There have been a few articles about underwater mortgages over the past week. Following is a summary and links to some of the articles.
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March 9, 2010
March 6, 2010
Mortgage Rates Decline
Freddie Mac’s weekly survey of rates shows a decline in 30 year fixed loans.
30 year fixed loans averaged 4.97 percent with 0.7 points for the week ending March 4. The week prior average was 5.05 percent and the same period a year ago was 5.15 percent.
The 15 year fixed rate was 4.33 percent, also with 0.7 points.
Don Grafues
Resource: FreddieMac
Resource: FreddieMac
March 5, 2010
Earned Principal Reductions
The Federal Deposit Insurance Corporation (FDIC) is considering a plan to help homeowners who are significantly underwater on their mortgage yet are current with payments. The program would offer “earned principal reduction” for an as yet to be determined period of time. If they proceed with the program it would be introduced later this year.
Don Grafues
Resource: REALTOR.org
Resource: REALTOR.org
March 3, 2010
Bailout For Fannie?
Fannie Mae is asking for another $15.3 billion from the government. Fannie’s 4th quarter loss was $16.3 billion, an improvement over the $25.2 billion loss in the 4th quarter of ’08. Fannie continues to be plagued with bad loans.
Don Grafues
Resource: REALTOR.org
Resource: REALTOR.org
March 1, 2010
A Proposal To Help Unemployed Keep Their Homes
The Mortgage Brokers Association made a proposal last Wednesday to help the unemployed keep their homes. The proposal is for mortgage servicers to lower mortgage payments to 31 percent of household income for nine months. The amount of the reduction would be added to the end of the mortgage.
The Treasury would make loans available to the servicers to make up the amount of the reduction. This would keep the holder of the mortgage intact.
A concern is that nine months will not be sufficient as finding work in nine months is very optimistic.
Treasury needs to give it approval for this program to be implemented.
February 27, 2010
Home Values And Perpetual Motion
REALTOR.org printed an article in which Todd Zywicki, a George Mason University law professor, argues that fraud was not the culprit of the housing meltdown. And his ideas are easily understood.
A simplified version of what happed is as follows;
- From 2001 to 2004 the Fed kept interest rates very low making adjustable rate mortgages very attractive.
- While these loans turned out to be risky, at the time homebuyers were making a smart decision to take advantage of these attractive, low cost loans.
- Once the Fed began raising interest rates, the adjustable rate mortgages began adjusting making it difficult for some home owners to continue making payments and they defaulted on their mortgage.
- As foreclosures increased, prices were driven down putting more people in an “underwater” situation.
This cycle of lower home values resulting in more defaults resulting in more foreclosures became perpetual, requiring extraordinary action to break the cycle.
Don Grafues
Resource: RALTOR.org
Resource: RALTOR.org
February 9, 2010
Interest Rates Going Up
Next month the Federal Reserve begins to wind down its program of purchasing mortgage backed securities. April 30 marks the end of the home buyer tax credit. The FHA has tightened it requirements and raised its premium. All of these events will result in higher interest rates.
The Federal Reserve Bank of New York President said rates would be closely monitored and the Fed will act as necessary.
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February 3, 2010
Fannie and Freddie Getting Tough
Freddie Mac and Fannie Mae are working to strengthen their loan portfolios.
They are both reviewing loans they have and when they find improper documentation they force the original lender to buy back the loan.
So far Freddie has sold back loans worth $2.7 billion. Fannie won’t disclose sales but it is estimated that during the first nine months of 2009, they sold $4.3 billion.
It is good that Fannie and Freddie are strengthening their portfolios but there is a downside. Lenders, fearful they may have to buy back a loan, are now much tighter on buyer qualifications for a loan making it more difficult to get financing.
Don Grafues
Resource: REALTOR.org
Resource: REALTOR.org
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January 28, 2010
New Articles (Pages)
Two new articles are published about the loan modification programs. The articles can be found in the right sidebar under “mortgages” and are titled “Making Home Affordable; Refinance” and “Making Home Affordable; Modification.”
These articles provide detail information on the two approaches to loan modifications; qualification requirements, how to apply and what to expect. There are numerous links to other sites with additional information as well as necessary forms.
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January 27, 2010
More On Mortgages
REALTOR.org had a news article on the 25th titled “Big Test Ahead for Mortgage Market”. Here is a quote;
The cessation of the government program to buy mortgage-backed securities, set to end in a couple of months, will show whether the White House and Federal Reserve have effectively stimulated the lending market to the point that it is now on solid footing.
If you saw our post yesterday titled “Loan Sharks” you saw where builders of new homes are being quoted rates between 12 and 20 percent.
I have a fear that the market will not fare well at all if lenders don’t start making loans.
Don Grafues
Resource: REALTOR.org
Resource: REALTOR.org
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