Howard Sumner

High Mortgage Interest Payments May Be Useful to Pursue Potential Nonfilers and Underreporters

The IRS may be able to enhance its efforts to address taxpayers who are making high mortgage interest payments, but are not filing tax returns

FHA Insures $37bn of Mortgages in July

By AUSTIN KILGORE
August 21, 2009 3:14 PM CST

[Update 1: Includes statements by FHA commissioner David Stevens]

The Federal Housing Administration (FHA) insured 197,613 mortgages worth $37bn in July, including $18.4bn for purchase mortgages and $15.6bn for refinance transactions.

The FHA, which insures lenders against loss in the event of borrower default, reported more than 108,000 mortgages were endorsed, or insured, in the second half of July, an increase of 11.4% from the first half of the month.

More than 55% - almost 60,000 mortgages -were for purchases, and almost 79% of those were with first-time homebuyers, FHA reported.

About 40% (43,000 mortgages) of the insured mortgages were refinance cases and the remaining 5% (5,074) were Home Equity Conversion Mortgages (HECMs), or reverse mortgage.

For all insured mortgages during the two-week period, the average FICO score was 670. The average purchase FICO was 695; the average refinance FICO was 662.

The FHA received 237,450 applications from potential mortgagors in July. The estimated seasonally adjusted annual rate for applications was 2,643,200.

In light of the growing volume of interest in the FHA program, a bill signed on August 7 expanded the program's endorsement authority to $400bn for fiscal year 2009 to meet projected demand.

"Given our expectation that FHA loan volumes will continue to be high until the credit crisis passes, we just received authorization by Congress for the authority to endorse up to $400bn for FHA insurance and are asking the same for next year," said FHA commissioner David Stevens n a mid-August speech. "We expect that increased authority will allow HUD to endorse approximately 2.25m mortgages in the next fiscal year."

Delinquencies Rise at a Slower Rate, Says TransUnion

By AUSTIN KILGORE
August 17, 2009 9:16 AM CST

The rate of mortgage borrowers 60 or more days late increased for the 10th straight quarter and is at an all-time high of 5.81% in Q209, according to market research by credit bureau TransUnion.

The rate of delinquencies is up 11.3% from Q109's rate, according to TransUnion's study of a random selection of 27m credit files from its national consumer database. The increase is lower, however, than the 16% increase between Q408 and Q109.

Mortgage delinquencies are up 65% year over year, TransUnion added.

"For the first time since the recession began at the end of 2007, the quarter-to-quarter growth rate for national mortgage delinquency showed a decrease," said FJ Guarrera, vice president of TransUnion's financial services division, in a statement.

Nevada (13.8%), Florida (12.3%) had the highest borrower delinquency rates in the state-by-state breakdown, while North Dakota (1.5%), South Dakota (2.1%) and Alaska (2.4%) had the lowest rates.

The average national mortgage debt per borrower declined 0.86% in Q209 to $193,811 from $195,500 in Q109, but is 0.59% higher than the Q209 average debt of $192,681 per borrower.

"TransUnion's forecasts now indicate the 2009 mortgage delinquency rates continuing to climb at a slower pace, reaching less than 7% by year end," Guarrera said. "However, due to a continued downward trend in housing prices throughout the year as well as high unemployment levels, TransUnion does not see national delinquency rates beginning to fall until the first half of 2010."

TransUnion, one of the major US credit bureaus, conducts a survey of exactly 27m credit files from its total consumer base, or about one in every nine consumer files in its database of 250m consumer files each quarter, a spokesperson told HousingWire in June.

For Immediate Release

July 30, 2009
Contact: corprel@freddiemac.com
or (703) 903-3933

REFINANCES IN SECOND QUARTER REDUCE MORTGAGE PAYMENTS BY $3.4 BILLION IN COMING YEAR

Cashout Refinancing At Lowest Share Since Third Quarter 2003

McLean, VA - In the second quarter of 2009, half of borrowers who refinanced their loan lowered their annual mortgage interest rate by at least 20 percent according to Freddie Mac's quarterly Refinance Report. The new interest rate was about 1.25 percentage points below the old rate. In aggregate the interest-rate reduction adds up to about $3.4 billion in payment savings for these homeowners over the next year.

"Interest rates for fixed-rate conventional conforming mortgages hit 50-year lows during the second quarter of 2009. In Freddie Mac's Primary Mortgage Market Survey® rates for 30-year fixed rate mortgages averaged just 5.03 percent over the quarter with 0.7 points, and twice hit an all-time weekly average low of 4.78 percent in April," noted Frank Nothaft, Freddie Mac vice president and chief economist. "A big part of the benefit of refinancing is the lower monthly payment that borrowers enjoy - the payment savings from ‘rate-and-term' refinancing done during the quarter is about $160 a month on a $200,000 loan. But these borrowers also accumulate principal faster than they would have with a higher-rate loan even after taking into account the longer terms of the new loans. In aggregate, second-quarter refinancers will have about $200 million additional principal paydown after a year than they would have under their old loans.

"Fixed mortgage rates are still very low, although they have climbed up a bit from their April lows. We are anticipating more than one-half of originations to be for refinancing throughout the rest of the year as long as rates stay near their current levels of 5.25 percent."

The report also indicates that 62 percent of prime borrowers who refinanced a conventional, second-lien mortgage either kept the same principal balance or reduced it, up from a revised 57 percent in the first quarter. The share of refinance loans resulting in new loan amounts that were at least 5 percent higher than the paid-off second-lien mortgage balances fell to a six-year low of 38 percent in the second quarter; the first-quarter cash-out share was revised down to 43 percent.

"In the second quarter, about $25 billion in home equity was cashed out by homeowners when they refinanced their conventional prime-credit home mortgage. This is up a little less than $5 billion from the first quarter volume, but, importantly, the rise reflects the jump in the number of loans refinanced rather than an increase in the amount borrowers are cashing out per loan," said Amy Crews Cutts, Freddie Mac deputy chief economist. "Credit standards are quite strict today for cash-out refis, and borrowers need a significant equity cushion to contemplate equity extraction. That's why cash-out volumes are 35 percent lower now than a year ago even though interest rates are so low."

These estimates come from a sample of properties on which Freddie Mac has funded at least two successive loans. Transactions are further screened to verify that the latest loan is for refinance rather than for home purchase. The Freddie Mac analysis does not track the use of funds made available from these refinances.

here are the market numbers for the first seven months. market stabilization i believe is what they show. the rental market continues to be the best performer in the market so far this year.