Rates GO d to the own

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

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

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

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?

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?

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....

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.



Tel (631) 687-3510 Ext. 101

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eneal@athccorp.com