Your Mortgage Spy

Low like the Lowest ever Low

2011-11-09T12:57:00.000-08:00

The ratio of mortgage payment to median family income is the lowest on record, according to a new report from Fiserv.

The company noted that purchase mortgage payments now account for just 13 percent of monthly median family income nationwide, which is the lowest figure since 1971, when data first started being collected.

In Las Vegas, the ratio has fallen to 11 percent from 32 percent!

Back in the first quarter of 2006, when mortgage lending moved at a frenzied pace and home prices only moved in one direction, the national number was 23 percent.

In areas where home prices exploded upwards, the number was probably beyond 50 percent, forcing many borrowers to go with teaser rates tied to option arms while simultaneously stating their income.

That explains why just a year or so later we experienced the worst housing bust ever.
Families Spending Less on the Mortgage

Nowadays, families are throwing a lot less of their income towards their housing payment each month, thanks to the near-record low mortgage rates and the reduced home prices.

Still, there are few buyers out there, evidenced by the continued weakness in purchase-money mortgage applications and faltering home prices.

The big issue continues to be consumer confidence, which has risen and fallen as new economic dramas unfold on a seemingly daily basis.

Until that business is resolved and the job market improves, it is expected that home sales (and prices) will remain flat.

Meanwhile, mortgage underwriting standards are a lot tougher than they had been during the boom, making it difficult for many to take advantage.

Then there are the millions stuck in their current properties thanks to issues like negative equity.
First-Time Homebuyers Rejoice

Unfortunately, this means many people aren’t able to benefit from this somewhat unprecedented situation, namely those with underwater mortgages.

But first-time homebuyers have the opportunity to get in on the cheap and position themselves much better than existing homeowners.

After all, if you buy now for say $200,000 and your neighbor (who isn’t going to walk away) owes $400,000 for a similar property, you’re looking pretty good.

That’s right. The current homeowner is banking on you, the new buyer, to buoy the housing market and get them back in the black. Assuming that happens you’ll experience some kick-butt appreciation.

Just be patient; it may take a while. Fiserv expects home prices to decline 3.6 percent into mid-2012 before rising 2.4 percent in the second half of 2012 through the first half of 2013.

Cash Out?

2011-11-07T14:14:00.000-08:00

The number of homeowners who refinanced with "cash out" continued to decline in the third quarter according to information released on Monday by Freddie Mac. Eighty-two percent of borrowers who refinanced their mortgages during the period either maintained about the same loan amount or lowered their mortgage balance by bringing money to the table. During the second quarter 77 percent of refinances fell into this category.

Of those who refinanced, 44 percent maintained approximately the same loan amount and 37 percent reduced the principal balance. Eighteen percent of refinancing homeowners increased their loan by more than 5 percent, Freddie Mac's definition of cash out. Over the period from 1985 to 2010 the average percentage of cash out refinances was 46 percent.

Homeowners took an estimated $5.3 billion in equity out of their homes. This was the lowest amount of equity removed from the system since the third quarter of 1995 and was substantially below the $6.3 billion cashed out in the second quarter. In the peak year for cash out refinancing volume (Q2 2006) there was $83.7 billion refinanced out of home mortgages.

Homeowners had a median rate reduction through refinancing a 30-year fixed-rate mortgage of about 1.2 percentage points or a 22 percent improvement in their rate, saving them about $2,500 over the first five years of a new $200,000 loan. The median rate reduction in the second quarter was 1 percent.

Freddie Mac's figures indicate that the borrowers who refinanced in the third quarter owned homes that had lost a median of 7 percent in value over the median of 5 years that the old mortgage had been in place. As Freddie Mac's House Price Index shows about a 25 percent decline in its U.S. series between September 2006 and September 2001, appraisals that these homes had either held their value better than the average home or had benefitted from value-enhancing improvements

7 ways to hear Not right now

2011-11-03T10:14:00.000-07:00

With mortgage rates so low, just about everyone and their mother has at least inquired about refinancing.
Unfortunately, a lot of current homeowners are finding that they don’t qualify for one reason or another.
That said, let’s explore some common reasons why you may be denied that precious refinance. And don’t fret, I’ll also offer solutions.
Lack of Equity/ LTV Restraints
Perhaps the most common reason for denial nowadays is a lack home equity, which translates to a loan-to-value ratio well above what’s acceptable.
For example, a great number of homeowners took out interest-only home loans and option-arms during the housing boom because home prices were only going in one direction. Up.
But once things took a turn for the worse, many of those homeowners had little, no, or even negative equity as a result.
Even those who opted for traditional fixed-rate mortgages may have sapped their home equity by cash-out refinancing repeatedly. Regardless, many of these homeowners will find that they don’t qualify for a traditional refinance thanks to their inflated LTV.
Solution: There are a few government-backed programs, as well as lender-based programs out there at the moment that deal with high LTVs. The most popular is HARP, and soon HARP 2.0 will be released, which has no LTV ceiling. Inquire with your loan servicer or any other lender/broker for details.
Loan Amount Too Big
What if your loan amount falls into the jumbo realm, and you don’t have the special qualities, such as an excellent credit score and a low LTV to qualify? This could make it difficult to get that low rate, let alone a refinance to begin with.
Jumbo loans are a lot more restrictive and come with higher interest rates than their conforming loan brethren. So expect more scrutiny if your loan amount is bigger than most.
Solution: Make it a cash-in refinance by bringing money in at closing to get the loan amount down below the conforming limit. This could also lower your LTV and land you with a lower interest rate! Just make sure you actually want to stay in the house for the long-haul.
Credit Score Too Low
Another common refinance roadblock is a less-than-perfect credit score. And by less-than-perfect, I mean crappy. If your credit score isn’t where it should be, there’s a good chance you won’t get approved for your refinance.
Credit scores below 620 are typically considered “subprime,” and will make qualification difficult, especially at high LTVs. Basically the combination of a low credit score and high LTV is a huge risk for a mortgage lender to take, especially in today’s market.
Solution: There are still options for those with low credit scores, such as FHA loans. You just need to shop around more to find them or enlist a mortgage broker to do the legwork for you. Either way, understand that the mortgage rate you see advertised on TV won’t be the one you receive. So you may want to work on ways to actually improve your credit score before you apply.
Insufficient Income
Another refinance killer is insufficient income. If your income isn’t as high as you said it was when you first got your mortgage during the boom (stated income loan), you may be in for a surprise this time around.
And supplying your actual income to the mortgage underwriter could be a rude awakening, even with the low mortgage rates on offer. If you aren’t able to squeeze below the maximum debt-to-income ratio limit, you’ll be denied.
Solution: While making more money is likely out of the question, adding a co-borrower could help you qualify. Or paying off existing debt. You can also shop around to find a lender with more forgiving limits.
Spotty Job History
This is a biggie, considering how bad the unemployment picture has become in recent years.
If you can’t prove that you’ve been steadily employed, typically for the past two years in a row, the underwriter may deny your refinance application, even if you make plenty and have loads of assets in the bank.
Solution: If you lost your job and resumed working, an underwriter may consider your application if you can document that your income is stable, predictable, and likely to continue. You can also consider a co-borrower for help qualifying.
Absence of Assets
Another toughie is asset documentation, especially with that nagging unemployment situation mentioned above.
If you don’t have sufficient, seasoned asset reserves to show the underwriter you’ll actually be able to make your monthly mortgage payments, you may be denied that refinance.
So it’s very important to put money away early and often into a verifiable account. Your mattress isn’t verifiable…checking and savings accounts, stocks, bonds, retirement accounts, etc. are.
Solution: Even if you don’t have the necessary assets, asking a friend or family member for a short-term loan could work. Just move the money into your own account several months before applying for the refinance to avoid getting the third degree from your lender.
You Listed Your Home
If you happened to list your home for sale, then quickly realized no one was interested, you may now be pondering a refinance. Unfortunately, your prospective lender probably won’t be too thrilled about it, considering the fact that you may sell again if given the chance and prepay your new loan. You may also run into problems when it comes time to appraise the property if it wasn’t selling at your asking price.
Solution: Call around and see which bank or lender doesn’t mind that the home is/was listed. Then remove the listing before you apply to ensure there aren’t any complications. And be prepared to write a letter or explanation regarding the “change of heart.”
In closing, these are just a few of the many, many ways you may be denied a refinance. This isn’t 2006. It’s 2011. And times have changed considerably.
Believe it or not, you actually need to qualify for mortgages these days. So do your homework and tie up any loose ends early on to avoid problems during the loan process.

Battle of the Terms 30 vs 10yr

2011-09-21T10:55:00.000-07:00

It’s time for another mortgage match-up folks. Today, we’ll look at 30-year vs. 10-year mortgages to see how they stack up.
Before we get started, it’s important to note that there are two very different types of 10-year mortgages out there.

There are 10-year fixed mortgages, which have a mortgage term of 10 years. And there are 10-year adjustable-rate mortgages, which have a term of 30 years.
The first type of mortgage is pretty straightforward. It’s similar to a 30-year or 15-year fixed mortgage, just shorter.

What this means, if you happen to be brave enough to go with the loan program, is that your mortgage payment will be quite high.
After all, if you only get 10 years to pay off your entire mortgage balance, you’ll need to come up with some sizable payments to get it down to zero in a hurry.

However, doing so will save you a ton in interest.
The “other” 10-year mortgage you’ll see out there is the 10/1 ARM, which is fixed for the first 10 years, and adjustable for the remaining 20.
This makes it a hybrid ARM because of its fixed/adjustable nature. It also means the loan payments have the ability to adjust both higher and lower once those 10 years are up.

So, are either programs a better choice than the classic 30-year fixed? Let’s see.
10-Year Fixed Mortgages
If you’re really, really serious about paying off your mortgage fast, this option could be for you.

Just note that your mortgage payment will be huge relative to other, more traditional options.

For example, on a $250,000 loan amount, a 10-year fixed with an interest rate of 3% would come with a monthly mortgage payment of $2414.02.
Compare that to a monthly payment of $1787.21 on a 15-year fixed at 3.5%, and a payment of $1193.54 on a 30-year fixed at 4%.
While the payment on the 10-year fixed is significantly higher, you’d only pay roughly $40,000 in interest over those 10 years.
On the 15-year, you’d pay about $72,000, and on the 30-year, you’d pay nearly $180,000 in interest.

That reason right there is why someone would opt for the shorter term. A lower mortgage rate and much less interest paid.

But it only makes sense if you really want to pay off your mortgage fast, and have the means to do it without breaking the bank.

Tip: The difference in rate between a 15-year fixed and 10-year fixed may be marginal or even insignificant, so taking the longer term could provide you with some much needed breathing room.

10-Year ARMs
Here’s where things get misleading. Many mortgage companies advertise 10-year ARMs as if they’re fixed mortgages.

They basically use that initial 10-year fixed period to their advantage when putting together marketing materials.
And mortgage lenders can make 10-year ARMs appear really attractive by touting the low mortgage rates that accompany them.

After all, an ARM will always be priced lower than a 30-year fixed mortgage.
Per Bankrate, the 10-year ARM averaged 3.76 percent last week, while the popular 30-year fixed hit a record low 4.32 percent.
So you can see why a customer may think the 10-year ARM is the better choice.
But the fact of the matter is that these loans are still adjustable-rate mortgages in fixed-rate clothing.
Put simply, if you’re not comfortable with a loan program that may adjust, steer clear.

Mortgage Rates Lowest Ever, Woo.

2011-09-09T10:27:00.000-07:00

About a month ago, I discussed whether mortgage rates could drop any lower. At that time, the en vogue 30-year fixed-rate mortgage averaged 4.32 percent, per Freddie Mac data.
Today, expectedly, it hit a fresh all-time low, falling to 4.12 percent. Freddie attributed it to “market concerns over Eurozone sovereign debt default and a weak U.S. employment report for August.”

In other words, more bad economic news we all knew was coming came through the door, putting downward pressure on bond yields, which go hand in hand with mortgage rates.
This was no surprise, given the ongoing negative sentiment that simply won’t go away. The good news is that all the stock market swings are making someone rich, but probably not you or I.

It almost seems orchestrated now, the upswing, the downswing, and repeat. Meanwhile, mortgage rates go up, go down, hover in place, and repeat.
Of course, rates have been trending lower and lower because economic news got progressively worse after a brief bright spot.
But I still believe there probably isn’t much more rates can do in the improvement category. Why?

Well, the 10-year bond yield, which essentially dictates their direction, has a historic floor of around 2%, which happens to be its current level, more or less.
It hit a low of 1.93% earlier this week, but has since risen back above 2%. It’s rock-bottom, at least historically, so chances are it doesn’t get any better.
And, as I mentioned in the previous article, most banks and corporations are much better positioned now than they were when the mortgage crisis first struck.

While things are certainly bad, there’s not really too much new drama. There are a lot of lingering problems that will take a long time to sort out, but probably nothing that would surprise any of us at this point.
That said, mortgage rates on the popular 30-year may flirt with the 3% range, but likely won’t do much more than that.
Does Anybody Care?

Regardless, nobody seems to be interested in the low mortgage rates anyways.
Purchase-money mortgage applications continue to falter, at a time when affordability for first-time homebuyers is at unprecedented levels.
That’s due to a lack of confidence, a lack of employment, and so on. And perhaps a view that buying a home now is like catching a falling knife.
Move-up buyers are screwed because they’ve got no home equity to use as a down payment, let alone to offload their current home, and those looking to refinance are stifled by the same problem, assuming the government doesn’t step in soon.

Finally, mortgage lenders could actually be holding rates a bit higher than they need to be (Chase) to keep demand in line with their reduced staff and risk appetite.
So even if they could go lower, they may not. Either way, I don’t think it’s mortgage rates that are holding us back, it’s housing. It’s just not that attractive anymore.

If you’re wondering whether to lock in your mortgage rate or float it, note that the Fed is considering buying more long-term Treasuries to lower mortgage rates. But this is only expected to lower rates by 0.1 or 0.2 percent.
Again, I see 3.99% pretty much being the bottom for the 30-year fixed. What do you think?

Rate vs Price

2011-08-02T08:11:00.000-07:00

Today we’ll take a look at the impact of both home prices and mortgage rates on your decision to buy a piece of property.

Obviously, both are very important not only in terms of whether you should buy (from an investment standpoint), but also how much house you can afford.

Mortgage Rates Still Low

At the moment, mortgage rates are very close to historic lows, with the popular 30-year fixed-rate mortgage averaging 4.55 percent last week, according to data from Freddie Mac.

But while rates are low, home sales are still pretty flat, thanks in part to high unemployment, a lack of consumer confidence, and perhaps inflated home prices.
Yep, even though home prices are well off their housing bubble peaks, many feel they’re still inflated.

This is made clear without the use of home price indices, fancy calculators and algorithms…just take a look at some listings and you’ll think home sellers are nuts for asking so much.
Problem is most of them are asking for prices below their mortgage balance (short sale) and still aren’t getting any bites.

Home Prices Inflated
You can’t really blame them, as most bought during the boom at ridiculously inflated prices or bought pre-boom, and subsequently refinanced to tap into all that wonderful home equity.

Getting back on point, home values have lost about a decade’s worth of appreciation, and are currently coupled with near-record low mortgage rates.

Home prices are predicted to be pretty flat over the next several years, but mortgage rates are expected to rise.

So should you buy now while rates are low and prices have foreseeable downward pressure, thanks to all that distressed/shadow inventory and lack of confidence?
Or should you wait it out and let home prices hit bottom first?

(How to get a mortgage?)
Well, first things first, it’s nearly impossible to buy at the bottom. Anyone will tell you this, whether it’s a home or a stock or anything else.
Predicating the absolute bottom, or even close to it, can be a tall order.
Home prices are also regional and local, so it’s not like home prices have fallen by the same amount throughout the country.

And not all home prices in the nation can be designated as cheap, average, or expensive – they vary tremendously.
At the same time, it’d be hard to argue that mortgage rates nationwide aren’t super low and only expected to rise.

That said, let’s look at a scenario where mortgage rates rise and home prices slump.

Example:
Sales price: $400,000
Loan amount: $320,000 (20% down = $80,000)
Mortgage rate: 4.50%
Mortgage payment: $1621.39
Total paid: $583,700.40

Now say home prices fall 10 percent over the next year or two, while mortgage rates rise from 4.50 percent to 6.00 percent, which isn’t necessarily unlikely.

Sales price: $360,000
Loan amount: $288,000 (20% down = $72,000)
Mortgage rate: 6.00%
Mortgage payment: $1726.71
Total paid: $621,615.60

So as we can see, buying the home at the current higher price with the lower mortgage rate results in both a lower monthly mortgage payment and significantly less interest paid throughout the loan.

That could also make qualifying easier with regard to the debt-to-income ratio requirement.

However, the down payment is $8,000 higher on the more expensive house, which could prove a barrier to homeownership if assets are low.

But we’re still looking at savings of roughly $30,000 with the larger, yet lower-rate mortgage.

Hopefully this illustrates the importance of low mortgage rates. Of course, there are a ton of variables that can come into play.
Most people move or refinance within seven years or so, making the interest savings unclear.

There’s also the thought that once interest rates rise, they’ll put more downward pressure on home prices, meaning property values today are artificially inflated based on the low rates, which has somewhat increased demand.
And who knows, maybe rates will stay relatively low and home prices will fall even more than expected over the next few years.

“Second mortgage vs. home equity loan.”

2011-08-01T09:34:00.000-07:00

It’s time for another installment of “mortgage match-ups.”

Today’s match-up: “Second mortgage vs. home equity loan.”
This is an epic battle of the junior liens, which while subordinate to their first mortgage brethren, can still hold their own in a fight.
But in this duel, we’re probably doing more to “clear things up” than we are comparing two loan programs.

Are second mortgages and home equity loans the same?
You see, when it comes down to it, most second mortgages are home equity loans. And vice versa.
So if you hear someone talking about one or the other, they could be talking about the same thing.

This is further complicated by the fact that most home equity loans are HELOCs, or home equity lines of credit.
Confused yet?

You should be, considering the ambiguity of it all…let’s break it down.
Second Mortgages, HELOCs, Home Equity Loans
A second mortgage is any home loan that is subordinated behind (comes after) a first mortgage.

This could be a HELOC or a home equity loan.
A HELOC, as previously mentioned, is a line of credit. In other words, you get a home loan with a certain line of credit, or draw amount, which you can use kind of like a credit card.

HELOCs are tied to the variable prime rate, and thus are adjustable-rate mortgages.
After the draw period, the amount drawn upon must be paid back during the repayment period.

*Note that while a HELOC is often used as a second mortgage, it can also be a stand-alone first mortgage, taken out by the homeowner when their mortgage is free and clear, or to refinance an existing lien.
Finally there’s the home equity loan, which can refer to both a HELOC or a closed-end second mortgage.

A “closed-end second mortgage” is a home loan that operates similarly to a first mortgage in that it’s a fixed amount, not a line of credit.
Additionally, it can be a fixed-rate mortgage or an ARM. These are typically taken out as an alternative to a HELOC, especially as purchase-money second mortgages.

For example, a borrower can avoid paying mortgage insurance by taking out a first mortgage at 80 percent loan-to-value and a concurrent second mortgage for the remaining 20 percent.

Unfortunately, many banks and mortgage lenders use the phrase “home equity loan” and “HELOC” interchangeably, adding to the confusion.
To ensure you actually get what you want/need, ask the loan officer or mortgage broker to explain the terms of each loan product clearly.

OCWEN a Win?

2011-07-27T07:47:00.000-07:00

Loan servicer Ocwen Financial Corporation has launched a new loan modification program aimed at helping borrowers with underwater mortgages.
The new initiative, known as the “Shared Appreciation Modification” (SAM) program, writes down an underwater borrower’s principal balance to 95 percent loan-to-value, thereby creating home equity.
Then, over three years, the written-down portion is forgiven in one-third increments, so long as the homeowner stays current on mortgage payments.
Later, when the house is either sold or refinanced, the borrower must share 25 percent of the appreciation with the investor of the loan.
Ocwen believes this approach won’t reward borrower delinquency, which is always a concern when offering a loan modification.
“Like all modifications, SAMs help homeowners avoid foreclosure. But they also restore equity,” said Ocwen CEO Ronald Faris.
“That’s a significant benefit to the customer and, we believe, the economy and housing market. Psychologically, it’s important too. Our analytics tell us that an underwater mortgage is one-and-a-half to two-times more likely to default than one with at least some positive equity.”
The SAM program was initially launched on a pilot basis back in August 2010, sporting a 79 percent borrower acceptance rate and just a 2.63 percent re-default rate.
Ocwen now has clearance to make it available to qualified customers who are experiencing negative equity in 33 states.
While it seems like a good approach to an ongoing problem, there are probably still scores of borrowers who are beyond the point of no return.
But it does seem to be a bit more strategic than the Making Home Affordable program, which has fallen well short of goal.

The Pro's of the aRM...

2011-07-26T06:15:00.000-07:00

While everyone always seems to focus on mortgage payments adjusting higher, there are a number of reasons why a mortgage payment may decrease.
No really, there are, so let’s take a look shall we.

Mortgage Payments Decrease on ARMs

If you have an adjustable-rate mortgage, there’s a possibility the interest rate can adjust both up and down.

You may have seen that now infamous interest rate reset chart, the one that shows billions of dollars worth of mortgages resetting from their fixed-rate period into their adjustable period.

Well, the damage may not be as bad as it appears because many of the mortgage indexes tied to these loans are rock bottom.

As a result, some homeowners who stayed in these seemingly “exploding ARMs” may actually see their mortgage payment fall.

When You Pay Down Your Mortgage

If you decide to pay off a large chunk of your mortgage, you can ask the mortgage lender to recast your loan (if they allow it).

This essentially re-amortizes the mortgage so the new, smaller balance is broken down over the existing months left on the loan.
Your mortgage payment is adjusted lower to reflect the smaller principal balance, but your mortgage rate doesn’t change.

While this could increase household cash flow, you may be better suited to pay off your mortgage early by making your old payment despite the lower balance.
Refinance to a Lower Rate

Here’s a no-brainer. If you want a lower mortgage payment, look into a rate and term
refinance.

Because mortgage rates are still very low, your mortgage payment will probably decrease if you refinance now.
(When to refinance a mortgage?)

Shop Your Insurance, Look Into a Tax Reassessment
Finally, be sure to shop your homeowner’s insurance, as it is typically included in your mortgage payment.

If you can snag a lower premium, your mortgage payment will decrease as a result.
Also look into a tax reassessment of your home.
Property values have been on the decline, so you may be able to save some money on property taxes by asking your county recorder’s office to reassess your property.
Remember, a mortgage payment is typically expressed as PITI, which stands for principal, interest, taxes, and insurance.
So address each component to save money on your housing costs.

Underwater #'s

2011-07-25T07:48:00.000-07:00

For the second month in a row, more than half of respondents think they’re upside down on their home.

The numbers aren’t as bad as June, when an all-time low of 45 percent indicated they were “right-side up,” but it’s still only the third time the number has dipped below 50 percent.

(What is an underwater mortgage?)
For comparison sake, 61 percent believed their home was worth more than their mortgage back in late 2008.

Government Workers More Upbeat
Interestingly, 71 percent of government workers believe their home is worth more than their mortgage, compared to just 50 percent of private sector employees and 42 percent of retirees.

With regard to mortgage payments, just seven percent said they’ve missed one or been late in the past six months.

And only eight percent of homeowners say it’s “at least somewhat likely” they’ll miss a payment in the next six months.
So that’s the good news – borrowers will continue to make on-time payments with the belief they’ll eventually gain home equity and get out of this mess.
The national telephone survey of 676 Homeowners was conducted between July 17-18.

Zillow: Post-Bubble Homebuyers Guilty of Overpricing Homes

2011-07-19T09:11:00.000-07:00

Those who purchased their homes post-housing bubble are guilty of overpricing their homes, according to a new survey from Zillow.

The company noted that current home sellers who purchased their homes in 2007 or later are overpricing their properties by an average of 14.1 percent.
Conversely, those who purchased pre-bubble, from 2002-2006, have only priced their homes 9.3 percent above current market value.

Meanwhile, those who purchased before 2002 have listed their homes by an average of 11.6 percent above market value.

“Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today,” said Zillow Chief Economist Dr. Stan Humphries,” in a release.

“But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.”

Humphries added that listing homes above the current market value causes them to stagnate, leading to a more bloated inventory, which further drives homes prices down.

The takeaway is that home prices remain very fragile, and haven’t done much more than fall or move sideways since the crash.

Even those who didn’t see their home price drift lower probably don’t have the required home equity to sell, factoring in agent commissions.
I guess this all begs the question, when is it going to be the right time to buy?

NY Closing Cost Scary?

2011-07-19T07:43:00.000-07:00

Mortgage rates may be at or near record lows, but closing costs aren’t.
Mortgage closing costs rose for a second straight year, according to a survey released today by Bankrate.
The company said the average loan origination and title insurance fees on a $200,000 mortgage total $4,070, up 8.8 percent from a year ago.
And the average bank/mortgage lender charges roughly $1,614 in loan origination fees, up 10.3 percent from last year.

Loan origination fees include services such as underwriting and loan processing fees, along with loan officer or mortgage broker compensation for closing the loan.
Keep in mind that the person closing your loan can also get paid on the back-end, via yield spread premium, or at least a new form of it now that it’s been outlawed.
(How does a mortgage broker get paid?)

New York Most Expensive for Closing Costs

New York topped the survey again for the second straight year, with average closing costs of $6,183, followed by Texas at $4,944 and Utah at $4,906.
Mortgage closing costs were cheapest in Arkansas, with an average of just $3,378.

The survey is based on good faith estimates for a $200,000 purchase-money mortgage on a single-family home with a 20 percent down payment (80% loan-to-value).
It excludes taxes, homeowners insurance, homeowners association fees, prepaid interest and other prepaid items.

Effort to refinance underwater GSE mortgages gains steam

2011-07-13T05:38:00.000-07:00

A bill from Sen. Barbara Boxer (D-Calif.), which would allow borrowers who are current but underwater on their Fannie Mae or Freddie Mac mortgage to refinance into a lower-rate loan, gained more industry support but also stirred more concern from investors.

Currently, more than 8 million Fannie or Freddie loans carry an interest rate of more than 6%. Boxer introduced the Helping Responsible Homeowners Act of 2011, S. 170, earlier this year. It would eliminate the negative equity restrictions and the upfront fees Fannie and Freddie charge when evaluating current homeowners. The bill would target roughly 2 million borrowers for a refinance into today's lower interest rate loan.

"They have been so solid in their mortgage payments every month even though the value of their home is going down," Boxer said in a conference call Tuesday. "This bill would remove the barriers that kept them trapped."
But under current tax law, a loan with a loan-to-value ratio over 125% would not be allowed to be packaged into a mortgage-backed security.
An aide for Boxer said there are vehicles that could be created and that it was also possible for Fannie and Freddie to move these loans into their portfolio – portfolios that under current conservatorship agreements should be on the decline.

The bill carries the support of Sen. Johnny Isakson (R-Ga.) and several industry trade groups including the National Association of Realtors, Mark Zandi, chief economist for Moody's Analytics and Bill Gross, the founder of investment firm PIMCO.
"The policy efforts implemented throughout the financial crisis have fallen short," Zandi said. "There have been many efforts and they've been helpful and they've clearly not been adequate.

The cost from this bill should be very small. I think this is a very efficient and effective way to help address one of the biggest roadblocks to a recovery and do it very quickly when the economy needs it."

One of the biggest hindrances to one of those initiatives that have under whelmed so far, the Federal Housing Administration Short Refinance program, is that Fannie and Freddie do not participate under guidance from their regulator the Federal Housing Finance Agency.

Wall Street investors expressed nervousness on Tuesday about the proposal, claiming such a move could shake-up an already fragile MBS market. But Boxer claims the cost to Fannie and Freddie to refinance these loans would be offset by the millions of underwater borrowers who could walk away otherwise.
"We don't think this is going to disrupt anything. In fact, we think this will stabilize the markets," Boxer said. "What would roil the market is if these millions of borrowers walk away from their loan."

PMI to pay underwater borrowers to stay

2011-07-11T08:15:00.000-07:00

Private mortgage insurer PMI Group (PMI: 1.415 -6.29%) will offer cash incentives to some homeowners in negative equity to help prevent mortgage defaults.

PMI subsidiary, Homeowner Reward is working with Loan Value Group, to administer the pilot program, called Responsible Homeowner Reward.

The program launched Monday and will start in select real estate markets where falling house prices left borrowers owing significantly more on their mortgage than what the property is worth.

Participation in RH Reward is voluntary and there is no cost to the homeowner, according to PMI. The cash will come after a lengthy period of keeping the mortgage current, generally from 36 to 60 months. According to PMI, the reward will be between 10 to 30% of the unpaid principal balance.

The Loan Value Group works "to positively influence consumer behavior on behalf of residential mortgage owners and servicers," according to its website.
LVG programs already delivered more than $100 million in cash incentives to distressed homeowners. However, those programs focus on turnkey solutions such as cash for keys, with an aim to avoid principal forgiveness. The Homeowner Reward program is taking a different path.

"We continue to seek creative and effective loss mitigation strategies," said Chris Hovey, PMI vice president of servicing operations and loss management. "PMI is especially supportive of homeownership retention efforts in states that are facing unprecedented housing challenges."

Why can't I get the rate I saw on the Banner?

2011-07-07T08:43:00.000-07:00

Mortgage rate Q&A: “Why are mortgage rates different?”

Why is the sky blue? Why are clouds white? Why won’t your neighbor trim their tree branches?

These are all good questions, and ones that often puzzle even the savviest human beings.

First things first, take a look at how mortgage rates are determined to better understand how banks and mortgage lenders come up with interest rates to begin with.
From there, you’ll need to consider why mortgage rates are different for consumer A vs. consumer B.

No One Size Fits All for Mortgage Rates
Mortgages are complicated business, and there certainly isn’t a one-size-fits-all approach.

Every loan scenario is different, and must be priced accordingly to factor in mortgage default risk (risk-based pricing).

Mortgage Rates Vary Based on the Loan Criteria

Mortgage rates don’t exist in a bubble – the parts affect the whole.

Banks and lenders start with a base interest rate (par rate) and then either raise it or lower it (rarely) based on the loan criteria.

There are loan pricing adjustments for all types of stuff, including:
• Loan amount
• Documentation (full, limited, or stated)
• Credit score
• Occupancy
• Loan Purpose (purchase or refinance)
• Debt-to-Income Ratio
• Property Type
• Loan-to-value / Combined loan-to-value

The more you’ve “got going on,” the higher your mortgage rate will be. And vice versa.

I’ve already covered a few related topics, including why mortgage rates rates are higher for condos and investment properties.Mortgage rates are also higher on jumbo loans and refinance transactions, especially those involving cash-out.

Advertised Mortgage Rates Are Best Case Scenario

You know those mortgage rates you see on TV? Those assume you’ve got an owner-occupied single family home, a perfect credit score, a huge down payment, and a conforming loan amount. Not to mention a newborn golden retriever.

Most people don’t have all those things, and as a result, they’ll see different mortgage rates. And by “different,” I mean higher.
How much higher depends on all the factors listed above. So take the advertised rates you see with a huge grain of salt.
Shop Around!

All the more reason to shop around. Compare mortgage rates online and speak with a mortgage broker.

Housing Inventory Issues?

2011-07-05T07:37:00.000-07:00

If you thought housing inventory was under control, you might want to read this.
The latest LPS Mortgage Monitor Report released today revealed that mortgages 90+ days delinquent and loans in foreclosure outnumbered foreclosure sales by a staggering 50 to 1 in May.
In other words, there’s an endless housing supply and not nearly enough demand to keep up with it, even with all the measures being taken to slow it all down.
Severely delinquent loans and foreclosure inventory totaled 4,084,557 at the end of May, while foreclosure sales were just 78,676 at month end.
It gets worse.
Foreclosure sales have been slowing – declines of 96 percent in DC, 80 percent in Maryland, 79 percent in New York, and 75 percent were seen in May.
And inventories of foreclosures in judicial states have increased twice as much as those in non-judicial states over the past year.
33% of Borrowers in Foreclosure Haven’t Paid in Two Years
This is good news for those facing foreclosure, as 33 percent of homeowners haven’t made a mortgage payment in over two years.
That’s a lot of free rent.
Oh, and negative equity continues to be a major concern, with nearly 30 percent of current loans underwater (hello short sale).
LPS noted that significantly underwater mortgages are defaulting up to 10 times more than loans with some home equity.
The only sliver of good news is new problem loans, defined as loans that were current six months ago and now 60 or more days delinquent, are now more than 50 percent below peak levels seen in 2009.

“Why use a mortgage broker?”

2011-06-17T08:08:00.000-07:00

“Why use a mortgage broker?”

If you’re in the market for a new mortgage, whether it be a purchase money mortgage or a refinance, you may be wondering how to go about it all.

Assuming you’ve heard the phrase “mortgage broker” thrown around, you may also be curious why anyone would use a mortgage broker.

Lower Rates

Mortgage brokers have access to wholesale mortgage rates, which are priced below those offered by retail banks.

They’re able to offer lower mortgage rates because they don’t need to pay a sales team to sell those rates, as mortgage brokers run their own businesses and earn money off commission (yield spread premium).

That said, you may be able to get a better deal if you work with a mortgage broker as opposed to walking into your local bank branch.

Rate Shopping

Not only that, but mortgage brokers have the ability to “shop your rate” with multiple mortgage lenders simultaneously, meaning more options for you and less legwork.

Customer Service

Finally, a mortgage broker may be able to provide better customer service than a giant, faceless corporation.

Many mortgage brokers are mom-and-pop shops, so it’s easy to get someone on the phone or speak in person.

They also tend to hustle a bit more with their commission on the line.

Concerns about Refinancing
Just as with the creation of any other new loan there are fees associated with refinancing your home mortgage. Depending upon how long you have been paying on your current loan, the interest vs. principle pay down will be a consideration. With a refinance, which means taking on a new loan, the bulk of your payment will once again go towards interest.

You also have to consider how much longer you will remain in your home. If you are going to save $1,400 a year by refinancing, but you have to spend $4,200 to get it done, then you will have to own that home for more than three years to realize any savings on that level.

Regardless of any of these concerns, if your situation is correct, you can save a ton of money by refinancing your current home mortgage loan. Do the research and do in now by comparing mortgage rates with us, time is of the essence and it may not be in your favor, but why?

If you want to see if Refinancing makes financial sense please reply via email with the following information

1. Current Interest Rate

2. Current Loan Balance

3. Idea of Home Value from Assessment or Recent Appraisal

4. Current Monthly Payment

5. Yearly Taxes

6. Yearly Homeowners Insurance

7. Idea of Credit Score or Rating Fair-550-620 Good 620-680 Excellent 680 and above.

By sending an email back with the above information, I can then forward you an accurate idea of what your new payment would be if you decided to refinance. Not 1 phone call unless you prefer to discuss further.

New HUD program offers up to 24 months of mortgage assistance to unemployed

2010-10-06T10:32:00.000-07:00

A new program run by the Department of Housing and Urban Development allows delinquent borrowers who are unemployed or suffering from a severe medical condition to receive assistance with mortgage payments for up to 24 months.

The Emergency Homeowners Loan Program offers up to $50,000 to eligible borrowers at a 0% interest rate. HUD officials called it a true bridge loan because all deferred payments are forgivable provided the borrower lives in a home and remains current on payments for five consecutive years.

But the program isn't for everyone. Brian Sullivan, public affairs representative for HUD, said borrowers must have a consistent track record of making mortgage payments on time. A household's yearly income also may not exceed 120% of the area median income and must have had its income reduced by at least 15% in two years due to sudden unemployment, underemployment or a medical condition.

The property must be the borrower's primary residence and at risk of foreclosure.

"This is about families who were paying their mortgage, were current, were working, and then something happen," Sullivan told HousingWire. "It's for low- to middle-income, working families."

HUD announced plans for the program in August, after the agency was designated under Dodd-Frank to create an emergency homeowners assistance program with an allocated budget of $1 billion. Funding through the new program is only available in the 32 states and Puerto Rico that were not otherwise funded by the Hardest Hit Fund.

Borrowers must meet with their local NeighborWorks division or state finance agencies with HUD approved standards to receive funding. NeighborWorks is a national nonprofit organization created by Congress to provide financial support, technical assistance and concealing services to homeowners.

HUD hopes to begin accepting applications by the end of the year. HUD announced Tuesday how the $1 billion would be divided by state (chart below, in dollars):

Mortgage rates still breaking record lows

2010-09-30T10:09:00.000-07:00

Mortgage rates, nearly across the board, reached record lows again for the week ending Sept. 23.

The Freddie Mac weekly survey showed the average 30-year fixed-rate mortgage reached 4.32% with an average 0.8 point, down to its all-time low from 4.37% last week. Last year, at this time, the 30-year FRM averaged 62 basis points higher.

The 15-year FRM reached a new record low at 3.75% with an average 0.7 point, down from 3.82% last week and 4.36% a year ago.

The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.52% with an average 0.6 point, down from 3.54% last week. And the 1-year Treasury-indexed ARM averaged 3.48% with an average 0.7 point, the only rate to increase from last week at 3.46%.

"Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week," said Frank Nothaft, vice president and chief economist at Freddie.

The weekly Bankrate survey of large banks and thrifts showed the average 30-year FRM at 4.5%, unchanged from last week. New record lows came for the 15-year FRM, which fell 2 bps to 3.94%, and the 30-year FRM jumbo loan that dropped to 5.16%.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

All About A Reverse

2010-09-21T17:13:00.000-07:00

Click on the Image to view the entire Flyer.

Brought to you by ReverseMortgage.net

Burning Down the House

2010-09-14T13:34:00.000-07:00

A North Carolina man facing foreclosure reportedly hired another man to burn down his house, according to a Winston-Salem-based news outlet.

Davidson County Sheriff David Grice said homeowner Gregory Ringley, 48, hired David Hill, 40, of Coeburn, Virginia, to start the fire.

The home was actually burnt down on August 16 – and a subsequent investigation found that a flammable liquid was used to start the fire.

Ringley was not only looking to avoid foreclosure, but also interested in collecting insurance money.

He was charged with conspiracy to commit arson and conspiracy to commit insurance fraud, while his mother, who drove Hill to the home to set the fire, faces charges of conspiracy to commit insurance fraud.

Both were being held on a $100,000 bond, while Hill was charged with second-degree arson and held on a $5,000 bond.

This incident is just one of many odd attempts to avoid foreclosure since the mortgage crisis got underway.

There was the guy who simulated robbery to pay the mortgage, and the other guy who tried to blow up the bank holding his mortgage.

Not to mention the guy who bulldozed his own home after his bank began foreclosure proceedings.

Back in early 2008, the Insurance Information Network of California actually warned homeowners not to resort to arson if facing foreclosure.

Sign of the times…

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Zero Down !!!!!!

2010-09-14T13:27:00.000-07:00

Just a few years after the mortgage crisis swept in, zero down mortgages seem to be making a comeback, according to a piece in the NY Times.

Mortgages with no money down have performed worse than home loans where borrowers have some skin in the game, but proponents believe the lack of down payment wasn’t/isn’t the core issue.

Instead, the combination of zero down financing, lax underwriting requirements (stated income), and exotic loan programs (option arms) has been seen as the problem.

So will the new breed of zero down mortgages perform better than their earlier counterparts?

Affordable Advantage

Fannie Mae recently launched “Affordable Advantage,” a program that allows borrowers to purchase a home for as little as $1,000 down.

Throw in downpayment assistance (to cover closing costs), and you can get a mortgage for as little as 67 cents.

But in order to qualify, you must fully document your income, have a minimum credit score of 680, and actually live in the home.

The only loan offered is a 30-year fixed-rate mortgage, making it all the more safer for borrowers (and mortgage lenders).

Currently, they’re available in four states, including Idaho, Massachusetts, Minnesota and Wisconsin.

And of the 500 loans originated in Wisconsin since March, none are delinquent after six months (slow clap).

USDA Zero Down Loan Program

One of the other few remaining zero down loan programs comes from the United States Department of Agriculture (USDA).

Though it’s reserved primarily for low-income individuals and households, you can have income up to 115% of the median for the area in which you purchase the home (figure that one out).

The property has to be located in a rural area (or exurb) and be modest in size, cost, and design, and borrowers must have “reasonable credit histories.”

But it’s still an easy way around that pesky down payment.

Then there are FHA loans, which only require 3.5 percent down – and before things went so very wrong, you could get 100 percent financing via seller-paid downpayment assistance.

Of course, those loans didn’t turn out so well…

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Mortgage Comparison Shopping

2010-08-31T09:16:00.000-07:00

The Federal Reserve has proposed a new rule that may make it easier for prospective homeowners and those looking to refinance shop around before making a commitment.

The proposal, which was part of a 930-page document published mid-month in the Federal Register, would allow consumers to cancel mortgage applications within three days and get refunded for certain costs.

Things like application fees and appraisal fees would be refundable, while credit report fees would not.

Mortgage shoppers would be entitled to refunds if they canceled an application within three business days of receiving key disclosures, including the Good Faith Estimate and Truth in Lending Act statement.

The Fed believes such a rule would help consumers shop for the best deal, instead of being locked in with one mortgage lender for fear of losing any up-front costs.

But many lenders believe the rule will have little effect, as most already wait several days before charging any fees.

Others are concerned it could delay an already backed-up process, as there will be a waiting period before anything is acted upon or ordered.

Although, it’s not uncommon for a loan to be “on hold” until it makes it through underwriting and receives a formal decision.

It’s unclear how the rule would affect mortgage brokers, those who work on behalf of banks directly with consumers.

A recent Bankrate.com study found that mortgage closing costs rose more than 36 percent this year, with loan origination fees rising nearly 25 percent and third-party fees jumping almost 50 percent.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

"Highly Affordable"

2010-08-24T12:05:00.000-07:00

Housing affordability remained near its highest level on record for the sixth consecutive quarter, according to the latest survey from the National Association of Home Builders.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) indicated that 72.3 percent of all new and existing homes sold during the second quarter were affordable to families earning the national median income of $64,400.

That’s up slightly from the first quarter and just shy of the record-high 72.5 percent seen in the first quarter of 2009.

Before 2009, the affordability index rarely topped 67 percent, and had never reached the 70 percent-mark.

But record low mortgage rates and falling home prices have opened the door for more buyers, less the tighter underwriting environment.

Kinda makes you wonder why no one is interested in buying a home these days – maybe affordability isn’t the driver.

After all, a ton of buyers pre-mortgage crisis couldn’t even afford to make their mortgage payments in the conventional sense, so they opted for mortgage programs with teaser rates like the option arm.

Perhaps they were more interested in the thought of home price appreciation, as opposed to simply living in a home.

Syracuse, NY Most Affordable Housing Market

The most affordable major housing market in the country was Syracuse, NY, pushing Indianapolis-Carmel, IN off the top spot, which it held for almost five years.

Nearly all (97.2%) of the homes sold there were affordable to households earning the median family income of $64,300.

Detroit, Youngstown, and Buffalo also made the list of the most affordable metros.

Meanwhile, the New York-White Plains-Wayne, NY-NJ area continued to be the least affordable major housing market during the second quarter, with just 19.9 percent of all homes sold deemed affordable to those earning the median income of $65,600.

Los Angeles, the Bay area, and Honolulu continued to linger at the bottom of the affordability scale during the quarter as well.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Countrywide Customers Eligible for Free Credit Monitoring

2010-08-24T11:35:00.000-07:00

If you provided personal information to or made mortgage payments to Countrywide Financial before July 1, 2008, you may be eligible for free credit monitoring for two years.

The ruling is part of a settlement finalized today by U.S. District Judge Thomas B. Russell of Paducah, who oversaw more than 36 lawsuits related to a security breach at the company.

The lawsuits are tied to the arrest of former Countrywide employee Rene Rebollo Jr., who was a senior analyst for the company.

Federal investigators claim Rebollo used a flash drive to download personal data from roughly 20,000 customers a week for two years from 2006 through August 2008.

The data included sensitive information ranging from birth dates and social security numbers, to mortgage and credit card information.

He later sold the seemingly valuable data to another defendant, Wahid Siddiqi, for just $500 and the pair earned a combined a $50,000 through sales to third parties, likely mortgage lead companies and similar entities.

Bank of America, which now owns the defunct mortgage lender, denied any wrongdoing, but said a settlement would help the company avoid additional expenses and litigation.

Former Countrywide customers who are able to prove their identity was “stolen” as a result of the breach are eligible for up to $50,000 in compensation for each offense.

The deadline to subscribe for free credit monitoring (Triple Advantage by Experian) is September 7, 2010 – the earliest deadline to file a claim for monetary compensation is October 18.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Soon but not yet....

2010-08-11T16:18:00.000-07:00

Last week, Federal Housing Administration (FHA) commissioner David Stevens announced plans for implementing FHA's new mortgage insurance premium structure. Based on industry feedback to the announcement, the FHA postponed the premium fee changes on all new case numbers for one month, and will now implement them on Oct. 4, 2010.

"Over this past week, the industry responded with support of the new fee structure, but voiced strong concern about having system changes ready in time to meet the original Sept. 7, 2010 deadline," said US Housing and Urban Development (HUD) deputy assistant secretary Vicki Bott. "Since these system changes impact regulatory disclosures, lenders expressed they must have the additional time to implement and test systems. FHA took this feedback seriously and has accommodated the need for additional time."

FHA will lower its upfront premium simultaneously with the increase to the annual premium. FHA's upfront mortgage insurance premium will be adjusted down to 100bps on all amortization terms and the annual mortgage insurance premium will increase to 85-90 bps on amortization terms greater than 15 years.

The Senate last week approved its version of HR 5981, which allows the FHA it to hike its annual premiums for its single-family program. It allows the FHA to raise its annual mortgage insurance, raising the statutory cap rate to 1.55% from 0.55% — a flexibility that the industry and the FHA says could ultimately reduce the cost of credit insured by the FHA.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Cash-In Refinances Rise in Latest Quarter

2010-07-28T13:20:00.000-07:00

During the second quarter, 22 percent of homeowners who refinanced their mortgages lowered their principal balance by bringing in additional money at closing, Freddie Mac reported today.

It was the third highest “cash-in refinance” share since Freddie Mac began keeping records on refinancing trends since 1985.

Cash-in refis (which are basically rate and term refis) increased from 19 percent in the first quarter, but were nowhere near the 36 percent share seen in the final quarter of 2009.

Meanwhile, cash-out refinances, where the original loan amount increased by at least five percent, represented 27 percent of all refinance loans.

Over the past three quarters, cash-out refinancing has been at its lowest since Freddie began tracking in the 80s.

The main cause of decline was harsher underwriting guidelines for loan-to-value ratios, coupled with reduced home prices.

In fact, the median appreciation of the collateral property was a negative five percent over the median prior loan life of four years.

Compare that to 20-30+ percent positive appreciation during the boom years in the mid-2000s, and you’ll know why everyone refinanced their mortgage (with cash-out).

Just $8.3 billion in home equity was pulled out during the second quarter, down from $8.4 billion in the first quarter and the lowest amount since 2000.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Applicationrs Rise....Are you taking advantage?

2010-07-21T12:28:00.000-07:00

Home loan application volume increased 7.6 percent on a seasonally adjusted basis for the week ending July 16, the Mortgage Bankers Association said today.

Refinance applications increased 8.6 percent week-to-week to the highest level since the week ending May 15, 2009.

The increase was led by a 10.7 percent rise in conventional refinance applications, offset by a 4.2 percent decline in government refinance apps.

“As rates on 30- and 15-year fixed-rate mortgages declined to the lowest levels recorded in the survey, refinance activity increased last week, said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

“The refinance index is up almost 30 percent over the past 4 weeks, but is still well below the peak seen last spring.”

He noted that those aiming to get the lowest interest rate are getting conventional loans, while those looking for a low down payment requirement are grabbing FHA loans.

Purchase Applications Rise

The seasonally adjusted purchase index increased 3.4 percent from a week earlier, thanks to an eight percent increase in government apps (FHA loans, VA loans).

The unadjusted purchase index was up 15.3 percent compared with the previous week (which included the Independence Day holiday), but off 35.7 percent from year-ago levels.

Interest Rates Hit New Lows

Meanwhile, the popular 30-year fixed fell to 4.59 percent from 4.69 percent, the lowest level ever recorded in the MBA’s survey, while the 15-year fixed slipped to 4.05 percent from 4.12 percent, also a record low.

Finally, the one-year adjustable-rate mortgage dipped to 7.17 percent from 7.20 percent, but clearly remains an unfavorable option.

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.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Blowing up the Bank?

2010-07-21T11:11:00.000-07:00

An Illinois man facing foreclosure reportedly attempted to blow up the bank that held his mortgage.

Last Friday at around 8 p.m., the disgruntled homeowner crashed into a PNC bank branch in his hometown of Lockport in an apparent attempt to destroy it.

The man then set off a four-inch mortar, typically reserved for fireworks shows, which blew off the roof of his car and shattered windows in the front of the bank.

Fortunately the bank was closed at the time and there were no reported injuries.

The homeowner, David Whitesell, has been charged with arson and criminal damage to property with an incendiary device, both felony offenses.

He was being held on a $30,000 bond and expected to appear in court this week.

There have been similar instances of homeowners going to great lengths to get revenge on their banks or attempt to bring their mortgages current using unconventional methods.

In February, a man bulldozed his home after the bank began foreclosure proceedings.

And last summer, another struggling homeowner robbed a bank in San Diego in order to make his mortgage payments.

He made off with $107,000 before eventually being caught.

A month earlier, a Long Island truck driver behind on his mortgage executed an elaborate fake robbery, which included telling police he was held up at gunpoint.

He eventually broke down and told police he was unable to keep up on his mortgage.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly.

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

No Closing Cost

2010-07-19T15:37:00.000-07:00

You may have seen ads for the “no cost refi” loan lately, a mortgage program that promises no fees or out-of-pocket expenses when you refinance your existing mortgage.
While this type of offer is by no means a new concept, it’s definitely a subject worth revisiting to ensure people understand what they’re getting when they choose a no cost refinance option.

A no cost refinance is essentially a loan transaction in which the lender or broker pays settlement costs, including typical fees such as processing and underwriting fees, appraisal fee, title/escrow fees, loan origination points, and so on.
A bank or lender may also bundle your closing costs on top of your loan amount, increasing the size of your loan, making it a “no-cash” loan. Though you may avoid out of pocket expenses and upfront fees, these costs are not lender paid and the loan is not a true no cost loan.
So how do banks and lenders make up for the absence of fees that normally must be paid?

The reality of the situation is that these types of loans will actually bump up your interest rate, sometimes dramatically in order to make up for the missing fees that are usually charged at closing.

Also note that no cost refinances will vary by lender, and some programs may cover all costs, while others may still charge you for certain third-party fees such as per diem interest, insurance, taxes, and even points!
Mortgage brokers can also setup a no cost refinance for you, adjusting their yield-spread premium to the point where they make enough money to offset the fees associated with the loan.

Let’s look at an example to illustrate the program:
Imagine that you’re credit profile allows you to qualify for a mortgage at an interest rate of 6% on a $500,000 loan, paying a point to the lender and another $2,500 in closing costs totaling $7,500. While this may seem like a large upfront cost, the trade off may be a lower interest rate.
With Countrywide’s “No Cost Refi” program you’ll cruise through the transaction without paying a dime, but you may end up with an interest rate of 6.5% or higher on the very same transaction.

Assuming you make the interest-only payment each month, you’ll pay an additional $200 a month, or roughly $2,400 annually if you select the “no cost refi” at an interest rate of 6.5%.

This is the point where you need to ask yourself what you plan to do with the property and the mortgage. If you’re planning on upgrading to a more expensive home in just a few years, or if you’re the type that refinances often, paying upfront costs for a lower interest rate may be a losing endeavor. For you, a no cost loan may be a good choice.

But if you plan to stay in the home for five or more years (or whenever the break-even point takes place), it would make sense to pay a little more upfront for future savings. After all, that $200 discount each month might ease your budgeting woes in the future, and amount to some serious savings if you stick with the mortgage for the long term.
Remember, no cost loans aren’t inherently good or bad. Their associated benefit or cost will really depend on your unique financial situation.

If you want to see if Refinancing makes financial sense please reply via email with the following information
1. Current Interest Rate
2. Current Loan Balance
3. Idea of Home Value from Assessment or Recent Appraisal
4. Current Monthly Payment
5. Yearly Taxes
6. Yearly Homeowners Insurance
7. Idea of Credit Score or Rating Fair-550-620 Good 620-680 Excellent 680 and above.
By sending an email back with the above information, I can then forward you an accurate idea of what your new payment would be if you decided to refinance. Not 1 phone call unless you prefer to discuss further.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

6 Million to lose Homes.....

2010-07-19T13:32:00.001-07:00

Of the eight million homeowners currently not making mortgage payments, six million are expected to lose their homes over the next two years, according to the latest Market Intelligence newsletter from John Burns Real Estate Consulting.

As a result, the national homeownership rate will fall to just 61.7 percent.

Here’s the math:

The numbers might be even worse if you factor in the additional five million homeowners with no equity in their homes, assuming they strategically default.

Fortunately, most borrowers don’t walk away voluntarily until equity falls to -62 percent of their home’s value, at least that’s how the study from the Federal Reserve goes.

You could also argue that homeowners with less than five percent equity in their homes could default as well, as you need an equity cushion to unload a home to pay for associated closing costs (and to buy a new one).

John Burns also noted that “loan modifications have little prayer of helping,” citing the fact that homeowners who received permanent loan modifications use more than 30 percent of their income to pay off debt other than the mortgage.

And we all know consumers prefer to pay their credit cards over their mortgages.

The sliver of good news is that 58 percent of homeowners can afford the median priced home vs. 45 percent historically.

Now if only anybody wanted one…

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Economist Reports the Housing Market Double Dip is Beginning

2010-07-14T12:26:00.000-07:00

Toronto-based Capital Economics, an independent macroeconomic research firm, said Tuesday that a double dip in the United States housing market is now materializing.

Furthermore, the report finds that for every home currently on the market, there are two homes waiting to be sold.

There are conflicting opinions on whether or not a double dip will occur, and warnings abound, but the research by Paul Dales clearly calls the beginning of a new downturn. However, the Federal Reserve Bank of Cleveland is also reporting numbers that indicate the macroeconomy still shows pockets of strength.

In the Capital Economics report, titled "Double Dip Begins," Dales argues that the rush to take advantage of the tax credit pushed new home sales up by 29% in the two months to April. But in May, new sales plunged by 33% m/m to a new record low. The pending home sales index also fell sharply, by 30% m/m in June.

"The expiration of the homebuyer tax credit at the end of April has triggered a double-dip in the housing market, with new home sales falling particularly sharply in May," he writes. "The only reason why existing home sales did not fall significantly is because they are measured at the contract closing, rather than signing stage."

New legislation signed into law at the start of July dictates that as long as a contract was signed before the end of April, homebuyers can still claim the tax credit if it is closed before the end of September. Existing sales will therefore fall more gradually.

Nonetheless, the number of homes in the foreclosure pipeline increased in the first quarter. The foreclosure inventory rate rose from 4.5% to 4.6% and the delinquency rate, which measures the proportion of all borrowers that have missed at least one mortgage payment, increased from 9.5% to 10.1%.

"That means the potential supply, or "shadow inventory", rose from 7.6m homes to 7.8m," Dales said. "That dwarfs the 3.9m homes already on the market."

Dales sourced his numbers from Bloomberg, CoreLogic, FHFA and Thomson Datastream. He also cites Case-Shiller, MBA, NAR and NAHB stats as well.

According to a report on international trade by the Federal Reserve Bank of Cleveland, the nominal trade deficit unexpectedly widened in May, as an increase in imports outweighed a slightly more modest rise in exports. The $1.9bn widening, which follows a $0.3bn widening in April, brings the deficit to an 18-month high of $43.3bn.

However, the report sees strength in some pockets of the economy.

"While the decrease in net exports will likely lop off a few tenths off of real GDP growth in the second quarter, the sharp increase in nonpetroleum imports suggests that domestic spending is continuing to recover," states the report. "The strengthening of the dollar has not hindered US exports yet, as exports climbed 2.4% in May."

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Subprime Lending is Dead; Long Live Subprime Lending?

2010-07-13T11:22:00.000-07:00

The lending market needs subprime mortgages. Yes, you read that right: our country, perhaps now more than ever, needs access to loan products for those with poor credit profiles. After all, more of us than ever before are now subprime credit risks.

New data released today by FICO Inc. show that a whopping 25.5 percent of consumers now have a credit score of 599 or below. That’s a market of more than 43 million people, and growing every day, too—thanks to unemployment levels that appear set to remain painfully high for the next five years.

This is the definition of growth market, too: historically, only 15 percent of consumers have found themselves with a credit score below 600. Now, a quarter of consumers fit the profile.

All of which underscores a unique irony to the financial mess we’re now in: much of the growth in demand for mortgages in recent history came out of the subprime sector, now thoroughly villianized and vaporized. Subprime mortgages represented between 8 and 15 percent of total origination volume between 1995 and 2003, according to data published by Inside Mortgage Finance.

These days, it’s closer to zero percent if it’s anything at all. Wells Fargo (WFC: 27.69 +2.33%)—the nation’s largest mortgage lender, year to date—said last week that it was shuttering its subprime operations and laying off as many as 3,800 employees. There isn’t a public market for subprime debt; banks surely don’t want to hold subprime credits on their balance sheet and explain such a strategy to shareholders; and the private mortgage securities market is still in what could best be characterized as critical condition. (Any private RMBS issuances seen in mortgages this year are primarily pristine credits, not subprime.)

Are we really prepared as a country to say, then, that a full quarter of all consumers—in a period of flat to declining wage growth, for those lucky enough to have jobs right now—simply don’t exist insofar as mortgages and credit cards are concerned? What if that number reaches 30 percent of consumers (and it will)?

Let me play devil’s advocate for a minute. Maybe we do need to accept the fact that a quarter of consumers shouldn’t really be consuming all that much; that’s an austerian viewpoint if there ever were one, but it is certainly true that consumers ended up way over their heads in debt and are still deleveraging household balance sheets. Much of that deleveraging, by choice or otherwise, tends to affect credit scores adversely.

That said, subprime lending existed as a viable market for years ahead of this mess, albeit with a risk profile akin to what you’d actually expect from subprime borrowers—default rates six times or more beyond what would be seen with prime credits. Only when a number of economic and market forces created an unsustainable housing bubble did we begin to see default behavior of subprime borrowers start to more closely mimic that of prime-credit borrowers—as those with debt management problems were often able to avoid reality by refinancing early and often.

The result was that subprime debt tempted investors with a too-good-to-be-true combination: impossibly high yield, especially in first-loss positions, mixed with default rates that were next to nil. Sure, voluntary prepayments are more of a risk with subprime product (borrowers with lower credit scores are typically more sensitive to interest rate movements)—but voluntary prepayment behavior has long been well understood by investors and frankly was easily hedged, or at least incorporated into trading strategy for subprime securities.

All of which is to say that subprime lending wasn’t always the villain it’s now being made out to be. In fact, back in 1999, when subprime lending was just firing up its engine, most of the consumer lobby was backing research highlighting “unequal access to capital” for those with poor credit; the Congressional lobbying machines were pushing lenders to make more loans to borrowers with weaker credit, and lenders were in turn touting their partnerships to lend to low- and moderate-income families.

I wrote about this issue way back in 2008, in a column called “Mortgage Mess Generates War of Entitlement”—it’s perhaps more apropos today than it was when I first wrote it, so I’d recommend reading it again.

Today, the tables have turned. Consumers are raging against high levels of default, and lenders are touting their successes in preventing foreclosures.

With so many consumers now stuck in the subprime credit bucket, and their numbers growing by the day, it’s really just a matter of time until the pendulum of public opinion swings back again towards wanting consumers to have access to credit. The very same organizations now harpooning lenders for predatory lending practices—rightly or wrongly—will begin calling for the banks and other lenders to make credit available to this group.

Oh, the irony of it all.

Much of our nation’s public policy is determined by the will of the voters, after all, and our Congressional representatives do tend to vote the will of people (short-sighted though the people's will may be). And if 25 percent of our nation’s consumers—ahem, make that voters—are now subprime credits, something tells me it won’t be long until even subprime consumers decide they ought to be able to buy something.

The only question left to answer is: just who will be there to lend to them?

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Citi is starting to lend....

2010-07-07T13:49:00.000-07:00

Citibank has reportedly increased mortgage lending at its retail branches by 60 percent in the past two months, according to the Wall Street Journal.

The New York City-based bank, which had to reassess its risk appetite after teetering on the brink of failure, also doubled its mortgage application pipeline in a matter of months.

The overall mortgage application pipeline increased to $2 billion in June from less than $1 billion in February, likely spurred on by record low mortgage rates.

Citi’s North American retail banking business head Brad Dinsmore told the paper that home loans had become a “top priority” for the company, and said most of the applications were likely to turn into loans, partially because of a focus on more affluent customers.

He added that mortgage application volume was strong in major cities like Los Angeles, New York, Chicago, and San Francisco, with 30 percent going toward home purchases rather than refinances.

Additionally, applications for jumbo mortgages are up 30 percent, likely because Citi is offering a 30-year fixed-rate mortgage at around five percent, well below competitor rates hovering above 5.6 percent.

Citi has roughly 1,000 retail banking branches in the United States, but recently announced the closure of 376 CitiFinancial branches nationwide and in Canada, along with hundreds of related layoffs.

However, CitiFinancial only offered personal loans and smaller home purchase and refinance loans, which doesn’t seem to be part of their long-term strategy.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly.

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

How Low can they can go?

2010-07-01T09:19:00.000-07:00

Average rates for all but one mortgage product category set new record lows, according to a pair of weekly surveys.

Freddie Mac's (FRE: 0.3951 -4.33%) weekly survey put the average rate for a 30-year fixed-rate mortgage (FRM) at 4.58% with an average 0.7 origination point for the week ending July 1, down from last week's average of 4.69%. A year ago, the average rate was 5.32%.

The Bankrate survey of large banks and thrifts put the average rate for a 30-year FRM at 4.75% with a 0.41 origination point, down from last week's average of 4.81%.

The average rates are both new lows for 30-year FRMs in the two surveys.

“Interest rates on fixed-rate mortgages and the 5-year hybrid ARM fell once again to all-time record lows this week in a period where the economy struggles to gain momentum and inflation remains very low,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Growth estimates for first quarter GDP were revised down by a half percentage point over the past two months to 2.7%, according to the Bureau of Economic Analysis. Annual inflation, as measured by the 12-month change in the core CPI, held at 0.9% in April and May, which is the slowest pace in over 44 years, as reported by the Bureau of Labor Statistics.

Rates on 15-year FRMs were also down. Freddie Mac put the average rate for a 15-year FRM at 4.04% with an average 0.7 point, down from last week's average of 4.13% and a year ago, when the average was 4.77%. Bankrate said 15-year FRMs averaged 4.2% with a 0.41 point, down from 4.26% last week. Both averages are new lows in the survey.

Rates are being driven down by an increased investor appetite for American bonds compared to those of other countries, particularly volatile Europe. But Brian Koss, executive vice president of Mortgage Network, in Danvers, Mass., believes psychological factors may come into play before rates drop any further.

"As you get near the 4.5 (percent) handle, it really acts as the new Rubicon that does not want to be crossed," Koss told Bankrate, adding that it's in the best interest of the largest mortgage servicers not to stimulate another refinancing boom because they likely would lose many of the loans they're currently profitably servicing.

Freddie said the average rate for a five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) was 3.79% with an average 0.7 point, down from last week's average of 3.84% and a year ago, when it averaged 4.88%. Bankrate put the average rate for a five-year Arm at 4.07% with a 0.41 point, down from last week's average of 4.13%.

The only mortgage product tracked in the surveys that did not set a new low was Freddie's average for one-year Treasury-indexed ARMs, which averaged 3.8% with a 0.7 point, up from last week's average of 3.77%. A year ago, the one-year ARM averaged 4.94%.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Senate Passes Homebuyer Tax Credit Extension

2010-07-01T08:42:00.000-07:00

Yesterday, the House pushed through a three month closing extension of the homebuyer tax credit.

Tonight, the Senate unanimously approved the bill — leaving the President to ratify the provision by signing it into law, as early as tomorrow morning.

"I thank my colleagues for joining me to pass this important extension and giving homebuyers in Nevada and around the country the opportunity to purchase their first home," said Sen Harry Reid (D-NV), in a statement following the bill's passage.

"In addition to helping thousands of families experience the American dream, this successful and popular program provides a much needed boost to Nevada's housing market and economy."

The deadline for the tax credit was midnight tonight but only if the mortgage went through, so with Obama's signature, it would have been possible that no contracts currently under offer — but unable to close — would fall through the cracks with the extended deadline.

The Senate approved provision will give buyers until Sept. 30 to complete their purchases and qualify for tax credits of up to $8,000.

If the President signs the bill into law tomorrow, it is unclear if the provision will apply retroactively to deals that close on Thursday, July 1.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Summary of the Mortgage Reform and Anti-Predatory Lending Act

2010-06-29T08:25:00.000-07:00

Below is a summary of the “Mortgage Reform and Anti-Predatory Lending Act,” which is a part of the wider Dodd-Frank Wall Street Reform And Consumer Protection Act:

- Require Lenders Ensure a Borrower’s Ability to Repay: Establishes a simple federal standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold (I think this bans stated income loans and no-doc loans).

- Prohibit Unfair Lending Practices: Prohibits the financial incentives for subprime loans that encourage lenders to steer borrowers into more costly loans, including the bonuses known as “yield spread premiums” that lenders pay to brokers to inflate the cost of loans. Prohibits pre-payment penalties that trapped so many borrowers into unaffordable loans.

- Establishes Penalties for Irresponsible Lending: Lenders and mortgage brokers who don’t comply with new standards will be held accountable by consumers for as high as three-years of interest payments and damages plus attorney’s fees (if any). Protects borrowers against foreclosure for violations of these standards.

- Expands Consumer Protections for High-Cost Mortgages: Expands the protections available under federal rules on high-cost loans — lowering the interest rate and the points and fee triggers that define high cost loans.

- Requires Additional Disclosures for Consumers on Mortgages: Lenders must disclose the maximum a consumer could pay on a variable rate mortgage, with a warning that payments will vary based on interest rate changes.

- Housing Counseling: Establishes an Office of Housing Counseling within HUD to boost homeownership and rental housing counseling.

Keep in mind that the mortgage section alone is 206 pages, so I didn’t get a chance to read it all, nor do I want to read it all, and I’m not sure anyone else did/does either…

Much of the language is vague, so only time will tell if the changes are meaningful, assuming the bill passes in a vote before Congress this week.

Of course, most regulation, especially that in the mortgage industry, is circumvented within days of being enacted, so don’t expect anything groundbreaking.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Most Borrowers Would Benefit from Mortgage Refinance, But Can't Qualify: Credit Suisse

2010-06-25T12:24:00.000-07:00

Mortgage rates hit all-time lows this week, amid a weak demand for new mortgages.

But even so, according to fixed income researchers at Credit Suisse (CS: 38.89 +1.30%), the majority of borrowers remain unable to take advantage of the exceptionally low rates that would reduce monthly payments. They find that only 38% of borrowers that could benefit from a refinance can actually do so due to a variety of barriers.

In commentary released this week, the analysts wrote that 73% of 30-year fixed-rate mortgages (FRM) are "refinanceable," meaning the new rate would be at least 50 basis points (bps) less than the old rate.

But the cost to refinance is higher in the current market and only 61% of 30-year FRM borrowers could see their mortgage rate reduced by at least 75 bps, the discount needed to make it cost effective for a borrower to refinance.

The pool of potential refinancers decreases even further because of stricter underwriting standards that will keep many refinancers on the sideline, keeping mortgage prepayment levels muted unless rates drop even further, the analysts wrote.

But if rates continue to decline, an increasing number of borrowers that would qualify for a refinance mortgage would find it cost effective to do so, increasing prepayments. Given current averages rates of 4.75% on 30-year FRMs, Credit Suisse estimates total prepayments of Agency mortgage would total $85bn, compared to average prepayments of $71bn during the previous three months. If mortgage rates decreased further, averaging 4.25% to 4.5%, prepayments would increase to $100bn to $110bn.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

D to the Anger...

2010-06-24T09:17:00.000-07:00

Mortgage delinquencies fell for the first time since 2008, but foreclosures are on the rise and loan modifications are re-defaulting at a seriously high rate, according to the OTS Mortgage Metrics Report released today.

Mortgages in all stages of pre-foreclosure (such as 30+ day lates, 60+ day lates, and so on) on all types of loans (prime, Alt-A, subprime) improved during the first quarter of 2010 as newly initiated foreclosures increased roughly 19 percent from the fourth quarter.

Meanwhile, foreclosures in process increased nine percent and completed foreclosures jumped nearly 19 percent as loan servicers ran out of options to keep borrowers in their homes.

After all, there aren’t solutions for everyone, namely those who had no business buying a home, especially a severely overpriced one.

Loan modifications also rose during the quarter, with “actions to prevent avoidable foreclosures” increasing five percent from the previous quarter and more than 61 percent from a year earlier.

But the performance of loan modifications is still dubious at best, with just 27.2 percent of mods performed in 2008 and 51.8 percent performed in 2009 current.

Yes, the numbers have improved over the past year, but with still more than half failing to do their job, you have to wonder if we’re just delaying the inevitable.

Of the mods performed in 2009, 26.2 percent are already seriously delinquent and 7.9 percent are in the process of foreclosure.

Early data has suggested that HAMP modifications are outperforming other modifications, which the OTS attributed to an emphasis on lower mortgage payments based on affordability and new requirements for documented and verified income.

After three months, 7.7 percent of HAMP modifications were 60 days or more delinquent, compared with 11.3 percent of all loan modifications.

Do the Funky Dry Wall

2010-06-24T09:08:00.000-07:00

Government mortgage financiers Fannie Mae and Freddie Mac announced today that they would provide mortgage payment relief to homeowners with problem drywall.

Fannie Mae, which said the funky drywall is covered under the company’s “Unusual Hardships” policy, will forebear payments for up to six months and has instructed loan servicers to minimize the derogatory credit scoring impact associated.

Meanwhile, Freddie Mac said loan servicers may grant forbearances on a case-by-case basis for up to three months or reduce payments for up to six months.

Servicers may also recommend forbearance for up to a full year, based on the borrower’s unique situation.

“Freddie Mac’s goal is to help borrowers cope with these unusual drywall problems by instructing our servicers to give them the full measure of relief available under our policies,” said Freddie Mac Vice President of Loss Mitigation Yvette Gilmore, in a release.

“This will help more borrowers shoulder the unexpected cost of remediation and continue to succeed as long-term homeowners.”

The defective drywall, which was imported in large quantities from China, was used by a number of homebuilders and contractors during the boom and after the Gulf Coast hurricanes in 2005.

It has been linked to a number of health-related problems and has reportedly caused corrosion of electrical wiring, appliances, heating and A/C systems.

Earlier this week, the pair also announced mortgage payment relief to homeowners living in areas affected by the Gulf of Mexico oil spill.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

F A I L.....

2010-06-17T10:23:00.000-07:00

While both HAMP and loan servicer-specific loan modifications are on the rise, most are expected to re-default, according to a new report from Fitch Ratings.

Roughly 15 percent of all residential mortgage-backed securities (RMBS) have received either a HAMP or non-HAMP loan modification through May, up from 10 percent in September 2009.

And nearly 35 percent of RMBS subprime loans have received at least one loan modification, up from 25 percent during the same period.

But the seemingly large numbers continue to fall short of expectations, and could slow thanks to new requirements like verifying income before issuing trial loan modifications.

Of course, the quality of loan modifications may improve as a result, as loans mods that relied upon stated income were much less likely to convert to permanent modifications under HAMP.

Fitch maintains that 65 percent to 75 percent of modified subprime and Alt-A loans will default again within a year.

For prime loans, the re-default rate is slightly lower at 55 to 65 percent, but it still makes you wonder if loan modifications even work?

And roughly 15 percent of all modified loans have received at least one additional modification after the first one failed.

So what’s the solution?

Well, Fitch thinks the expanded use of short sales will “help the loan resolution landscape over time.”

Just a shame they result in a borrower losing their home, but it seems that’s the only real answer to this pesky foreclosure problem.

Top 10 tips for loan refinancing

2010-06-16T10:26:00.000-07:00

Top 10 tips for loan refinancing

Housing Info Update

2010-06-14T13:19:00.000-07:00

After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market -- but maybe they're being too optimistic.

In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries, Zillow.com's chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.

The four myths:

1.

The housing recession is over. It's not, Humphries said. He estimates the bottom in home prices won't come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation.
2.

After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. "Once we hit bottom, the bottom is going to be a long and flat affair across the markets," he said. "What we're going to see once we hit bottom is the second phase of the housing recession... that second phase is one of being flat."
3.

The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn't envision foreclosure activity stabilizing until late 2011.
4.

The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. "The biggest impact [in home sales] we believe were low prices... low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration."

Still, it's easy to understand why many homeowners want look on the bright side.

"They went from what everyone thought was a lucrative asset to something worth a lot less than they owed on it," said Douglas Culkin, president of the National Apartment Association, in a phone interview. "We all want it to get better," he said.

Some want to finally sell their homes and move on with their plans. And homeowners are tired of thinking their houses are bleeding equity, losing value like a new car driving off the dealership lot.

As for prospective home buyers, even if consumers are feeling confident enough to take an extra trip to Wal-Mart these days, many are not going to jump in and spend on a large-ticket item like a house, said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.

"The reality of the situation in which we find ourselves today has sunk in with people," she said in a phone interview. "If a foreclosure hasn't been a part of their life, it has been a part of someone else's life... and they've seen the pain that inflicts on the family."

That perception isn't going to fade quickly.

Rates are D to the own

2010-06-14T10:07:00.000-07:00

Mortgage rates improved again this week as economic uncertainties remained, according to mortgage financier Freddie Mac.

The always fashionable 30-year fixed-rate mortgage averaged 4.72 percent during the week ending June 10, down from 4.79 percent last week and 5.59 percent a year ago.

The 15-year fixed fell to 4.17 percent from 4.20 percent, a new record-low, and the fourth such record low in four weeks.

It’s nearly a point lower than the 5.06 percent average seen this time last year.

“Following a relatively weak employment report, bond yields fell this week and mortgage rates followed,” Freddie Mac chief economist Frank Nothaft said in a release.

“Overall, the economy does show signs of improvement. The Federal Reserve reported in its June 9th regional economic review that the economy strengthened in all 12 of its Districts over April and May” (how mortgage rates work).

Adjustable-rate mortgages also improved, with the five-year ARM slipping to 3.92 percent from 3.94 percent and the one-year ARM falling to 3.91 percent from 3.95 percent.

A year ago, the five-year averaged 5.17 percent and the one-year stood at 5.04 percent – the one-year is at its lowest point since the week ending May 27, 2004.

The interest rates above are good for conforming loan amounts at 80 percent loan-to-value at par; pricing adjustments may increase or decrease the rate you actually receive.

Jumbo loans continue to price a half percentage point or more higher than conforming mortgages.

Purchase Activity Down

2010-06-14T09:45:00.000-07:00

Purchase activity fell for a fifth straight week, but this time refinance applications also took a dive, according to the latest survey from the Mortgage Bankers Association.

The group’s seasonally adjusted purchase index slipped 5.7 percent from one week earlier, while the unadjusted purchase index was off 16.3 percent from the previous week and 30.4 percent lower than the Memorial Day week last year.

The refinance index, which had increased for a month straight, finally pulled back, slipping 14.3 percent from the previous week.

“Purchase and refinance applications dropped this week, even after an adjustment for the Memorial Day holiday,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

“Purchase applications are now 35 percent below their level of four weeks ago, as homebuyers have not yet returned to the market following the expiration of the homebuyer tax credit at the end of April.”

He noted that refinance applications were also off despite record low rates, partially because many borrowers either already refinanced, or cannot qualify due to uncertain job situations and/or underwater mortgages.

Meanwhile, the 30-year fixed slipped to 4.81 percent from 4.83 percent, while the 15-year fixed increased to 4.26 percent from 4.24 percent.

The out-of-favor one-year adjustable-rate mortgage fell to 6.94 percent from 6.96 percent.

Please note that the interest rates above are good for mortgages at 80 percent loan-to-value.

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 began.

If you are interested in refinancing you can receive real time quotes and payment options by calling me directly. You can reach me, Gene Neal at 877-276-6400 Ext 101.

Stated vs Actual

2010-05-24T09:29:00.000-07:00

Just prior to the mortgage crisis, stated income loans ran rampant, and once home prices took a turn for the worse, many of these loans defaulted at a fast clip.

Over time, it became clear that stated income was not the best way to measure a borrower’s ability to repay their obligations, especially when guaranteed home price appreciation was no longer around to pick up the slack.

The same seems to be true of loan modification performance, as evidenced by the conversion rate of mods under the Making Home Affordable program.

Loan servicers who have required income documentation prior to starting trial loan modifications have seen much greater success than those who haven’t asked for income documents upfront.

For example, subprime servicer Ocwen Financial Corp. (who required verified documentation) has seen an 83 percent success rate in converting trial loan modifications to permanent ones, while others accepting stated income have seen success rates as low as six percent.

In fact, juggernauts like Bank of America, Wells Fargo, and Chase are seeing conversion rates at the low-end of the spectrum, at or around 25 percent, thanks in part to accepting stated income to get things going.

This seemingly haphazard approach (similar to the ways things were run prior to the crisis) may explain why 277,640 of the 1,214,085 trial loan modifications have already been canceled.

Fortunately, all loan servicers will be required to use verified income prior to starting a trial loan modification with an effective date on or after June 1.

That should result in a much better conversion rate for all loan servicers going forward, especially the big guys that don’t seem to be getting the job done.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly.

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

Home Purchase Applications Drop.....

2010-05-24T09:26:00.000-07:00

Home loan applications fell 1.5 percent on a seasonally adjusted basis for the week ending May 14, the Mortgage Bankers Association said today.

The refinance index actually jumped 14.5 percent from one week earlier thanks to the low interest rates on offer, but home purchase applications plummeted 27.1 percent to their lowest point since May 1997.

It’s pretty clear the expiration of the homebuyer tax credit in late April led to this extreme drop-off, and it makes you wonder if home prices will be able to sustain, even with the near record-low mortgage rates on offer.

The decline in purchase apps pushed the refinance share of mortgage activity from 57.7 percent to 68.1 percent of total applications.

Meanwhile, the popular 30-year fixed-rate mortgage slipped further to 4.83 percent from 4.96 percent, and the 15-year fixed averaged 4.19 percent, down from 4.32 percent.

The one-year adjustable-rate mortgage dipped to 6.81 percent from 6.86 percent.

Mortgage points increased on all loan types, somewhat eliminating any benefit tied to the interest rate improvement.

The interest rates above are good for mortgages at 80 percent loan-to-value.

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 began.

I am an actual person so if you are interested in refinancing you can receive real time quotes and payment options by calling me directly.

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

The Street Vs The Home

2010-05-13T11:47:00.000-07:00

With all the recent stock market volatility, you may be wondering what effect such events have on mortgage rates.

Well, when economic fears rise, as they did last week, investors flee the stock market and head toward safer U.S. Treasury bonds, like the benchmark 10-year bond.

As a result, yields for those bonds plummet because demand is strong and a higher yield isn’t necessary to lure investors.

And because the 30-year fixed tends to follow the direction of the 10-year bond yield, mortgage rates fell.

Last week, the stock market plummeted thanks to fears of major default in Europe, but after a bailout package was announced today, stocks surged higher.

Mortgage rates will also climb higher on the news, though they may stay lower longer thanks to the general uncertainty in the air.

This is good news for prospective homeowners, as mortgage rates were expected to keep climbing throughout the year while the economy improved.

As a rule of thumb, bad economic news pushes mortgage rates lower, while good economic news pushes mortgage rates higher.

Stocks move in much the same way, except of course higher stock prices are seen as a positive and higher mortgage rates are viewed quite unfavorably.

Keep in mind, however, that this is just one of many factors that determine mortgage rates, and a change in stock prices may not always indicate a similar change in rates.

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

Tel (631) 687-3510 Ext. 101

eFax Attn Gene Neal

631-389-2556

Fax (631) 687-3513

eneal@athccorp.com

Way to Lock Up

2010-05-13T09:30:00.000-07:00

For California Mortgage Delinquencies, Location Matters
12May10

location

In sunny California, mortgage delinquencies vary widely by county, as evidenced by a Fitch Ratings study.

Fitch took a look at all securitized, non-agency mortgage loans in the state and discovered that “delinquencies are highly correlated with the level of negative equity.”

And while mortgage performance in California is not substantially different than that of the remainder of the country, certain parts of the state are underperforming or outperforming the rest of the nation.

In the hard-hit Riverside-San Bernardino-Ontario MSA, 23 percent of prime loans are 60+ days delinquent, making it the worst performing region in the nation.

Meanwhile, the San Francisco-San Mateo-Redwood City MSA is the best performing region in the country, with just four percent of prime loans 60+ days delinquent.

Additionally, high-risk option arms and subprime loans in San Francisco outperform less risky Alt-A mortgages in Riverside.

“From 2000-2006, nominal home prices in San Francisco increased by 81% and have since declined 22% from their peak. Over the same period, prices in Riverside have declined 55% from their peak after jumping 193%,” Fitch said in a release.

As a result, 90 percent of Riverside mortgages are now underwater, with nearly 60 percent of mortgage holders owing more than 150 percent of the value of their home.

“Fitch estimates the weighed average current loan-to-value ratio (LTV) in Riverside to be 164%. By comparison, less than 1% of San Francisco mortgages are more than 50% underwater, with a weighted average current LTV of 81%.”

Over the past year, San Francisco home prices have increased by 12 percent, while residences in Riverside have appreciated by just one percent.

Senate Bill Bans Mortgage Kickbacks, Liar Loans
12May10

no hassle

An amendment introduced by Oregon Senator Jeff Merkley and Minnesota Senator Amy Klobuchar aimed at protecting homeowners from deceptive lending practices passed the Senate by a vote of 63-36 today.

As a result, mortgage lenders and loan originators will be banned from accepting payments based on the interest rate and other terms of the loan, which effectively wipes out loan steering.

The legislation also seemingly kills off yield spread premium, which was one of the main ways mortgage brokers were compensated (how mortgage brokers make money).

“Deceptive mortgage practices like hidden steering payments directly led to the Wall Street meltdown and resulted in millions of families losing their homes,” said Senator Merkley in a release.

“We took a huge stride forward today in the fight to restore fairness for homeowners and strengthen the financial foundations of our families. I look forward to seeing this amendment become law so that never again will hidden steering payments put millions of homeowners on the fast track to foreclosure.”

Current rules allow loan originators and mortgage lenders to place borrowers into higher-cost and riskier loans, even when they qualify for more affordable loans.

Merkley cited a WSJ study, which found that 61 percent of subprime loans originated in 2006 went to borrowers who qualified for prime loans.

The bill will also require lenders to document income and “other underwriting standards” to ensure borrowers can actually repay their loans, putting an end to no doc loans and so-called “liar loans,” otherwise known as stated income loans.

These are huge changes and the implications may be great for the mortgage industry.

The amendment was also co-sponsored by Senators Chuck Schumer (D-NY), Olympia Snowe (R-ME), Scott Brown (R-MA), Mark Begich (D-AK), Barbara Boxer (D-CA), Chris Dodd (D-CT), Carl Levin (D-MI), Al Franken (D-MN) and John Kerry (D-MA).

Refis Jump as Rates Slide, Purchases Slow as Tax Credit Ends
12May10

hot cold

Refinance demand surged last week as mortgage rates benefited from economic uncertainty, but purchase activity cooled following the expiration of the homebuyer tax credit, according to data from the Mortgage Bankers Association.

“The recent plunge in rates on US Treasury securities, due to a flight to quality as investors worldwide sought shelter from the Greek debt crisis, benefitted US mortgage borrowers last week,” said Michael Fratantoni, MBA Vice President of Research and Economics.

“Rates on 30-year mortgages dropped to their lowest level since mid-March. As a result, refinance applications for conventional loans jumped, hitting their highest level in six weeks.”

The refinance index increased 14.8 percent during the week ending May 7, pushing its share of mortgage activity to 57.7 percent of total applications from 51.9 percent the previous week.

“In contrast, purchase applications fell almost 10 percent in the first week following the expiration of the homebuyer tax credit, as the tax credit likely pulled some sales into April that would otherwise have occurred in May or later.”

The seasonally adjusted purchase index fell 9.5 percent week-to-week; the unadjusted purchase index was off 8.9 percent from the previous week and 0.6 percent lower than the same week a year ago.

Meanwhile, the average contract rate for a 30-year fixed-rate mortgage fell to 4.96 percent from 5.02 percent, and the 15-year fixed slipped to 4.32 percent from 4.34 percent.

The one-year adjustable-rate mortgage averaged 6.86 percent, down from 7.03 percent – the ARM share of activity remained unchanged at 6.3 percent of total applications.

The rates above are good for mortgages at 80 percent loan-to-value.

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 began.

(photo: qmnonic)

Black Eyed Pea Takes Foreclosure Crisis into Own Hands
11May10

will.i.am

Black Eyed Peas frontman will.i.am has taken on the foreclosure crisis, creating the i.am home fund to help those in jeopardy of losing their homes as a result of the economic downturn.

Yesterday, he unveiled the program on Oprah, surprising two struggling families facing foreclosure by paying off their mortgages.

Sure beats the other freebies Oprah has been known to throw out to guests on the show…

One family with eight children owed $250,000 on their mortgage and had already exhausted their 401k and savings account after the breadwinner lost his job.

The other lucky victim was a single mom who had been laid off after her company downsized, leaving her eight months behind on the mortgage and owing about $100,000.

Both families are now free-and-clear, let’s just hope they don’t try to pull cash-out anytime soon.

“Growing up I dreamt that one day I’d be able to buy my mom a house and take care of my family,” said will.i.am on his website. “I realized that dream and experienced the positive effect giving back had on my family.”

“Now I am compelled to help others who are in jeopardy of losing their homes and inspire others to join the movement.”

The i.am home fund is collecting donations to help other families in similar situations, though it’s unclear how the money will be allocated.

A number of struggling homeowners have already written in on the website in hopes of receiving assistance.

(photo: nicogenin)

Mortgage Rates vs Stock Market
10May10

wall street

With all the recent stock market volatility, you may be wondering what effect such events have on mortgage rates.

Well, when economic fears rise, as they did last week, investors flee the stock market and head toward safer U.S. Treasury bonds, like the benchmark 10-year bond.

As a result, yields for those bonds plummet because demand is strong and a higher yield isn’t necessary to lure investors.

And because the 30-year fixed tends to follow the direction of the 10-year bond yield, mortgage rates fell.

Last week, the stock market plummeted thanks to fears of major default in Europe, but after a bailout package was announced today, stocks surged higher.

Mortgage rates will also climb higher on the news, though they may stay lower longer thanks to the general uncertainty in the air.

This is good news for prospective homeowners, as mortgage rates were expected to keep climbing throughout the year while the economy improved.

As a rule of thumb, bad economic news pushes mortgage rates lower, while good economic news pushes mortgage rates higher.

Stocks move in much the same way, except of course higher stock prices are seen as a positive and higher mortgage rates are viewed quite unfavorably.

Keep in mind, however, that this is just one of many factors that determine mortgage rates, and a change in stock prices may not always indicate a similar change in rates.

Foreclosure Protest Ends with Seven Arrests
07May10

hand cuffs

A man who holed up inside his home to avoid a foreclosure-driven eviction was removed today after a week-long protest.

The homeowner, Keith Sadler, along with several protesters from the “Toledo Foreclosure Defense League,” had bound themselves together using chains.

State Bank and Trust Co. foreclosed on the Stony Ridge, Ohio home last year and later purchased it at a sheriff’s sale in March for $33,333.

Court records reveal that Sadler was supposed to vacate the property by midnight Monday, but it was clear he had no intentions of leaving voluntarily.

The disgruntled homeowner said he had made mortgage payments for 12 years since buying the property from his father, and only fell behind after being laid off from his job (and for medical reasons).

He lived in the home for some 20 years before police knocked down the front door at 6:30 AM local time and carried him out by his arms and legs.

Sadler, along with six others, Connie Smithengale, 20; Bryer Baumgartner, 19; Nicholas Botek, 23; Jessica Angelov, 20; Daniel Orange, 25; and Johnathan Kutsch, 22, were arrested and charged with misdemeanor obstructing justice and trespassing.

The Toledo Foreclosure Defense League has called for a moratorium on both foreclosures and evictions, arguing that banks have been bailed out while homeowners get kicked to the curb.

Back in February, there was word of a so-called “foreclosure ban,” which essentially would prohibit foreclosure action until a borrower was evaluated and found to ineligible for HAMP (or a reasonable attempt to contact the borrower was made).

This isn’t the first dramatic tale of foreclosure and probably won’t be the last…back in September, a San Diego man robbed a bank in order to make his mortgage payments.

A month earlier, a family lost their home to foreclosure thanks to a 7-cent underpayment.

What’s next?

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

Tel (631) 687-3510 Ext. 101

eFax Attn Gene Neal

631-389-2556

Fax (631) 687-3513

eneal@athccorp.com

1.6 Millie

2010-04-29T12:40:00.000-07:00

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.

Refi's headed UP

2010-04-22T10:40:00.000-07:00

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

eneal@athccorp.com

Time/Cut

2010-04-20T11:05:00.000-07:00

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

eneal@athccorp.com

Wave to your Mortgage

2010-04-20T10:55:00.000-07:00

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

eneal@athccorp.com

Anemic Galaxy..."Anemic Start"

2010-04-15T10:32:00.000-07:00

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

eneal@athccorp.com

Rates Headed Up...for How Long?

2010-04-09T07:52:00.000-07:00

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 Bankrate.com 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, Bankrate.com’s survey had the 30-year FRM at 5.2%. Over the past three weeks, the Bankrate.com 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%.

Bankrate.com 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%.

Bankrate.com 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

eneal@athccorp.com

Subprime Delinquencies Fall for First Time in 4 Years

2010-04-07T17:16:00.000-07:00

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

eneal@athccorp.com

Soon not now but Soon ......So they say......

2010-03-31T13:52:00.000-07:00

First American CoreLogic estimates that the typical US homeowner who is in negative equity will not experience positive equity until late 2015 to early 2016. In severely depressed markets, the typical borrower in negative equity may not experience positive equity until 2020 or later.

CoreLogic projects more than 11.3m — or 24% — of all residential properties with mortgages had negative equity at the end of the Q409. While the largest decreases in home prices appear to have already happened, it remains to be seen when borrowers will return to positive equity.

To predict how much long borrowers will remain in negative equity, CoreLogic projected future home values and unpaid principal balances for a selected set of Core Based Statistical Areas (CBSAs) to gauge how long it will take for the average underwater borrower to return to positive equity.

The chart above projects the amount of negative equity using CoreLogic short-term forecasts and a baseline view of long-term price trends nationally through 2020. It also takes into account the amortization assumptions described below for ten markets.

According to the projections, it will take the typical borrower until late 2015 or early 2016 for negative equity to disappear. But in severely depressed markets, like Detroit, negative equity won’t dissipate even by 2020, because of its depressed economy. Negative equity is widely considered a trigger to strategic default, and a Treasury Department program announced Friday attempts to address the problem by pushing lenders and servicers to offer borrowers principal reductions on their mortgages.

And although house price appreciation will, over time, offset negative equity, amortization — the paying down of loan balances — will in most cases be a more significant remedy to negative equity, a research note from CoreLogic economists states. Over the next 10 years, the average loan balance will decrease by an annual rate of 3.3%; meanwhile home price are expected to increase at a 3% annual rate over the next decade, they claim.

Of the ten markets CoreLogic studied, the Washington-Arlington-Alexandria CBSA is expected to reach positive equity by 2015; Atlanta-Sandy Springs-Marietta, Dallas-Plano-Irving and Riverside-San Bernardino-Ontario are projected for 2016; Boston-Quincy by 2017; and Cape Coral-Fort Myers, Pittsburgh, Las Vegas-Paradise and Lancaster, PA by 2020. It is estimated that Detroit will not reach positive equity until after 2020.

The projections are based on a 3% annual home price appreciation. An alternative scenario of 5% annual price appreciation would put the first markets recovering by 2013, but CoreLogic said 5% appreciation would be much higher than historical appreciation, especially given today’s low inflation environment. Conversely, a 1.5% annual appreciation, which would be fairly low relative to history, would push back the point of positive equity to at least 2017.

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

eneal@athccorp.com

Rates stay down

2010-03-30T10:14:00.000-07:00

Mortgage rates inched up a bit this week, but remain near historic lows, according to mortgage financier Freddie Mac.

The popular 30-year fixed averaged 4.99 percent during the week ending March 25, up from 4.96 percent last week and 4.85 percent a year ago.

The less popular 15-year fixed climbed a single basis point to 4.34 percent, but is still below the 4.58 percent average seen a year earlier.

“Mortgage rates inched up slightly this week as bond yields rose even further,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. (Why mortgage rates move)

“Interest rates on 30-year fixed mortgages, however, were still below 5 percent for the fourth consecutive week.

Adjustable-rate mortgages displayed similar movement, with the five-year ARM rising to 4.14 percent from 4.09 percent and the one-year climbing to 4.20 percent from 4.12 percent.

A year ago, the five-year averaged 4.96 percent and the one-year stood at 4.85 percent.

The mortgage rates above are good for conforming loans at 80 percent loan to value; pricing adjustments for things such as credit score may raise or lower your actual rate.

Jumbo loans continue to price a percentage point or so higher than conforming loans.

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

eneal@athccorp.com

Bank of America Wants You to Earn Principal Forgiveness

2010-03-30T09:35:00.000-07:00

Bank of America announced a new strategy today to tackle the pesky underwater mortgages on its books, many acquired via its merger with Countrywide.

The so-called “earned principal forgiveness” initiative will target borrowers with subprime loans, option ARMs, and prime two-year hybrid ARMs.

For loans at least 60 days delinquent with current loan-to-value ratios of 120 percent or higher, the bank will offer an interest-free forbearance of principal that the homeowner can turn into reduced principal over five years if they stay current on payments.

“In our experience with Home Affordable Modification Program and National Homeownership Retention Program modifications, Bank of America has found that many homeowners who owe considerably more on their mortgages than their homes are worth are reluctant to accept a solution that addresses only the amount of the payment without an accompanying reduction in the balance due on the loan,” said Barbara Desoer, president of Bank of America Home Loans.

Bank of America said it will make principal reduction the initial consideration toward reaching HAMP’s 31 percent debt-to-income ratio target when modifying the aforementioned loan types.

Certain holders of option arms may also receive a HAMP modification that eliminates the negative amortization feature and results in the forgiveness of all or part of the negative amortization amount to reduce principal to as low as 95 percent loan to value.

Of course that means the borrower will no longer have the ability to make ultra-low monthly mortgage payments, but BofA hopes the equity reward will be enough to avoid strategic default and foreclosure.

The bank estimates it will be able to offer principal reduction solutions to 45,000 borrowers, representing $3 billion in total reduced principal.

Bank of America is also extending its National Homeownership Retention Program (its own loan modification program) for an additional six months to December 31, 2012.

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

eneal@athccorp.com

Wise Man speaks.....

2010-03-26T10:01:00.000-07:00

March 26 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the recent rise in Treasury yields represents a “canary in the mine” that may signal further gains in interest rates.

Higher yields reflect investor concerns over “this huge overhang of federal debt which we have never seen before,” Greenspan said in an interview today on Bloomberg Television.

“I’m very much concerned about the fiscal situation,” said Greenspan, 84, who headed the central bank from 1987 to 2006. An increase in long-term interest rates “will make the housing recovery very difficult to implement and put a dampening on capital investment as well.”

The yield on 10-year Treasury notes was 3.86 percent at 12:19 p.m. in New York, little changed from late yesterday and up from 3.69 percent at the end of last week.

U.S. interest-rate swap spreads declined to the lowest levels on record this week, reflecting investor concerns about the ability of nations to finance rising fiscal deficits.

The rate to exchange floating- for fixed-interest payments for 10 years fell below the comparable-maturity Treasury yield for the first time on March 23. The swap spread reached as low as negative 10.19 basis points yesterday before reaching negative 7.63 basis points.

Record Deficit

The U.S. budget deficit reached a record $1.4 trillion for the fiscal year that ended Sept. 30 amid falling tax revenue from the recession, a bailout of the banking and auto industries, and the $787 billion economic stimulus package.

“I don’t like American politics and what’s happening,” Greenspan said.

Historically, there has been “a large buffer between the level of our federal debt and our capacity to borrow,” he said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”

Greenspan said in an interview last year that a consumption tax was a likely response to a widening budget deficit. That may not be sufficient when the gap is caused by a failure to cut spending, he said today.

“I’m not convinced by any means that we can succeed in stabilizing this long-term outlook strictly from a value-added tax,” Greenspan said.

Stock Rally

The former Fed chairman said the U.S. economic recovery has been driven “to a very large extent” by a resurgence of stock prices. The Standard & Poor’s 500 Index has jumped 73 percent since its low on March 9, 2009. The index rose 0.5 percent to 1,171.24 at 12:19 p.m. in New York.

“You can see the whole blossoming of finance,” Greenspan said. “As these stock prices have gone up, debt became far more valuable, and you can see this huge issuance, especially of junk bonds.”

A continued rally in share prices could help sustain the expansion, Greenspan said. Still, the unemployment rate could remain “not terribly far from where it is” at 9.7 percent as people re-enter the labor force to take advantage of job openings in a growing economy.

The U.S. economy expanded at a 5.6 percent annual rate in the fourth quarter of 2009, and corporate profits climbed, figures from the Commerce Department showed today in Washington. Company earnings increased 8 percent, capping the biggest year- over-year gain in a quarter century.

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

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Mortgage Rates Increase as Fed MBS Purchase Program Nears End

2010-03-25T08:43:00.000-07:00

With just one week left before the end of March — and the end of the Federal Reserve’s $1.25trn mortgage-backed securities (MBS) purchase program — mortgage rates were up in two weekly surveys.

Freddie Mac (FRE: 1.30 +1.56%) said the average rate for a 30-year fixed-rate mortgage (FRM) was 4.99% with an average 0.6 origination point for the week ending March 25, up from last week’s average of 4.96%. A year ago, the rate average was 4.85%.

The Bankrate.com survey of large banks and thrifts put the average rate for a 30-year FRM at 5.11% with an average 0.41 origination point, up from last week’s average of 5.07%, but down from last year’s average of 5.19%.

“Mortgage rates inched up slightly this week as bond yields rose even further,” said Freddie Mac vice president and chief economist Frank Nothaft. “Interest rates on 30-year fixed mortgages, however, were still below 5% for the fourth consecutive week.

Freddie said the 15-year FRM averaged 4.34% with an average 0.6 point, up from last week when it averaged 4.33%. A year ago at this time, the 15-year FRM averaged 4.58%. Bankrate.com said the 15-year FRM averaged 4.47% with an average 0.41 origination point, up from last week’s average of 4.45%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.14% with an average 0.6 point, Freddie said, up from last week when it averaged 4.09%, but down from last year’s average of 4.98%. Bankrate.com put the five-year ARM at 4.49% with an average 0.41 point, up from last week’s average of 4.46%.

Freddie also said the one-year Treasury-indexed ARM averaged 4.2% with an average 0.6 point, up from last week when it averaged 4.12% and down from last year’s average of 4.85%.

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Refinance Share Lowest Since October

2010-03-24T10:28:00.000-07:00

Mortgage demand slipped week-to-week thanks to lackluster refinance activity, the Mortgage Bankers Association said today.

The home loan application index fell 4.2 percent on a seasonally adjusted basis (-3.9% unadjusted) for the week ending March 19.

Refinances were off 7.1 percent compared with the previous week, while the seasonally adjusted purchase index climbed 2.7 percent.

The unadjusted purchase index rose 2.8 percent, but was still 15 percent lower than the same period a year ago.

Meanwhile, the refinance share of applications fell to 65 percent from 67.3 percent, the lowest point since October 2009, despite interest rates hovering near record lows.

The uber-popular 30-year fixed-rate mortgage jumped up to 5.01 percent from 4.91 percent during the week, while the 15-year fixed increased to 4.33 percent from 4.24 percent.

The one-year adjustable-rate mortgage stood unchanged at 6.75 percent, while the ARM-share of total applications increased to 4.8 percent from 4.6 percent.

The rates are good for loans at 80 percent loan to value with a loan origination fee of around 0.75 percent for the fixed loans and 0.32 percent for ARMs.

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

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Rates GO d to the own

2010-03-12T09:50:00.000-08:00

Mortgage rates fell for a second consecutive week, albeit by very little, according to mortgage financier Freddie Mac.

The popular 30-year fixed averaged 4.95 percent during the week ending March 11, down from 4.97 percent a week ago and 5.03 percent last year.

The 15-year fixed fell a single basis point to 4.32 percent, and is still lower than the 4.64 percent seen a year earlier.

The five-year adjustable-rate mortgage averaged 4.05 percent, down from 4.11 percent last week and 4.99 percent last year.

Finally, the one-year ARM slipped to 4.22 percent from 4.27 percent, and is well below the 4.80 percent average seen in early March 2009.

“During a light week of mixed economic reports, mortgage rates eased somewhat,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. (Why mortgage rates are going down)

“Pending existing home sales fell 7.6 percent in January, well below the market consensus of a 1 percent gain. Meanwhile, the economy lost only 36,000 jobs in February, fewer than market forecasts, and the unemployment rate held steady at 9.7 percent.”

The interest rates above are good for conforming loan amounts at a loan to value of 80 percent; pricing adjustments may raise or lower your actual rate.

Jumbo loans continue to price one percent or higher than conforming loans.

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

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Short Sales R Us

2010-03-11T09:03:00.000-08:00

It appears 2010 will indeed be the year of the short sale, according to a report from the New York Times.

Apparently the Treasury is planning to add another weapon to its growing foreclosure prevention arsenal, though this latest one involves the loss of the home.

Come April 5, a streamlined and standardized short sale process will emerge – lenders will rely on real estate agents to determine the value of a home and the corresponding minimum offer to accept (hmm).

The homeowner won’t know the figure, but if an offer comes in that meets or exceeds it, the bank or lender must take it.

Similar to programs already in place, participants will receive incentive payments; the servicing bank will get $1,000, and another $1,000 will go towards a second mortgage if one exists.

Additionally, the homeowner would receive $1,500 for relocation costs if they participated.

The aim of the program is to reduce the large number of vacant homes and minimize losses for banks that would otherwise face costly foreclosure-related expenses.

And former homeowners wouldn’t have to worry about the bank coming after them for the unpaid mortgage balance.

However, skeptics are concerned that short sales have a high propensity for fraud and could lead to intentional default and shady dealings.

Short sales continue to be used sparingly, as they are time consuming and complicated, though government mortgage financier Fannie Mae saw them triple in 2009.

There’s always the option of a short refinance as well, but those come with the risk of re-default, which could end up extending the crisis.

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

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Saving the Homes

2010-03-05T13:07:00.000-08:00

Speaking at today’s 2010 Multicultural Real Estate and Policy Conference in Washington, DC, Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair went on a charm offensive by defending the Home Affordable Modification Program (HAMP) against criticism that the program regulary fails to reach its goals and is destined to fail.

“It’s still too soon to know how successful it will ultimately be,” said Bair, at the conference. “It is true that the numbers of trial and permanent modifications have lagged behind program projections. But at the same time, we saw a slowdown in the pace of new foreclosures in the second half of last year.”

“This suggests that servicers were at least looking for alternatives that could minimize their losses and keep people in their homes,” she adds.

Bair said the administration now recognizes that problems in the mortgages industry continue to evolve. “Now we’re dealing with underwater mortgages,” she said. “That’s why we’re actively looking at principal write-downs within our loss share agreements and other failed bank programs.”

Bair added that such extreme measures may be necessary to prevent strategic defaults, especially in homes with mortgages that are currently at 150% LTV or more. Getting it down to 100% LTV may be vital to preventing homeowners from walking away.

In terms of improving mortgage financing, the FDIC chair promoted securitization as a solution. But this will only happen after regulatory reform and the clearing-up of bank balance sheets.

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

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Below the Fizzzzive

2010-03-04T09:46:00.000-08:00

Mortgage rates were down in two weekly surveys, and in Freddie Mac’s (FRE: 1.2205 +1.71%) index, rates dipped below 5%.

Freddie Mac said the average interest for a 30-year fixed-rate mortgage was 4.97% with a 0.7 origination point for the week ending March 4, down from 5.05% one week ago. Last year at this time, the 30-year FRM averaged 5.15%.

Bankrate.com’s weekly survey of large banks and thrifts put the 30-year FRM at 5.12% with a 0.39 origination point, down from last week, when it was 5.15%.

“30-year fixed mortgages fell below 5% to match levels seen two weeks ago and are helping to maintain affordable home-purchase conditions,” said Frank Nothaft, Freddie Mac vice president and chief economist.

“In fact, monthly principal and interest mortgage payments for a typical family buying a median-priced home of $163,800 were just $709 in January, the lowest amount since February 1998, according to the National Association of Realtors,” he added. “For first-time homebuyers, the fourth quarter of 2009 was the third most affordable quarter since 1981 behind the first and second quarter of 2009.”

Freddie said the average rate for a 30-year FRM was 4.33% with an average 0.7 point, down from last week’s average of 4.4% and a year ago, when the average was 4.72%. Bankrate.com said 15-year FRMs were average at 4.46% with a 0.39 point, down from 4.52% last week.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.11% with an average 0.6 point, down from last week’s average of 4.16% and a year ago, when the five-year ARM averaged 5.08%. Bankrate.com said the five-year ARM average was 4.46% with a 0.39 point, down from last week, when it was 4.53%.

Freddie said the one-year ARM averaged 4.27% with an average 0.6 point, up from last week when it averaged 4.15%, but down from last year, when it was 4.86%.

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

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Are you Above the 6?

2010-03-03T10:12:00.000-08:00

We all know mortgage rates have been flirting with records over the past year and change, but many have still not taken advantage, or can’t, according to a piece in the WSJ.

Despite the en vogue 30-year fixed floating around five percent, 37 percent of borrowers with the popular mortgage have mortgage rates of six percent or higher, per Credit Suisse analysts.

The group of borrowers represents a collective $1.2 trillion in home loans, and billions in lost savings, whether by choice or necessity.

Apparently more than half could lower their rate by nearly three-quarters of a percentage point, and many could shave off a full point, assuming they qualified.

So why are refinance numbers so low? Is it the bad weather, stringent underwriting guidelines, or perhaps another reason?

Well, we found out last week that a staggering 11.3 million, or 24 percent, of all residential properties with a mortgage in the United States are underwater, meaning more is owed on the mortgage(s) than the property is worth.

That’s enough to dampen refinance numbers, though there are options for borrowers looking to refinance with negative equity.

Mortgage bankers have also argued that costs and fees associated with refinancing have risen to the point where it’s unattractive for many homeowners.

Things like mortgage insurance must also be factored into refinance costs for those with little equity.

All in all, it appears that those who need it least are receiving much of the benefits of the low rates, as refinances only seem to be going to the most creditworthy borrowers.

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

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Are you Ready to Refi?

2010-03-02T10:13:00.000-08:00

The Home Affordable Refinance Program (HARP) has been extended until June 30, 2011, according to the Federal Housing Finance Agency (FHFA).

“FHFA has reviewed the current market situation and the state of mortgage insurance availability and has determined that the market conditions that necessitated the actions taken last year have not materially changed,” said FHFA Acting Director Ed DeMarco, in a statement on its website.

“Accordingly, to support and promote market stability, and to encourage lenders and other mortgage market participants to fully adopt the HARP program, including the implementation of the October 2009 expansion of loan-to-value ratios (LTVs) to 125 percent, FHFA is authorizing the extension of HARP until June 30, 2011.”

The program is one portion of the government’s Making Home Affordable Program, which also includes the Home Affordable Modification Program (HAMP).

It began in April 2009 and was set to expire on June 10 of this year; HAMP is expected to run until December 31, 2012.

Apparently things are worse than anticipated, what with more than 11.3 million, or 24 percent, of all residential properties with mortgages in the United States underwater as of year-end.

Of the more than four million refinanced mortgages purchased or guaranteed by Fannie Mae and Freddie Mac in 2009, 190,180 were HARP refinances with loan-to-value ratios between 80 percent and 125 percent.

If you’re looking to refinance with negative equity, this is your ticket.

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

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Home Prices D to the rop....

2010-03-01T09:05:00.000-08:00

The rate at which home prices are dropping may be slowly coming to a halt across the United States, with analysts at Barclays Capital predicting only a 4 or 5% dip left to go before stabilization. But the rate of appreciation on the back side of that bottoming out is likely to “muddle along for the next few years,” they say in a weekly letter to investors.

This conclusion is based on expected aftershocks of the “smoothed-out” housing supply model, where millions of potential foreclosures are being averted temporarily with government-backed programs or by suppliers slowing the rate in which foreclosures hit the market. On the positive side, they say this effort actually prevented home prices from falling considerably more.

But the smoothed-out method, while successful on the supply side, is coming at a cost: “The overhang of distressed inventory is a huge negative technical – it suggests that any price rise will probably be met by increased distressed sales,” say the securitization analysts in their Residential Credit Strategy report.

“Meanwhile, home prices do seem a little cheap, using fundamental metrics like price/rent and price/income ratios, but not extremely so,” they add. “Thus, a meaningful rise in prices would need big changes on both the technical and fundamental fronts.”

Home prices dipped only slightly in December, according to Standard & Poor’s Case Shiller US National Home Price Index. However, it is the recent drop in new home sales, down 11.2% from December to January, that the analysts find “disappointing.”

And in added response to claims that housing is becoming more and more affordable in the United States, the report adds that “affordability indices are not good predictors of future moves in home prices.”

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.

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Mr Plow

2010-02-22T10:22:00.000-08:00

MOSCOW, Ohio --
Like many people, Terry Hoskins has had troubles with his bank. But his solution to foreclosure might be unique.

Hoskins said he's been in a struggle with RiverHills Bank over his Clermont County home for nearly a decade, a struggle that was coming to an end as the bank began foreclosure proceedings on his $350,000 home.

"When I see I owe $160,000 on a home valued at $350,000, and someone decides they want to take it – no, I wasn't going to stand for that, so I took it down," Hoskins said.

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Hoskins said the Internal Revenue Service placed liens on his carpet store and commercial property on state Route 125 after his brother, a one-time business partner, sued him.

The bank claimed his home as collateral, Hoskins said, and went after both his residential and commercial properties.

"The average homeowner that can't afford an attorney or can fight as long as we have, they don't stand a chance," he said.

Hoskins said he'd gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure.

Hoskins told News 5's Courtis Fuller that he issued the bank an ultimatum.

"I'll tear it down before I let you take it," Hoskins told them.

And that's exactly what Hoskins did.

Man Says Actions Intended To Send Message To Banks

The Moscow man used a bulldozer two weeks ago to level the home he'd built, and the sprawling country home is now rubble, buried under a coating of snow.

"As far as what the bank is going to get, I plan on giving them back what was on this hill exactly (as) it was," Hoskins said. "I brought it out of the ground and I plan on putting it back in the ground."

Hoskins' business in Amelia is scheduled to go up for auction on March 2, and he told Fuller he's considering leveling that building, too.

RiverHills Bank declined to comment on the situation, but Hoskins said his actions were intended to send a message.

"Well, to probably make banks think twice before they try to take someone's home, and if they are going to take it wrongly, the end result will be them tearing their house down like I did mine," Hoskins said.

Man Has No Regrets Over Bulldozing House

Hoskins said he's heard from people all over the country since his story first aired Thursday, and he said most have been supportive.

He said he sought legal counsel before tearing down his home and understands the possible consequences, but he has never doubted his decision once he made it.

"When I knew I was going to lose it, I decided to take it down," Hoskins said.

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

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The Decline of the Behind

2010-02-19T11:49:00.000-08:00

The number of borrowers falling behind on their mortgage payments dropped sharply at the end of last year, a sign the foreclosure crisis is beginning to ebb.

The Mortgage Bankers Association said Friday that the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October to December quarter, down from 3.8 percent in the third quarter. The decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.

The new trend in late payments is significant because it means the number of people going into foreclosure will continue to decline this year. And that is important for all homeowners in areas where cheaply priced foreclosures are bringing down neighboring values.

In high-foreclosure cities like Las Vegas, Phoenix and Miami, for example, homes have lost roughly half their values from their peaks. But Friday's report showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.

Jay Brinkmann, the trade group's chief economist, said the report likely marks "the beginning of the end" of the wave of mortgage delinquencies and foreclosures that started more than three years ago.

Still, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record for the 10th straight quarter.

"The bad news is that we still have a big problem," Brinkmann said. "The good news is it looks like it may not get much bigger."

There will be, however, more short-term pain. Nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of under 20 percent.

Banks have prolonged the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the under the Obama administration's $75 billion mortgage relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.

But experts warn that hundreds of thousands of borrowers won't be eligible or won't complete the process. So far, only 116,300 borrowers out of about 1 million who enrolled have had the terms of their mortgages changed permanently.

Obama, meanwhile, was to announce Friday that housing agencies in the five hardest-hit states will receive $1.5 billion to help spur local solutions. Those five are Arizona, California, Florida, Michigan and Nevada.

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

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Rates Drop down again...

2010-02-18T14:13:00.000-08:00

Mortgage rates strung together two consecutive weeks of declines and are nearing record low territory again, according to the latest survey from mortgage financier Freddie Mac.

“Mortgage rates eased for the second week, while economic data releases suggest that the housing market may be in a slow state of recovery,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement.

The hot, hot, hot 30-year fixed averaged 4.93 percent during the week ending February 18, down from 4.97 percent last week and 5.04 percent a year ago.

The 15-year fixed slipped a single basis point to 4.33 percent, and sits firmly below the 4.68 percent seen this time last year.

Adjustable-rate mortgages got in on the fun too, with the five-year ARM slipping to 4.12 percent from 4.19 percent, about a point below the 5.04 seen a year ago.

The one-year ARM fell 10 basis points week-to-week to average 4.23 percent, and is more than a half point below the 4.80 percent average seen last year.

The interest rates above are good for conforming loan amounts at 80 percent loan-to-value; mortgage pricing adjustments may lower or raise your actual contract rate.

Jumbo loans continue to price about a percentage point higher than conforming loans.

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

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Fed Rates to go Higher?

2010-02-17T12:04:00.000-08:00

Mortgage News

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Country Wide caught pulling Trickery

2010-02-17T10:47:00.000-08:00

Former mortgage lender Countrywide Financial is mailing out checks to 2,700 borrowers as part of a settlement with Florida homeowners, according to Attorney General Bill McCollum.

In July 2008, McCollum’s office filed a lawsuit against the Calabasas, CA-based lender for what it called deceptive and unfair trade practices, namely putting borrowers into mortgages they couldn’t afford with misleading rates and penalties.

More than $16.9 million in so-called relief payments will be distributed this week, with each check written for over $6,000.

“These checks will make a significant difference for Floridians who are trying to save their homes,” said Attorney General McCollum, in a statement. “This will provide real relief to struggling homeowners and families.”

The big question is how many of the affected homeowners actually still own their homes (or are at least current on the mortgages), given the fact they’re located in foreclosure-riddled Florida.

The AG was also awarded $4 million to fund a foreclosure defense assistance program; the first funds were distributed in late 2009.

The organizations that receive the grants over the next two years have agreed to provide free legal assistance to eligible homeowners facing foreclosure who cannot afford an attorney to review their case.

Ex-Countrywide boss Angelo Mozilo was also named in the case, and a civil case against him is still pending in Broward County Circuit Court.

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

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Home Prices Head D to the own

2010-02-17T10:43:00.000-08:00

Millions of foreclosures are expected to keep downward pressure on home prices over the next several years, according to two new studies.

One study, conducted by John Burns Real Estate Consulting Inc., estimates that five million homes and condos currently delinquent are sailing toward foreclosure.

This so-called “shadow inventory” will wind up on the market with the rest of the unsold homes out there, adding about 10 months of unwanted sales stock.

In Orlando, the shadow inventory is a staggering 27 months of sales; it’s 24 months in Miami and 18 months in hard-hit Las Vegas.

Of course, banks are doing their best to keep most of these homes off the market for as long as possible to avoid flooding the market.

But most loss mitigation efforts like loan modifications aren’t expected to hold up, with as many as 70 percent re-defaulting over time, according to the S&P study.

The same study said loan servicers seemed to have exhausted the supply of potential candidates for loan modifications and will find many loans are “unredeemable.”

This could push banks and lenders into offering more robust foreclosure alternatives such as short sales and short refinances.

But even so, many, if not all of these measures are simply delaying the inevitable, which is a larger housing inventory than the numbers indicate.

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

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Citi Offers Six Month Stay In Exchange for Keys

2010-02-12T10:52:00.000-08:00

Citi announced today that it will let borrowers stay in their homes for six months if they agree to a deed-in-lieu of foreclosure.

In exchange for the deed on their property, homeowners will also get a minimum of $1,000 for relocation assistance and counseling, as well as coverage for certain property expenses if Citi determines the borrower can no longer afford them.

Borrowers must continue to pay utilities on their own, though homeowner’s association and escrow fees will be determined on a case-by-case basis.

So what’s the catch? Well, as part of the agreement, homeowners must maintain the property in its current condition and agree to bi-monthly meetings with relocation specialists.

The upside with a deed-in-lieu of foreclosure is that the borrower is released from the mortgage liability, but the obvious downside is losing their home.

The win for the bank is avoiding foreclosure costs, and the possible damage/theft to the home that comes with that; the program may also reduce downward pressure on home prices.

The pilot program, which is expected to help as many as 1,000 families in places Texas, Florida, Illinois, Michigan, New Jersey and Ohio, will begin on February 12.

To be eligible for the program, dubbed the “Foreclosure Alternatives Program,” borrowers must be at least 90 days delinquent, occupy the property in question, and hold a first mortgage with clear title owned by CitiMortgage.

Homeowners will only be considered for the program after being evaluated for a permanent loan modification; for those who don’t qualify, CitiMortgage will also explore the possibility of a short sale.

“At CitiMortgage, we’re committed to finding every solution possible to help families facing foreclosure. However, the reality is that not every homeowner has the financial ability to remain in their home,” said Sanjiv Das, CEO of CitiMortgage, in a release.

“The goal of the program is to help homeowners make a smooth transition into the next chapter of their lives. The Foreclosure Alternatives Program is another tool in our ongoing efforts to find creative, innovative ways to help our customers across a variety of difficult financial situations.”

Late last year, mortgage financier Fannie Mae unveiled a foreclosure prevention tool called the “Deed for Lease Program,” which allowed borrowers to lease their homes after agreeing to a deed-in-lieu of foreclosure.

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

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Mortgage Rates Sneak Under Five Percent, Again

2010-02-12T10:51:00.001-08:00

Mortgage rates were mostly lower this week, according to the latest survey from mortgage financier Freddie Mac.

The uber-popular 30-year fixed dipped to 4.97 percent from 5.01 percent during the week ending February 11, and remains just below the 5.16 percent seen a year ago.

“Interest rates on 30-year fixed-rate mortgages are below 5 percent for a third week this year, which helps a number of homeowners to refinance their existing housing debt” said Freddie Mac vice president and chief economist Frank Nothaft, in a statement.

“In mid-June of last year, for example, 30-year fixed-mortgage rates topped nearly 5.6 percent. Currently, the monthly payments would be almost $77 per month lower on a $200,000 loan balance.

The 15-year fixed averaged 4.34 percent this week, down from 4.40 percent a week ago and 4.81 percent a year ago.

The five-year adjustable-rate mortgage slipped to 4.19 percent, down from 4.27 percent last week and 5.23 percent last year.

The low rates have contributed to refinance demand, with more than two out of three mortgage applications used for that purpose in the first six weeks of 2010, according to the MBA.

However, the one-year ARM bucked the trend, rising to 4.33 percent from 4.22 percent, but it’s still beating its year-ago average of 4.94 percent.

The mortgage rates above are good for conforming loan amounts with a loan-to-value of 80 percent; pricing adjustments may raise or lower your contract rate.

Jumbo loans continue to price about a percentage point higher than conforming loans.

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

eneal@athccorp.com

Weak Purchase Activity Lowers Mortgage Demand

2010-02-12T10:46:00.000-08:00

Less-than-stellar purchase activity pushed mortgage demand down 1.2 percent on a seasonally adjusted basis during the week ending February 5, the Mortgage Bankers Association said today.

The group’s seasonally adjusted purchase index was off 7.0 percent compared with one week earlier, and the unadjusted purchase index was 7.5 percent lower than the same week a year ago.

Meanwhile, refinance activity inched up 1.4 percent compared with the previous week as mortgage rates dipped back below the five-percent threshold, pushing the refinance share of applications to 69.7 percent from 69.2 percent.

The popular 30-year fixed-rate mortgage averaged 4.94 percent during the week, down from 5.01 percent seven days earlier.

The less popular 15-year fixed remained unchanged at 4.33 percent, and the even less popular one-year adjustable-rate mortgage decreased to 6.68 percent from 6.70 percent.

The ARM-share of total applications remained unchanged at just 4.5 percent of total applications.

The MBA’s weekly survey covers more than half of all retail, residential home loan applications, but does not factor out duplicates or declined files.

Keep in mind that borrowers are double and triple-apping a lot more than they had been in the past because mortgage lenders and underwriters are much more stringent than they were previously.

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

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Above 5% For How Long?

2010-02-04T12:46:00.000-08:00

The 30-year fixed climbed back above five percent this week, rising two basis points to 5.01 percent, according to mortgage financier Freddie Mac.

A year ago, the popular mortgage program averaged 5.25 percent, meaning interest rates have been attractive for a long, long time now.

“Mortgage rates remained relatively stable for a second week amid news of a strengthening housing market,” said Frank Nothaft, Freddie Mac vice president and chief economist, in a release.

“Pending existing home sales rebounded by 1 percent in December from a record drop in November that was due in part to the original expiration of the homebuyer tax credit, according the National Association of Realtors®.”

The 15-year fixed averaged 4.40 percent this week, up from 4.39 percent last week, but well below the 4.92 percent average seen a year ago.

The five-year adjustable-rate mortgage climbed to 4.27 percent from 4.25 percent, but still remains about a point below the 5.26 percent seen this time last year.

Finally, the one-year ARM bucked the trend, slipping to 4.22 percent from 4.29 percent, and easily beating its year-ago average of 4.92 percent.

The interest rates above are good for conforming loan amounts with a loan to value of 80 percent; mortgage pricing adjustments may lower or raise your actual interest rate.

Jumbo loans continue to price a percentage point or higher than conforming loans.

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

eneal@athccorp.com

Mortgage or Credit Card?

2010-02-04T12:41:00.000-08:00

Well, an increasing number of consumers are making sure the plastic is paid before the mortgage, bucking the historical trend and adding to strategic default worries nationwide, according to credit bureau TransUnion.

In the first quarter of 2008, the percentage of consumers current on credit cards but delinquent on mortgages first surpassed the percentage of consumers current on their mortgages and delinquent on their credit cards.

Since then, the trend was worsened, with the percentage of consumers who are delinquent on their mortgages and current on their credit cards rising to 6.6 percent as of the third quarter of 2009, up from 4.3 percent in Q1 2008.

“Conventional wisdom has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages,” said Sean Reardon, the author of the study and a consultant in TransUnion’s analytics and decisioning services business unit, in the release.

“However, a recent TransUnion analysis has found that increasingly more consumers are paying their credit cards before making mortgage payments. This analysis reaffirms the results of a previous TransUnion study that examined data between the third quarter of 2006 and the first quarter of 2008.”

It’s even worse in hard-hit foreclosure hotspots like California and Florida; in the Golden State, more than 10 percent of consumers are current on their credit cards but late on the mortgage, up from 3.5 percent in 2007.

In the Sunshine State, the number is above 12 percent, up from five percent in in 2007.

The reversal in payment hierarchy could signal that homeowners see mortgage default as inevitable or less of a concern, now that it’s become so widespread.

Or it may have to do with continued loss of equity, pushing more homeowners to stop paying voluntarily and focus on other, more manageable obligations.

It looks increasingly likely 2010 will be the year of the strategic default…

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

Tel (631) 687-3510 Ext. 101

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eneal@athccorp.com

Demand Heats the Market

2010-02-03T11:27:00.000-08:00

Mortgage demand jumped 21 percent on a seasonally adjusted basis (23.5% unadjusted) during the week ending January 29 compared to one week earlier, according to the Mortgage Bankers Association.

“Mortgage application volume rebounded last week, returning the purchase and refinance indexes to levels from mid-December,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in a release.

“Rates continue to hover around 5 percent, quite low by historical standards, but are well above the record lows seen in 2009, and hence are not generating substantial refi volume. We expect that rates will rise over the next few months as the Federal Reserve winds down its MBS purchase program, and this will likely lead to a decline in refinance volume.”

The refinance index surged 26.3 percent during the week, while seasonally adjusted purchase applications increased more than 10 percent.

Unadjusted purchase demand was up 17.5 percent week-to-week, but still off 11.2 percent compared with the same week a year ago.

The refinance share of mortgage activity increased to 69.2 percent of total applications from 67.6 percent one week earlier as interest rates displayed little movement.

Both the popular 30-year fixed-rate mortgage and the 15-year fixed dipped a single basis point to 5.01 percent and 4.33 percent, respectively.

The one-year adjustable-rate mortgage decreased to 6.70 percent from 6.84 percent, while the ARM-share of total applications fell to 4.5 percent from 4.7 percent.

The MBA’s weekly survey covers more than half of all retail, residential home loan applications, but does not factor out duplicates or declined apps.

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

Tel (631) 687-3510 Ext. 101

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eneal@athccorp.com

Fannie Mae Offering 3.5 Percent in Closing Costs if You Buy One of Their Homes

2010-02-03T11:22:00.000-08:00

Government mortgage financier Fannie Mae is offering 3.5 percent in seller assistance if you purchase one of their previously foreclosed HomePath properties.

The offer is good for any owner-occupant who purchases an REO (Real estate owned) home listed on Homepath.com by May 1, 2010.

The 3.5 percent of the final sales price may be used toward either closing costs and/or choice of appliances; finally, you can get that shiny metallic Sub-Zero fridge you always wanted.

“Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market recover” said Terry Edwards, Executive Vice President of Credit Portfolio Management, in a press release.

“Many families are taking advantage of the federal homebuyer tax credit to buy a new home so this is a great time for Fannie Mae to offer some additional help.”

Many of the Fannie Mae-owned properties also offer special financing, allowing borrowers to purchase a home with as little as three percent down.

The down payment can be funded by your own savings, or via a gift, grant, or loan from a nonprofit organization, state or local government, or employer, so let’s hope this whole thing doesn’t get exploited (mortgages with no money down).

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

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Activity Down but so are Rates....

2010-01-27T09:52:00.000-08:00

An apparent lack of borrowers eligible to take advantage of the near record-low mortgage rates is pushing mortgage demand lower, according to the Mortgage Bankers Association.

Refinance activity fell 15.1 percent last week compared to the previous week, while the seasonally adjusted purchase index slipped 3.3 percent.

On an unadjusted basis, purchase applications were up 2.8 percent compared with the previous week, but 4.5 percent lower than the same period a year ago.

Overall, mortgage applications were off 10.9 percent on a seasonally adjusted basis (-10.1% unadjusted) for the week ending January 22, and 19.8 percent compared with the same week a year earlier.

“Refinance activity fell substantially last week,” said Michael Fratantoni, MBA’s Vice President of Research and Economics, in the release. “Although rates remain low, there appears to be a smaller pool of borrowers who are willing and able to refinance at today’s rates.”

This could be the case because many homeowners are now underwater, owing more on their mortgage than the current value of the property.

It may also be attributable to income loss and/or unemployment for a number of borrowers, or a desire to take advantage of a potentially more favorable loan modification.

Or the fact that most who planned to refinance did so already, back in 2009.

The popular 30-year fixed averaged 5.02 percent up last week, up from 5.00 percent even, while the 15-year fixed increased just a single basis point to 4.34 percent.

The one-year adjustable-rate mortgage increased to 6.84 percent from 6.72 percent, making it a very undesirable choice for homeowners.

The MBA’s weekly survey covers more than half of all retail, residential home loan applications, but does not factor out duplicate or declined apps.

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

eneal@athccorp.com

G to the ame Over

2010-01-27T09:50:00.000-08:00

The FHA continued its crackdown of approved mortgage lenders today, withdrawing three from the program and suspending another.

FHA approval was withdrawn for:

- Strategic Mortgage Corporation (Strategic)
- ProMortgage Inc.
- Americare Investment Group Inc. (dba Premier Capital Lending and TopDot Mortgage)

Additionally, the FHA Mortgagee Review Board (MRB) suspended the FHA approval of Home Mortgage, Inc. (HMI) of Burr Ridge, Illinois.

Offenses ranged from charging borrowers excessive fees to making false certifications to keeping owners in place that were accused of bank fraud.

ProMortgage allowed borrowers to submit verification of employment directly to the lender, which is a huge no-no, as it pretty much allows you to manipulate and falsify documents.

Just another day in the mortgage industry, really…

“FHA takes its oversight role very seriously and will move swiftly and decisively to protect borrowers from unscrupulous lenders,” said FHA Commissioner David Stevens, in a statement.

“Any lender who refuses to comply with FHA requirements will simply no longer enjoy the privilege of participating in FHA programs.”

And by enjoy, he means exist, because most of these lenders rely on the origination of FHA loans to stay in business.

Two other lenders, Action Mortgage Corp. of Cranston, Rhode Island and Cooper and Shein, LLC (dba Great Oak Lending Partners) of Timonium, Maryland, were placed on probation for a period of six months for misleading advertising.

Look for continued enforcement as the FHA works to protect its dwindling insurance fund.

FHA Borrowers Eligible for Help Before Delinquency

2010-01-27T09:43:00.000-08:00

Struggling homeowners with FHA mortgages are now eligible for loss mitigation assistance before falling behind on payments, according to the U.S. Department of Housing and Urban Development.

In the past, homeowners couldn’t receive assistance until they had missed payments, a rule that has since been updated thanks to the Helping Families Save Their Home Act of 2009.

Effective immediately, loss mitigation options such as forbearance and the FHA’s own Home Affordable Modification Program (FHA-HAMP) may be used to assist borrowers facing “imminent default.”

By imminent default, they mean FHA borrowers current or less than 30 days past due on their mortgage obligations who are “experiencing a significant reduction in income or some other hardship that will prevent” them from making their next mortgage payment.

The borrower must be able to document the cause of imminent default, whether it’s unemployment, loss of income, or a change in household financial circumstances, such as illness or disability.

Those able to prove such circumstances will be eligible for things like forbearance, where payments are postponed or suspended for a limited period of time, or a HAMP loan modification, where payments are slashed to more affordable levels via a partial claim.

“The partial claim defers the repayment of a portion of the mortgage principal through an interest-free subordinate mortgage that is not due until the first mortgage is paid off. The remaining balance is then modified through re-amortization and in some cases, an interest rate reduction,” HUD said.

The move is intended to help keep borrowers in their homes and protect the FHA insurance fund from unnecessary losses.

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

eneal@athccorp.com

Housing Data Down

2010-01-25T08:30:00.000-08:00

Stocks dipped briefly after the National Association of Realtors released data showing that existing-home sales plunged in December after three straight-increases that were aided by a fat government tax credit.

Home resales fell by 16.7% to a 5.45 million annual rate from an unrevised 6.54 million in November, a bigger drop than the 11.6% decrease in sales expected by economists surveyed by Dow Jones Newswires. See story on home sales.

However, prices rose year over year for the first time in more than two years the percentage of distressed home resales, including foreclosures, has declined to 32%, after nearing 50% in late 2008 and early 2009.

Investors breathed calmer on Monday as officials over the weekend reiterated support for the re-confirmation of Fed Chairman Ben Bernanke. In the previous session, the Dow closed down 4% for the week, as investors fretted over Bernanke's prospects, U.S. bank restrictions posed by President Barack Obama and the potential for monetary tightening from China.

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

eneal@athccorp.com

Big Bank Slickery?

2010-01-22T08:15:00.000-08:00

FDIC chief Sheila Bair, who spearheaded loan modification efforts early on at failed institutions such as Indymac, received a rather interesting mortgage from Bank of America last summer, according to a report from The Huffington Post Investigative Fund.

Her family reportedly purchased a $1.1 million home in the Maryland suburbs in July, borrowing $898,000 from Bank of America.

At the same time, they refinanced their former home in Amherst, Massachusetts as a second home (or vacation property).

Only problem is the “second home” is a duplex, and Bank of America doesn’t seem to permit financing on multi-unit second homes.

It would need to be declared as an investment property, which is subject to a higher interest rate and more financing restrictions that may have killed the deal entirely.

If you think the duplex issue is a simple oversight, consider the fact that she also rents out the “second home,” bringing in between $15,000 and $50,000 annually as a result, per her most recent financial disclosure.

The loan documents tied to the “second home” included a rider stating it was to be used for their “exclusive use and enjoyment” and could not be used as a rental property.

Also consider that this type of scenario is a common type of occupancy fraud, whereby borrowers claim a property is a second home instead of an investment property to qualify or obtain a lower rate.

Not only that, but she met with the Charlotte-based bank regarding bailout talks in the weeks between the closings of her two mortgages (Bank of America wound up with $45 billion, the second most of any bank).

To resolve that issue, the FDIC gave her a retroactive waiver, as the agency prohibits employees from participating in any matters involving a bank seeking a loan.

Oh, and Bair landed a 5.62 percent interest rate on the 30-year fixed tied to the “second home” in Amherst, and six percent even on the jumbo loan attached to the primary residence in Maryland.

It works from the top down folks…

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

eneal@athccorp.com

Rates are at 5%

2010-01-21T12:33:00.000-08:00

Mortgage rates decreased for a third straight week, sliding below the all-important psychological five-percent threshold, according to mortgage financier Freddie Mac.

The widely popular 30-year fixed averaged 4.99 percent during the week ending January 21, down from 5.06 percent last week and 5.12 percent a year ago.

The 15-year fixed continued to move lower, averaging 4.40 percent this week, down from 4.45 percent last week and 4.80 percent last year.

Fixed mortgages rates continue to follow bond yields lower (how mortgage rates work).

“Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th,” said Frank Nothaft, Freddie Mac chief economist, in a statement.

The five-year adjustable-rate mortgage slipped to 4.27 percent from 4.32 percent, and sits nearly a point below the 5.24 percent seen last year.

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

Tel (631) 687-3510 Ext. 101

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eneal@athccorp.com

The one-year ARM also improved, falling to 4.32 percent from 4.39 percent, 60 basis points lower than the 4.92 percent average of a year ago.

The mortgage rates above are good for conforming loan amounts at 80 percent loan-to-value with no pricing adjustments factored in.

Jumbo loans continue to price a percentage point or so higher than conforming loans.

Adjustable Rate Mortgage Share Lowest on Record in 2009

2010-01-20T09:11:00.000-08:00

Last year, just three percent of purchase-money conventional loans were adjustable-rate mortgages, according to Freddie Mac’s 26th Annual Adjustable-Rate Mortgage (ARM) survey of prime loan offerings.

That’s the smallest annual share since the Federal Housing Finance Agency began keeping track in 1982, and nowhere close to the 62 percent share seen in 1984 when inflation and long-term interest rates were high.

Only 1 percent of FHA loans issued during its fiscal year ending September 30, 2009 were ARMs.

“Fixed-rate lending has dominated the home mortgage market over the past year because of the 50-year low in interest rates for this product and the comfort that a fixed principal-and-interest payment assures the consumer,” said Frank Nothaft, Freddie Mac chief economist.

“While ARM lending has been limited, those consumers who prefer an ARM generally have many lenders and products to choose from. The most offered product in the survey was the 5/1 ARM, where more than four out of five ARM lenders quoted rates. The 5/1 hybrid has a fixed rate for five years and then adjusts annually afterwards.”

The one-year ARM used to dominate the mortgage market, with all banks and mortgage lenders who originated ARMs offering it back in 1997.

In 2009, only 23 percent of ARM-lenders carried the product; a similar number of lenders offered a one-year jumbo loan product, down from 35 percent in 2008.

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

Tel (631) 687-3510 Ext. 101

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eneal@athccorp.com

Modification Woes

2010-01-19T08:01:00.000-08:00

Nathan Reynolds is something of an expert on the government’s foreclosure prevention program. A mortgage broker who’s worked in the Chicago area since 1998, he’s seen both his business and his home’s value plummet in the past few years. After receiving his own trial loan modification from JPMorgan Chase, he’s helped others apply for modifications through the program on his own time.

But in November, after Reynolds had made trial loan payments for seven months, Chase told him his mortgage would not be permanently modified. Chase had determined that his personal financial troubles were only temporary — because Reynolds had expressed optimism that the administration’s policies might rescue the housing market, boosting his income.

That’s not a legitimate reason for a loan servicer to deny someone’s modification, according to the Treasury Department’s guidelines for the program. And Reynolds’ experience — along with the cases of two other homeowners examined by ProPublica, shows how servicers have created unnecessary hurdles that, in some instances, violate the loan program’s rules.

Housing advocates say they frequently see homeowners rejected or kept in a trial modification for questionable reasons. “There’s a real resistance on the servicers’ part to making permanent modifications,” said Diane Thompson of the National Consumer Law Center.

The administration set a goal of helping up to 4 million homeowners through the $75 billion mortgage modification program as a way to blunt the boom in foreclosures. Treasury has produced a growing number of mandatory guidelines for banks and other loan servicers to review applications and perform the modifications. In exchange for tailoring loan payments to 31 percent of the homeowner’s monthly income, both the servicer and the owner of the loan receive incentive payments.

Servicers representing 85 percent of the housing market have signed up to participate. Applicants must first go through a trial period before their mortgage payments can be permanently reduced. But servicers have been slow to convert hundreds of thousands of trials into permanent modifications — as of November, only about 31,000 had been made permanent . That spurred Treasury to publicly criticize the servicers’ performance and to put out new guidelines in recent months to speed up the process.

Treasury said recently that the effort has resulted in a “significant increase” in offers of permanent modifications, but numbers demonstrating how significant won’t be available until February.

ProPublica has reported since last June on homeowners’ frustrations in receiving a prompt answer from servicers, particularly the program’s largest servicers — Bank of America, JPMorgan Chase, Wells Fargo and CitiMortgage. In response to widespread complaints, those servicers have dramatically increased staffing and touted other improvements, such as new document management systems.

But when homeowners do get an answer, the reasons don’t always jibe with how the program is supposed to work. Housing advocates say this is a direct result of a lack of effective oversight of servicers in the program, something [7] ProPublica has focused on before .

‘An Excuse to Deny Someone’

Reynolds was a prime candidate for a loan adjustment and was among the earliest homeowners to receive a trial modification.

His mortgage brokerage business had followed the market downward, and as a result, he’d fallen three months behind on his interest-only mortgage. Area real estate cratered. His own home, bought in 2001 for just over $400,000, had rocketed up to about $1.2 million in value in 2006, and then down again to about $350,000. With a refinancing in 2005 and a home equity line of credit with Countrywide, his mortgage debt exceeded his home’s value by more than 70 percent.

Soon after the loan program was announced last February, Reynolds applied. He received an application in late April and was accepted, making his first payment of about $2,400 (down from $3,300) in May. He made six more payments. Like many borrowers in the program, he says he was asked over and over to send the same documents and later, updated versions of those documents. Finally, in late November, he received an answer: He was denied a permanent loan modification.

The reason? A Chase employee explained to Reynolds that they’d determined his financial difficulties weren’t permanent. In his application, he’d written that he believed that the government’s rescue efforts would “save the U.S. housing market” and that his business “will once again be profitable.” The Chase employee told him that statement indicated his hardship was only temporary.

“That’s just nonsense,” said Thompson of the consumer center. “To me, that sounds like an excuse to deny someone.”

Chase spokeswoman Christine Holevas told ProPublica that Reynolds had been denied “because the skill and ability is still there to earn the income.” Since he’d “stated in his letter that business would be picking up,” it was “not considered a permanent hardship,” Holevas said.

Such a determination contradicts Treasury’s guidance to servicers for the program. A FAQ issued to servicers says the program does not “distinguish between short-term and long-term hardships for eligibility purposes.”

When ProPublica asked about this guideline, Holevas did not directly respond. She did offer another reason for denying Reynolds: Chase’s review of financial information showed his income had not decreased.

Reynolds, who has a wife and two small children, says no Chase employee had made such a claim to him and that the documents he provided show that his mortgage business dropped more than 50 percent in 2009. He submitted a new hardship statement in December, in which he tried to make clear that his troubles are real and lasting. Holevas said those documents would be reviewed.

Now, Reynolds says his finances are at the breaking point and bankruptcy appears unavoidable if Chase denies him again. “I did everything that was asked of me, but Chase has me backed into a corner that I cannot get out of.”

The Nine-Month Trial

Six months into a trial modification, Gary Fitz of California still doesn’t know whether or when his mortgage will be permanently modified, and he’s been told he’ll have to wait for a few more months.

Under the program’s design, the trial period was supposed to last three months, giving time for the servicers to collect and evaluate the homeowner’s financial information. At the end of the trial, if the homeowner fit the program’s criteria and had made all three modified payments, the servicer was supposed to promptly make the modification permanent.

Instead, trial modifications routinely last more than six months, homeowners and housing advocates say.

There are a number of adverse consequences of a trial period’s dragging on, said the consumer law center’s Thompson. Because a homeowner is not making a full payment, the balance of the mortgage grows during the trial period. The servicer reports the shortfall to credit reporting agencies, so the homeowner’s credit score can drop. And most important, says Thompson, the homeowner isn’t saving money in case the modification fails and the home is foreclosed. “Keeping someone in a trial modification really does not do them a favor,” she said.

Fitz’s case shows why some homeowners have remained in limbo so long.

He sought a loan modification in the spring of 2009 because his wife’s salary had been cut. Like millions of others, he applied soon after the administration announced the program last February. He was accepted for a trial modification and made his first payment in July.

Fitz was prepared for an uphill struggle. A Wells Fargo customer service representative told him early in the application process that he should make seven copies of his financial information — because Wells Fargo would likely lose it more than once. He says he’s sent the same paperwork in five times.

When the trial stage lasts so long, servicers commonly ask homeowners for updated financial information months into the trial period. Fitz, for example, submitted his paperwork for the first time last spring. But when Wells Fargo requested an updated package in December, it showed that he’d received a pay raise last June of about $80 per month.

Because of that, Wells Fargo started him over on a new trial period – even though his trial payments climbed just $27, from $1,733 to $1,760. His first payment on the new trial period is due Feb. 1, meaning that by the time he completes it, he will have been making trial payments for nine months.

Wells Fargo spokesman Kevin Waetke said the company does not comment on individual borrower’s cases. He did say, however, that “the federal guidelines require a final review of updated financial documents before moving any Home Affordable Modification from trial status to complete.”

That’s not true. A Treasury guidance to servicers issued in October, meant to streamline the review process, says there is “no requirement” to “refresh” the homeowner’s documentation as long as it was up-to-date when it was originally received.

Wells Fargo also appears to have begun Fitz’s second trial period contrary to Treasury guidelines. A Treasury guidance last April said that a servicer should not begin a new trial period if a homeowner has only a minor income change (defined as exceeding the “initial income information by 25 percent or less”). Guidelines issued laterare even more restrictive about starting a new trial period. The reason is clear: The purpose of the trial period for the homeowner is to demonstrate the ability to pay, and such a small change in income is unlikely to affect that.

Asked to respond, Waetke said that “given the complexity of the program, the volume of calls we receive and the number of modifications currently in process, there is the potential for a mistake to be made.” He added that Wells Fargo would continue to review the case.

Buying Time

Sometimes there seems to be no reason at all for a trial period to drag on.

Cynthia Mason of Texas, another homeowner with a Wells Fargo mortgage, also recently restarted her trial period after several months.

Last spring, she sought a loan modification because medical and other expenses had made it impossible for her to afford her mortgage payment on a fixed alimony income. She’d planned to supplement that income with a job, but has been unable to find anything. Like Fitz, she began the program in July.

In October, good news came with a phone call: She’d been accepted for a permanent modification. She waited for the final paperwork to arrive, but it never did. Instead, while speaking to a Wells Fargo employee about an unrelated issue six weeks later, she found out that she’d in fact been denied. When Mason inquired why, she says she was told some documentation was missing, but the employee could not tell her what it was. She also learned she owed late fees because she’d paid the modified payment, not the original, full payment, in November and December.

When she complained about the late fees (which were eventually canceled), she was passed to a different employee, who told her she was being put back into a trial period. She didn’t understand why. Another representative finally told her that she’d been denied because of a negative “Net Present Value” test. The test is the calculation at the center of the Treasury Department’s program: It determines whether the loan’s owner (sometimes the lender, sometimes a mortgage-backed security’s investors) is likely to make more money modifying the loan or not. A negative result means the servicer has no obligation under the program to modify the loan and is a common reason for denial.

But in Mason’s case, a Wells Fargo employee told her she’d nevertheless been put back into the trial period in order to “buy time.”

Wells Fargo spokesman Waetke declined to speak about Mason’s case but did say that the bank sometimes extends the trial period “to allow customers time to get the documents so we can complete the review.” Mason says she doesn’t know of any documents that might be missing, and she’s not optimistic about receiving a permanent modification. By extending the trial, Mason told ProPublica, Wells Fargo is “just prolonging the inevitable” – denial.

Straight from the source.

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

eneal@athccorp.com

Homes Owned Less than 90 Days Soon to be Eligible for FHA Financing

2010-01-18T08:24:00.000-08:00

Soon it will be easier to finance foreclosed properties with FHA loans.

HUD Secretary Shaun Donovan announced today that FHA financing will be permitted on homes owned by sellers for less than 90 days in a bid to stabilize home prices and accelerate the sale of vacant properties.

The agency currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days, making it difficult for those who acquire foreclosed properties to resell them, as FHA loans are the most widely used nowadays.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan, in the release.

“FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

The move came after FHA research revealed that “acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days.”

Consequently, prohibiting the use of FHA loans for subsequent sales would adversely affect the seller’s ability to move the property, leading to higher holding costs, a drag on home prices in the surrounding area, and an increased risk of vandalism.

At the same time, HUD noted that it understands the risk of predatory practices related to the rule change, which is why the waiver is limited to sales meeting a number of conditions.

The transactions must be arms-length, with no identity of interest between buyer and seller, forward mortgages (no reverse mortgages), and in cases where the sales price of the property is 20 percent more than the seller’s acquisition cost, more conditions must be met.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The rule change is being implemented on February 1, and will be effective for one year, unless extended or withdrawn earlier.

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

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Atlantic Home Capital, Corp.

Refinancing Boosts Mortgage Applications

2010-01-14T11:15:00.000-08:00

Refinancing pushed mortgage applications higher during the week ending January 8, according to the latest weekly survey from the Mortgage Bankers Association.

The home loan application index increased 14.3 percent on a seasonally adjusted basis from one week earlier, and 66 percent on an unadjusted basis, as the previous week included the New Year’s holiday.

The refinance index jumped 21.8 percent on a seasonally adjusted basis from one week earlier, while purchases increased a meager 0.8 percent.

As a result, the refinance share of mortgage activity increased to 71.5 percent of total apps from 68.2 percent a week earlier.

Meanwhile, interest rates saw a bit of improvement after a month-long run up.

The 30-year fixed dipped to 5.13 percent from 5.18 percent, while the 15-year fixed decreased to 4.45 percent from 4.62 percent.

Conversely, the one-year adjustable-rate mortgage skyrocketed to 6.83 percent from 6.42 percent.

The MBA’s weekly survey covers more than half of all retail residential mortgage applications, but does not factor out multiple or declined apps, which have surely risen in the past year or two.

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

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Atlantic Home Capital, Corp.

Over $47 Billion in Prime and Alt-A Interest-Only Loans to Recast Over Next Year

2010-01-12T09:20:00.000-08:00

More than $47 billion in prime and Alt-A mortgages where borrowers are currently making interest-only payments are set to recast to fully-amortizing payments over the next year, according to Fitch Ratings.

“This recast exposes borrowers to an average payment increase of 15% and possibly higher if interest rates increase,” the company said in a release. “Over the next two years, a total of $80 billion of prime and Alt-A loans, and a total of $50 billion Subprime loans are due to recast.”

The news is worrisome considering the fact that 60-day delinquency rates have risen more than 250% in the 12 months following previous recasts for prime and Alt-A loans.

“While only 3.3% of prime loans are 60 or more days delinquent prior to recast, delinquencies the year after recast increased to 9.3%. Similar effects have been seen in Alt-A and subprime, with delinquencies increasing from 12% to 29% for Alt-A, and from 20% to 58% for subprime.”

Then there’s the negative equity issue, which further exacerbates the situation; essentially many that could avoid a recast by refinancing into low rate mortgages are out of luck.

Fitch said the current loan-to-value (LTV) ratios for prime and Alt-A loans are 118 percent, with 64 percent of borrowers underwater.

Additionally, the vast majority of interest-only loans set to recast are adjustable-rate mortgages, adding to the severity of payment shock.

“Of those IO loans recasting in the next two years, 99% of prime, 94% of Alt-A, and 90% of subprime are ARM loans.”

Oh, and most of these borrowers qualified for the loans based on their ability to make the initial interest-only payments rather than the fully amortized principal and interest payments, often while simply stating income.

When your life changes, your mortgage should, too.

For Information regarding your situation

Call Gene Neal 877-276-6400 Ext 101

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Gene Neal mean's Luxury Service

2009-12-29T11:38:00.000-08:00

A candle doesn’t lose its glow when it lights another, please read below.

In a recent article on lifestyle mistakes by mortgage borrowers, I gave an example of such a mistake that touched a nerve on the part of some readers. I said in the article that many borrowers would find irresistible the deal I labeled a mistake, and I was right. Some readers did find the deal I described as irresistible, and were completely convinced that I was wrong in saying that it was a loser. The deal is worth revisiting.
An Irresistible Deal For Payment Myopic Borrowers

The borrower in my example had a 6% loan with a $200,000 balance and 10 years to go. She is offered a 5.75% refinance for 30 years that will reduce her monthly payment from $2220 to $1267. Although the borrower was not required to put up any cash, upfront charges amounting to $17,000 had to be financed, that is, included in the loan amount.

The readers who said that this deal would have been irresistible to them focused on payment savings and ignored or understated changes in the borrower’s loan balance. They are payment myopic, which is a pervasive malady among households who never seem to be able to get out of debt.

The most common approach of my payment myopic readers was to divide the $17,000 of upfront charges by the $953 of monthly payment savings to derive a “breakeven period” of 18 months. Stay longer than 18 months, they told me, and it is all gravy.

Not so. There is a valid way to calculate a breakeven period, as I will show below, but that isn’t it. The borrower would not have broken even after 18 months because at that point she would owe $35,658 more if she refinanced than if she didn’t. That is a long way from breakeven.
A Wealth Analysis of the Deal

My preferred way to analyze this type of problem is to estimate the borrower’s wealth if she refinances, compared to what it would be if she didn’t refinance, after an elapsed period equal to the number of years the borrower expects to be in the house. I will assume that period is 5 years.

Total payments over 5 years would be $$75,982 if the borrower refinances compared to $133,225 if she doesn’t, a saving of $57,243. However, at the end of the 5 years, the loan balance if the borrower refinances would be $201,294, a little more than the balance with which she started. This reflects the $17,000 that was added to the balance at the refinancing, and the slow pay-down in the early years of a new 30-year loan. If she didn’t refinance, the balance would be paid down to $114,851, reflecting the rapid pay-down on a mortgage that has only 10 years left. The difference in the balances is $86,443. which is $29,200 more than the difference in total payments. Taking account of lost interest and tax savings makes only a small difference in the outcome. Over 5 years, the refinance is a loser big time.

These numbers were derived from calculator 3a on my web site. Is there a simple method that doesn’t require a calculator but gives a tolerably accurate answer? There is, and I use it myself when I’m hurried.
A Quicker Approach: Relate Interest Saving to Upfront Cost

A good estimate of the breakeven period is the upfront cost divided by the interest savings. The .25% reduction in the interest rate is worth $500 a year at the beginning. Dividing the upfront cost of $17,000 by $500 gives a breakeven period of 34 years. This is an underestimate because the interest saving declines over time as the balance is paid down. I ignore the extension of the term from 10 to 30 years because that is neither a cost nor a benefit. On a refinance that works, the period required for the interest rate saving to cover the upfront cost should be no more than 4-5 years.

This is how you are supposed to do it. The most important concern is the Homeowner or potential Homeowner first. To receive Free Upfront advice on your current situation
Please call us at 877-276-6400 Ask for Gene the Mortgage Spy for a chance to win up to $500 dollars off of your closing cost.

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