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September 9, 2013

Why Jumbo Mortgage Rates Are Lower than Conforming Interest Rates

Category: Financial News,Published Articles – admin – 4:21 pm

Did you know that rates on jumbo home loans are actually lower than lenders are offering on conforming loan amounts? It’s hard to believe that larger loan amounts that typically have a higher rate of default can be accessed at a lower rate of interest. For the better part of the last decade, conventional interest rates were quite a bit lower than jumbo loan rates.

New Mortgage Financing Posts

Interest on FHA Mortgage Refinance Programs Increases
Jumbo Mortgage Loans Expand Credit for Home Financing

According to the Wall Street Journal, conforming mortgages carry a higher interest rate because of policy changes of the federal reserve and government sponsored enterprises, like Fannie Mae and Freddie Mac.  According to Nick Timiraos, Freddie Mac and Fannie Mae, have increased the fees those companies charge to brokers and mortgage lenders, which has in effect caused interest rates to be higher for popular conforming loans that are backed by Fannie Mae or Freddie Mac.

Meanwhile, interest-rate volatility has driven up yields on mortgage bonds issued by Fannie and Freddie as investors brace for a slowdown in the Federal Reserve’s bond-buying program, which has included those mortgage bonds. That has boosted rates on conforming mortgages . Jumbo house loans, meanwhile, are typically kept on banks’ balance sheets, which means prices aren’t usually set by bond markets. According to Brad Blackwell, the executive V.P. of Wells Fargo, “Banks have more deposits than loans today, so the desire to put that money to work, as well as the fact that it’s at a very low cost, allows us to make non-conforming mortgages at a very good interest rate.

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December 3, 2012

What Are 2nd Mortgage Loans?

Category: Published Articles – admin – 5:25 pm

The Consumer Financial Protection Bureau defines a 2nd mortgage or junior-lien is a loan you take out using your house as collateral while you still have another loan secured by your house. Nationwide lenders defines a second mortgage as “a loan taken out in addition to the existing home mortgage.” Home equity loans and equity lines of credit  are common examples of second mortgages. Some 2nd liens are “open-end” and other 2nd mortgage loans are “closed-end.”
The term “second” means that if you can no longer pay your mortgages and your home is sold to pay off the debts, this loan is paid off second. If there is not enough equity to pay off both loans completely, your second mortgage loan lender may not get the full amount it is owed. As a result, second mortgage loans often carry higher interest rates than first mortgage loans.
TIP: Be careful using home equity to consolidate higher interest debts. When you use home equity to pay off other debts you really aren’t paying them off. You are merely taking out one loan to repay another. The 2nd mortgage rates may be lower in the short term, but that’s only because you are using your home as collateral. The risk is that if you can’t repay your equity loan, you could lose your property. Read the original article from the Consumer Financial Protection Bureau.

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November 16, 2012

Negative Home Equity Refinancing for Upside Down Loans

Category: Mortgage Relief News,Published Articles – admin – 10:17 am

Comparing HARP and FHA for Refinancing a Mortgage Underwater

By now most people have heard about the “super refi” also known as the Home Affordable Refinance Program. This refinance mortgage was inspired by Fannie Mae and Freddie Mac in an effort to stem the loan defaults that were rapidly increasing from borrowers that had a tremendous amount of negative home equity and were unable to refinance into the lower market rates advertised on television and the radio. If you have a loan owned by Fannie or Freddie, you may be eligible to refinance your “upside-down mortgage.”

According to Marsha O’Hare, a financial service specialist and HUD-certified housing counselor at Apprisen, a Columbus, Ohio, the first step is to figure out who owns your mortgage. She stresses the importance of uncovering what type of mortgage you actually have. If the loan is owned or guaranteed by Freddie Mac or Fannie Mae, you may be eligible for the government’s HARP 2.0. “It allows someone who is not delinquent in their payments to refinance, even if the house is worth less than the mortgage balance.” Having the ability to refinance “1st mortgages” and “home equity loans” together could come in the HARP 3.0 Program in 2013.

Nationwide posted an article for distressed homeowners that need advice on refinancing underwater mortgages. They underscored the opportunity that the HARP 3.0 would afford borrowers that did not have liens owned by Fannie Mae or Freddie Mac. Finding a lender that can process a negative equity loan in less than a month could be challenging.

The second option to refinance an upside down mortgage is the latest relief option insured by the Federal Housing Administration. This is called the FHA Short Refinance, because it reduces the principal amount down to “fair-market value” for a specific pool of FHA customers that have a significant amount of negative equity. This FHA program is offered to borrowers who are current on their loan payments, but owe more than their house is worth. This targeted group must also have a mortgage that is not owned or serviced by Fannie Mae, Freddie Mac or FHA. A key part of the program is that refinance lenders must agree to reduce the principal of the loan, so contact your mortgage provider to see if you are eligible. Read more about short refinancing online at the FHA or Making Homes Affordable website.

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October 19, 2012

Romney Mortgage Plan and Vision for Fixing US Housing Sector

Category: Mortgage Relief News,Published Articles – admin – 2:57 pm

Last week Mitt Romney published a report that outlines his plan for the housing sector and his indictment on Obama’s failures in the real estate and mortgage industries over the last four years. Romney recently committed to not repealing the mortgage interest deduction for American homeowners even though his critics have accused him of this. This article is important because it underscores Romney’s vision for solving problems with the Home Affordable Refinance Program and the other government sponsored measures for Americans that are stuck with underwater mortgages. The National Mortgage News posted the following Romney article below online.

The housing crisis has taken an immense toll on the economy, and the impact has been devastating for millions of American families. Since 2009, 8.5 million foreclosure notices have been sent to U.S. homeowners, the average home has lost $13,000 in value, and eleven million borrowers are “underwater,” owing more on their home loans than their homes are now worth. Although there have been some recent signs of life in the housing market, our economy remains stuck in neutral with 23 million Americans struggling to find work, persistently high unemployment that has stayed above 8% for a record 43 consecutive months, and real household incomes falling more than $4,000 over the past four years. The weakness of the recovery has left many in America struggling to make ends meet, pay their bills, or stay current on their mortgage payments. Over 3 million households are currently in the foreclosure process or seriously late on their home loan payment.

Over the past four years, the Obama administration has never offered a clear vision for the future of housing finance policy. At best, the president’s policy response to the housing crisis can be described as confused and reactive. Early in his term, the president stated, according to Washington Post reporter Bob Woodward that “we will not roll out an aggressive plan for under water mortgage refinancing,” and it was not included in his 2009 stimulus. After the president reversed course and did roll out a mortgage relief plan, what followed was a series of confusing new government programs with names like HAMP, HARP, 2MP, H2H and EHLP. Unfortunately these alternative refinance programs have been poorly administered with constantly changing terms and overstated goals that have never been met. In the case of one program, when the goals were not being met the administration’s solution was to expand it, creating HARP 2.0. In his State of the Union Address this year—nearly three years after the program was first launched—the president proposed expanding the program further. While Wall Street needs effective regulation, the president’s solution was the Dodd-Frank Act. The 2,319-page law has produced more than 9,000 pages of new regulations to date, and regulators are only one-third of the way done.  Read the entire article at the National Mortgage News website.

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November 27, 2011

Higher FHA Loan Amounts Extended by Congress

Category: FHA Mortgage,Mortgage News,Published Articles – admin – 5:15 pm

After months of mortgage relief talk, Congress passed a bill that would increase FHA mortgage limits. This was a government compromise that would help homeowners with less than perfect credit get rid of their bad credit mortgage with a record low fixed interest rate. With higher FHA loans, borrowers will have more home loan choices. The fact is that new home buyers and people looking for an affordable refinance would see higher amounts in more than 660 markets across the country. Congress raised loan limits for FHA home loans while leaving loan ceilings untouched for Fannie Mae and Freddie Mac. In effect, this may make FHA the go-to financing option for borrowers needing loans up to $729,750 with down payments as low as 3.5 % in higher cost regions of California; Washington, D.C.; New York, New Jersey and in other states including Massachusetts, Florida and North Carolina.  Fannie Mae and Freddie Mac home mortgage loan programs in those areas, meanwhile, stay capped at $625,500. Equally important, the new plan raises the FHA ceilings for purchasers in hundreds of more moderate-priced markets. For Seattle-area buyers’ the maximum FHA loan amounts jumped to $567,500, while the Fannie Mae-Freddie Mac ceiling remains at $506,000. In Hartford, Connecticut, the limit for FHA is now $440,000 up from $320,850 yet the maximum loan amount for Fannie Mae and Freddie Main are limited to $417,000.

Home buyers with low down payments in Portland, Oregon, who previously had been limited to FHA mortgages of $362,250, can borrow up to $418,750 under the new plan, $1,500 more than they can get from Fannie and Freddie, which generally require steeper down payments and higher credit scores. The new loan ceilings in hundreds of markets are at the core of the compromise: They raise the maximum FHA loan amount in all areas of the country to 125% of the local median home-sale price, while leaving Fannie Mae’s and Freddie Mac’s limit at 115% of median.

What motivated Congress to create separate and unequal rules that transform FHA traditionally a haven for moderate income, first-time buyers with minimal cash — into a key source of financing for buyers in the upper as well as mid-bracket markets? Nobody in Congress actually proposed this idea at the start. By a 60-38 vote in October, the Senate passed an amendment raising all three agencies’ limits to $729,750 in high cost areas and 125% of the median sale price elsewhere. The goal lobbied aggressively by realty and homebuilding groups was to inject needed oomph into lagging home sales. But Republicans in the House balked at doing anything that might prolong the existence of Fannie and Freddie, both the targets of scathing criticism for their multibillion costs to taxpayers and big bonuses for top executives. What ultimately emerged from the legislative scrum was the current compromise penalizing Fannie and Freddie, while boosting FHA. House Republicans weren’t enthusiastic about helping FHA, either the agency faces its own financial challenges but unlike Fannie and Freddie, FHA is subject to congressional appropriations and closer oversight. Republican critics held their noses and voted for the plan. What will this mean for buyers from now through the end of 2013, when the compromise expires? “There’s no doubt this will drive more business to FHA,” said David H. Stevens, former FHA commissioner.” Read the rest of the Daily Herald Article Here.

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July 7, 2011

Rising Home Mortgage Rates?

Category: Published Articles – admin – 5:15 pm

Lenders reported home loan rates rose upward this week after remaining steady at 4.5% for the last month.  The fixed 30-year mortgage rates inched up to 4.625% according to Freddie Mac.  The mortgage rates rose from 4.50% a week earlier and back to where it was at the end of May, before the latest dip down. The interest rates tend to track the yield on the 10-year Treasury bond, which has moved higher since hitting a recent low June 24.

More and more we are noticing “refinance lenders” are extending no cost loans via their yield spread premium paid by the bank to the lender in an effort to cover the fees associated with the loan for the borrower.

Freddie Mac, which asks lenders each week about the terms they are offering to well-qualified borrowers, said the fixed 15-year mortgage rates were being offered at an average rate of 3.75% this week. Last week the rate averaged 3.69%.  The borrowers in the survey would have had solid credit, 20% down payments or home equity and would have paid 0.7% of the loan amount upfront on average in fees and discount points to the loan companies.

According to Freddie Mac’s chief economist, Frank Nothaft, “Interest rates on all mortgages outstanding in the 1st quarter of this year averaged just under 6%.” “With today’s rates, these homeowners who have the ability to refinance could shave $169 per month in interest payments on a $200,000, fixed 30-year mortgage.”

However, the trend of rising rates seemed likely to further cut into the already deflated mortgage refinance loan activity.  Since most homeowners have already refinanced their mortgages already have done so with rates below 5% for much of the last two years.  MBA published a report that indicated a 9.2% drop in new applications for home loan refinance transactions compared to the previous week. It should also be noted that refinance volume has now fallen for three consecutive weeks.

See the original article at the LA Times Online.

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April 20, 2011

New Rules and Standards for Home Mortgage Loans

Category: Home Loan Guidelines,Published Articles – admin – 2:12 am

Before the housing bubble exploded, many home mortgage lenders and brokers were not operating with consumers’ best interest in mind.  They enabled and sometimes encouraged borrowers to take out mortgages with interest rates that shot upward after an introductory period even ones in which the principal balance rose over time. The Dodd-Frank mortgage reform bill passed last year aims to prevent these practices from coming back, mandating that lending companies ensure that all borrowers have the ability to pay back their home loans. As required by the Dodd-Frank law, the Federal Reserve on Tuesday proposed a set of minimum standards for home loans with no cost, creating an “ability-to-repay” requirement for most home loans, as part of an effort to make sure that U.S. lenders don’t return to the shady practices of the housing market boom.

Mortgage lenders would be able to meet that standard by verifying the consumer’s income or assets or making a “qualified mortgage” that requires the lender to calculate the maximum interest payment in the first five years. Home mortgages that meet that standard would have protections against lawsuits. They also would have restrictions on fees and would not allow the principal balance to grow.

The Fed also provided two more options for satisfying the “ability-to-repay” standard. Those affect lenders who are providing mortgage refinance loans with risky features and those in rural and other underserved areas. The Fed is seeking comments on the proposal by July 22. However, the central bank will not complete the process, as its authority over mortgage lending rules is scheduled to transfer to the new Consumer Financial Protection Bureau on July 21. At that point, the consumer bureau is charged with taking over the proposal.

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March 14, 2011

Forecasting Mortgage Rates in 2011

Category: Mortgage Rate Report,Published Articles – – 12:54 pm

Most economists believe that rates will go higher in 2011.  So far, we have seen higher FHA rates, conventional rates, and mortgage refinance rates on the whole.  According to Lead Planet chief economist, Josh Emmons, “Expect rates to continue to inch up in 2011, before inflation kicks in, causing rates to jump significantly.” While a higher FHA insurance premium and other rates on those holding a 15-year mortgage or 30-year mortgage are expected to rise which means the economy is improving, as long as mortgage rate refinancing and other rates in regards to mortgages increase at a gradual, manageable pace.  Having said that, rates are still quite favorable, and you can still take advantage of fixed rate refinancing.  Read the original article online> Mortgage Refinance Rates Forecast for 2011.

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March 1, 2011

The Truth About FHA Loan Programs

Category: FHA Mortgage,Published Articles – admin – 12:44 am

The FHA Loan Blog, posted an interesting article the reveals some insight about the popular FHA loan programs.

  1.  You do not have to have a government job to qualify for an purchase or refinance with a FHA mortgage.
  2.  FHA rates are not higher than conventional interest rates.
  3.  FHA home loans are not just for 1st time homebuyers.
  4.  Mortgage insurance is not required with FHA loans on 15–year terms at or below 90% LTV.
  5.  No cash out is allowed on the FHA Streamline.

Read the original article, 10 Myths about FHA Loans.

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February 8, 2011

Cash Refinancing and Freddie Mac

Category: Published Articles – admin – 4:45 pm

Freddie Mac noted that 2010 saw the highest “cash-in” share since began keeping records on home refinancing patterns in 1985. Cash-out refinance activity in recent years has been harder due to tighter loan guidelines and tougher underwriting standards.  When you factor in the declining in property values, it’s easy to see that cash-out refinance transactions are very difficult to achieve because lenders are not as aggressive. Among the refinances in Freddie Mac’s analysis, the median appreciation of the collateral property was a negative percent over the median prior loan life of 4.1 years.  Read the complete article online > Mortgage Refinancing and Debt Consolidation.

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Underwater Mortgage Crisis

Category: Published Articles – admin – 12:43 am

The term underwater mortgage refers to borrowers that have a home with a mortgage balance that is greater than their property’s appraised value.  Unfortunately most of these homeowners do not qualify for traditional mortgage refinancing. Nearly 1 in every 4 U.S. homeowners with a home loan owes more on their house than it is actually worth. Once a month, those 10.8 million borrowers are faced with a question that cuts to the core of the American Dream and offers a confusing collision between a deep-seated sense of personal obligation and a cold, simple business calculation: Should I continue to make my mortgage payment?   For decades, there was only one answer for most people: Of course I should keep paying, it’s the right thing to do. Besides, the argument went, a home is a great investment. Today, in the wake of the most seismic housing collapse in the nation’s history, that logic has increasingly been challenged by homeowners despondent about their lack of options. Many borrowers are holding on to hope that the Obama mortgage plan will help even more people refinance in 2013.

Walking away from a house, however, is more than the sum of a few business decisions. For many homeowners, it’s either an act of civic defiance against a system they no longer buy into or the end result of being shuffled around by institutions that don’t help them solve their financial problems. While walking away is a frightening and dangerous step into the unknown, millions have beaten the path in the past few years. To find out what it’s like to walk away, The Huffington Post asked readers who were considering making the move, or who had already done so, to write in and share their stories. That was in January 2010. A year later, we followed up with them to see how they reflected on the experience.Although researchers find that some underwater borrowers who could continue paying their home loans strategically default anyway, the vast majority continue to pay. Many homeowners, out of a combined sense of fear, shame, courage and morality, resist making what is otherwise a logical financial decision.

We initially heard from 58 people from all over the country who fit the criteria. Ten of them have become unreachable over the past year, but the remaining 48 were eager to share their stories. A year later, only eight of them are still paying their home mortgage loan. Some requested anonymity because of the shame associated with foreclosure; others requested it because they don’t want to draw retribution from the banks. But there were those who were happy to share their tales on the record. Almost universally, the homeowners we spoke with took personal responsibility for their situations, declining to blame the banks or politicians. Yet nearly all of them faced similar struggles in their attempts to work with their banks: lost paperwork and little interest in finding a financial compromise.

The hostility people felt from their banks made the decision to walk away easier for many, and some now even revel in it, celebrating a break from a system they see as rigged against them. “We get daily calls from creditors and banks that threaten this and that, and I just laugh knowing I am helping to bring down the system that has brought us all down and continues to reap giant profits at the expense of the little guy,” said one. Others are still haunted with shame by the decision. Most said they felt a mix of both.  Read the complete Huffington Post Article written by Ryan Grim.

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February 4, 2011

Mortgage Companies Eliminate 600 Jobs in December

Category: Published Articles – admin – 3:16 pm

Mortgage lending shops finished the year with 260,600 full-time employees on their payrolls, down slightly from 261,400 in December 2009.  However, the U.S. Bureau of Labor Statistics adjusted upward its count of the industry’s workforce by approximately 15,000 jobs. For example, BLS originally estimated that total employment in the mortgage banker/broker sector was 245,300 full-time positions as of November 30.  But the jobs report released Friday morning shows the mortgage industry had 261,200 full-time employees in November.

The new BLS report shows lending organizations cut 600 workers in December. During the end of the month, mortgage loan refinancing activity began to slow as interest rates climbed. Since then, applications for home purchase loans have soared because new home buyers are taking advantage of the discounted home prices nationally.

As of Friday morning, the yield on the benchmark 10-year Treasury was at 3.6%, an indication that the days of a 4% 30-year rates on fixed  mortgage refinance loans may be long gone. Meanwhile, Friday’s overall job report was another disappointment with the U.S. economy generating only 36,000 net new jobs in January.  However, BLS revised upwards the increase in November jobs from 71,000 to 93,000, and the December jobs numbers from 103,000 to 121,000.

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