Rate spikes appear to be a thing of the past for now and rates have come down to around 6%. Contrary to news reports, loans are available for all mortgage programs. // The loan modifications landscape is changing daily. Politicians are considering it, Fannie/Freddie are trying to develop LM policies, and lenders are doing them. The focus is mostly on (above) market interest rate reductions, but on the most painful issue of foregiving part of the loan balance we still have a long way to go. // Starting this week I will include a market analysis piece to help us project the inevitable RE turnaround :)) - Paul
Market analysis: The Case-Shiller Index vs other indicators
There has been much ado about which home price index is a best indicator of the health of the U.S. housing market. There are really only two worth considering since the National Association of Realtors median prices tell an unreliable tale at best.
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Weaker job market leads to lower rates
For the week ending Oct 30th the 30-year fixed averaged 6.20% with an average 0.7% fee, up from last week when it averaged 6.46%. Last year at this time, the 30-year fixed averaged 6.24%.
"Mortgage rates fell this week amid new indications of a pullback in consumer spending and a weaker jobs market," said Frank Nothaft, Freddie Mac vice president and chief economist.
Freddy Mac rate surveys. 1-3 week trend: Uncertain
FHA reverses borrower bankruptcy policy
The Federal Housing Administration is reversing a long-standing policy. It wants to help borrowers who have filed for bankruptcy stay in their homes. 'Mortgagees must, upon receipt of notice of bankruptcy filing, send information to debtor's counsel indicating that loss mitigation may be available, and provide instruction sufficient to facilitate workout discussions, including documentation requirements, timeframes and servicer contact information", according to an FHA mortgagee letter.
Not all loan modification services are equal
Most loan modification services just process the file and accept the lender's first offer. Still useful maybe because doing it yourself is typically a frustrating experience that will likely yield worse, or no results. This is how we are different: We take the time to understand the hardship situation, create a detailed file to support our case with the lender, negotiate and fight for our clients AND we don't get paid unless the borrowers accepts the LM in writing. We have a long standing relationship with decision makers, and know what lenders "will take", so we can get the best LM offer. Realtors are invited to refer their (prospective short sale) clients through my loan modification referral program.
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Better a witty fool than a foolish wit.
The government is expected to announce up to $50 billion to directly address bad mortgages and millions of homeowners at risk of foreclosure. Roughly 10% of mortgages are in arrears, about 4 million loans, and roughly 7.5 million homeowners are under water. Let's say 10 million distress situations in total. The real number could be as high as 20 million. With $50 Bil that amounts to about as little as $2,500 per. Something tells me this is not going to cut it. But, it's a move in the right direction. - Paul
Lender options: Loan modification, short sale, or foreclosure
This is (should be) the order of preference to lenders for the purpose of minimizing losses. Sadly, the common experience is exactly the opposite: Lenders are slow and too demanding in responding to short sale requests. Loan modifications, ditto. And foreclosures will eventually happen automatically. This results in preventable lender losses and borrowers looking for an honorable solution are rebuffed (and in the absence of a loan modification also forced to abandon their homes). I recommend distressed borrowers pursue a short sale and loan modification simultaneously. Realtors are invited to refer their clients through my loan modification referral program.
Bond yields drive long term rates up
For the week ending Oct 30th the 30-year fixed averaged 6.46% with an average 0.7% fee, up from last week when it averaged 6.04%. Last year at this time, the 30-year fixed averaged 6.26%.
"Long-term mortgage rates followed long-term Treasury bond yields higher this week, pushing fixed-rate mortgages up to levels of two weeks ago," said Frank Nothaft, Freddie Mac vice president and chief economist. "The Federal Reserve's 0.50% cut in the discount rate and federal funds target rate on Wednesday is likely to keep short-term interest rates low; consequently, initial interest rates on ARMs, which tend to be set relative to other short-term rates, may remain near current levels.
Fed's Yellen says rates could reach Zero...
San Francisco Federal Reserve President Janet Yellen said the Fed could lower rates below 1%, and that they could reach as low as zero amid a weak economy. Read more.
Housing plunge: The Fannie fix
"Two scapegoats in the mortgage mess, Fannie Mae and Freddie Mac, could play a key role in a housing revival". By Colin Barr, senior writer, NY Times. Read.
