Thursday, April 29, 2010

1.6 Millie

Barclays Capital expects 1.6 million distressed sales of homes this year, according to a report in the WSJ.

These “distressed sales” will mainly be in the form of foreclosures and short sales, and will make up roughly 30 percent of all home sales this year and next.

In 2011, the same number of distressed sales is expected, followed by a slight decline to 1.5 million in 2012.

Last year, the bank said such sales totaled 1.5 million.

Barclays currently estimates that banks and mortgage investors such as Fannie Mae and Freddie Mac own 480,000 homes – that number is expected to rise over the next 20 months and peak at 536,000 in January 2012.

However, there’s also the so-called shadow inventory, which they measure by tallying homeowners 90 days or more overdue on mortgage payments or already in the process of foreclosure.

As of the end of February, a startling 4.6 million households were in that category, though not all of them will lose their homes thanks to loan modifications and other loss mitigation efforts.

At the same time, you need to factor in strategic default, which includes borrowers that may be current but thinking about walking away.

Barclays estimates that home prices will fall another three to five percent on average over the next couple years.

You can reach me, Gene Neal at 877-276-6400 Ext 101.

Thursday, April 22, 2010

Refi's headed UP

Mortgage demand, which had recently fallen to the third lowest point since June, snapped its slump and increased 13.6 percent last week, according to the Mortgage Bankers Association.

The rally was led by a 15.8 percent increase in refinance applications and a 10.1 percent jump in purchase activity.

However, purchase applications were still off 5.2 percent compared with the same week a year ago.

The refinance share of mortgage activity increased to 60 percent of total applications, up from 58.9 percent the previous week, as mortgage rates inched back toward record lows.

“Treasury rates fell last week causing a decline in mortgage rates,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a press release. “As a result, refinance applications picked up over the week, as some borrowers took advantage of this recent rate volatility to lock in a low fixed-rate loan.”

“Purchase applications continued to increase coming out of the Easter holiday, as we approach the end of the homebuyer tax credit, and are up modestly over last month.”

The popular 30-year fixed dropped to 5.04 percent from 5.17 percent, while the 15-year fixed averaged 4.34 percent, down from 4.45 percent.

The one-year adjustable-rate mortgage also improved, falling to 6.95 percent from 7.02 percent.

Maybe interest rates aren’t going to surge after all…

The MBA’s weekly survey covers more than half of all retail, residential loan applications, but does not factor out duplicate or rejected apps, which have surely risen since the mortgage crisis got underway.

Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

Tuesday, April 20, 2010


Going forward, borrowers who previously experienced a deed-in-lieu of foreclosure won’t have to wait as long to get approved for a subsequent mortgage.

Last week, mortgage financier Fannie Mae changed its required waiting period (the amount of time that must elapse after a pre-foreclosure event) to reflect current market conditions.

In the past, borrowers had to wait four years after a deed-in-lieu of foreclosure to get approved for a mortgage with Fannie Mae.

That time period has been slashed to just two years, though the maximum loan-to-value is limited to 80 percent. After four years, the maximum LTV climbs to 90 percent.

Pre-foreclosure sales and short sales, which Fannie categorizes as the same event, a property sold in lieu of foreclosure for less than the total amount owed, will also have a two year waiting period with the same LTV requirements.

Additionally, certain extenuating circumstances will allow borrowers to get loans after just two years at up to 90 percent LTV.

In all cases, borrowers must re-establish their credit, meaning they must meet minimum credit score requirements and eligibility requirements.

Fannie Mae and Freddie Mac currently require a five-year waiting period after foreclosure to re-establish credit; the waiting period is only three years for an FHA loan and two years for a VA loan.

Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

Wave to your Mortgage

Bank of America plans to waive mortgage payments for up to nine months for those jobless and collecting unemployment benefits, according to the Charlotte Observer.

There’s a bit of a catch though: borrowers must agree to hand over the house if they’re unable to find a job within those nine months.

Of course, BofA would give soon-to-be former homeowners $2,000 for relocation costs if they failed to get back on their feet during that time.

For those lucky enough to snag a job, the unpaid mortgage payments would be tacked onto the existing mortgage and paid back over time.

If the new job was lower paying than the original, BofA would consider a loan modification to make mortgage payments more sustainable.

The proposed program must still meet accounting and regulatory guidelines, as lenders are required to write down the value of a loan if the modified payment plan lasts beyond three months.

But BofA doesn’t see it as a “modification.” Will federal regulators see it that way too? Stay tuned…

Bank of America, which acquired under-fire Countrywide back when, hasn’t exactly starred under the Making Home Affordable effort.

Before turning things around recently, the banking giant had only completed 98 permanent loan modifications under the program, so image is clearly at stake.

The company also recently launched an earned principal forgiveness program for underwater borrowers, whereby homeowners will earn principal reductions by making on-time payments over time.

Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

Thursday, April 15, 2010

Anemic Galaxy..."Anemic Start"

The US housing recovery is off to an “anemic” start, credit-rating agency Fitch Ratings said in commentary today.

“The federal housing credit and very attractive affordability both gave the housing sector a brief jolt after bottoming out in the middle of last year,” said managing director and lead US homebuilding analyst Bob Curran. “However, faltering consumer confidence has somewhat restrained the recovery so far, with numerous challenges still awaiting the sector.”

Among the challenges facing the US housing market include the termination of the Federal Reserve’s mortgage-backed securities purchase program, the conclusion of the housing credit program, and continued high levels of delinquency and foreclosure.

“Nevertheless, housing has embarked on a recovery, admittedly more muted than expansions of the past,” Fitch said in a press release.

As the recovery seen in housing so far remains fragile, US Department of Housing and Urban Development (HUD) secretary Shaun Donovan told House of Representatives lawmakers Wednesday that eliminating government support of the housing market through a quick resolution of the government-sponsored entities could further upset the mortgage markets.

Other expert witnesses at the House hearing urged some form of government support of the US housing finance system in whatever post-GSE world that emerges as public policy is shaped to respond to the ongoing financial crisis.

Again I look forward to becoming your Mortgage advisor and ultimately saving you money and time. Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

Friday, April 9, 2010

Rates Headed Up...for How Long?

In the wake of the end to the Fed’s $1.25trn mortgage-backed securities (MBS) purchase program, mortgage rates jumped in two weekly surveys.

The Freddie Mac (FRE: 1.37 +2.24%) weekly survey put the average interest rate for a 30-year fixed-rate mortgage (FRM) at 5.21% with an average 0.6 point for the week ending April 8, up from the previous week, when the average was 5.08%, and up from the same time last year, when the average rate was 4.87%. It’s the highest average rate for 30-year FRM since August 13, 2009, when it averaged 5.29%. It is the fourth week Freddie’s rates have inched upward.

Mortgage rates followed bond yields higher amid a positive March employment report, said Frank Nothaft, Freddie Mac vice president and chief economist.

“Following its extension in early November of last year, the homebuyer tax credit is showing some impact on housing market activity, mostly through the use of government-insured mortgages, which tend to be a favorite among first-time homebuyers,” Nothaft said.

“Compared to the week ending December 4, 2009, which was the first week after the original expiration date, mortgage applications for home purchases are up 17% for the first week in April of this year for government-insured loans, compared to an 11% decline in conventional loans, according to the Mortgage Bankers Association,” he added.

The survey of large banks and thrifts put the average rate for a 30-year FRM at 5.35% with a 0.47 origination point, up from last week’s average of 5.23%. Last year,’s survey had the 30-year FRM at 5.2%. Over the past three weeks, the average increased one quarter of a percentage point.

Freddie said the 15-year FRM averaged 4.52% with an average 0.6 point, up from last week when it averaged 4.39%. Last year, the 15-year FRM averaged 4.54% with an average 0.6 point, up from last week when it averaged 4.39%, but down from the average rate of 4.54% one year ago. It’s the highest average rate for 15-year FRM since the week ending December 31, 2009, when it averaged 4.54%. put the average rate for a 15-year FRM at 4.69% with a 0.47 origination point, up from last week’s average of 4.53%.

Freddie said the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.25% this week with an average 0.6 point, up from last week when it averaged 4.1%. A year ago, the 5-year ARM averaged 4.93%. In addition, Freddie said the one-year Treasury-indexed ARM averaged 4.14% this week with an average 0.5 point, up from last week when it averaged 4.05%. At this time last year, the 1-year ARM averaged 4.83%. said the five-year ARM averaged 4.55% with an average 0.47 origination point, up from last week’s average of 4.51%.

Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

Wednesday, April 7, 2010

Subprime Delinquencies Fall for First Time in 4 Years

The delinquency rate on subprime residential mortgage-backed securities (RMBS) fell for the first time in four years, according to Fitch Ratings.

Subprime RMBS delinquencies dipped to 46.3 percent in March from 46.9 percent the prior month, but are still well above the 39.8 percent rate seen a year ago.

Subprime delinquencies increased for 44 straight months, from a low point of 6.2 percent in June 2006, before things took a turn for the worse.

“The improvement in subprime delinquencies may be nothing more than a seasonal anomaly of tax refunds being utilized to help borrowers catch up on late mortgage payments,” said Managing Director Vincent Barberio.

“Nonetheless, March roll rates fell significantly from last month and are now at their lowest level in over two years.”

The roll rate is the pace at which performing loans become delinquent.

Loan modification programs may also be helping with delinquencies, although that could just be a temporary, given their terrible re-default rate.

Meanwhile, the prime RMBS delinquency rate climbed to 10.1 percent, thanks to a 34th consecutive monthly increase in serious delinquencies.

Mortgage lates on prime loans, which are intended for the most creditworthy borrowers, increased from 9.9 percent in February and 4.8 percent a year ago.

Prime jumbo loans are performing even worse, especially in California, which holds 44 percent of the $371 billion market share.

The delinquency rate for such loans climbed to 11.8 percent from 11.6 percent month-to-month in the Golden State.

In Florida, the prime jumbo delinquency rate increased to 17.5 percent from 17 percent; fortunately the state only holds a six percent share.

Any questions or concerns don’t hesitate to contact me, Gene Neal your Mortgage Expert.

Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513