Activity Down but so are Rates....

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

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FHA approval was withdrawn for: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

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

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?

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%

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

Fax (631) 687-3513

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

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

Fax (631) 687-3513

eneal@athccorp.com