Mortgage Rates Edge Up This Week

Mortgage Rates Edge Up This Week

The popular 30-year mortgage rate, as well as other rates, were on the rise this week, but still remain at low levels, Freddie Mac reports in its weekly mortgage market survey.

The 30-year fixed-rate mortgage averaged 4.81 percent this week, up from last week’s 4.76 percent. Last year at this time, the 30-year mortgage rate averaged 4.99 percent.

The 15-year fixed-rate mortgage inched above the 4 percent mark this week, after sinking below that level last week to 3.97 percent. This week, 15-year rates averaged 4.04 percent. A year ago at this time it averaged 4.34 percent.

The 5-year adjustable-rate mortgage averaged 3.21 percent this week, up from last week’s 3.17 percent.

“The rate uptick was related to higher than anticipated inflation data for February and ongoing geopolitical concerns,” says Frank Nothaft, chief economist at Freddie Mac.

Source: “30-Year Fixed-Rate Mortgage Edges Up to 4.81 Percent,” Freddie Mac (March 24, 2011)

Obama Budget Seeks Cap on Itemized Deductions

Obama Budget Seeks Cap on Itemized Deductions

President Obama is targeting the tax deduction for mortgage interest payments and charitable contributions made among high-income earners.

The proposed budget cuts call for taxpayers in the 33 percent and 35 percent tax brackets to be limited in deducting charitable contributions and mortgage interest payments at the 28 percent rate. The deduction would affect households with taxable income of $250,000 or more. The White House says the move would bring in $321 billion within 10 years.

"NAR will remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest," National Association of REALTORS® President Ron Phipps has said in opposing any MID cuts. (Get the latest news on MID and NAR’s stance at REALTOR.org.)

Other real estate industry and nonprofit sectors are also joining in the resistance, arguing that capping the deduction will hurt an already battered housing market even more.

"This is an attack on the middle class," says Jerry Howard, chief executive of the National Association of Home Builders.

At a time when charities continue to struggle with a drop in donations, limiting the charitable deduction will likely cut large donations for the arts, environment, education and other sectors even more, says Tim Delaney, head of the National Council of Nonprofits, a network of charities.

In the past, the Obama administration and several tax deficit commissions have unsuccessfully called for limiting or eliminating MID. MID costs the Treasury Department an estimated $131 billion a year.

Source: “Slash Mortgage Deductions for the Rich? Fat Chance,” CNNMoney.com (Feb. 15, 2011)

Mortgage Rates Drop Slightly

Mortgage Rates Drop Slightly
Mortgage rates didn’t fluctuate too much this week, dropping only slightly in some cases while the conforming 30-year fixed mortgage rate held unchanged at 4.94 percent for the week, Bankrate.com reports.

Bankrate.com reports the following average rates:
• 15-year fixed mortgages fell to 4.29 percent.
• Large jumbo 30-year fixed rates dropped slightly to 5.57 percent.
• 5-year adjustable rate mortgages fell to 3.88 percent.

“The average 30-year fixed mortgage rate has been particularly docile, with the average rate fluctuating less than one-tenth of a percentage point over the past month,” according to Bankrate.com. “A heavy dose of economic data and ongoing debt issuance by the U.S. Treasury have the potential to introduce some volatility to mortgage rates over the next week.”

Mortgage rates have remained at historic lows for several years. The last time mortgage rates were above 6 percent was November 2008.

Source: “Bankrate: Mortgage Rates Mostly Lower,” Bankrate.com (Jan. 13, 2011)

Good news for homeowners considering a Short Sale

WASHINGTON — The government launched a new effort Monday to speed up the time-consuming, often-frustrating process of selling your home if you owe more than it's worth.

The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale — known as a short sale — or agree to turn over the deed of the property to the lender. It's designed for homeowners who are in financial trouble but don't qualify for the administration's $75 billion mortgage modification program.

Owners will still lose their homes, but a short sale or deed in lieu of foreclosure doesn't hurt a borrower's credit score for as much time as a foreclosure.

For lenders, a home usually fetches more money in a short sale than a foreclosure. And the bank avoids expensive legal bills, cleanup fees and maintenance costs that follow a foreclosure.

"It's very traumatic and embarrassing and frustrating to go through a foreclosure," said Laurie Maggiano, policy director of the Treasury Department's homeownership preservation office. With a short sale, she said, "your financial issues are your own problem and not neighborhood conversation."

Falling home prices and lost jobs have forced many sellers into this position. For example, in Orange County short sales made up about 26 percent of the market in March, compared with 17 percent a year earlier, according to data complied by Altera Real Estate, a local brokerage.

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In the Minneapolis-St. Paul metro area, about 12 percent of all deals since October were short sales, up from about 8 percent a year earlier, according to the Minneapolis Area Association of Realtors.

The expanded incentives will help accelerate short sales, said Mark Zandi, chief economist at Moody's Analytics. He expects 350,000 homeowners nationwide to use the program through the end of 2012, more than double his earlier forecast.

A short sale appears to be the only way out for Brandee Chambers, 36, of Las Vegas. She got into trouble during the housing boom by taking out a risky loan against her home and using the money to buy two investment properties in Phoenix.

She later lost those two properties to foreclosure, and now she is trying to sell the home she lives in for $209,000, but the mortgage balance is $350,000.

Chambers, who owns two hair salons, says she would rather stay in her home, where she lives with her 14-year-old son. But she had no luck getting help with her loan. She said she's resigned to scaling back her lifestyle and renting out an apartment.

"I've had to accept a lot in the last year," she says.

For buyers, though, short sales can be a great opportunity.

Marco Cappelli, 49, a winemaker from Northern California, is planning to buy a short sale this month in the Sierra Nevada foothills. He and his wife are paying $214,000 for a property that had been listed at $270,000. The pair plan to fix it up, install a hot tub and rent it out to vacationers.

Along with the financial incentives, the new government program makes another key change. Mortgage companies will have to set their minimum bid before the house is listed for sale. If the offer is above that, the lender must accept it.

That's a big change from current practice. Lenders generally don't calculate how much money they are willing to accept on a short sale until they have an offer in hand, causing long delays before the sale is approved.

The new program "will give us a degree of efficiency that we have not had in the past," said Matt Vernon, Bank of America's executive in charge of short sales and foreclosed properties.

Under the new process, buyers who submit an offer to purchase a home in a short sale should get a response within two weeks, as opposed to months. If that happens as planned, it would be a big improvement. Real estate agents across the country have complained that lenders are often difficult to reach, sometimes only communicating by e-mail and infrequently at that.

"You're one of 400 properties on a screen," said Dave Bauer, a real estate agent in Danville.

Some real estate agents who specialize in short sales are optimistic. "It could be the first government program that actually helps Las Vegas," said Steve Hawks, a real estate agent there who specializes in short sales. Most borrowers in Las Vegas, he said, owe so much more on their mortgages than their properties are worth they can't qualify for a loan modification.

The Treasury Department outlined the plan in November, but doubled the original $1,500 in relocation money after realizing that many homeowners need more cash to move out. That's because landlords usually want large deposits from people whose credit records have gone sour after missing mortgage payments.

However, there are plenty of restrictions. To qualify, the home needs to be a borrower's primary residence. Homeowners either have to be behind on their mortgages or on the verge of becoming delinquent.

Currently, the program is not available for mortgages owned or guaranteed by mortgage finance companies Fannie Mae and Freddie Mac, though the two government-controlled companies will soon follow suit, said the Treasury's Maggiano.

Fed: Low Rates Likely Through 2010

Fed: Low Rates Likely Through 2010
Interest rates are likely to remain low into 2011, Federal Reserve policymakers hinted this week in at least two presentations. These indications came one week after the Fed shut down its program to buy mortgage-backed securities, which had kept rates at or near record lows in recent months.

In a speech Thursday, Fed Governor Daniel Tarullo said, "The relatively modest pace of recovery, the continued high rate of unemployment, subdued inflation trends, and well-anchored inflation expectations together suggest that the need for highly accommodative monetary policies will not diminish soon.”

Likewise, Donald Kohn, Fed vice chairman in a speech in San Francisco, said the Fed would raise rates, “in due course,” but he also noted that low rates "help offset the lingering restraining effects on economic activity and prices."

So far, rates have risen modestly, but analysts speculate they will likely become much more volatile down the road.

“It’s an uncertain type of market,” says Keith Gumbinger of HSH.com.

Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association, predicts that the Fed will have created a situation where there are days or weeks of low-rate opportunities, and other days and weeks when rates rise significantly.

Mortgage rates bounce back

Still under 5% for borrowers with good credit

By Inman News, Thursday, April 9, 2009.

Inman News

Mortgage rates bounced back this week but remained below 5 percent for borrowers with good credit and 20 percent down payments, Freddie Mac said in releasing the results of its weekly survey of lenders.

Applications for conventional purchase mortgages are up 22 percent since the end of February, and demand for refinancings is up 129 percent, Freddie Mac said, citing data from the Mortgage Bankers Association.

Freddie Mac said 30-year fixed-rate mortgages averaged 4.87 percent with an average of 0.7 point for the week ending April 9, up from 4.78 percent a week ago and 5.88 percent a year ago.

The 15-year fixed-rate mortgage averaged 4.54 percent with an average 0.7 point, up from 4.52 percent last week and 5.42 percent a year ago.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 4.93 percent with an average 0.7 point, up from 4.92 percent last week and 5.56 percent a year ago.

One-year Treasury-indexed ARMs averaged 4.83 percent with an average 0.5 point, up from 4.75 percent last week and 5.18 percent a year ago.

Those rates were for mortgages eligible for purchase or guarantee by Freddie Mac. Borrowers taking out loans too large or risky for Freddie Mac, or providing down payments less than 20 percent, can expect to pay more.

Applications for both refinance and purchase loans were up last week, the Mortgage Bankers Association reported in a separate survey.

The MBA said loan applications were up 4.7 percent during the week ending April 3. Demand for purchase loans was up 11.1 percent, driven by a 17.1 percent jump in applications for government-backed loans, largely FHA. Demand for conventional purchase loans was up 7.7 percent.

Demand for refinance loans increased a more modest 3.2 percent. Refinance applications made up 77.9 percent of all mortgage applications during the week ending April 3, down from 79.1 percent the previous week.

Looking back one year, applications for purchase loans are down about 23 percent, while demand for refinance loans is up 150 percent. At this time a year ago, refinance applications made up 52.2 percent of mortgage applications.

Fannie Mae recently reported it nearly doubled the dollar volume of refinancings from February to March, to $77 billion -- the company's largest refinance month since 2003.

U.S. Treasury: Mortgage Rates 'as Low as 2 percent'

U.S. Treasury: Mortgage Rates 'as Low as 2 percent'
by Broderick Perkins

Some of the 3 to 4 million homeowners eligible for loan modifications could see interest rates as low as 2 percent under the Obama administration's new "Making Home Affordable" (MHA) initiative.

Originally dubbed the "Homeowner Affordability and Stability Plan," MHA contains a provision to modify mortgages for qualified homeowners struggling to make the monthly payment.

A loan modification, unlike a refinance, changes the terms of the existing loan without writing a new one. Modifications are designed to make mortgages more affordable.

Also called a "workout," this provision is open to anyone including those who haven't missed payments, but may be at risk of missing payments.

The modification plan is open to anyone with any loan that has a balance under Fannie Mae and Freddie Mac limits, which now as high as $729,750 in some high-cost areas.

The modification program, also designed to standardize a hodge-podge of modification efforts by lenders, comes with financial incentives for both homeowners and lenders.

Loan servicers get thousands of dollars for modifying mortgages and borrowers get a principal reduction also for thousands of dollars over five years for paying on time.

MHA modifications are designed to make the monthly cost of housing more affordable by reducing the mortgage payment to as little as 31 of household income. Lenders can accomplish that by reducing interest rates, extending the life of the loan and even reducing the principal -- though to date most lenders have balked on forgiving debt.

"To reach the target affordability level of 31 percent, interest payments will first be reduced down to as low as 2 percent. If at that rate the debt to income level is still over 31 percent, lenders then extend the term or amortization period up to 40 years, and finally forbear principal at no interest, until the payment is reduced to the 31% target," according to the Treasury's "Making Home Affordable Updated Detailed Program Description."

The program runs through 2012, allows borrowers to modify a loan only once and applies only to loans made on or before Jan. 1 2009. Mortgages for single-family homes worth more than $729,750 are excluded.

• Do you qualify? Visit FinancialStability.gov's modification area to find out.

• There's more mortgage modification news that really hits home by helping you make the right choices to get the lender on your side.

Refinancing help

MHA also includes a refinancing provision for those with loans held by Fannie Mae or Freddie Mac.

Homeowners with less than 20 percent equity in their homes, who now find it difficult if not impossible to refinance, may be eligible to get new loans at lower interest rates provided the new note doesn't exceed 105 percent of the home's value.

The refinanced loans can be as large as $729,750 in high cost areas and go to those who are current and on time with their mortgage payments.

• Do you qualify? Visit FinancialStability.gov's refinance area to find out.

• For more information on all the provisions of the Obama administration's MHA, visit Making Home Affordable on line.

Mortgage Interest Deduction Limits Not Included in Proposed Budget

Mortgage Interest Deduction Limits Not Included in Proposed Budget

The proposal in the Administration's FY 2010 budget to limit itemized deductions, including the mortgage interest deduction, for upper income taxpayers has found no champions in either the House or the Senate. The House and Senate Budget Committees have met to formulate a Budget Resolution to provide a guide for revenues and spending. NAR had been concerned that the Budget Resolution might include references to the Administration's proposal to use a portion of the mortgage interest deduction as a means of setting aside funds to "pay for" revisions to the health insurance and health care systems. In the end, neither the House nor the Senate included any reference to the proposal. The proposed Budget Resolutions did direct the tax-writing committees to set aside reserves for funding health care reform, but left the challenge of identifying the payment mechanism to the tax writers.

Visit www.realtor.org/2009housingtaxcredit

Major Banks Re-Enter Jumbo Arena -Great News for San Francisco!

Major Banks Re-Enter Jumbo Arena
Bank of America is among the major banks rolling out jumbo mortgage programs and holding the loans in their own portfolios.

It will offer loans from $730,000 to $1.5 million with 30-year fixed rates under 6 percent; but borrowers must make a 20-percent down payment, have good credit, provide proof of income, and hold six months' of principal, interest, property tax, and insurance payments in reserve.

Other banks offering jumbo loans include ING Group's ING Direct unit and Luxury Loans of San Diego.

Source: Chicago Daily Herald, Ken Harney (03/20/09)

Obama- Loan Modification Plan

Is My Loan Eligible for Modification Under the Obama Plan?
by Ralph Roberts

The Treasury Department recently released a report, which include eligibility requirements to determine which homeowners qualify for relief under the plan. Following are the eligibility requirements as specified in the guidelines:

• Mortgage must have originated on or before January 1, 2009.
• Home must be an owner-occupied primary residence (verified with tax return, credit report, and other documentation such as a utility bill) – this program is not designed for investor-owned properties.
• Home must be a single family 1-4 unit property (including condominium, cooperative, and manufactured home affixed to a foundation and treated as real property under state law).
• Home may not be vacant or condemned.
• Borrowers in bankruptcy are not automatically excluded from consideration.
• Borrowers in active litigation regarding the mortgage loan can qualify for a modification without waiving their legal rights.
• First lien loans must have an unpaid principal balance (prior to capitalization of arrearages) equal to or less than:

  • 1 Unit: $729,750
  • 2 Units: $934,200
  • 3 Units: $1,129,250
  • 4 Units: $1,403,400

• Foreclosure actions are suspended during the trial period or while borrowers are considered for alternative foreclosure prevention options. If homeowners fail to qualify, foreclosure proceedings may resume.
• No minimum or maximum LTV ratio for eligibility purposes.
• Loans are eligible for only one loan modification under the program.
• Subordinate liens (such as second mortgages or home equity loans or lines of credit) are not included in the Front-End DTI calculation, but they are included in the Back-End DTI calculation.
• Servicers should follow any existing express contractual restrictions with respect to solicitation of borrowers for modifications.

Applicants will be accepted into the program until December 31, 2012 (the program expiration date), but incentive payments will continue up to five years after the date of entry into the Home Affordable

Modification Program. Monitoring will continue through the life of the program.

Keep in mind that these eligibility requirements are simply government guidelines. Avoid the temptation to qualify or disqualify yourself based solely on what the eligibility requirements indicate. Consult a loan modification specialist who works with lenders on a daily basis to review your situation and determine whether you are likely to qualify. Sometimes the only way to determine whether you qualify is to actually submit your loan modification application.