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Rates on 30-year loans remain below 5%

November 13th, 2009 2:39 PM

Rates this week for 30-year home loans stayed below 5 percent for the second week in a row.

The average rate fell to 4.91 percent from 4.98 percent a week earlier, mortgage company Freddie Mac said Thursday.

Rates hit a record low of 4.78 percent in the spring, but are still attractive for people looking to buy a home or refinance.

The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.

Last week, Congress passed a bill extending and expanding a key federal tax credit that has helped to boost sales.

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6,500. First-time homebuyers – or anyone who hasn’t owned a home in the last three years – would still get up to $8,000. To qualify, buyers have to sign a purchase agreement by April 30, 2010 and close by June 30.

However, lenders remain cautious and credit standards are tough, so the best rates are available only to borrowers with solid credit and a 20 percent downpayment.

Recent data show a housing market on the mend. The National Association of Realtors said Tuesday that third-quarter home sales outpaced the previous three months and the year-ago figures, and price declines are moderating. The same day, homebuilder Toll Brothers Inc. said contracts for new homes rose 42 percent in its fiscal fourth quarter.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.

The average rate on a 15-year fixed-rate mortgage fell to 4.36 percent from 4.40 percent recorded last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.29 percent, down from last week’s 4.35 percent. Rates on one-year, adjustable-rate mortgages declined to 4.46 percent from 4.47 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 point for 30-year loans. The fee averaged 0.6 point for 15-year, five-year and one-year loans.

Posted by Marcos Fullana on November 13th, 2009 2:39 PMPost a Comment (0)

U.S. mortgage delinquencies hit another record in 3Q

November 18th, 2009 10:48 AM

The pace at which people fell behind on their mortgages slowed during the summer for the third consecutive quarter, but the overall delinquency rate hit another record, a new report shows.

For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That’s up 58 percent from 3.96 percent a year ago.

Being two months behind is considered a first step toward foreclosure, because it’s so hard to catch up with payments at that point.

The rate was up 7.6 percent from the second quarter. That’s a much smaller jump than the 11.3 percent rise in the second quarter from the first, and the 14 percent leap seen in the quarter before that.

While the slowing growth rate is a positive sign, the increase shows there’s still a lot of problematic mortgages out there, said F.J. Guarrera, vice president of TransUnion’s financial services division. The company doesn’t expect the figure to start declining until the middle of 2010.

Two things must get better before mortgage delinquency rates start reversing themselves, he said: home values and unemployment. “Until we see improvement in both of those areas, it’s possible that it will take longer for delinquency to improve,” Guarrera said.

The statistics, which are culled from TransUnion’s database of 27 million consumer records, show that mortgage delinquencies remain highest in the four states where the crisis has hit the worst.

• In Nevada, the rate reached 14.5 percent, up from 7.7 percent a year ago.

• In Florida, the rate was 13.3 percent, up from 7.8 percent last year.

• In Arizona, the rate hit 10.4 percent, up from 5.5 percent in 2008.

• In California, the rate jumped to 10.2 percent, from 5.8 percent last year.

North Dakota remained the state where mortgage holders most often paid on time, with just 1.7 percent delinquency, up from 1.4 percent last year.

TransUnion expects delinquency to rise to just short of 7 percent for the fourth quarter, compared with 4.6 percent for the 2008 fourth quarter. The rate may reach 16 percent in Nevada. Those states with the highest delinquency and foreclosure rates will likely continue to see depressed housing prices.

The average mortgage debt per borrower nationwide edged up to $193,121 in the third quarter, from $192,287 last year. The District of Columbia had the highest average mortgage debt per borrower at $359,788. The lowest average mortgage debt per borrower was in West Virginia at $97,265.

Posted by Marcos Fullana on November 18th, 2009 10:48 AMPost a Comment (0)

Frank floats loan plan for unemployed homeowners

November 18th, 2009 10:47 AM

Rep. Barney Frank said Monday he is pushing a proposal to use some of the interest the government collects from the financial industry bailout to give loans to unemployed homeowners struggling to pay the mortgage.

The lack of aid to jobless homeowners has been identified as a big weakness in the Obama administration’s plan to tackle the mortgage crisis. A report by a congressional oversight panel said last month that the $50 billion program “was not designed to address foreclosures caused by unemployment,” which are now the main cause of default.

Frank, chairman of the House Financial Services Committee, said in Fall River and New Bedford at appearances with Housing and Urban Development Secretary Shaun Donovan that he favors providing government help in the form of federal loans to homeowners who have lost their jobs until they get another job.

“These are people who are very responsible, very thoughtful. They got a home, it’s above water, they’ve got equity, but they’re unemployed, and you can’t afford mortgage payments on unemployment,” said Frank, D-Mass.

Frank said the program would be funded using interest banks pay on the $700 billion Wall Street bailout, known as the Troubled Asset Relief Program.

Frank spokesman Steve Adamske said the program was actually developed by Congress in the 1970s but never funded. The proposal is now part of legislation introduced in September, called the Main Street TARP bill.

It would provide $2 billion in TARP money for low-interest loans to homeowners who have lost their jobs but who have good prospects for being able to resume mortgage payments in the future. The emergency loans would be provided for up to 12 months with the possibility of extending them for another year.

A Treasury Department spokeswoman declined to comment on Monday when asked about Frank’s proposal.

On Capitol Hill, many lawmakers have complained about the slow pace of loan modifications. Sen. Jack Reed, D-R.I., said in an interview last week that his staff has been considering ways to make mortgage companies do more loan modifications.

Reed said the Obama administration’s foreclosure assistance program hasn’t been working fast enough for his home state. Thirteen percent of Rhode Island homeowners were delinquent or in foreclosure as of June 30, the same as the number nationally, according to the Mortgage Bankers Association.

The foreclosure crisis is increasingly tied to joblessness, Reed said, as more borrowers with good credit lose their jobs and their ability to make monthly payments.

Lenders, meanwhile, have modest programs to aid the unemployed. Citigroup, for instance, has been reducing payments to an average of $500 for three months for some customers who have recently lost their jobs. Other banks give homeowners a break from payments for as long as six months.

Copyright © 2009 The Associated Press, Michelle R. Smith, Associated Press writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. AP Business Writers Alan Zibel and Daniel Wagner contributed to this report from Washington.

Posted by Marcos Fullana on November 18th, 2009 10:47 AMPost a Comment (0)

Senators push for Chinese drywall relief

November 6th, 2009 6:46 PM

A bipartisan group of senators from states hard hit by defective Chinese drywall is seeking a Senate resolution to urge banks and mortgage lenders to offer homeowners some relief.

The resolution introduced Wednesday carries no penalties but encourages lenders to delay or suspend mortgage payments – without penalty – for families with contaminated drywall. The lawmakers noted that some homeowners are juggling two housing payments because the contaminated drywall has made their homes uninhabitable.

“The dangers and health risks posed by contaminated drywall have forced thousands of families out of their homes and into temporary living situations, and many such families are unable to afford an additional financial burden,” the resolution states.

“Many homeowners are stuck with contaminated drywall in their homes and they need all the help they can get,” said Florida Sen. Bill Nelson, who has been pushing the Consumer Product Safety Commission since February to investigate imported drywall. “This is just one more way we’re trying to get them some relief.”

The senators estimate some 1,300 homeowners in 26 states and the District of Columbia are dealing with health and safety issues linked to the use of contaminated drywall.

Homeowners have reported a range of problems with corrosion and odors, as well as headaches, rashes and nosebleeds.

A federal task force investigating the problem last week reported it had found elevated levels of two elements in some Chinese-made drywall: sulfur and strontium. But it still does not know whether there is any link between the import and the problems homeowners are experiencing.

The results of additional tests are expected later this month.

Sens. Nelson and George LeMieux from Florida; Mary Landrieu and David Vitter of Louisiana; and Mark Warner and Jim Webb of Virginia introduced the resolution.

Copyright © 2009 The Miami Herald, Lesley Clark. Distributed by McClatchy-Tribune Information Services.

Posted by Marcos Fullana on November 6th, 2009 6:46 PMPost a Comment (0)

Rates on 30-year loans fall below 5 percent

November 6th, 2009 6:45 PM

Rates for 30-year home loans dipped below 5 percent this week after rising for three straight weeks.

The average rate fell to 4.98 percent from 5.03 percent a week earlier, mortgage company Freddie Mac said Thursday.

Rates had hovered below 5 percent for nearly a month until inching upward two weeks ago. They hit a record low of 4.78 percent in the spring, but are still attractive for people looking to buy a home or refinance.

The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities in an effort to lower rates on mortgages and loosen credit. Rates on 30-year mortgages traditionally track yields on long-term government debt.

That, plus a federal tax credit of up to $8,000 for first-time homebuyers, has helped boost the ailing housing market.

The number of signed contracts to buy previously occupied homes rose for the eighth month in a row in September, while residential construction spending jumped by 3.9 percent, the largest gain in more than six years, data this week showed.

Still, lenders are cautious and standards remain tight, so the best rates are available only to borrowers with solid credit and a 20 percent downpayment.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, frequently in line with long-term Treasury bonds.

The average rate on a 15-year fixed-rate mortgage declined to 4.40 percent from 4.46 percent recorded last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.35 percent, down from last week’s 4.42 percent. Rates on one-year, adjustable-rate mortgages decreased to 4.47 percent from 4.57 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac’s survey averaged 0.7 points for 30-year loans. The fee averaged 0.6 points for 15-year, five-year and one-year loans.

Posted by Marcos Fullana on November 6th, 2009 6:45 PMPost a Comment (0)

FHA delays the release of disputed audit of its finances

November 5th, 2009 4:35 PM

The Federal Housing Administration (FHA) abruptly delayed the release of a long-awaited independent audit of the financial soundness of the agency, citing potential problems with the accuracy of some of the study’s economic models.

The audit, compiled by Integrated Financial Engineering of Rockville, was scheduled to be released Wednesday, and the agency’s top officials planned to brief reporters on its results.

But on Tuesday evening, the agency postponed the event, saying the report had yet to be finalized. In a separate statement Wednesday, FHA Commissioner David H. Stevens said the delay was related to economic scenario tests that the agency requested “above and beyond” what was originally to be included in the audit, so that the FHA could “better understand a broader range of risk scenarios.”

“Based on these results, we raised questions about the accuracy of IFE’s modeling, and IFE therefore advised us that we should not treat the report as final,” Stevens said. “IFE is now running additional tests to ensure that the final report is accurate.”

FHA’s financial health has been a topic of growing concern as the agency’s loan volume exploded and its default rate climbed. Congress has been worried about the prospect of a taxpayer bailout. FHA officials have said the agency will not need one. But Reps. Darrell Issa (R-Calif.) and Spencer Bachus (R-Ala.) asked Housing and Urban Development Secretary Shaun Donovan on Monday to provide data backing up that claim.

In September, Stevens said the audit would show that the agency’s cash reserves had dropped below federally mandated levels. As of Oct. 1, the reserve fund no longer had enough cash to cover at least 2 percent of the agency’s outstanding loans, as required by law, he said.

But while the reserves are at a historic low, the audit predicted that they would rebound to the required level within two to three years largely as a result of the recovery in the housing market, said Stevens, citing preliminary data from the report.

On Wednesday, neither the FHA nor the auditing firm would comment about whether the preliminary data are now in question.

But Barry Dennis, president and chief operating officer of the auditing firm, said his office is working as quickly as possible to produce the final report. “In an environment like we’re in today, you need to look at a number of different economic scenarios, and in the process of doing that, we needed to track down some potential issues,” Dennis said.

Copyright © 2009 washingtonpost.com.

Posted by Marcos Fullana on November 5th, 2009 4:35 PMPost a Comment (0)

Fed again pledges to hold rates at record-lows

November 5th, 2009 4:34 PM

The Federal Reserve pledged Wednesday to keep a key interest rate at a record low for an “extended period,” signaling that the weak economy remains dependent on government help to grow.

The Fed said economic activity has “continued to pick up” and that the housing market has strengthened – a key ingredient for a sustained recovery.

But Fed Chairman Ben Bernanke and his colleagues warned that rising joblessness and tight credit for many people and companies could restrain the rebound in the months ahead.

“Economic activity is likely to remain weak for a time,” they said.

Against that backdrop, the Fed kept the target range for its bank lending rate at zero to 0.25 percent. And it made no major changes to a program to help drive down mortgage rates.

Commercial banks’ prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will remain about 3.25 percent, the lowest in decades.

Still, some credit card rates have risen over the past several months. In part, that reflects rate increases by lenders in response to escalating defaults on credit card loans. Lenders also pushed through increases before a new law clamping down on sudden rate hikes for credit card customers takes effect early next year.

On Capitol Hill, the House voted Wednesday to accelerate the enactment date of the new rules to protect consumers from many such surprise changes. Credit card companies would have to comply immediately, rather than starting in February, unless they agreed to freeze interest rates and fees. But the proposal’s chances in the Senate are considered dim.

The average rate nationwide on a variable-rate credit card is 11.5 percent, according to Bankrate.com. Lenders charge more and credit card customers pay rates higher than the prime because the debt they run up is riskier.

On Wall Street, the Dow Jones industrial average at first held onto an increase of more than 100 points after the Fed’s announcement. But stocks eventually gave up most of their gains in a late-day slump. It wasn’t clear how much of a role the Fed’s statement played. Some analysts noted that investors are nervous as the release of the government’s October jobs report on Friday approaches.

In normal times, the Fed controls only short-term rates. But after the financial crisis erupted, the Fed began buying longer-term Treasuries. Its purchases kept those rates lower than they’d otherwise be.

This is good news for borrowers with auto loans, some student loans, 15- and 30-year fixed-rate mortgages and some adjustable-rate mortgages. But it hurts savers and people dependent on fixed incomes who would normally be enjoying higher yields.

On Wednesday, the Fed stuck with its pledge to keep rates at “exceptionally low” levels for “an extended period.” Most analysts don’t think the Fed would begin to boost rates until next spring or summer.

Fed policymakers “believe they need to keep rates low to ensure that the recovery doesn’t falter,” said Joel Naroff of Naroff Economic Advisors.

The central bank hopes low rates will encourage consumers and businesses to boost spending, which would invigorate the recovery. The Fed signaled that it can continue to hold rates low because inflation is all but nonexistent.

The Fed has now entered a new phase: Managing the recovery rather than fighting the worst recession and financial crisis to hit the country since the Great Depression.

The economy began growing again last quarter for the first time in more than a year. But much of that growth came from government-supported spending on homes and cars. The strength and staying power of the recovery are uncertain, especially once government supports are removed.

In such a fragile recovery, a rate increase by the Fed is unlikely anytime soon, said Chris Rupkey, an economist at the Bank of Tokyo-Mitsubishi.

“Growth does not mean a rate hike,” Rupkey said.

As with past rebounds, the budding recovery won’t likely stop the unemployment rate from rising. The rate, now at a 26-year high of 9.8 percent, is expected to hit 9.9 percent on Friday, when the government releases the unemployment report for October. The jobless rate could rise as high as 10.5 percent around the middle of next year before declining, analysts said.

At some point, once the recovery is firmly rooted, the Fed is likely to start signaling that higher rates are coming. One hint of an eventual rate hike would be the Fed’s changing or dropping its pledge to hold rates at record-low levels for an “extended period.”

It’s a delicate task. Boosting rates and removing supports too soon could short-circuit the recovery. On the other hand, holding rates low and keeping government supports intact too long could unleash inflation.

Though it didn’t change a program to help drive down mortgage rates, the Fed did say it will trim its purchases of debt from Fannie Mae and Freddie Mac to $175 billion, from $200 billion, because the supply of that debt has declined.

At its previous meeting in late September, the Fed agreed to slow the pace of a $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac. It decided to wrap up the purchases by the end of March instead of at year-end. So far, the Fed has bought $776 billion of the mortgage securities.

Its efforts to lower mortgage rates are paying off. Rates on 30-year loans averaged 5.03 percent, Freddie Mac reported last week. That’s down from 6.46 percent last year.

Though the Fed will slow its purchases of mortgage securities, rates for home loans should remain low – in the 5 percent range – as long as the purchases continue, analysts say.

Posted by Marcos Fullana on November 5th, 2009 4:34 PMPost a Comment (0)

Mortgage bankers claim better FHA condo rules

November 5th, 2009 4:33 PM

The Federal Housing Administration (FHA) previously announced a tightening of the rules for condo mortgage approvals, but delayed implementation and a formal announcement from Oct. 1 to Nov. 2, and then Dec. 7, 2010.

After meetings with FHA officials, however, the Mortgage Bankers Association (MBA) has said that rules governing condo mortgage approvals will be less onerous than first announced in an article published by Inman News.

According to Faramarz Moeen-Ziai, a mortgage banker at San Ramon, Calif.-based Bank of Commerce Mortgage, the most important change is the rule on recertification. As first announced, a condo currently certified for the FHA program would have to be recertified. That change could add a time-consuming burden to condo sales. Under the new rules, according to MBA, existing certifications would still be valid.

“If what the MBA says is the deal, (the new rules are) essentially a non-event,” says Moeen-Ziai. “The big deal for us wasn’t the guideline changes – guideline changes happen all the time. It was wiping the slate clean on all previously approved condo projects’ and requiring re-certification.”

The FHA, as announced by the MBA, will also insure up to 50 percent of a condo project’s loans, and up to 100 percent in “well established” condo developments. Earlier versions called for FHA to approve up to 30 percent of loans.

However, MBA says that some things will change. FHA, for example will require that owner-occupants must inhabit at least 50 percent of a condo association’s units.

The FHA has neither confirmed nor denied the MBA announcement.

Source: Inman News, Nov. 5, 2009, Matt Carter

© 2009 Florida Realtors®

Posted by Marcos Fullana on November 5th, 2009 4:33 PMPost a Comment (0)

Congress extends higher mortgage loan limits

November 3rd, 2009 11:15 AM

On Thursday, the U.S. Congress passed a congressional resolution to extend the current higher Fannie Mae, Freddie Mac and FHA loan limits through 2010. The present, higher loan limits expire at the end of 2009 and revert to previous lower limits. The move still needs to be signed by President Obama, which is expected shortly.

The National Association of Realtors® (NAR) thanked Congress for speedy action.

“NAR commends both houses of Congress for their quick action in continuing these higher limits during a time for recovery in the housing market and national economy,” says NAR President Charles McMillan. “The higher limits, along with the homebuyer tax credit extension, are necessary to keep the markets moving at this critical time.

“Home sales have shown significant movement upwards in the past six months, and reduced inventory in some segments of the housing market, but not in all. Home purchases in the middle-income and higher brackets have not moved much, and those markets must improve before we can experience a fully sustained housing recovery. These higher loan limits will help motivate qualified homebuyers to purchase in those markets,” McMillan said.

The resolution would extend the present loan limits for FHA, Fannie and Freddie through the 2010 calendar year at 125 percent of local median home sales prices, up to a maximum of $729,750 in high-cost areas. The floor for FHA is $271,050; the floor for Fannie Mae and Freddie Mac conforming loan limits is $417,000.

© 2009 Florida Realtors®

Posted by Marcos Fullana on November 3rd, 2009 11:15 AMPost a Comment (0)