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

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

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

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.....

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.



Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

eneal@athccorp.com

Mortgage Rates Increase as Fed MBS Purchase Program Nears End

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%.


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

Refinance Share Lowest Since October

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.


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 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.



Tel (631) 687-3510 Ext. 101

Fax (631) 687-3513

eneal@athccorp.com