Fed chairman says unemployment remains a concern By Inman News®
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After climbing for two weeks in a row, mortgage rates reversed course this week, with rates on 30-year fixed-rate loans again below 4 percent after Federal Reserve Chairman Ben Bernanke voiced worries about persistently high unemployment.
Freddie Mac's Primary Mortgage Market Survey showed rates on 30-year fixed-rate mortgages averaged 3.99 percent with an average 0.7 point for the week ending March 29, down from 4.08 percent last week and 4.86 percent a year ago. Rates on 30-year fixed-rate mortgages hit an all-time low in records dating to 1971 of 3.87 percent during the first three weeks of February.
Rates on 15-year fixed-rate mortgages, a popular refinancing option, averaged 3.23 percent with an average 0.8 point, down from 3.3 percent last week and 4.09 percent a year ago. Rates on 15-year loans hit a low in records dating to 1991 of 3.13 percent during the week ending March 8.
For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.9 percent, with an average 0.8 point, down from 2.96 percent last week and 3.7 percent a year ago. The five-year ARM hit a low in records dating to 2005 of 2.8 percent the week of Feb. 23.
Rates on 1-year Treasury-indexed ARMs averaged 2.78 percent with an average 0.6 point, down from 2.84 percent last week and 3.26 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1.
Looking back a week, a separate survey by the Mortgage Bankers Association showed demand for purchase loans during the week ending March 23 was up a seasonally adjusted 3.3 percent from the week before. The MBA survey showed demand for purchase loans was up 1 percent from a year ago.
Requests to refinance existing mortgages were down for the sixth week in a row, to a level 24.2 percent lower than a peak seen in February, 2012. Requests to refinance still accounted for 71.9 percent of all mortgage applications, but that's the lowest share since July 2011.
Freddie Mac's chief economist, Frank Nothaft, attributed the decline in mortgage rates to weaker housing economic indicators.
The Standard & Poor's/Case Shiller 20-City Composite home price index slid in January to its lowest reading in about a decade, Nothaft said in a statement. "In addition, new-home sales declined 0.5 percent in February, below the market consensus of an increase, and pending existing home sales also declined for the month."
Mortgage rates are determined largely by investor demand for mortgage-backed securities (MBS) guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.
During the downturn, the government helped keep mortgage rates low by buying more than $1 trillion in MBS. The government's "quantitative easing" programs -- which also included purchases of Treasury bonds -- added to the demand for MBS and similar investments, pushing up their price, and reducing their yields.
Although the Federal Reserve discontinued its mortgage-backed securities purchases in March 2010, mortgage rates continued to fall as MBS remained popular with investors seeking a safe haven from turmoil in financial markets.
As the economic recovery picks up steam, mortgage rates and interest rates could rise if government-backed MBS and Treasury bonds fall out of favor with investors.
Real estate economists and analysts surveyed by the Urban Land Institute expect 10-year Treasurys to rise as the recovery picks up steam, from an average of 2.4 percent this year to 3.1 percent in 2013 and 3.8 percent in 2014.
Historically, mortgage rates have tracked 10-year Treasury yields fairly closely, so that forecast implies mortgage rates could rise 140 basis points, or 1.4 percentage points, in the next two years.
According to Euro Pacific Capital Inc. CEO Peter Schiff, the flight from bonds could be exacerbated by the government's massive holdings, which Schiff thinks have a distorting effect on the market.
Schiff -- whose views are more pessimistic than those of many investors and economists -- predicts a bubble in bond markets will lead to another economic crash in the next two to three years.
The root of the problem is similar to the problems faced by debtor nations in Europe, Schiff told Forbes this week: “We consume more than we produce and we borrow abroad, but we are never going to be able to pay them back."
Mortgage rates began their recent surge on March 13 after the Federal Reserve's open market committee announced that its members do not anticipate an expansion of existing quantitative easing programs.
The committee said the Fed will continue reinvesting principal payments from its MBS holdings into like investments, and rolling over maturing Treasury securities at auction. Signs of an economic recovery and a surge in the stock market may also have hurt demand for Treasurys and MBS.
Yields on Treasurys and MBS came back down this week after Federal Reserve Chairman Ben Bernanke said unemployment remains a worry and that the Fed remains prepared to boost the economy with "continued accommodative policies."
Much of the recent improvement in job markets is due to a slowdown in layoffs rather than increased hiring, Bernanke said Monday at an economics conference.
The private sector employs 5 million fewer workers than it did at its peak, and the workforce has grown in the meantime, he noted. The unemployment rate in February was 3 percentage point above its average over the 20 years before the recession.
Further improvements in the unemployment rate "will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke said.
The National Association of REALTORS®' chief economist, Lawrence Yun, stated that fears of rising mortgage rates could spur homebuyer demand. But if rates increase significantly, that would reduce buyers' purchasing power, Yun said.
Yun predicts rates on 30-year fixed-rate mortgages will soon be in the 4.3 to 4.6 percent range.
In their most recent forecast, economists at Fannie Mae said they expect 30-year fixed-rate loans to average 4.1 percent during the second half of 2012, and 4.3 percent in 2013.
Copyright 2012 Inman News
Showing posts with label finance. Show all posts
Showing posts with label finance. Show all posts
Monday, April 2, 2012
Friday, February 13, 2009
Lower Mortgage Rates
From Realty Times of February 13, 2009
Lower Mortgage Rates Translate into Large Volume of Refinancing
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.16 percent with an average 0.7 point for the week ending February 12, 2009, down from last week when it averaged 5.25 percent. Last year at this time, the 30-year FRM averaged 5.72 percent.
The 15-year FRM this week averaged 4.81 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. A year ago at this time, the 15-year FRM averaged 5.25 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.23 percent this week, with an average 0.6 point, down from last week when it averaged 5.26 percent. A year ago, the 5-year ARM averaged 5.19 percent.
One-year Treasury-indexed ARMs averaged 4.94 percent this week with an average 0.5 point, up from last week when it averaged 4.92 percent. At this time last year, the 1-year ARM averaged 5.00 percent.
"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage."
"The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008. As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association."
Copyright © 2009 Realty Times. All Rights Reserved.
Lower Mortgage Rates Translate into Large Volume of Refinancing
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.16 percent with an average 0.7 point for the week ending February 12, 2009, down from last week when it averaged 5.25 percent. Last year at this time, the 30-year FRM averaged 5.72 percent.
The 15-year FRM this week averaged 4.81 percent with an average 0.7 point, down from last week when it averaged 4.92 percent. A year ago at this time, the 15-year FRM averaged 5.25 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.23 percent this week, with an average 0.6 point, down from last week when it averaged 5.26 percent. A year ago, the 5-year ARM averaged 5.19 percent.
One-year Treasury-indexed ARMs averaged 4.94 percent this week with an average 0.5 point, up from last week when it averaged 4.92 percent. At this time last year, the 1-year ARM averaged 5.00 percent.
"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage."
"The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008. As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association."
Copyright © 2009 Realty Times. All Rights Reserved.
Monday, January 26, 2009
Top Five Myths About Loan Modification
From Realty Times of January 26, 2009
Top Five Myths About Loan Modification by Ralph Roberts
DETROIT--(BUSINESS WIRE)-- Ralph R. Roberts, consumer advocate and spokesperson for Federal Loan Modification Law Center, today released a list dispelling the top five myths about loan modification. Intended to better educate homeowners facing the prospect of losing their home in foreclosure, the following list demystifies the most common misconceptions surrounding the loan modification process.
MYTH #1: My bank wants me out of my house. My bank wants my home. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions). In today's market, there's a good chance they'll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.
MYTH #2: My credit score is bad so I won't qualify. Unlike the option of refinancing out of trouble, which requires you to apply for a new loan, loan modification simply adjusts the terms and perhaps reduces the balance of a loan you already have. Your credit score is much less of a factor in determining whether you qualify for a loan modification. In addition, a successful loan modification can actually improve your credit score over time, especially if it prevents you from ending up in foreclosure or bankruptcy.
MYTH #3 I am not late on my mortgage payments so I won't qualify. I have to miss a payment to be eligible. Early on, this was true. In fact, some early eligibility requirements stated that you had to be 61 days delinquent in order to qualify. In other words, you would have had to have missed two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders. Many lenders are now working out loan modifications with borrowers who are up to date on their payments. It's difficult to determine whether you qualify until you actually discuss your situation with the lender or with an attorney who is knowledgeable and experienced in loan modifications.
MYTH #4: I would be better off walking away or declaring bankruptcy than modifying my loan. Walking away from the home and filing for bankruptcy are certainly two options, but they are rarely the best options when you are facing foreclosure. If you simply walk away, the lender is unlikely to pursue legal action against you, but in some jurisdictions, the lender can pursue a deficiency judgment against you to collect the difference between what the lender receives for your home at auction and what you currently owe on the balance of the mortgage. Filing for bankruptcy may be better than just walking away, but it can leave a blemish on your credit history that makes it difficult to borrow money in the future. A successful loan modification is almost always a more prudent choice.
MYTH #5: It's too late. I have already received a foreclosure notice. As long as you still reside in the home – that is, you didn't voluntarily abandon it, and the home hasn't been sold at a foreclosure auction – you may still have time to work out a loan modification with your lender. The sooner you take action, the more options you have available and the more time you have to pursue the best option, but you can still negotiate late into the process. By contacting the lender or, better yet, having your attorney contact the lender on your behalf, you demonstrate a good faith effort to work out a solution and can often buy yourself extra time to negotiate a loan modification.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Top Five Myths About Loan Modification by Ralph Roberts
DETROIT--(BUSINESS WIRE)-- Ralph R. Roberts, consumer advocate and spokesperson for Federal Loan Modification Law Center, today released a list dispelling the top five myths about loan modification. Intended to better educate homeowners facing the prospect of losing their home in foreclosure, the following list demystifies the most common misconceptions surrounding the loan modification process.
MYTH #1: My bank wants me out of my house. My bank wants my home. Banks and other lending institutions do not want to foreclose. They earn more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing (attorney fees), rehabbing the home, and then selling it (agent commissions). In today's market, there's a good chance they'll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.
MYTH #2: My credit score is bad so I won't qualify. Unlike the option of refinancing out of trouble, which requires you to apply for a new loan, loan modification simply adjusts the terms and perhaps reduces the balance of a loan you already have. Your credit score is much less of a factor in determining whether you qualify for a loan modification. In addition, a successful loan modification can actually improve your credit score over time, especially if it prevents you from ending up in foreclosure or bankruptcy.
MYTH #3 I am not late on my mortgage payments so I won't qualify. I have to miss a payment to be eligible. Early on, this was true. In fact, some early eligibility requirements stated that you had to be 61 days delinquent in order to qualify. In other words, you would have had to have missed two full payments. The truth is that the eligibility requirements are constantly changing and differ among lenders. Many lenders are now working out loan modifications with borrowers who are up to date on their payments. It's difficult to determine whether you qualify until you actually discuss your situation with the lender or with an attorney who is knowledgeable and experienced in loan modifications.
MYTH #4: I would be better off walking away or declaring bankruptcy than modifying my loan. Walking away from the home and filing for bankruptcy are certainly two options, but they are rarely the best options when you are facing foreclosure. If you simply walk away, the lender is unlikely to pursue legal action against you, but in some jurisdictions, the lender can pursue a deficiency judgment against you to collect the difference between what the lender receives for your home at auction and what you currently owe on the balance of the mortgage. Filing for bankruptcy may be better than just walking away, but it can leave a blemish on your credit history that makes it difficult to borrow money in the future. A successful loan modification is almost always a more prudent choice.
MYTH #5: It's too late. I have already received a foreclosure notice. As long as you still reside in the home – that is, you didn't voluntarily abandon it, and the home hasn't been sold at a foreclosure auction – you may still have time to work out a loan modification with your lender. The sooner you take action, the more options you have available and the more time you have to pursue the best option, but you can still negotiate late into the process. By contacting the lender or, better yet, having your attorney contact the lender on your behalf, you demonstrate a good faith effort to work out a solution and can often buy yourself extra time to negotiate a loan modification.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Friday, January 23, 2009
Few Borrowers Can Revise Mortgage Loans
We do not wish to only present the good news - you will get the other side of the story here as well!
Not everyone agrees that the bailout is working. One woman's story as it appears in RISMEDIA, January 23, 2009:
A different view of the bailout!
It appears our new president has a major challenge ahead of him in this area!
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Not everyone agrees that the bailout is working. One woman's story as it appears in RISMEDIA, January 23, 2009:
It appears our new president has a major challenge ahead of him in this area!
.
Sunday, January 18, 2009
Federal bailout is working, Zions banker says
The first clear feedback on the TARP progream:
This article from the AZ Republic Newspaper of Jan. 18 indicates that "the effort appears to have bolstered the stability of the banks and has helped to get credit flowing again."
Federal bailout is working
It is significant to note that the writer does feel the government will be repaid the funds provided by this program. That doesn't seem to get mentioned very often!
.
This article from the AZ Republic Newspaper of Jan. 18 indicates that "the effort appears to have bolstered the stability of the banks and has helped to get credit flowing again."
It is significant to note that the writer does feel the government will be repaid the funds provided by this program. That doesn't seem to get mentioned very often!
.
Friday, January 16, 2009
More on Lower Interest Rates
Realty Times of January 16, 2009
Slow Economy and Government Actions Lead to 11 Weeks of Lower 30-Year Fixed Rates
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.96 percent with an average 0.7 point for the week ending January 15, 2009, down from last week when it averaged 5.01 percent. Last year at this time, the 30-year FRM averaged 5.69 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year FRM this week averaged 4.65 percent with an average 0.7 point, up from last week when it averaged 4.62 percent. A year ago at this time, the 15-year FRM averaged 5.21 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.25 percent this week, with an average 0.6 point, down from last week when it averaged 5.49 percent. A year ago, the 5-year ARM averaged 5.40 percent. The 5-year ARM has not been lower since the week ending September 8, 2005, when it averaged 5.24 percent.
One-year Treasury-indexed ARMs averaged 4.89 percent this week with an average 0.5 point, down from last week when it averaged 4.95 percent. At this time last year, the 1-year ARM averaged 5.26 percent.
"Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions," said Frank Nothaft, Freddie Mac vice president and chief economist. "So far, both the U.S. Treasury Department and the Federal Reserve have added over $100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages. The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008 announcement, to further shore up mortgage lending and keep rates low.
"In December, the unemployment rate rose to 7.2 percent, the highest since January 1993, and the economy lost 2.6 million jobs over 2008, the largest annual drop since 1945. That brought down yields on Treasury securities and mortgage rates followed."
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Copyright © 2009 Realty Times. All Rights Reserved.
.
Slow Economy and Government Actions Lead to 11 Weeks of Lower 30-Year Fixed Rates
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.96 percent with an average 0.7 point for the week ending January 15, 2009, down from last week when it averaged 5.01 percent. Last year at this time, the 30-year FRM averaged 5.69 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year FRM this week averaged 4.65 percent with an average 0.7 point, up from last week when it averaged 4.62 percent. A year ago at this time, the 15-year FRM averaged 5.21 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.25 percent this week, with an average 0.6 point, down from last week when it averaged 5.49 percent. A year ago, the 5-year ARM averaged 5.40 percent. The 5-year ARM has not been lower since the week ending September 8, 2005, when it averaged 5.24 percent.
One-year Treasury-indexed ARMs averaged 4.89 percent this week with an average 0.5 point, down from last week when it averaged 4.95 percent. At this time last year, the 1-year ARM averaged 5.26 percent.
"Interest rates for 30-year fixed rate mortgages fell for the 11th straight week to another record low, due in part to the slowing economy and government actions," said Frank Nothaft, Freddie Mac vice president and chief economist. "So far, both the U.S. Treasury Department and the Federal Reserve have added over $100 billion in liquidity to the mortgage market since September 2008, which put downward pressure on interest rates for fixed-rate mortgages. The Federal Reserve may add up to an additional $570 billion more this year, based on its November 25, 2008 announcement, to further shore up mortgage lending and keep rates low.
"In December, the unemployment rate rose to 7.2 percent, the highest since January 1993, and the economy lost 2.6 million jobs over 2008, the largest annual drop since 1945. That brought down yields on Treasury securities and mortgage rates followed."
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Copyright © 2009 Realty Times. All Rights Reserved.
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Thursday, January 15, 2009
Low-Interest-Rates
Realty Times for January 15, 2009
Quick! Take That Low-Interest-Rate Holiday by Broderick Perkins
One holiday Blue Light Special appears to be working.
Interest rates are as low as they been since Freddie Mac started tracking them, refinancing applications are soaring and home buys are on the move.
Freddie Mac on Christmas Eve, bless them, said the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent for the week ending Dec. 24, 2008. That's the lowest the rate has been since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year rate averaged 4.91 percent.
Five year hybrid adjustable rate mortgages (ARMs) were higher at 5.49 percent, but 1-year ARMs were below 5 percent at 4.95 percent nationwide and even lower 4.75 in the Northeast and Southwest.
Talk about visions of sugar plums.
With home prices in a trough, with all the money you've been saving on reduced holiday spending and gasoline conservation, with all those motivated sellers out there twisting in the frigid wind?
It's a good time to consider refinancing your mortgage and it's a good time to be thinking "Buy A Home -- Now!"
Forget settling down for a long winter's nap.
It's obviously time to put on your refinance thinking cap or your buy-a-home lid, not that go-to-sleep winter topper.
Either way, you won't be alone. Jack Frost can't hold a candle to housing consumers who feel the heat.
On Dec. 24, the Mortgage Bankers Association's composite index of mortgage applications to buy a home or refinance a mortgage -- bless it also -- rose to 1,245.4, the highest since 2003, from 841.4 a week earlier. The group's refinancing gauge rose 63 percent and purchases gained 11 percent.
Low rates have you looking to refinance?
The average rates are so low, refinancing can benefit even those who purchased a home a year or two ago, even if they had a small equity stake in their home and used an ARM to buy.
The key, say the experts, is to examine your options.
Visit your existing lender first, especially if your lender doesn't sell loans and has a vested financial interest in keeping its portfolio intact. It will prefer to refinance you at the going rate rather than cut a loan modification and lose money.
Also shop around at other banks, credit unions (especially credit unions) and other lenders that also retain loans.
Trading an ARM for a fixed rate that's slightly higher also isn't a bad deal if that ARM rate will eventually explode with an upward adjustment.
A 40-year mortgage also can help offset the cost of trading an ARM for a fixed rate, due to the longer term's relatively smaller payments.
If you have both equity in your home and pristine credit, bargain hard. You have the most options.
Quickly pull your credit report from the only federally-sanctioned free service, AnnualCreditReport.com and check it twice for accuracy.
Don't overlook trading one ARM for another, especially if the new ARM is a hybrid that provides enough breathing room, say five or seven years or more before the first adjustment.
A U.S. Housing and Urban Development-approved counselor, experienced mortgage broker or mortgage adviser can help you quickly sort through options from lenders, bailout programs and other sources to get you a refinanced mortgage -- fixed or adjustable -- that is most viable.
Examine all potential options by comparing all loan costs of each refinance from a variety of sources -- in-house lenders, secondary market lenders and brokers.
Low rates making you think about buying?
Budget. Know all sources of every penny and where every penny goes. You can't know where you can cut costs until you know in detail what those costs are.
Save. Pinch Pennies. Save More. Being miserly isn't lame. It's a prerequisite to homeownership. If you don't have a savings account worth three to six months of your net income, you are already a financial disaster waiting to happen should there be an emergency. In addition to money for the down payment, lenders today will expect you to have some cash left over for insurance, taxes, maintenance and other costs that come with homeownership.
Don't just get your credit report, read the darn thing. Your credit report is a report card on your credit use -- the good, the bad, the ugly -- and, too often, the incorrect. Which is why you want to see it. If there are errors, follow the instructions to correct them.
Get professional help. Can't determine what your credit report is trying to tell you? Not sure how to calculate what you'll need to save for a down payment? Don't know how to set up a budget? Most consumers don't. It's okay to ask for help. It's smart to ask for help. You don't know everything about buying a home, even if you are moving up, but especially if you are a first-timer. Save the pride for after the purchase.
Whether it's a financial planner, financial counselor, real estate agent, mortgage broker, loan officer, or real estate market nerd, ask family, friends, co-workers and others you trust for references to find those who can help you. Get help in setting goals, sifting through mortgage programs, understanding the title and escrow process, finding a home and keeping a home -- all well before you are actually in the market for a home.
Learn about market and economic conditions that could impact your decision. Learn about home prices, mortgage rates, home buying costs and other issues surrounding what's likely to be your most complicated purchase ever.
Attend workshops, seminars and classes.
Browse for housing information from online content providers, including MyMoney.gov, the Better Business Bureau (search "Tips for Troubled Homeowners") and Deadline Newsroom's home buyers search results.
Pick up a few books, or save some bucks in the library reading "Buying Your First Home" (Nolo, $24.99); "The National Association of Realtors Guide To Home Buying" (Wiley, $19.95) and "Let's Get Real About Money" (Financial Times, $19.99), among others.
Above all -- refinancing or buying -- move fast. The mortgage market is as volatile as it's ever been. Rates could quickly reverse course and head back into Scrooge territory.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Quick! Take That Low-Interest-Rate Holiday by Broderick Perkins
One holiday Blue Light Special appears to be working.
Interest rates are as low as they been since Freddie Mac started tracking them, refinancing applications are soaring and home buys are on the move.
Freddie Mac on Christmas Eve, bless them, said the 30-year fixed-rate mortgage (FRM) averaged 5.14 percent for the week ending Dec. 24, 2008. That's the lowest the rate has been since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year rate averaged 4.91 percent.
Five year hybrid adjustable rate mortgages (ARMs) were higher at 5.49 percent, but 1-year ARMs were below 5 percent at 4.95 percent nationwide and even lower 4.75 in the Northeast and Southwest.
Talk about visions of sugar plums.
With home prices in a trough, with all the money you've been saving on reduced holiday spending and gasoline conservation, with all those motivated sellers out there twisting in the frigid wind?
It's a good time to consider refinancing your mortgage and it's a good time to be thinking "Buy A Home -- Now!"
Forget settling down for a long winter's nap.
It's obviously time to put on your refinance thinking cap or your buy-a-home lid, not that go-to-sleep winter topper.
Either way, you won't be alone. Jack Frost can't hold a candle to housing consumers who feel the heat.
On Dec. 24, the Mortgage Bankers Association's composite index of mortgage applications to buy a home or refinance a mortgage -- bless it also -- rose to 1,245.4, the highest since 2003, from 841.4 a week earlier. The group's refinancing gauge rose 63 percent and purchases gained 11 percent.
Low rates have you looking to refinance?
The average rates are so low, refinancing can benefit even those who purchased a home a year or two ago, even if they had a small equity stake in their home and used an ARM to buy.
The key, say the experts, is to examine your options.
Visit your existing lender first, especially if your lender doesn't sell loans and has a vested financial interest in keeping its portfolio intact. It will prefer to refinance you at the going rate rather than cut a loan modification and lose money.
Also shop around at other banks, credit unions (especially credit unions) and other lenders that also retain loans.
Trading an ARM for a fixed rate that's slightly higher also isn't a bad deal if that ARM rate will eventually explode with an upward adjustment.
A 40-year mortgage also can help offset the cost of trading an ARM for a fixed rate, due to the longer term's relatively smaller payments.
If you have both equity in your home and pristine credit, bargain hard. You have the most options.
Quickly pull your credit report from the only federally-sanctioned free service, AnnualCreditReport.com and check it twice for accuracy.
Don't overlook trading one ARM for another, especially if the new ARM is a hybrid that provides enough breathing room, say five or seven years or more before the first adjustment.
A U.S. Housing and Urban Development-approved counselor, experienced mortgage broker or mortgage adviser can help you quickly sort through options from lenders, bailout programs and other sources to get you a refinanced mortgage -- fixed or adjustable -- that is most viable.
Examine all potential options by comparing all loan costs of each refinance from a variety of sources -- in-house lenders, secondary market lenders and brokers.
Low rates making you think about buying?
Budget. Know all sources of every penny and where every penny goes. You can't know where you can cut costs until you know in detail what those costs are.
Save. Pinch Pennies. Save More. Being miserly isn't lame. It's a prerequisite to homeownership. If you don't have a savings account worth three to six months of your net income, you are already a financial disaster waiting to happen should there be an emergency. In addition to money for the down payment, lenders today will expect you to have some cash left over for insurance, taxes, maintenance and other costs that come with homeownership.
Don't just get your credit report, read the darn thing. Your credit report is a report card on your credit use -- the good, the bad, the ugly -- and, too often, the incorrect. Which is why you want to see it. If there are errors, follow the instructions to correct them.
Get professional help. Can't determine what your credit report is trying to tell you? Not sure how to calculate what you'll need to save for a down payment? Don't know how to set up a budget? Most consumers don't. It's okay to ask for help. It's smart to ask for help. You don't know everything about buying a home, even if you are moving up, but especially if you are a first-timer. Save the pride for after the purchase.
Whether it's a financial planner, financial counselor, real estate agent, mortgage broker, loan officer, or real estate market nerd, ask family, friends, co-workers and others you trust for references to find those who can help you. Get help in setting goals, sifting through mortgage programs, understanding the title and escrow process, finding a home and keeping a home -- all well before you are actually in the market for a home.
Learn about market and economic conditions that could impact your decision. Learn about home prices, mortgage rates, home buying costs and other issues surrounding what's likely to be your most complicated purchase ever.
Attend workshops, seminars and classes.
Browse for housing information from online content providers, including MyMoney.gov, the Better Business Bureau (search "Tips for Troubled Homeowners") and Deadline Newsroom's home buyers search results.
Pick up a few books, or save some bucks in the library reading "Buying Your First Home" (Nolo, $24.99); "The National Association of Realtors Guide To Home Buying" (Wiley, $19.95) and "Let's Get Real About Money" (Financial Times, $19.99), among others.
Above all -- refinancing or buying -- move fast. The mortgage market is as volatile as it's ever been. Rates could quickly reverse course and head back into Scrooge territory.
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Friday, January 9, 2009
Another New Low in Mortgage Rates
Realty Times - January 9, 2009
Long-Term Rates for Tenth Consecutive Week Setting Yet Another New Low
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.01 percent with an average 0.6 point for the week ending January 8, 2009, down from last week when it averaged 5.10 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year FRM this week averaged 4.62 percent with an average 0.7 point, down from last week when it averaged 4.83 percent. A year ago at this time, the 15-year FRM averaged 5.43 percent. The 15-year FRM has not been lower since June 13, 2003, when it averaged 4.60 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.49 percent this week, with an average 0.7 point, down from last week when it averaged 5.57 percent. A year ago, the 5-year ARM averaged 5.63 percent.
One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.5 point, up from last week when it averaged 4.85 percent. At this time last year, the 1-year ARM averaged 5.37 percent.
"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac vice president and chief economist. "On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008."
"Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week."
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Long-Term Rates for Tenth Consecutive Week Setting Yet Another New Low
McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.01 percent with an average 0.6 point for the week ending January 8, 2009, down from last week when it averaged 5.10 percent. Last year at this time, the 30-year FRM averaged 5.87 percent. The 30-year FRM has not been lower since Freddie Mac started the Primary Mortgage Market Survey in 1971.
The 15-year FRM this week averaged 4.62 percent with an average 0.7 point, down from last week when it averaged 4.83 percent. A year ago at this time, the 15-year FRM averaged 5.43 percent. The 15-year FRM has not been lower since June 13, 2003, when it averaged 4.60 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 5.49 percent this week, with an average 0.7 point, down from last week when it averaged 5.57 percent. A year ago, the 5-year ARM averaged 5.63 percent.
One-year Treasury-indexed ARMs averaged 4.95 percent this week with an average 0.5 point, up from last week when it averaged 4.85 percent. At this time last year, the 1-year ARM averaged 5.37 percent.
"Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," said Frank Nothaft, Freddie Mac vice president and chief economist. "On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008."
"Since the end of October 2008, these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week."
--------------------------------------------------------------------------------
Copyright © 2009 Realty Times. All Rights Reserved.
.
Monday, December 22, 2008
Treasury Department Sidesteps
From Realty Times of December 22, 2008
Washington Report: Treasury Department Sidesteps by Kenneth R. Harney
It was the biggest housing mystery in Washington last week: What happened to the Treasury Department's much-ballyhooed plan to cut mortgage rates to four and a half percent to stimulate home buying?
Under the plan, Fannie Mae and Freddie Mac would buy loans at four and a half percent and the Treasury would subsidize the difference between that and market rates.
But last Tuesday, in an interview on the CNBC cable network, Treasury Secretary Henry Paulson basically said: Who me? We never announced any such plan. It got leaked prematurely.
Paulson also hinted that he would be reluctant to launch such an ambitious and potentially costly program without having the tacit support of the incoming Obama administration's Treasury team.
The National Association of Realtors, which had proposed the rate buydown concept to Treasury weeks ago, again called for the federal government to find a way to lower rates to four and half percent.
Meanwhile, new reports surfaced that a second plan was being considered: Under this alternative, the 12 Federal Home Loan Banks around the country would offer cut-rate mortgages using money raised by bond issuances at 3 percent by the Treasury.
According to the Reuters news service, this concept is being pushed aggressively by the president of one of the banks -- Alfred DelliBovi of New York -- and is under active consideration by the bank system's top regulator, James Lockhart, director of the Federal Housing Finance Agency.
The net effect of either plan would be the same to consumers: Sharply lower monthly mortgage costs. For example, here's what a four and a half percent rate does to principal and interest payments compared with a note rate of five and half percent: On a $200,000 mortgage, the one point difference would reduce payments by $122 a month.
One a $300,000 loan, the savings would go to $183 a month. And on a $400,000 mortgage, costs would be lowered by $244 a month.
In his comments on CNBC, Paulson said his department would like to cut home buyers' payments: "We're continuing to look at (that)," he said, "and we wouldn't be doing our jobs if we didn't look at other ideas to reduce mortgage interest rates."
Meanwhile, with market rates tumbling to five percent and below, a half point rate buydown could cost the government much less than originally estimated.
Then again -- there's always the possibility that to stimulate a REALLY big round of home buying, rates could be cut to 4 percent.
After all, it's the holiday gift season … and the housing industry could sure use one.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Washington Report: Treasury Department Sidesteps by Kenneth R. Harney
It was the biggest housing mystery in Washington last week: What happened to the Treasury Department's much-ballyhooed plan to cut mortgage rates to four and a half percent to stimulate home buying?
Under the plan, Fannie Mae and Freddie Mac would buy loans at four and a half percent and the Treasury would subsidize the difference between that and market rates.
But last Tuesday, in an interview on the CNBC cable network, Treasury Secretary Henry Paulson basically said: Who me? We never announced any such plan. It got leaked prematurely.
Paulson also hinted that he would be reluctant to launch such an ambitious and potentially costly program without having the tacit support of the incoming Obama administration's Treasury team.
The National Association of Realtors, which had proposed the rate buydown concept to Treasury weeks ago, again called for the federal government to find a way to lower rates to four and half percent.
Meanwhile, new reports surfaced that a second plan was being considered: Under this alternative, the 12 Federal Home Loan Banks around the country would offer cut-rate mortgages using money raised by bond issuances at 3 percent by the Treasury.
According to the Reuters news service, this concept is being pushed aggressively by the president of one of the banks -- Alfred DelliBovi of New York -- and is under active consideration by the bank system's top regulator, James Lockhart, director of the Federal Housing Finance Agency.
The net effect of either plan would be the same to consumers: Sharply lower monthly mortgage costs. For example, here's what a four and a half percent rate does to principal and interest payments compared with a note rate of five and half percent: On a $200,000 mortgage, the one point difference would reduce payments by $122 a month.
One a $300,000 loan, the savings would go to $183 a month. And on a $400,000 mortgage, costs would be lowered by $244 a month.
In his comments on CNBC, Paulson said his department would like to cut home buyers' payments: "We're continuing to look at (that)," he said, "and we wouldn't be doing our jobs if we didn't look at other ideas to reduce mortgage interest rates."
Meanwhile, with market rates tumbling to five percent and below, a half point rate buydown could cost the government much less than originally estimated.
Then again -- there's always the possibility that to stimulate a REALLY big round of home buying, rates could be cut to 4 percent.
After all, it's the holiday gift season … and the housing industry could sure use one.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Sunday, December 21, 2008
Lowest Home Loan Rates Ever!
I have received a mailing from a local mortgage representative that states that " ....home loan rates dropped to the lowest levels that have ever been seen....".
If you would like to receive a copy of the entire mailing, please send me an email address to which I may send it. The article is too long to be reproduced here and I do not wish to violate any coyright laws by quoting pieces of the article.
Go get one of those loans!
.
If you would like to receive a copy of the entire mailing, please send me an email address to which I may send it. The article is too long to be reproduced here and I do not wish to violate any coyright laws by quoting pieces of the article.
Go get one of those loans!
.
Thursday, October 30, 2008
States Step Up Foreclosure Relief
From Realty Times of October 30, 2008
States Step Up Foreclosure Relief by Broderick Perkins
"Defaulting on the Dream: States Respond to America's Foreclosure Crisis" is a must read for home owners struggling with their mortgage.
Produced by the Pew Charitable Trusts as the first detailed dissertation to chronicle the impact of the foreclosure crisis at the state level, the report is chock full of "where-to-go-for-help" advice.
"The stakes are incredibly high. Home ownership is the primary vehicle through which American families build financial security. It also is an essential building block of state and local economies," according to Pew managing directors Susan Urahn and Shelley Hearne.
Their timing is impeccable. One in 33 current U.S. homeowners may be headed toward foreclosure in the coming years because of subprime loans, and in some states the crisis is more acute. In Arizona, one in every 18 homeowners could lose their home. In Nevada, the ratio is one in 11, according to the report.
The report charts some assertive, even experimental state efforts to mitigate financial harm to homeowners, lenders, local communities and state budgets.
To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.
Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.
Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.
Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.
To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.
And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.
The report also explains the foreclosure process and lists home owners options when they default (become more than 30 days late on a payment) on their mortgage.
Bring the account current by paying the past due balance on their loan, including late charges and other fees assessed by the lender.
Renegotiate the terms of their loan with the lender.
Pay off their loan by refinancing the loan with another lender.
Sell the property to pay off the current loan, if the home is worth more than the mortgage. Or if the property is not worth the mortgage balance, engage a "short sale" where the lender forgives a portion of the debt provided a seller is available to buy the home.
Voluntarily convey the property back to the lender through a deed–in-lieu of foreclosure.
The report also lists a host of relief efforts, some on the state level, some not, some well known, some not so well known, including:
Homeownership Preservation Foundation creates partnerships to help families overcome obstacles that could cause foreclosure.
National Consumer Law Center uses consumer law to promote marketplace justice for vulnerable home owners and families.
Pennsylvania's Homeowners' Emergency Mortgage Assistance Program (HEMAP) is a loan fund that provides eligible state residents with foreclosure assistance.
Minnesota's Foreclosure Prevention Assistance Program provides eligible state home owners with counseling and financial assistance.
Ohio's Opportunity Loan Refinance Program helps borrowers refinance high-cost loans with a 30-year fixed-rate and a 20-year, fixed rate second.
Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance is available to help see you through hard times.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Visit Mr. Broderick's blog at
DEADLINENEWSROOM
To review the detailed article referenced by Mr. Broderick, visit:
Defaulting on the Dream
.
States Step Up Foreclosure Relief by Broderick Perkins
"Defaulting on the Dream: States Respond to America's Foreclosure Crisis" is a must read for home owners struggling with their mortgage.
Produced by the Pew Charitable Trusts as the first detailed dissertation to chronicle the impact of the foreclosure crisis at the state level, the report is chock full of "where-to-go-for-help" advice.
"The stakes are incredibly high. Home ownership is the primary vehicle through which American families build financial security. It also is an essential building block of state and local economies," according to Pew managing directors Susan Urahn and Shelley Hearne.
Their timing is impeccable. One in 33 current U.S. homeowners may be headed toward foreclosure in the coming years because of subprime loans, and in some states the crisis is more acute. In Arizona, one in every 18 homeowners could lose their home. In Nevada, the ratio is one in 11, according to the report.
The report charts some assertive, even experimental state efforts to mitigate financial harm to homeowners, lenders, local communities and state budgets.
To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.
Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.
Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.
Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.
To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.
And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.
The report also explains the foreclosure process and lists home owners options when they default (become more than 30 days late on a payment) on their mortgage.
Bring the account current by paying the past due balance on their loan, including late charges and other fees assessed by the lender.
Renegotiate the terms of their loan with the lender.
Pay off their loan by refinancing the loan with another lender.
Sell the property to pay off the current loan, if the home is worth more than the mortgage. Or if the property is not worth the mortgage balance, engage a "short sale" where the lender forgives a portion of the debt provided a seller is available to buy the home.
Voluntarily convey the property back to the lender through a deed–in-lieu of foreclosure.
The report also lists a host of relief efforts, some on the state level, some not, some well known, some not so well known, including:
Homeownership Preservation Foundation creates partnerships to help families overcome obstacles that could cause foreclosure.
National Consumer Law Center uses consumer law to promote marketplace justice for vulnerable home owners and families.
Pennsylvania's Homeowners' Emergency Mortgage Assistance Program (HEMAP) is a loan fund that provides eligible state residents with foreclosure assistance.
Minnesota's Foreclosure Prevention Assistance Program provides eligible state home owners with counseling and financial assistance.
Ohio's Opportunity Loan Refinance Program helps borrowers refinance high-cost loans with a 30-year fixed-rate and a 20-year, fixed rate second.
Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance is available to help see you through hard times.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Visit Mr. Broderick's blog at
To review the detailed article referenced by Mr. Broderick, visit:
.
Thursday, October 16, 2008
Smaller Homeowner Bailout Already In Place
--------------------------------------------------------------------------------
From Realty Times of October 16, 2008
Smaller Homeowner Bailout Already In Place, by an old freind, Broderick Perkins
Don't wait for home owner bailout provisions to trickle down from the $700 billion "Emergency Economic Stabilization Act of 2008," (H.R. 1424) recently rushed through Congress.
When it comes to help from new federal legislation for distressed home owners, the $300 billion "Housing and Economic Recovery Act of 2008" (H.R. 3221), signed earlier this year, can provide more immediate relief.
The $300 billion recovery act has both a mandated mortgage modifying provision and a voluntary "Hope For Homeowners" (H4H) refinance program, for home owners who qualify.
President Bush signed the larger $700 billion stabilization act on Oct. 3, 2008, but it is, in-part, "stay tuned" legislation. Exactly how it will be implemented to help home owners -- or the economy at large, for that matter -- isn't fully clear.
In part, the stabilization act calls for federal agencies holding mortgage and mortgage securities to identify loans that can be modified and work toward modifications. The stabilization act also allows the U.S. Secretary of the Treasury to use loan guarantees and credit enhancements to help home owners avoid foreclosures. And the stabilization deal calls for shoring up the H4H program. How any of those provisions will be implemented, however, is still under consideration.
Loan modifications
On the other hand, the older recovery act, signed in July came with one provision ready to go. It mandated that mortgage servicers modify loans for certain home owners to help them avoid foreclosure as long as three requirements are met:
A default on the mortgage either has already happened or is "reasonably foreseeable."
The home owner lives in the property as his or her primary residence.
The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.
It's up to the home owner to prove, in writing, his or her case to the lender. That could mean some back and forth negotiating, even legal wrangling. To that end, an accredited mortgage, banker and broker certifier, CMPS Institute, offers a sample letter containing more assistance, and tips to help home owners negotiate a loan modification.
The institute further advises:
1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.
2. Send the letter along with documented evidence -- your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.
3. Deal directly with a representative of the lender's "loss mitigation" or workout department-- not a broker, loan originator or other mortgage staffer.
FHA refinancing
Newly effective Oct. 1, 2008 a second provision of the recovery act allows troubled mortgage holders to avoid foreclosure by refinancing into smaller, more affordable, Federal Housing Administration (FHA)-backed mortgages, provided Uncle Sam gets a piece of the equity-growth action and provided the lender voluntarily agrees to the deal, which includes writing down or reducing loan balances.
U.S. Department of Housing and Urban Affairs' (HUD) "Hope For Homeowners"fact sheets spell out the details.
The refinanced, 30-year, fixed rated FHA mortgages in the H4H program are for home owner-occupants having difficulty making their payments.
The existing mortgage must have been originated on or before January 1, 2008, and the owner must have made at least six payments.
Banks can volunteer to write down an existing mortgage to 90 percent of the new appraised value of the home. To get the deal to fly, any holders of existing mortgage liens must release the liens and waive all prepayment penalties and late payment fees. The existing first mortgage holder has to accept the H4H loan as full settlement of all outstanding indebtedness.
As of March 2008, the home owner's total monthly mortgage payments due must be more than 31 percent of the household's gross monthly income.
The loan amount on the new H4H mortgage cannot exceed $550,440. The amount can include a financed 3 percent "Upfront Mortgage Insurance Premium" and other loan costs. The home owner must also pay a 1.5 percent annual mortgage insurance premium.
The home owner cannot take out a second mortgage for the first five years of the new loan, except under certain emergency conditions.
The borrower must agree to share equity with the FHA, both the equity created at the beginning of the new mortgage and future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The FHA will share a portion of its equity earnings, when available, with past lien holders until any available appreciation is exhausted. Any left over appreciation goes to the FHA on the sliding scale.
More help for home owners: "Foreclosure Prevention Efforts Grow.
Copyright © 2008 Realty Times. All Rights Reserved.
Broderick has done a great job sorting through the Govt lawyer language to explain an important program available NOW. Visit his website at
DEADLINENEWSROOM
.
From Realty Times of October 16, 2008
Smaller Homeowner Bailout Already In Place, by an old freind, Broderick Perkins
Don't wait for home owner bailout provisions to trickle down from the $700 billion "Emergency Economic Stabilization Act of 2008," (H.R. 1424) recently rushed through Congress.
When it comes to help from new federal legislation for distressed home owners, the $300 billion "Housing and Economic Recovery Act of 2008" (H.R. 3221), signed earlier this year, can provide more immediate relief.
The $300 billion recovery act has both a mandated mortgage modifying provision and a voluntary "Hope For Homeowners" (H4H) refinance program, for home owners who qualify.
President Bush signed the larger $700 billion stabilization act on Oct. 3, 2008, but it is, in-part, "stay tuned" legislation. Exactly how it will be implemented to help home owners -- or the economy at large, for that matter -- isn't fully clear.
In part, the stabilization act calls for federal agencies holding mortgage and mortgage securities to identify loans that can be modified and work toward modifications. The stabilization act also allows the U.S. Secretary of the Treasury to use loan guarantees and credit enhancements to help home owners avoid foreclosures. And the stabilization deal calls for shoring up the H4H program. How any of those provisions will be implemented, however, is still under consideration.
Loan modifications
On the other hand, the older recovery act, signed in July came with one provision ready to go. It mandated that mortgage servicers modify loans for certain home owners to help them avoid foreclosure as long as three requirements are met:
A default on the mortgage either has already happened or is "reasonably foreseeable."
The home owner lives in the property as his or her primary residence.
The lender is likely to recover more through the loan modification or workout than by forcing the home owner into foreclosure.
It's up to the home owner to prove, in writing, his or her case to the lender. That could mean some back and forth negotiating, even legal wrangling. To that end, an accredited mortgage, banker and broker certifier, CMPS Institute, offers a sample letter containing more assistance, and tips to help home owners negotiate a loan modification.
The institute further advises:
1. Your hardship letter should demonstrate job loss, a serious health condition, an ensuing balloon payment, a coming adjustable rate reset or some other financial calamity that will preclude you from making your mortgage payments as scheduled.
2. Send the letter along with documented evidence -- your financial statements, employment records, tax returns and bank statements and other evidence that demonstrates how you can afford a modified loan under your present financial circumstances. Also send the lender a current appraisal of your home or otherwise document the current value of your home.
3. Deal directly with a representative of the lender's "loss mitigation" or workout department-- not a broker, loan originator or other mortgage staffer.
FHA refinancing
Newly effective Oct. 1, 2008 a second provision of the recovery act allows troubled mortgage holders to avoid foreclosure by refinancing into smaller, more affordable, Federal Housing Administration (FHA)-backed mortgages, provided Uncle Sam gets a piece of the equity-growth action and provided the lender voluntarily agrees to the deal, which includes writing down or reducing loan balances.
U.S. Department of Housing and Urban Affairs' (HUD) "Hope For Homeowners"fact sheets spell out the details.
The refinanced, 30-year, fixed rated FHA mortgages in the H4H program are for home owner-occupants having difficulty making their payments.
The existing mortgage must have been originated on or before January 1, 2008, and the owner must have made at least six payments.
Banks can volunteer to write down an existing mortgage to 90 percent of the new appraised value of the home. To get the deal to fly, any holders of existing mortgage liens must release the liens and waive all prepayment penalties and late payment fees. The existing first mortgage holder has to accept the H4H loan as full settlement of all outstanding indebtedness.
As of March 2008, the home owner's total monthly mortgage payments due must be more than 31 percent of the household's gross monthly income.
The loan amount on the new H4H mortgage cannot exceed $550,440. The amount can include a financed 3 percent "Upfront Mortgage Insurance Premium" and other loan costs. The home owner must also pay a 1.5 percent annual mortgage insurance premium.
The home owner cannot take out a second mortgage for the first five years of the new loan, except under certain emergency conditions.
The borrower must agree to share equity with the FHA, both the equity created at the beginning of the new mortgage and future appreciation in the value of the home. If the home is sold or refinanced, the homeowner will share the equity with FHA on a sliding scale ranging from a 100 percent FHA share after the first year to a minimum of 50 percent after five years. The FHA will share a portion of its equity earnings, when available, with past lien holders until any available appreciation is exhausted. Any left over appreciation goes to the FHA on the sliding scale.
More help for home owners: "Foreclosure Prevention Efforts Grow.
Copyright © 2008 Realty Times. All Rights Reserved.
Broderick has done a great job sorting through the Govt lawyer language to explain an important program available NOW. Visit his website at
.
Monday, October 13, 2008
Troubled Asset Relief Program
From Realty Times -
Washington Report: Paulson and Neel Kaskari by Kenneth R. Harney .. 10-13-08
Most people call it the $700 billion bailout, but in Washington it goes by the unglamorous name: TARP.
That stands for Troubled Asset Relief Program, and it's the centerpiece of the federal government's effort to take bad mortgages and other toxic financial products off the books of banks.
The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers - thereby helping to ease the current credit freeze.
TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.
Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kaskari and he's an aeronautical engineer by training who used to work on satellite designs for NASA.
High on Paulson's and Kaskari's priority list will be to quickly start buying up defaulted "acquisition, development and construction" (ADC) loans made by local and regional banks to home builders. That's potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.
Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular "piggyback" plans that allowed people to purchase homes with no downpayment.
Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.
Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks -- and that's extremely important -- its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.
Still another key priority: Reworking the repayment terms of tens of thousands of "underwater" and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.
That, in turn, should gradually begin to have positive impacts on local real estate market conditions.
But don't expect miracles overnight. This is going to take months and years to fully work its way through the system.
In the meantime, Realty Times will keep a close eye on TARP -- and keep you posted on important developments.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
.
Washington Report: Paulson and Neel Kaskari by Kenneth R. Harney .. 10-13-08
Most people call it the $700 billion bailout, but in Washington it goes by the unglamorous name: TARP.
That stands for Troubled Asset Relief Program, and it's the centerpiece of the federal government's effort to take bad mortgages and other toxic financial products off the books of banks.
The idea is that by buying those assets at a fair market price, the banks will have the capital and confidence to begin making loans again to small businesses, home builders and individual consumers - thereby helping to ease the current credit freeze.
TARP is barely a week into official operation, but there are important developments underway that anyone interested in real estate ought to know about.
Treasury Secretary Paulson picked a 35-year-old whiz kid from his former Wall Street firm, Goldman Sachs, to run the entire program. His name is Neel Kaskari and he's an aeronautical engineer by training who used to work on satellite designs for NASA.
High on Paulson's and Kaskari's priority list will be to quickly start buying up defaulted "acquisition, development and construction" (ADC) loans made by local and regional banks to home builders. That's potentially huge for real estate because it could eventually set the stage for a slow revival of new home building.
Another target: Defaulted equity lines of credit and second mortgages made to home buyers during the boom years. You probably remember the wildly popular "piggyback" plans that allowed people to purchase homes with no downpayment.
Many of those second liens are gushing red ink in bank portfolios right now. By getting them off the books, the program should eventually allow local and regional banks to begin offering credit lines and seconds to homeowners who need them and qualify for them.
Though TARP will also be buying up billions of dollars of complex mortgage securities from giant banks -- and that's extremely important -- its help to small and medium-sized lending institutions on ADC loans and home equity lines may well have more immediate, tangible impacts on local real estate markets around the country.
Still another key priority: Reworking the repayment terms of tens of thousands of "underwater" and delinquent mortgages to allow home owners to remain in their houses and avoid foreclosure.
That, in turn, should gradually begin to have positive impacts on local real estate market conditions.
But don't expect miracles overnight. This is going to take months and years to fully work its way through the system.
In the meantime, Realty Times will keep a close eye on TARP -- and keep you posted on important developments.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
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Tuesday, October 7, 2008
Market Conditions & Total Mortgages in U.S.
Market Conditions by Realty Times Staff October 7, 2008
It appears that with the recent final woes in the nation and on Wall Street, the Dow fell below 10,000 for the first time since 2004 in the first hour on Monday, many consumers are holding back on their spending.
Even before the latest ailing markets, reports indicated that August had been the weakest for consumer spending in six months. The Commerce Department reported that consumer spending was unchanged in August -- not a positive sign in an economy that needs jumpstarted.
The New York times reports that cutbacks seem to be across the board, from the automobile industry to fashion to restaurants. "Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter." This number is currently closer to zero percent.
Copyright © 2008 Realty Times. All Rights Reserved.
Some numbers heard on the radio. 95% of all mortgages are current and being paid every month. There are $14 Trillion total mortgages in the U.S. Thus 5% or $700 Billion are of concern. Interesting number, $700 Billion. Hmmmmm.
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It appears that with the recent final woes in the nation and on Wall Street, the Dow fell below 10,000 for the first time since 2004 in the first hour on Monday, many consumers are holding back on their spending.
Even before the latest ailing markets, reports indicated that August had been the weakest for consumer spending in six months. The Commerce Department reported that consumer spending was unchanged in August -- not a positive sign in an economy that needs jumpstarted.
The New York times reports that cutbacks seem to be across the board, from the automobile industry to fashion to restaurants. "Less than a month ago, Nigel Gault, chief domestic economist at Global Insight, a forecasting service, predicted that domestic economic output would rise 1.2 percent in the third quarter." This number is currently closer to zero percent.
Copyright © 2008 Realty Times. All Rights Reserved.
Some numbers heard on the radio. 95% of all mortgages are current and being paid every month. There are $14 Trillion total mortgages in the U.S. Thus 5% or $700 Billion are of concern. Interesting number, $700 Billion. Hmmmmm.
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Monday, September 29, 2008
THE BAILOUT - SURPRISE, SURPRISE!!
The bailout bill has failed in the U.S. House !!!!
What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.
What next, nobody knows at this stage. Probably Thursday before they can restart negotiations.
Brief Overview of Bailout Plan
From Realty Times on September 29, 2008
Washington Report: Overview of Bailout Plan by Kenneth R. Harney
There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.
The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:
At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.
Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.
Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.
You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.
The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.
Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.
Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.
It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.
Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.
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Copyright © 2008 Realty Times. All Rights Reserved.
Washington Report: Overview of Bailout Plan by Kenneth R. Harney
There's no question what's been dominating debate in Washington -- the Treasury's and Congress's plans to buy hundreds of billions of dollars of distressed mortgages from lenders and investors.
The fine print rules and regulations for the bailout plan won't be known for weeks, but here's a quick overview from a real estate perspective on how it's supposed to work:
At its core, the plan is all about taking home loans off lenders' and investors' books that are currently illiquid -- they can't be sold, or are extremely difficult to sell -- because no one is sure what they're really worth.
Consider this hypothetical example: Say you own a mortgage-backed bond that has 100 subprime home mortgages in it. At the moment, 24 of those loans are delinquent; but 76 are paying on time. That proportion is pretty close to reality, according to the latest delinquency numbers from the Mortgage Bankers Association.
Now, because there are serious defaults in the pool, there's a stigma attached to your subprime bond. The best offer you've heard is maybe 20 cents on the dollar - which is ridiculous because over three quarters of your loans are paying on time, and the monthly cash flows should be worth a lot more.
You need an organization or program to intervene, buy your mortgage pool for a fairer price. That, in turn, will allow you to take in some cash and make some new mortgages.
The buyer of your loans can now work to see whether the interest rates, monthly payments, and other features of the 24 “bad” mortgages can be modified to be more affordable for the home owners involved.
Let's say that over a period of three years, those modifications end up saving 15 of the 24 delinquent mortgages from going into foreclosure. The new owner of the pool now has 90 loans paying on time, making it a lot more valuable than it paid.
Although the example is simplified, it's pretty much what the bailout plan is all about: Taking undervalued assets, holding them for awhile and turning them into better assets -- lemons into lemonade -- and reselling them, maybe even at a profit.
It's not clear at the moment how successful this will be long-term. But by buying up incorrectly valued mortgages at a “fair” price, the government has a chance to pump new money into the market -- money for new home mortgages -- and even lower interest rates in the process.
Exactly how to do that -- with what rules and guidelines -- has been what all the noise in Washington has been about.
--------------------------------------------------------------------------------
Copyright © 2008 Realty Times. All Rights Reserved.
Saturday, September 13, 2008
THE STATE OF US FINANCES AND FORECLOSURES
The following statement recently appeared in a News Article:
"Lenders have repossessed a record 656,545 properties nationwide – or 8.6 of every 1,000 households in the US" - the data was attributed to ForeclosureS.com.
It concerns me that it is stated in terms of 1,000 households - in reality it is 0.86% of households, less than 1%, but sounds more ominous when they say it as they do. I do agree it is a very painful experience for those affected, and do not mean to minimize the impact to those folks, but let's at least keep it in a reasonable perspective.
In a similar fashion, August Foreclosures were a new record! However, have any of you heard that the percentage of foreclosures in August reflected a reduced rate of foreclosures over July? Stated differently, the rate of foreclosures dropped! Hmmm, don't guess you heard that.
How about the Bank Foreclosure Crisis. Some large banks have fallen, and no doubt others will follow. I can't prove the numbers I heard but this is what I heard. "The Feds are still looking at 117 banks that are potential Lehman Brothers or Bear Stearns". The speaker then went on to say that there are 8500 banks in the U.S.
Hmmmm, if that's accurate, then the 0.0138% largest of the 8500 banks may be in trouble.
What is the old expression, liars figure, figures lie? Well, it does sell papers. Maybe this makes me guilty of being a liar?
Again, not trying to minimize the concerns we face but let's at least try to offer the whole story after we sell the paper.
.
"Lenders have repossessed a record 656,545 properties nationwide – or 8.6 of every 1,000 households in the US" - the data was attributed to ForeclosureS.com.
It concerns me that it is stated in terms of 1,000 households - in reality it is 0.86% of households, less than 1%, but sounds more ominous when they say it as they do. I do agree it is a very painful experience for those affected, and do not mean to minimize the impact to those folks, but let's at least keep it in a reasonable perspective.
In a similar fashion, August Foreclosures were a new record! However, have any of you heard that the percentage of foreclosures in August reflected a reduced rate of foreclosures over July? Stated differently, the rate of foreclosures dropped! Hmmm, don't guess you heard that.
How about the Bank Foreclosure Crisis. Some large banks have fallen, and no doubt others will follow. I can't prove the numbers I heard but this is what I heard. "The Feds are still looking at 117 banks that are potential Lehman Brothers or Bear Stearns". The speaker then went on to say that there are 8500 banks in the U.S.
Hmmmm, if that's accurate, then the 0.0138% largest of the 8500 banks may be in trouble.
What is the old expression, liars figure, figures lie? Well, it does sell papers. Maybe this makes me guilty of being a liar?
Again, not trying to minimize the concerns we face but let's at least try to offer the whole story after we sell the paper.
.
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