  Sign up and have the latest mortgage news emailed to you with mortgage rate alerts and special lending offers when they arise.


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01 Jun 09 Mortgage Rates Spike

A significant rise in mortgage rates is threatening to undermine the already shaky real estate market and toss sand into the gears of the Government’s plans to rescue the economy. Beginning last fall, the Federal Reserve rolled out a series of initiatives–such as the purchase of Fannie Mae and Freddie Mac mortgage-backed securities and long-term treasury bonds–that worked to drive mortgage rates down to all-time lows. Federal officials hoped that by pushing the cost of purchasing a home artificially lower, they could lure more buyers into the market to gobble up the massive supply of unsold homes. Meanwhile, lower mortgage rates could also enable scores of homeowners to lower their monthly payments by refinancing. That, in turn, would free up cash to be pumped back into the economy. For some time, the mortgage market acted accordingly, with rates of less than 5 percent triggering a flood of refinancing applications. But last week, rates surged, a development that could create all sorts of headaches for federal officials, consumers, and the economy as a whole.

Here are five things you need to know about the surge in FHA mortgage rates:

1. The jump: Thirty-year fixed mortgage rates had been holding in the 5 percent range since mid March, averaging 5.03 percent on Tuesday, May 26. But rates jumped in the following days, hitting an average of 5.44 percent on Thursday, May 28. By midday Monday, rates had fallen back a bit, to 5.36 percent, according to

2. Key Factors: Fixed mortgage rates have been pushed higher by a surge in 10-year Treasury note yields, which climbed to 3.67 percent on June 1 from 2.68 percent on April 1, according to Bloomberg news. (Fixed mortgage rates typically track the yields on 10-year Treasury notes.) A number of factors have worked to increase Treasury yields. Nascent optimism about the economy has made ultra-safe investments like Treasuries less appealing. “If you look at the broad aggregate of economic data, it’s not great but it’s better on balance,” says Keith Gumbinger of “So the Treasury market especially is going to be moving away from those emergency and panic modes we’ve been in now for 6 months.” In addition, concerns about deflation are giving way to worries about inflation, he says. However, the bulk of the pressure is coming from concerns about the massive amount of government debt needed to finance the Obama administration’s huge bailout and stimulus programs that encouraged lenders to offer loan modification plans to qualified borrowers..

3. Home purchase impact: It’s important to remember that thirty-year, fixed rate for bad credit mortgage loans of 5.36%, 5.5% are still incredibly low by historic standards. Still, higher rates have the potential to force home prices lower to compensate for the higher purchasing costs. “If [the higher rates are] in place for a while it could have the effect of putting some additional pressure on home prices,” Gumbinger says.

4. Mortgage refinancing impact: But the impact on the mortgage refinancing market could be more significant. Rates in the 5.5% range would evaporate roughly 65% of home refinancing demand because the higher rates don’t offer enough savings to make the transaction worthwhile for many consumers, says Mark Hanson, a managing director who handles real estate and finance research at the Field Check Group. “Why would you want to pay $5,000 to close a loan when you are saving $20 or $30 a month,” he says. “It’s just not enough.” Even more concerning, many consumers have already filled out mortgage applications without locking in their mortgage rates because they expected rates to drift lower before closing. The recent spike in FHA mortgage rates, however, has made many of these yet-to-be-closed, non-locked loans unsalvageable without a sharp drop in rates. “Of all the applications in, 60 to 70% are [not locked],” Hanson says. “Out of those, 75% are dead.”

5. Federal response: Given how aggressively the federal government has moved to bring mortgage rates lower, it’s possible that Uncle Sam will step in to the market again. “I expect some sort of intervention,” Hanson says. Federal intervention could take any number of forms, including plans to beef up its already expansive mortgage-backed security or Treasury bond purchase program.

6. Rate outlook: Gumbinger says the recent spike reflects uncertainty about the broader economy. “We are at the portion of the economic game where you are going to get this kind of fits and starts arrangement,” he says. “Things are rosy one minute, and then somebody is going to catch wind or something and we could run the other way.” He says rates may revisit the 5 percent range in the coming months. “And if we do, know that that may be temporary as well,” he says. “If you really want a 5% number or a high 4% number on your mortgage, you need to be prepared in this market to take advantage of it.


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25 Feb 09 Obama Mortgage Rescue Plan Rolls Out as Median Home Price Drop Below $300,000

While most real estate evaluators would agree that Obama’s mortgage rescue plan is likely to slow foreclosures for many homeowners, some financing experts question how much it can help in a high-cost regions such as San Diego where home values have fallen so sharply. For example, the rescue plan offers much-needed refinancing to borrowers who owe more than 80 % of the value of their homes. But homeowners would be ineligible for mortgage refinancing to a lower, more affordable rate if their first loan exceeds 105 % of their home’s current market value.


Home refinancing would be limited to loans guaranteed by Freddie Mac and Fannie Mae, the government-controlled secondary mortgage agencies.  “How is 105 % loan-to-value going to help people who are upside down by 20% to 50 %?” said Dave McDonald, president of the San Diego chapter of the California Association of Mortgage Brokers. 


Less critical was Dustin Hobbs, spokesman for the California Mortgage Bankers Association, who lauded Obama for coming up with a flexible program that could yield some positive results. Much will depend on the implementation, he said, especially the part of the proposal that aims to provide mortgage modifications for borrowers in danger of default or foreclosure. Obama is proposing to have the Treasury Department partner with financial institutions to reduce mortgage payments so that borrowers pay no more than 31% of their income.  Under the new mortgage rescue plan, mortgage rates could be reduced to as little as 2%; they now stand at about 5% for thirty-year, fixed rate home mortgages. “I would certainly hope that when they’re working on the implementation details, they’ll take into consideration that California is in a unique situation with so many borrowers in high-cost regions who are 15% or more underwater,” Hobbs said. 


FHA has attempted to stem the foreclosure crisis with their Hope for Homeowners program that was designed to reward lenders who write-down mortgages to 90% for borrowers with negative home equity and delinquent mortgage payments.  CFB mortgage advisor, Jeff Moran said, “Hope for Homeowners looks great on paper, but the FHA mortgage lenders have not wanted to touch them.”


Nonprofit counseling agencies approved by the federal housing department to work with financially struggling homeowners said they expect the plan will be able to avert foreclosures but caution that there are still those who may have to walk away from their homes. “Some individuals, though, may find there may not be a solution or option to prevent foreclosure. But in renegotiating with their mortgage lender or credit counselor, they can prepare for a new location for their family.”


Part of the strength of the Obama plan is creating clear loan modification standards, said Mark Goldman, a real estate instructor at San Diego State University. “So many of the programs that were supposed to help last year have really done nothing,” he said. “Now, they’re really putting pressure on the lenders, saying you cannot keep the rapid pace of home foreclosures and clearly it’s bad for everyone involved when the foreclosure news continues to worsen.”  The proliferation of foreclosures was reflected in DataQuick’s report, which showed that 1,232 of January’s 2,240 re-sales were foreclosure properties, compared with 340 of 1,038 re-sales in January 2008.


As President Barack Obama unveiled his plan to stem the tide of foreclosures, new figures showed distressed properties continuing to drag down San Diego’s housing market. MDA DataQuick reported yesterday that the county’s median home price fell below $300,000 last month for the first time in seven years depressed by reduced sales prices of foreclosed homes.


The January median of $280,000 was down 6.7% from December, the largest single month percentage decrease of the current slump. While home sales volume was up 34.7% from a year earlier, a record 55% of re-sales were homes that had gone through foreclosure in 2008. “I think for a lot of buyers in inland areas, this has become a bargain bonanza,” DataQuick analyst Andrew LePage said.


The Census Bureau and U.S. Department of Housing and Urban Development reported separately that construction of new homes and apartments nationwide dropped 16.8% last month to a seasonally adjusted annual rate of 466,000 units, the slowest pace for a survey that dates back to 1959, two years before Obama was born.

Meanwhile, DataQuick’s LePage said some neighborhoods – Lemon Grove, Oceanside and South Bay as a whole turned in record sales counts for any January since the company began tracking San Diego in 1988.  “All indications are that prices will continue to erode, but not everyone is waiting for the ultimate price bottom,” LePage said.  Mortgage interest rates remain incredibly low but the credit crunch continues with mortgage lenders continuing to offer tighter guidelines that prevent the average consumer from purchasing a new home or refinancing an existing property in an effort to avoid foreclosure.


As of January, San Diego County’s overall median had dropped 45.9% from the November 2005 peak of $517,500. The resale house median was down 44.3% from its $574,000 peak to $320,000, and resale condos were off 51.3% from their $400,000 peak to $195,000.  Among signs of an eventual recovery, however, is a continuing drop in the number of homes for sale.


According to the San Diego Association of Realtors, active listings yesterday totaled 15,108, down 18.1% from a year ago.   “There’s very little we can say positive about the economy or job market,” Dennehy said, “but we can certainly say this is an encouraging sign that qualified buyers are responding to the bargains available to the market and volumes are improving from last year’s levels.”  Read complete  UNION-TRIBUNE CA Housing Article article written by Roger Showley and Lori Weisberg



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03 Feb 09 Dodd Home Loans Refinanced with Countrywide Questioned

The mortgage refinancing of Senator Christopher Dodd’s Washington townhouse and Connecticut house will end the Senate Banking Committee chairman’s transactions with Countrywide.  Dodd, a Connecticut Democrat, said he regretted doing business with Countrywide, which was once the nation’s largest residential lenders and that he was publicly releasing all loan documentation and records in his possession related to the home loans.”I regret I did not do this sooner and I apologize to the people of Connecticut for the delay,” he said in a statement.  As chairman of the Senate’s banking panel, Dodd plays an influential role in overseeing mortgage finance laws that affect U.S. lenders, investment firms, international trade finance and housing.

Why hasn’t Senator Chris Dodd provided his controversial home loan papers?

Watch Dodd & Countrywide Video

B of A acquired Countrywide last year, which many blame for helping to inflate the massive housing bubble that burst last year and sent the global financial system and the U.S. economy into a tailspin.  Dodd said he and his wife “acted properly in our mortgage refinancing negotiations. We did not seek or expect any special rates or terms on our loans and we never received any.”

Mortgage leads continue to rise with low rate demands as loan application volumes continue to rise.  Many mortgage industry executives suggest that very few applicants qualify for home refinancing, because guidelines have tightened and home values have sunk.  Read the original article> Senator Dodd Refinance Mortgages with 2 Countrywide. For the record, Mortgage Related News believes that Dodd did nothing wrong.


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16 Jan 09 Mortgage Refinancing Activity Skyrockets

In a recent USA Today article, Stephanie Armour examines the home refinancing rush, as ecord low mortgage rates have spurred a surge in homeowners wanting to refinance. According to a report from Mortgage Bankers Association, over 85% of new mortgage activity involved refinancing applications.


Mortgage lenders are swamped by the giant wave of mortgage refinancing requests.  Many have shed staff the past couple of years as the housing market slumped. Now they lack the manpower to quickly process refinancing requests.  “Lenders aren’t prepared for the surge,” says Mark Zandi of Moody’s   Some lenders are even hiring more people to accommodate the growing demand for refinancing.


In a normal market, refinance loans take 50% to 60% of its business.  Many anticipate  the refinancing boom to continue at a rapid pace.”The refinancing wave could become very large,” Zandi says. “There are millions of people with some equity and good credit scores who are now saying, ‘Let’s refinance.’ Home refinancing will increase substantially.”  Many people can’t take advantage of the lower rates. Among them are millions whose houses have declined so much in value that the homeowners owe more money than their homes are worth.  Ken Schimpf, 61, a retired carpenter in Lancaster, California, bought his home for $330,000.   With similar homes in his area now going for about $240,000, he can’t refinance to get a lower interest rate.”It’s a lost cause,” Schimpf says. “It’s very frustrating.  Most reports indicate that not many borrowers have qualified for Hope for Homeowner, which is FHA’s new loan program that enables borrowers who have no equity to still qualify for a refinance loan.


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12 Dec 08 Mortgage Rates Drop to 4.5 Year Low

Mortgage interest rates dropped again this week, following the government’s efforts to assist the troubled housing market.  Government sponsored mortgage lender Freddie Mac said Thursday that fixed rates on 30-year mortgages averaged 5.47% for the week ending Dec. 11. That’s down from 5.53% last week and well below 6.11%, which is where the rate stood at this time last year.  Mortgage interest rates began to fall after November 25th, when the administration announced that it would throw another $800 billion into the financial markets to unfreeze consumer credit and mortgage lending.

Specifically, mortgage rates responded to the Federal Reserve’s announcement that it would purchase up to $500 billion in mortgage loan securities backed by Fannie Mae, Freddie Mac and Ginnie Mae. It will also buy another $100 billion in direct debt issued by those firms.  Mortgage refinancing rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government’s announcement, down from the previous Monday’s 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted.  “What we’re seeing is a slight continued decline influenced by the Federal Reserve’s announcement to buy half a trillion in mortgage backed securities,” Gumbinger said. “And this continued minor downdraft is also due to the poor economic climate.”

The thirty-year mortgage rate has not been this low since March 25th, 2004 when it averaged 5.40%.  “Following the release of the November employment report, which showed the largest monthly decline in jobs since December 1974, bond yields fell slightly this week allowing fixed mortgage rates room to ease back a little further,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release on Thursday.  FHA home loan rates declined as well, so more homeowners should now be able to qualify for a refinance loan that features interest rates fixed in the 5% range.

The fifteen year fixed rate mortgage this week averaged 5.20%, which is down from 5.33% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.78%.   The 15-year rate has not been this low since February 7, 2008, when it averaged 5.15%.  Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 5.82% this week, up from last week when it averaged 5.77%. At this time a year ago, the 5-year ARM averaged 5.89%.

According to the Mortgage Bankers Association, the one-year Treasury-indexed ARM averaged 5.09% this week, up from last week when it averaged 5.02%. Last year, the 1-year ARM averaged 5.50 percent.  “The housing market still hangs in the balance,” Nothaft said in a release. “On a year-over-year basis, after rising in both August and September, pending existing home sales fell 1.0% in October, based on figures from the National Association of Realtors. Meanwhile, conventional mortgage loan applications for home purchases over the week ending December 5th were up 2.0% from four weeks prior, but were still 51% below the same period last year.” Get informed when the interest rates change and get the most updated mortgage rate news online.


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