Citi Offers Six Month Stay In Exchange for Keys

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

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.



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Weak Purchase Activity Lowers Mortgage Demand

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?

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.



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eneal@athccorp.com

Mortgage or Credit Card?

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.


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Demand Heats the Market

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

Fax (631) 687-3513

eneal@athccorp.com

Fannie Mae Offering 3.5 Percent in Closing Costs if You Buy One of Their Homes

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.


Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

eneal@athccorp.com