Mortgage Rates Maintaining Status Quo

Prices of mortgage backed securities held to a tight range yesterday, closing the day in essentially the same place they opened. The lack of volatility in MBS prices allowed lenders to keep mortgage rates near five month lows. Yesterday's main event, besides weakness in the dollar and record high gold prices, was the Treasury Department auction of $39billion 3 year notes. Auction demand could be described as below average, but not weak enough to warrant a rise in rates. Strong demand for our nation’s debt is one of the main factors helping to keep mortgage rates near historic lows.

The data calendar is thin today. This morning the Mortgage Bankers’ Association released their weekly applications index. This data tracks the weekly change in the number of applications at major lenders for mortgages. Last week’s report came in surprising low, applications for both refinances and purchase loans dropping significantly. Today’s report showed a large increase in new applications. The overall application activity index jumped 16.4%. The purchase index increased by 13.2% and the refinance activity moved higher by 18.2%. .

Increased application activity may increase the time it takes for lenders to process and approve loans. If you are hoping to take advantage of the first time home buyer tax credit, which expires at the end of next month, increased turn times may delay your closing beyond that date, which disqualifies you from use of the credit. I encourage anyone looking to take advantage of this tax credit to get your application submitted even if you haven’t found a property yet. Some lenders will still underwrite your loan with a “to be determined” address. This will speed up the approval process once you find a home. There is a possibility that this tax credit will be extended, but as it is right now it is set to expire at the end of next month. The clock is ticking.

At 1pm eastern, the U.S. Department of Treasury auctioned $20billion 10 year notes. This auction is more relevant to MBS values than yesterday’s 3 year note auction as the average life of a new mortgage loan is much closer to 10 years than 3. As always with Treasury auctions, market participants look at the demand to gauge its success. Strong demand, especially from foreign accounts, has kept treasury yields low which contribute to low mortgage rates. Matt and AQ covered the auction MBS Commentary blog.

Reports from fellow mortgage professionals indicate that par 30 year conventional mortgage rates are holding in the 4.625% to 4.875% range for well qualified consumers. To secure a par rate you must have a FICO score of 740 or higher, a loan to value at 80% or less and pay all closing costs including an estimated one point loan origination/discount/broker fee. There are a couple lenders offering rates at 4.5% for consumers with exceptionally high FICO scores and lower loan to values. If you are seeking to access equity in your home, you should expect either a higher interest rate or additional fees due to the loan level price adjusters that were added by Fannie Mae and Freddie Mac last year.

As I have been saying in recent posts, floating remains risky. This is not a lock alert but I am continuing to advise my clients to lock in now and take advantage of the great rates being offered. I am continuing this stance as you have more to risk by floating than you can gain meaning rates could move a little lower but there is more room above leading to higher rates.

Be sure to do homework before applying for a loan

Doing research and asking questions before sitting down to sign off on a mortgage loan are essential for first-time home buyers navigating through the home purchase process.

That was the message some local Realtors and a real estate attorney had for potential home buyers Saturday during a free seminar at CiCi's Pizza in Hendersonville.

The clock is ticking for first- time buyers wanting to get into the housing market in order to take advantage of a tax credit of up to $8,000 that ends on Nov. 30 of this year. The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after Jan. 1, 2009, and before Dec. 1, 2009.

Tasks such as finding out how much home you can afford, checking your credit and getting an inspection done once you decide on a home purchase will save prospective home buyers a lot of grief down the road, said Cheryl McDonald Jones, an attorney with The Yelverton Firm in Hendersonville.

"Make sure you understand the type of loan you are getting so you understand the PMI (Private Mortgage Insurance) that goes with it," she said. "PMI is figured on how you are assessed when you apply for the loan and it depends on your income, the amount of money you put down, things like that. Also, be careful how many times your credit is checked. Anytime someone checks your credit, it dings your credit and a lot of people don't realize that. It's not a huge hit, but if you are borderline (for loan approval) it can be enough to drop you below the threshold and you won't get the loan."

Potential home buyers should plan on a monthly house payment taking up about 29 to 31 percent of their budget, Jones said. There are some loan programs that will not allow the home buyer to exceed 31 percent, she added.

Another mistake some first time home buyers make is having expectations that are too high, the attorney said.

"A lot of first time home buyers watch too much HGTV (Home and Garden network) and they are expecting a picture-perfect home for a low price," she said. "There are lots of good products out there, but be prepared to do some work on some of these products because this is an expensive area to live in."

Another tip is to make sure you get a home inspection done to find out the structure's condition before you sign on the dotted line, Jones said.

"I'm a huge fan of independent home inspections -- I get paid to be paranoid," she said. "I know it costs some money up front, but it will give you piece of mind going forward."

Opportunities for home ownership in the Henderson County market are getting better, said Brian Fraga, a Realtor with Prudential Lifestyle Realty, a local real estate firm and sponsor of the seminar.

While the local housing market has been down in recent months, there are signs of improvement, he added.

"We are very optimistic that the market is in a true rebound and much of that is attributed locally to an improvement in the Florida market and other areas in the country where people move here from," Fraga said.

Beware An Abusive Tactic From Mortgage Loan Originators

Of all the issues that have bedeviled regulators and legislators dealing with consumer protection, perhaps the most troublesome have been the abuses connected to the way mortgage loan originators are compensated.

Most reform proposals aimed at curbing abuses by mortgage brokers don't apply to loan-officer employees of lenders. And many of the less-thoughtful proposals for curbing broker abuses would eliminate the borrower's option to have the lender pay the broker's fee in exchange for a higher rate.

The good news is that there has been progress on this issue. Recent proposals by the Federal Reserve to amend truth-in-lending rules seek to address abuses by loan officers as well as brokers. The revised truth-in-lending rules would also retain the option borrowers currently have in how they pay mortgage brokers.

The problem is not how much loan originators make, but how they make it. Under existing arrangements, loan originators, who deal directly with borrowers, can often increase their income by inducing their customers to make bad choices. This works because most borrowers don't have the information and education needed to protect themselves. Many loan officers don't succumb to this temptation, but too many do.

The abusive tactic that has generated the most controversy centers on payments to brokers by wholesale lenders for delivering interest rates that are higher than the "par rate" -- the rate at zero points. For example, a lender delivering prices to a broker who quotes 5 percent on a 30-year fixed-rate mortgage at zero points might pay 1 point for 5.25 percent, or 2 points for 5.5 percent. (A point is 1 percent of the loan amount). These payments by a lender are called "rebates," or "negative points." When pocketed by a mortgage broker, they are called "yield spread premiums".

There is nothing inherently abusive about yield spread premiums -- quite the contrary, when properly used they help to provide a valuable option to borrowers. But they can be used abusively. Here are illustrations of proper use by an ethical broker, and abusive use by a deceitful one.

Ethical Broker: Mrs. Jones, my fee is 1 point. If you select the 5 percent loan, you will pay me at closing. As an alternative, you can take the 5.25 percent loan and the lender will pay my 1 percent fee.

Deceitful Broker: Mrs. Jones, your rate is 5.5 percent. The good news is that my fee is being paid by the lender so my services to you are free.

Loan officers who work for a single lender can also be abusive, but in a different way. They receive retail prices from their back offices, meaning that their commission is included in the posted price. But the loan officer typically has discretion to charge the borrower more than the posted price, termed an "overage," if he can get the borrower to accept it. The loan officer shares the overage with the firm. Overage abuse has attracted much less attention than yield spread premiums abuse, but there is no reason to believe that it is less pervasive.

The Fed proposal would prohibit payments to mortgage brokers and loan officers that are based on a loan's "terms and conditions," including the interest rate and points. The rule would bar a wholesale lender from paying a broker more for a loan with a higher interest rate than for the same loan with a lower rate. However, the rule would not keep lenders from offering rebates on loans with above-par rates, which brokers could offer to clients to cover their fee or other settlement costs.

The rules are a bit rigid in that a broker must be paid entirely by the borrower or entirely by the lender; he cannot be paid by both. The rationale is that borrowers may get confused if the broker fee is shared by the two parties.

The Fed's proposed rule would also bar lenders from offering higher commissions on loans carrying overages. It doesn't bar overages, but it removes all financial incentives for the originator to charge one. This undercuts claims by the National Association of Mortgage Brokers that efforts to rein in yield spread premiums abuse alone would create an "unequal playing field."

Fannie Picks up $57 Billion of Refinanced Loans

Mortgage giant and government-sponsored enterprise Fannie Mae (FNM: 0.58 0.00%) in May took on more refinanced mortgages as part of a federal program, raising its refi volume to $57bn, as its delinquency rate rose to more than double the year-ago level.

In April, the GSE began accepting refinanced mortgage originations under the Making Home Affordable Program (MHA Program).

“We expect that our refinance volumes will remain above historical norms in the near term, but may fluctuate from month to month based on a number of market factors,” Fannie said in its monthly summary. “We expect that the MHA Program will bolster refinance volumes over time as major lenders adopt necessary system changes and consumer awareness continues to build.”

Until then, however, the delinquency rate among Fannie’s loans looks likely to continue to increase as it has every month in the last year. The rate of “serious” delinquencies among Fannie’s single-family loans rose 27 bps to 3.42% at the end of April and is up from 1.22% a year earlier.

Despite the rising delinquency rate, Fannie continues to provide the market with liquidity, issuing $67.7bn of mortgage-backed securities in the month, including the securitization of $61.4bn of whole loans held for investment.

According to a Bank of America analyst, this trend of high-volume securitization enforces a trend seen in May when issuance volumes began increasing, to the industry’s surprise.

“[T]his report further confirms the securitization of seasoned mortgage loans by Fannie Mae starting in May,” says the analyst. “Their mortgage loan (unsecuritized) holdings declined by $59bn while their MBS holdings increased by $80bn in May.”

Mortgage rates tick up; 30-year at 5.24%

Are mortgage rates on the way up or down? It depends on whom you ask.

Bankrate.com's on Thursday said its weekly national survey taken Wednesday showed an uptick in rates, with the average 30-year fixed mortgage rate moving to 5.24 percent, from 5.21 percent.

The average 30-year fixed-rate mortgage carried a .43 discount and origination points, on average.

There was some good news from Bankrate. The average 15-year fixed rate mortgage inched down to 4.74 percent, from 4.76 percent last week. The average rate on a 30-year jumbo mortgage was 6.37 percent.

Just to confuse things, Freddie Mac said Thursday its weekly survey, for the week ended Thursday, pegged the average 30-year fixed rate at 4.82 percent, compared with 4.86 percent last week. In the same weekly period a year ago, the average rate on a 30-year fixed rate mortgage was 5.98 percent.

Freddie Mac said the 15-year fixed rate average also slipped, to 4.5 percent from 4.52 percent a week ago.

Wednesday, the Mortgage Bankers Association said mortgage loan applications rose 2.3 percent in the week ended May 15 but an increased share of applications were for refinancings.

Mortgage Loan Rates Stay Under 5% - 9 Straight Weeks

Mortgage loan interest rates continue to hold steady at under 5% for the ninth week in a row.

Although Freddie Mac reported a minimal mortgage interest rate increase of .02 percent for the week ending May 14th, 30-year fixed rate mortgages continue to hover below the 5% mark. Despite the slight increase, the interest rates, 4.84 last week to 4.86 this week, are still the best we have seen in 40 or 50 years especially during a buyer’s market. Last year for the same period, the interest rate on an average 30-year loan was 6.01 percent.

15 year mortgage rates barely edged up by .01 percent from 4.51 to 4.52 for this same week period. While the five-year adjustable mortgage rates slipped to 4.82 percent from 4.9 percent; and the one-year ARM fell to 4.71 percent from 4.78 percent.

The biggest change was High Balance Conforming Owner Occupied and 2nd Home loans which were at a low mortgage interest rate of 4.875% for 30 year fixed.

While the mortgage interest rates showed minimal increase, the volume of loan applications was down. The low mortgage interest rates and all-time high affordable housing are attracting more first time home buyers. According to Frank Northaft, Freddie Mac VP and Chief Economist, “Relatively low house prices and interest rates are clearly helping first-time homebuyers. First-time homebuyers accounted for half of existing home sales in the first three months of this year.”

Freddie Mac collects mortgage interest rates each week from lenders around the country.

Is a Fixed Reverse Mortgage loan right for you?

A Fixed Rate Reverse Mortgage offers the long-term security of consistency and dependability. Interest rates and margins fluctuate frequently, which in turn can change the total amount of income you will receive from your reverse mortgage - but, with the benefits of a fixed rate reverse mortgage, the amount remains the same from the day you sign up to years down the road.
Your interest will never change, which means that you can plan with your finances with greater confidence and use your money for your important expenses. Additionally, you will know exactly how much of an inheritance your heirs will receive which greatly relieves anxiety on all sides.
A Reverse Mortgage benefits senior homeowners by offering a tax-free return on the investment of their home by means of a steady income from a loan derived from the value of their home. In this situation, a Fixed Rate Reverse Mortgage can further reduce any uncertainty about the retirement years by eliminating effects caused by unstable interest rates. There need be no guesswork about how much money.
Historically, a majority of Reverse Mortgage borrowers have taken the adjustable rate route simply because fixed rates have often been higher than the adjustable rates at that time. Now, with current mortgage rates, the fixed rate has become a wise choice. Two years ago the fixed-rate was as high as 6.5%. But in March, 2009 the Fixed Rate Reverse Mortgage was down to as low as 5.63%. This rate accounts for the Initial Interest Rate as well as the Effective Rate. It is a hard and fast rate, and eligibility is based on the Initial Rate rather than the Expected Rate, which is the information by which an adjustable rate reverse mortgage is calculated. By choosing the fixed rate option, that rate will be locked down for the life of the reverse mortgage.
Borrowers have a few options when it come to choosing their Reverse Mortgage program, but in an unstable economy with rising margins, consumers may feel they want to hone their options to what is safe and affordable. With tightening credit, banks must raise loan margins in order to sell reverse mortgage loans on the secondary market. With a higher index and margin, the borrower will receive less money. When the index changes during the lifetime of a loan, the borrower can end up losing a percentage of the income that they were expecting. It would seem that when the margins increase on reverse mortgages the homeowner appears to end up with less money for their reverse mortgage.
This is one of the risks associated with adjustable rate mortgages but avoided with fixed-rate mortgages at a time like this, when rates are low.
By locking in at a low rate, the equity on your home will not erode quickly as rates increase over the years. If you plan to take the full loan amount in the beginning, for instance, if you want to pay off an existing mortgage, or you have another large upfront expense, the fixed rate option is a chance to come away with possibly thousands more dollars than with the adjustable rate option. Now is the greatest time to sign up for a Fixed Rate Reverse Mortgage, with the lowest rates in history and a time where financial stability is most important.

Spain mortgage loan drop eases in March-cen bank

The reduction in mortgage lending by Spanish banks eased substantially in March from sharp falls seen in January and February, the Bank of Spain said on Monday.
New mortgage loans granted by the banks fell 18.5 percent in March from a year ago, compared to a 49 percent drop in January and a 42 percent fall in February.
The 7 billion euros lent was the largest amount since July 2008, according to provisional data cited by the central bank.
Bank of Spain figures also showed banks may slowly be turning the consumer credit tap back on.
Banks lent consumers 24.4 percent less than a year ago in March, compared to a 41.6 percent decline in February.
The bank's figures do not take into account the calendar effect that March had two extra working days this year compared to a year ago.

Refinance Mortgage Loan- Free Related Knowledge Base About Home Mortgage Loans

Are you searching for information related to refinance mortgage loan or other information somehow related to sub prime mortgages, or mortgage table? If yes, this article will give you helpful insights related to refinance mortgage loan and even somehow related to loan calculator mortgage calculator and mortgage approval that you might not have been aware of.
In most cases, it doesn’t make much sense to have to mortgage life insurance. The chance that you will become unable to pay the mortgage is generally small. Furthermore, if that happens, your family or the others in your household will have to find other ways to pay all the bills not just your mortgage.
A balloon payment mortgage is a fixed-rate non amortized mortgage with a large final payment. Typically, the mortgage matures from five to seven year term. At the end of the term, the borrower pays final payment which is much larger than the regular mortgage payment. Hence, the final payment represents the balloon.
If you are a homeowner looking for a mortgage with a poor credit rating you will be the most likely need to borrow from a sub prime mortgage lender. Sub prime mortgage lenders are lenders that specialize in writing bad credit mortgages. You need to be careful when selecting a bad credit mortgage lender as some will take advantage of your situation and overcharge you for the loan. Here is what you need to know when selecting a sub prime mortgage lender.
If this article still doesn’t answer your specific refinance a mortgage loan quest, then don’t forget that you can conduct more searches on any of the major search engines like Search Yahoo Dot Com to get specific refinance mortgage loan information.
To switch from one mortgage requires tremendous amount of time of self evaluation. The self evaluation involves many aspects of the most current financial situation. The borrowers must make sure that the switch is a change for the better. Using the mortgage options to your advantage, the borrowers free up equity and capital for personal expenses like wedding, vacation, cars, and more.
In a fixed rate mortgage, the borrower pays the same interest rate on all the payments. So, the borrower pays the same mortgage payment on each payment period. This is conventional way to finance a property.
Proprietary Reverse Mortgage: As a mortgage broker or lender, mortgage leads are a most desired commodity. With a blend of good customer relations, bargaining power and salesmanship, a mortgage lead can be quickly converted into a mortgage client.
It might interest you to know that lots of folks searching for refinance mortgage loan also got information related to another mortgage protection lead, commercial mortgage rates, and even mortgage calculator with down payment here with ease.

Casi Mod mortgage loan modification software

THOUGH MORE and more attorney generals are policing the mortgage loan modification industry, loan modification can be a lucrative business as long as you are in compliance. Companies are being investigated or shut down because of unethical practices and failing the screening process of qualifying a client before taking their payment. So how can you take control of your company?Evidently, managers are not able to monitor all conversations between the sales team and the consumer so by giving the sales agents the tools to be able to screen the clients during the first conversation this will save time and money. Casi Mod loan modification software tailored to put your management in control. While most modification software available is intended to only obtain information and then collect fees from the client, Casi Mod will go far beyond that. From the preliminary conversation, the consultant is able to observe the present financial situation of the prospect. This will give the sales agent a general idea if the person is a possible candidate for a mortgage modification. Once the prospect is screened the sales agent will have the ability to create a modification plan that is beneficial to the client based on the company’s criteria. Furthermore, before the file is submitted to processing a request for a prequalification can be sent to a supervisor. Since it is impossible for a supervisor to micro manage its staff at all times, a request for a prequalification can reassure you that you are in control of all files that are submitted into your processing pipeline.Once given the approval to be sent to processing, the agent can easily send the loan modification package directly by printing, emailing, or e-faxing to the client. Also, with the accounting feature it will give you the opportunity to track all payments collected from the client.When the file is in processing, a security option to have view only access is available. Casi Mod’s automated quality control notes system will hard code comments input into to each file. All logs entered will be time and date stamped to keep clients aware of the file status. The user will have the option to print, email or efax the file history directly to the client at anytime. Furthermore, in case a complaint is made, the convenience of having a system that will allow you to share all action taken will be of benefit to your company

Interest rates remain low, mortgage loan RATE applications up

Despite a drop in mortgage loan applications the previous week, more homeowners last week were looking to refinance existing home loans along with a growing number of new buyers seeking mortgages.For the week ending April 10, the Mortgage Bankers Association reported a drop in mortgage loan application volume, but said that the Easter and Passover holiday weekend could have affected homeowner and buyer trends.However last week, ending April 17, the MBA announced that its Market Composite Index - which is a measure of mortgage loan application volume - hit 1,172.1 which demonstrates a 5.3 percent increase on levels from one week prior. The Refinance Index also edged higher - up 7.7 percent from the previous reading. According to the MBA, refinancing as a percentage of all mortgage activity is now nearly 80 percent.With a slumping residential real estate market having taken a toll on consumers and businesses alike, some of the hardest hit areas include Florida, California and Nevada. But looking back one year, the housing market is beginning to show some signs of life.The MBA reports that mortgage loan application volume is up a whopping 76.9 percent compared to the same time last year.Are homeowners finding the government's programs including Making Home Affordable and first-time homebuyer tax credits enough incentive to look at buying or refinancing an existing home?Perhaps, but many argue that it's low interest rates that are prompting homeowners to refinance.Tom Porcelli, a senior economist at Castlestone Management, is quoted by Bloomberg as saying, "The increase in refinancing is a huge positive. It'll reduce mortgage payments and ultimately give consumers the ammunition to save more or spend a little more."

Mortgage Loan rate defaults rise but homeowners stay put

More Californians are failing to make their mortgage payments than at any time in the last 20 years, but fewer of them are losing their homes, according to new figures.The drop in foreclosures follows moratoriums adopted by major banks and mortgage giants Fannie Mae and Freddie Mac. The increase in loan defaults, meanwhile, suggests that rising unemployment and the continuing recession are still claiming fresh victims.

Graphic: Foreclosures by county
But another factor in the soaring default rate could be that some struggling homeowners are purposely skipping their payments so that they can get their loans refinanced, industry experts say.Lenders are so backlogged with requests to adjust loan terms that "they focus on the borrowers who already are circling the drain and ignore the people who are keeping up with their payments," said Jeff Lazerson, president of Mortgage Grader, a Laguna Niguel loan broker.Lynne Neagle, 73, of Westminster may be a case in point.
DATABASE

Neagle said she and her husband had trouble paying their mortgage, but their loan servicer ignored their pleas to renegotiate terms -- until they quit paying, that is. Suddenly, she said, they were presented with new ways to lower their payments and are currently negotiating new terms through the Hope Now program set up by the federal government and some of the country's largest mortgage lenders."Before we stopped making our payments, nobody wanted to deal with us," Neagle said. "We stopped paying, and that really got their attention." A default notice is the first step in the foreclosure process, and California homeowners received 135,431 of them in the three months ended March 31, MDA DataQuick of San Diego said Wednesday. That's an 80% increase over the previous three-month period and a 19% jump over the same period last year.Meanwhile, the number of actual foreclosures, in which the home was repossessed by the lender, fell to 43,620 in the first quarter, a 6% drop from the last three months of 2008 and a 7.6% decline from the year-earlier quarter. Foreclosures peaked in the third quarter of 2008 at 79,511.Much of the drop stems from a change in state law that made it more cumbersome for lenders to foreclose, DataQuick analysts said. That also led to procedural delays for banks and other lenders, which in many cases were not prepared to handle the additional paperwork."Some of these outlets weren't staffed enough to process all these loans, and so they had this huge backlog that we're starting to see work its way through," said Andrew LePage, a DataQuick analyst. "There's also a chunk of it that could be the lender pushing the borrowers into default to get the modification rolling or the borrowers doing it themselves to qualify."Nationally, foreclosure numbers also have fallen.Data firm RealtyTrac of Irvine said Wednesday that the number of homes taken over by banks dropped to 190,543 in the first three months of the year, a 13% decrease from the last three months of 2008. Defaults jumped 10% over the same period, to 306,785.Late last year, the country's two biggest buyers of home loans -- Fannie Mae and Freddie Mac -- stopped foreclosures on many of the loans under their control. Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., Morgan Stanley and Wells Fargo & Co. all followed suit, saying they wanted to give President Obama time to work out the details of his housing plan.Those moratoriums have tapered off. Fannie and Freddie announced at the beginning of April that they would begin foreclosing on homes again. The various federal efforts now underway do offer some incentives for banks to help homeowners in default -- including a $1,000 payment to loan servicers for every successful loan modification. But the incentives are even better for loans that are current -- $1,500 in those cases. And the centerpiece of Obama's plan, the Homeowner Affordability and Stability Program, is aimed at people who are current on their loans.But many troubled borrowers in California are not eligible for help under Obama's plan because they owe much more on their loans than their homes are worth. To qualify for one of Obama's programs, a mortgage's balance must be no more than 105% of the value of the home.