Mortgage Loan Outlet

There are many mortgage loan companies out there that are excited  to help you refinance your 1st and 2nd mortgages.  You have probably seen advertisements all over the Internet and television for refinancing services.  These refinance ads can significantly helps you because you have the opportunity to compare the many different mortgage refinancing options. 

If you find that one mortgage lender does not work with you the way you would like you can always find a different lender somewhere else.  With the competitive loan quotes you are in a position to get some of the best lending advice you have seen in years.  Read the complete article > Home Mortgage Loan Rates.

Freddie Mac recently reported a 30% decline in July MBS issuance along with a 33% drop in the buying of mortgage loans that have been refinanced. Freddie Mac said it purchased $34.1 billion in refinancing loans in July, but Fannie has stopped reporting home refinancing volumes. 

According to the company’s new monthly activity report, Fannie Mae’s issuance of mortgage-backed securities fell 39% in July from the prior month. The government mortgage giant issued $79.7 billion in MBS during July, compared to $130 billion in June. At the same time, its commitments to purchase loans rose 42% in July to $103.6 billion, a sign that residential production could be picking up.

However, their regulator reported that Fannie purchased 264,317 mortgage refinance loans in July and Freddie purchased 158,182 refinancing transactions. Based on Freddie’s average loan size, Fannie purchased approximately $57 billion in mortgage refinancing. Fannie also said 3.9% of its single-family mortgages in June were 90 days or more past due, up from 1.36% a year ago

Last week, government officials warned about loan modification scams and predatory mortgage aid offers from brokers and loan relief specialists.  Homeowners should be alert and do their due diligence of companies, when considering refinancing for a loan workout from a company other than your existing mortgage lending company. Some of the reports have indicated that struggling borrowers have been paying fees of $2,000 to $5,000 in up-front fees to companies that promise foreclosure prevention. Some government officials say such operations are usually fraudulent because help is available for free from government-approved housing counselors. However, most people understand what kind of services they get for “free.” 

QUESTION- Is it possible my payments will be higher?

ANSWER- If you’re still paying a low, intro rate, it is possible your monthly mortgage loan payment will increase more under the federal refinancing program. But the idea is to avoid the surprise interest rate adjustments and negative amortization that erodes your home equity even in a healthy housing market. In the last few years, 2/1, 3/1 and 5/1 ARM’s have sent shock waves through communities across the nation, because borrowers were suddenly hitting their variable rate period with no options to refinance into a reasonable fixed rate mortgage.  After submitting a request for the Making Home Affordable program, your current mortgage lender should give you a “good faith estimate” that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn’t an improvement.  You can also check out the payment reduction estimator on the government’s Web site at http://www.makinghomeaffordable.gov.

QUESTION- Should I wait to see if mortgage interest rates come down in a couple of months before applying?

ANSWER- Probably not, since mortgage rates are at historic lows.  Last week, rates on thirty-year mortgage loans inched upward to nearly 4.9%, but that’s still close to the lowest level since the Great Depression.  Ken Inadomi, director of the New York Mortgage Coalition said, “Waiting for mortgage rates to drop further would be irresponsible and could backfire.” Even low intro mortgage rates should not be that much lower than fixed interest rates these days and in some cases, they may even be higher. So it’s probably in your best interest to lock in now to a low rate refinance loan that you can afford.  Remember, the Making Home Affordable program expires on June 10, 2010.  Read complete article > Is Mortgage Relief Melting with Loan Mod Scams

The Federal Reserve bond-buying binge may bring mortgage rates to their lowest levels since World War II.  On the news that the Federal Reserve would buy as much as $300 billion of long-term U.S. Treasury securities, the rate on a 30-year fixed mortgage fell to 4.75% from around 5% on Wednesday.

Record Low Mortgage Rates Helping Homeowners Refinance

Still, the low rates–on top of the $8,000 homebuyer tax credit and price cuts on homes–may not be enough to entice buyers. As the Bloomberg story points out: If you’re worried about losing your job, buying a new home isn’t on your list of priorities. Plus, even if you’re game to jump into the market, tightened lending standards and new restrictions from Fannie Mae are making it difficult to get home mortgages.

The lower mortgage rates are hardly a game changer, writes analyst Josh Levin in a Citigroup research note on Wednesday. “We continue to hear from homebuilders about the inability of potential buyers to source even the minimum 3.5% down payment necessary for an FHA home loan. Also, homebuilders have run sales in which they have agreed to sponsor low mortgage rates and the uptick in sales has typically been marginal,” he writes.

And some folks are waiting out the market, hoping home prices have farther to fall. See the rest of the article >  - Article written By Emily Friedlander

A recent mortgage lending survey offered a bird’s eye view of the home financing activity involving mortgage bankers, commercial banks and thrift and loan companies. In a recent article, Jason Cardiff told Mortgage Related News that he anticipates that the FHA mortgage rates could decline to 4.5% or even 4.25%. 

Jason Cardiff also said, “The Federal Reserve has made its move to pump more blood back into the housing sector.” The index was 876.9, up from 723.4 a week earlier, the trade group said. Almost 73% of mortgage applications came from borrowers seeking to mortgage refinance loans at reduced interest rates, not home buyers. See the original article > Mortgage rates Decline as Refinance Applications Rise

Henry Paulson puts treasury behind Fannie Mae and Freddie Mac, in an effort to calm housing market with fluid lending from mortgage lenders.

Paulson said: He had the authority to buy unlimited stakes. Increase credit lines for business and mortgage loans that would help homeowners; He discusses borrowing directly from the Federal Reserve.

In a recent article, the chief economist for LendingTree, Cameron Findlay stated that borrowers need to have a few borrowing qualifications met to get the lowest mortgage rates.  First, you’ll need a FICO credit score of 720 or higher, a loan-comparison website. 

To avoid surprises, you should obtain your credit score before you apply for a mortgage loan, says Nancy Flint-Budde, a financial planner in Salem, N.Y. Your credit score is based on information in the credit reports compiled by the three main credit bureaus: TransUnion, Equifax and Experian. You can order a free copy of all three of your credit reports once a year at www.annualcreditreport.com. You’ll have to pay extra for your credit score.  

Once you have received your credit reports, check them for errors that could hurt your score. If your reports show late payments make sure the info is accurately reported.  The only way to repair the damage is by showing mortgage lenders that you can prove it was a mistake or “you must have change your ways”, says Craig Watts, spokesman for Fair Isaac, who developed the FICO score. That will take time, because you need to demonstrate a pattern of on-time payments.  However, if your credit reports show large credit card balances, you can raise your score quickly by paying them off, Watts says. Your “credit utilization” ratio, which reflects to the amount you’ve borrowed as a percentage of your available credit, accounts for 30% of your credit score. Credit repair solutions are available if you need help getting errors and duplicates removed from your credit report.  Read the complete story by Reporter Sandra Block>

In a recent article, James Sterngold considers the impact many consumers aren’t seeing in mortgage relief from TARP.  As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn’t succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won’t lend to them.

While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program on Oct. 3, most bank lending to consumers remains tight and mortgage rates were high. The average credit-card rate was 14.33% on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41% in October 2007.   That’s prompted criticism from Alan S. Blinder, a professor of economics at Princeton University in New Jersey and a former Federal Reserve vice chairman, who says the government should take a more active role as a stakeholder in the nation’s banks.   “With the banks in a state of catatonic fear now, they’re just sitting on the capital,” Blinder said in an interview. “I don’t fault the banks one bit, since this shows Wall Street they’re safer, but then this doesn’t get you much improvement. If you’re taking money from the public purse, we should get something in return, and we’re really not.”

Jeffrey Garten, a professor of international trade and finance at the Yale School of Management in New Haven, Connecticut, and a Commerce Department undersecretary during the Clinton administration, says banks should be forced to increase their lending or risk having taxpayer money taken away. “The government isn’t acting aggressively enough to demand a quid pro quo,” Garten said. “The public good is the key to the private good in this case. It’s not the other way around.”

$8.5 Trillion

Although the government has committed more than $8.5 trillion to energizing the economy, and the Fed cut a key lending rate almost to zero, banks haven’t made it easier to borrow. The Fed said consumer credit fell by $6.4 billion in August, the largest drop in 65 years, and then by $3.5 billion in October, the first time since 1992 that there were two months of declines in a year.

In its most recent quarterly Senior Loan Officer Opinion Survey in October, the Fed reported that about 85% of U.S. banks said they had tightened standards on commercial and industrial loans to companies with more than $50 million in annual sales, up from 60% in July. 95% said they increased the cost of those home loans. About 70% said they made it more difficult to obtain prime mortgage loans, and almost 65% said they did the same for consumer loans.

Mortgage Rates

While mortgage rates have declined, they haven’t fallen as fast as bank borrowing rates, meaning financial institutions are demanding more profit for every dollar they lend. Average rates on thirty-year home mortgages fell to 5.14 % last month, according to data compiled by McLean, Virginia-based Freddie Mac. That’s down from 6.67% in June 2007, before the worst turmoil in the housing market. At the same time, the spread of mortgage rates over the 10-year Treasury bond yield rose to 2.958 percentage points from 1.567. 

The spread of rates on so-called jumbo mortgage loans, those of more than $729,750, is close to a record at 1.6 percentage points above the rate for smaller mortgage loans that conform to terms of ones Freddie Mac and Fannie Mae will purchase, according to financial data firm BanxQuote in White Plains, New York. A year ago the difference was 0.23 percentage points.

High interest rates have angered consumers. The Fed has offered relief in the form of rule changes that allow banks to raise interest rates only on new credit cards and future purchases, not on existing balances. Banks will also have to give cardholders 45 days notice of changes in terms, up from 15 days. Those changes aren’t scheduled to take effect until July 2010.   Read the complete article online >  

Despite complaints that mortgage lenders and banks are not financing enough of new home mortgages, bankers say there’s plenty of money to borrow if banks agree that you are worthy of credit.  In the case of business clients, that means banks are happy to lend to growing companies that can handle the payments.  The Fed cut interest rates, but how many borrowers are being approved for mortgage loans?  Can borrowers with bad credit refinance into an affordable payment or will they lose their home to foreclosure?

But even where banks are lending to sound businesses, they are tightening standards on new mortgage loan programs. In a distressed economy, they say, and with the example of so many failed mortgages around them, it makes sense to demand more security from borrowers.  In a recent article, Bill Williamson, division president for Bank of the West’s Portland said, “When times were better, we were willing to make some exceptions off our guidelines and policies for well-run, growing companies.” 

A bad credit score often leads to a mortgage lender denial of credit. So, if you have poor credit, and your fico scores are too low to qualify for FHA or non prime mortgages, you’ll need to find a  lender that works with hard money.

The approval process for bad credit mortgages is a lot simpler than that of other home loans. The lender considers the property being used as collateral to determine whether it holds sufficient value for the investor/lender to be willing to take the risk of granting the loan. Most hard money lenders require the LTV to be less than 65%. The borrower’s current financial status and future potential is reviewed to calculate the debt to income ratio. And, because we recommend hard money loans only for a short-term solution of 6-18 months, so make sure there is no pre-payment penalty.

Many people in California are using Hard money mortgage loans for foreclosure bailout loans. But, they are not a good idea for mortgage refinancing unless you’re refinancing to help for foreclosure prevention. If possible, try to work out your financial issues with your creditors before trying for home refinance loans or home equity debt consolidation loans. Once you get to the point where your scores are high enough for a sub-prime loan (typically 540-619), then secured debt consolidation loans for consolidating revolving debt to pay off credit card debt will lower your payments and save money.

According to a report in the Wall Street Journal, the Treasury Department is considering a plan to reduce mortgage rates on loans for home financing to 4.5%. On Thursday, Federal Reserve Chairman Ben Bernanke urged the government to consider sweeping steps to prevent foreclosures, including buying risky home loans and mortgage refinancing them under more favorable terms to homeowners.  Prices on mortgage loan securities, which would most feel the impact of any such moves, barely budged on either development. Many mortgage insiders are concerned because the newly released financing plans are simply considered to be another temporary fix that likely would not be the solution to the housing and foreclosure crisis.

Last week, the Fed agreed to buy $600 billion worth of mortgage loan securities, guaranteed by Fannie Mae and Freddie Mac, and agency debt in an effort to prop up the home loan market. That helped bring mortgage rates down nearly one-half of a percentage point.  The latest plans lack crucial details on how they would actually work. For example, it’s not clear in a slowing economy if there will be enough qualified buyers who will actually risk buying a home when they are uncertain about their jobs and the value of the home they buy.  “People are confused about the plans,” said Kevin Cavin, mortgage strategist at FTN Financial. 

Another issue, he said, is that Treasury’s plan would only help new home buyers, not those who need to refinance existing home loans. That could be impractical to implement, as well as unfair, to those homeowners stuck with mortgage loans at higher rates.  “How can you separate purchase borrowers from refinance borrowers in terms of mortgage rates?” Mr. Cavin said.  If the government directly buys loans extended for home purchases, it will create a two-tier market, said Mahesh Swaminathan, mortgage strategist at Credit Suisse. Refinancings “will occur in the regular market and possibly at higher rates,” he said.  FHA mortgage refinancing has been supporting most of the loan programs designed to stem the foreclosure crisis.  Steve Park of Mortgage Brokers Network said, “FHA home loan programs have become Main Street for brokers and lenders nationally.  Park continued, “The good news is that any bit of lower rates will help everyone.”

Even though government intervention is clearly necessary, some market participants are worried that if it is prolonged it could have a disruptive impact on markets, since they would no longer be establishing fair value.  “While reducing mortgage rates is a key goal, it should not destroy the market’s ability to function on its own,” said Mr. Swaminathan. “Government purchases cannot be the permanent solution.”  Yet another twist is that it is unclear whether these proposals will be altered or even suspended when the Obama administration takes over in January.  But the urgency to address the housing situation is clear.

Mr. Bernanke, speaking earlier Thursday, cited estimates showing as many as 15% to 20% mortgage loans may be “under water,” meaning more is owed on the house than it is worth.  The chairman estimated that mortgage lenders are on track to initiate 2.25 million foreclosure proceedings this year, more than double the rate before the crisis.  Housing weakness has been a drag on the overall economy, Bernanke said, adding that “a slowing economy has in turn reduced the demand for houses, implying a further weakening in the mortgage and housing markets.”

With home foreclosures soaring at record rates, the economic picture dimming and job losses ramping up, all the elements were in place to push prices lower.  “The turmoil in the financial and mortgage markets are placing further downward pressure on a housing market already weakened by its own fundamentals.” said David Blitzer, Standard & Poor’s spokesman for the indexes, in a press release. “All three aggregate indices and 13 of the 20 metro areas are reporting new record rates of decline. . . . Prices are back to where they were in early 2004.”  Mortgage rates are higher than 2004 levels, but historically they are still at low levels.  Mortgage lending guidelines are much tighter than 2004 and this is one of the driving forces for declining home values. Homebuyers and borrowers seeking refinance loans simply can’t find many options with mortgage loans.

The 10-city index is now 23.4% off its peak price, which came in June 2006; the 20-city index is down 21.8% from its July 2006 high and the national index has fallen 21% since the third quarter of 2006.  Home prices in the 10-city index have fallen for 26 consecutive months. The decline has broadened over the past 12 months, with prices dropping in every city of the 20-city index during September.  In the weakest market, Phoenix, the 12-month loss came to 31.9%. Las Vegas prices plummeted 31.3% and San Francisco recorded a 29.5% decline. The best performing markets, Dallas and Charlotte, N.C., still posted drops - 2.7% in Dallas and 3.5% in Charlotte.  With San Francisco and Las Vegas, the other members of the 10-city index are: Miami, down 28.4% year-over-year; Los Angeles, down 27.6%; San Diego, down 26.3%; Washington, down 17%; Chicago, down 10.1%; New York, down 7.3%; Boston, down 5.7%; and Denver, down 5.4%.  In addition to Phoenix, Dallas, Charlotte and the cities in the 10-city index, the 20-city index is made up of: Detroit, down 18.6%; Tampa, Fla., down 18.5%; Minneapolis, down 14%; Seattle, down 9.8%; Atlanta, down 9.5%; Portland, Ore., down 8.6%; and Cleveland, down 6.4%.

Foreclosures continue to take a heavy toll, with sales in some cities dominated by properties repossessed by banks and then put back on the market, often at bargain prices. In Las Vegas and Cleveland, for example, about half of all homes for sale are bank-owned properties, according to the real estate website, Trulia.com.  “Foreclosures are clearly a part of the market now,” said Blitzer.  He added that the national index price trends tend to be more moderate because they encompass many more exurban and rural areas, where, in many cases, home prices never skyrocketed as they did in some of the hotter, urban markets.  From the foreclosure prevention efforts, many mortgage lenders are providing loan modifications plans to delinquent homeowners.  Read Complete article at CNNMoney.com

In a recent article written by Bryan Dornan, he reflects on the subprime mortgage problems starting in 2006 and brings us up to speed with FHA and the foreclosure crisis.  Dornan points out how the media is giving the mortgage lending banks like Countrywide, Chase and Wamu a pass with the FHA loan guidelines that have been tightened to the point of strangulation. 

The FHA mortgages were reborn in 2007 with new cash out requirements that enabled borrowers to qualify for cash out refinancing up to 95%.  In an effort to curb foreclosures HUD introduced the FHA Secure refinance that enabled borrowers who were paralyzed with a high rate adjustable mortgage to lock into a fixed rate loan that they could afford.  The homeowners that had enough equity began utilizing FHA home loans for debt consolidation and home improvement funding.  In 2008, Congress finally passed an economic bill that mandated FHA mortgage loan amounts to increase nationally.  

FHA recently introduced the H4H that is considered a “short refinance” because it is a mortgage loan modification endorsed by FHA.  

Read the complete article Loan modifications, FHA Refinancing and No Hope for Homeowners.

According to National Association of Realtors, existing-home sales including single-family, townhomes, condominiums and co-ops increased 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September, up from a level of 4.91 million in August.  Home sales volume was 1.4 percent higher than the 5.11 million-unit pace in Sept. 2007, the first year-over-year gain posted in existing home sales since November 2005.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island,” said NAR chief economist Lawrence Yun. Much of the sales activity was in foreclosed homes. “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions. These are pulling the median price down because many are being sold at discounted prices,” Yun said.

Housing areas that saw a lot of foreclosures are starting to see more sales. Some prices are actually being bid up, as demand increases for foreclosed homes in California. In Sacramento and Riverside counties in California as well as in Prince William County in Virginia, sales have been up for the last six months. Home sales have also picked up in the third quarter in the Kalamazoo area. “If you’re looking for some good news, inventory is down and pendings (pending sales) are up. People are buying,” said Tom Seelbinder, a real-estate agent with Re/Max Advantage in Portage.

Total housing inventory at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, the NAR reported, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. The drop marks two consecutive monthly declines since inventories peaked in July.

According to Mortgage Rates Pulse, interest rates are forecasted to remain low in 2009, but that doesn’t mean that home loan rates might rise slightly.

While mortgage loans are still hard to get, people are still getting loans especially since homes are now more affordable. “The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac. Inventory remains high, and price declines are pressuring owners,” said Yun.

The NAR is now actively pushing for additional stimulus in the form of higher tax credits for home buyers as well as a removal of the repayment feature tied to the original first-time buyer tax credit passed by Congress earlier this year.

“Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising FHA home loan limits would bring more buyers into the market and further reduce inventory,” says Yun.

Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Existing home sales generally account for 85 percent of total home sales and more than 40 percent of multiple listing service data each month.

The Homeownership Preservation Initiative (HOPI) is a partnership between the City of Chicago, Neighborhood Housing Services of Chicago, and key lending, investment and servicing institutions doing business in Chicago. The partnership seeks to preserve homeownership whenever possible and keep families in their homes through counseling, loss mitigation and loan modifications. When foreclosure is unavoidable, the partners seek to preserve the vacant properties as neighborhood assets.

Three-Year Goals:

Homeownership Preservation: Help 1,500 homeowners avoid foreclosure.  Help 500 homeowners per year avoid foreclosure through loss mitigation efforts, including loan workouts, refinancing, loan modifications, repayment plans and small loans to bring homeowners current on mortgage payments.  Property Preservation: Reclaim 300 vacant, foreclosed properties

NHS, through cooperation with lender partners and the Department of Housing, will acquire 100 foreclosed single family buildings per year over three years, rehab them to safe and habitable condition, and sell the homes to low and moderate income families.

311 Homeownership Preservation Campaign

To expand efforts to reach homeowners at risk of foreclosure, the City of Chicago has developed the 311 Homeownership Preservation Campaign. The 311 Campaign will encourage homeowners to call 311 at the first sign of mortgage delinquency. Callers will be connected with one of three credit counseling agencies affiliated with the Credit Counseling Resource Center for a free one-hour counseling session. The counseling agency will:

Provide an in-depth assessment of the homeowner’s financial situation and an individual action plan: Serve as a liaison between the homeowner and the mortgage company, where appropriate, to advocate for a repayment plan, loan modification or other loss mitigation strategy that will help the homeowner avoid foreclosure.   Provide referrals to local resources, where appropriate, for job training, tax assistance, emergency grants, and foreclosure prevention classes.

Questions about the Program:

How does the counseling session work?   The 311 Operator will connect you with a not-for-profit, accredited housing counselor. The counseling session will take place over the phone and is completely confidential. The counselor will gather information from you about your financial obligations and work through your options for avoiding foreclosure. If appropriate, the counselor will help you contact your mortgage lender and negotiate a repayment plan.

How long does the counseling session take?  You should be prepared to spend at least 45 minutes on the phone with the counselor. If you are not able to participate in a counseling session right now, you should call back as soon as you have time available. I’m not in foreclosure now, but I lost my job and am afraid I won’t be able to make my mortgage payment.

Can I participate?   Yes! The counselor can help you establish a budget to get through the next few months.

Are there grants available?   Depending on your particular financial and family situation, there may be low interest loans or emergency funds available. The only way you can determine the best options available to you is by speaking with a housing counselor.

Is there a cost for this counseling? The counseling is being provided free of charge to callers. The City of Chicago and participating lenders are funding the program.